FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 25, 1995 (12 Weeks)
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-1183
PEPSICO, INC.
(Exact name of registrant as specified in its charter)
North Carolina 13-1584302
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 Anderson Hill Road, Purchase, New York 10577
(Address of principal executive offices) (Zip Code)
(914) 253-2000
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
Number of shares of Capital Stock outstanding as of April 21, 1995:
787,567,370
PEPSICO, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I Financial Information:
Condensed Consolidated Statement of
Income -12 week periods ended
March 25, 1995 and March 19, 1994 2
Condensed Consolidated Balance Sheet -
March 25, 1995 and December 31, 1994 3-4
Condensed Consolidated Statement of
Cash Flows - 12 week periods ended
March 25, 1995 and March 19, 1994 5
Notes to Condensed Consolidated
Financial Statements 6-8
Management's Analysis of Operations,
Cash Flows and Financial Condition 9-23
Independent Accountants' Review Report 24
Part II Other Information and Signatures 25-26
Exhibit 11 Computation of Net Income Per Share of
Capital Stock - Primary and Fully
Diluted 27-28
Exhibit 12 Computation of Ratio of Earnings to
Fixed Charges 29-30
Exhibit 15 Letter from KPMG Peat Marwick LLP regarding
Unaudited Interim Financial Information
(Accountants' Acknowledgment) 31
Exhibit 27 Financial Data Schedule 32
- -1-
PART I - FINANCIAL INFORMATION
PEPSICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in millions except per share amounts, unaudited)
12 Week Periods Ended
3/25/95 3/19/94
Net Sales $6,190.8 $5,728.9
Costs and Expenses, net:
Cost of sales 3,022.0 2,784.5
Selling, general and administrative
expenses 2,470.5 2,326.7
Amortization of intangible assets 69.2 67.2
Operating Profit 629.1 550.5
Interest expense (160.0) (132.6)
Interest income 27.2 20.5
Income Before Income Taxes and Cumulative
Effect of Accounting Changes 496.3 438.4
Provision for Income Taxes 175.2 155.6
Income Before Cumulative Effect of
Accounting Changes 321.1 282.8
Cumulative Effect of Accounting Changes:
Postemployment benefits(net of
income tax benefit of $29.3) - (55.3)
Pension assets (net of income tax
expense of $14.5) - 23.3
Net Income $ 321.1 $ 250.8
Income (Charge) Per Share:
Before Cumulative Effect of
Accounting Changes $ 0.40 $ 0.35
Cumulative Effect of Accounting Changes:
Postemployment benefits - (0.07)
Pension assets - 0.03
Net Income Per Share $ 0.40 $ 0.31
Cash Dividends Declared
Per Share $ 0.18 $ 0.16
Average Shares Outstanding Used
To Calculate Income (Charge)
Per Share 799.5 810.0
See accompanying notes.
- -2-
PEPSICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions)
ASSETS
Unaudited
3/25/95 12/31/94
Current Assets
Cash and cash equivalents $ 289.0 $ 330.7
Short-term investments, at cost 1,134.5 1,157.4
1,423.5 1,488.1
Accounts and notes receivable, less
allowance:
3/95 - $146.5, 12/94 - $150.6 2,087.0 2,050.9
Inventories
Raw materials and supplies 368.3 454.8
Finished goods 590.5 515.2
958.8 970.0
Prepaid expenses, taxes and
other current assets 547.9 563.2
Total Current Assets 5,017.2 5,072.2
Investments in Affiliates 1,284.0 1,295.2
Property, Plant and Equipment 16,353.7 16,130.1
Accumulated Depreciation (6,495.4) (6,247.3)
9,858.3 9,882.8
Intangible Assets, net 7,782.6 7,842.1
Other Assets 793.6 699.7
Total Assets $24,735.7 $24,792.0
Continued on next page.
- -3-
PEPSICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (continued)
(in millions except per share amount)
LIABILITIES AND SHAREHOLDERS' EQUITY
Unaudited
3/25/95 12/31/94
Current Liabilities
Short-term borrowings $ 1,771.7 $ 678.5
Accounts payable 1,202.4 1,451.6
Accrued compensation and benefits 685.9 753.5
Income taxes payable 652.9 671.7
Accrued marketing 407.8 546.2
Other current liabilities 1,136.6 1,168.9
Total Current Liabilities 5,857.3 5,270.4
Long-term Debt 8,216.4 8,840.5
Other Liabilities 1,931.8 1,852.1
Deferred Income Taxes 1,954.9 1,972.9
Shareholders' Equity
Capital stock, par value 1 2/3 cents
per share:
authorized 1,800 shares, issued 3/95
and 12/94 - 863.1 shares 14.4 14.4
Capital in excess of par value 949.1 934.4
Retained earnings 7,918.4 7,739.1
Currency translation adjustment (659.5) (470.6)
8,222.4 8,217.3
Less: Treasury Stock, at Cost:
3/95 - 74.8 shares, 12/94 - 73.2 shares (1,447.1) (1,361.2)
Total Shareholders' Equity 6,775.3 6,856.1
Total Liabilities and
Shareholders' Equity $24,735.7 $24,792.0
See accompanying notes.
- -4-
PEPSICO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions, unaudited)
12 Week Periods Ended
3/25/95 3/19/94
Cash Flows - Operating Activities:
Income before cumulative effect of accounting
changes $ 321.1 $ 282.8
Adjustments to reconcile income before cumulative
effect of accounting changes to net cash
provided by operating activities:
Depreciation and amortization 386.3 347.1
Deferred income taxes 1.0 17.9
Other noncash charges and credits, net 106.1 75.7
Net change in operating working capital,
excluding effects of acquisitions (600.9) (544.4)
Net Cash Provided by Operating Activities 213.6 179.1
Cash Flows - Investing Activities:
Acquisitions and investments in affiliates (43.7) (101.1)
Capital spending (399.3) (352.7)
Proceeds from sales of property, plant
and equipment 13.9 13.4
Short-term investments, by original maturity:
More than three months - purchases (47.2) (146.9)
More than three months - maturities 32.8 323.3
Three months or less, net 11.3 (314.0)
Other, net (47.6) (46.0)
Net Cash Used for Investing Activities (479.8) (624.0)
Cash Flows - Financing Activities:
Proceeds from issuances of long-term debt 366.1 307.1
Payments of long-term debt (48.3) (374.4)
Short-term borrowings, by original maturity:
More than three months - proceeds 519.8 765.0
More than three months - payments (767.8) (927.9)
Three months or less, net 395.2 1,017.9
Cash dividends paid (139.6) (127.8)
Purchases of treasury stock (122.5) (231.9)
Proceeds from exercises of stock options 38.4 33.7
Other, net (10.5) (12.1)
Net Cash Provided by Financing Activities 230.8 449.6
Effect of Exchange Rate Changes on Cash
and Cash Equivalents (6.3) (4.5)
Net (Decrease) Increase in Cash and
Cash Equivalents (41.7) 0.2
Cash and Cash Equivalents - Beginning of year 330.7 226.9
Cash and Cash Equivalents - End of period $ 289.0 $ 227.1
Supplemental Cash Flow Information:
Cash Flow Data
Interest paid $ 175.4 $ 138.0
Income taxes paid $ 138.0 $ 249.4
Noncash Investing and Financing Activities
Liabilities assumed in connection with
acquisitions $ 23.6 $ 67.8
Issuance of treasury stock and debt for
acquisitions $ 3.2 $ 8.9
See accompanying notes.
- -5-
PEPSICO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1) The Condensed Consolidated Balance Sheet at March 25, 1995 and the
Condensed Consolidated Statements of Income and Cash Flows for the 12 week
periods ended March 25, 1995 and March 19, 1994 have not been audited, but
have been prepared in conformity with the accounting principles applied in
PepsiCo, Inc. and Subsidiaries' (PepsiCo) 1994 Annual Report on Form 10-K
(Annual Report) for the year ended December 31, 1994. In the opinion of
management, this information includes all material adjustments, which are
of a normal and recurring nature, necessary for a fair presentation. The
results for the 12 week period ended March 25, 1995 are not necessarily
indicative of the results expected for the year.
(2) Significant debt issuances, including the related effects of any
interest rate and/or foreign currency swaps entered into concurrently with
the debt, are listed below (exclusive of commercial paper). As disclosed
in PepsiCo's Annual Report, PepsiCo enters into the swaps to effectively
change the interest rate and currency of specific debt issuances with the
objective of reducing borrowing costs.
Principal Maturity Interest
Debt Issued (in millions) Date Rate
12-week period ended March 25, 1995:
$ 25.0 1996 7.13% Fixed
50.0 1996 6.85% Fixed
145.4 1996 *
200.0 1997 *
92.0 1998 *
25.0 2000 *
25.0 2002 *
$562.4
Subsequent to March 25, 1995:
$200.0 2002 *
* Variable rate debt indexed to either LIBOR or commercial paper rates.
In addition, during the 12 week period ended March 25, 1995, PepsiCo repaid
upon maturity:
- $514 million fixed rate Notes that had been effectively converted
into variable rate debt through interest rate swap agreements.
- Swiss Franc 130 million 5 1/4% Bearer Bonds that had been
effectively converted into a U.S. dollar liability of $50 million
through a currency exchange agreement.
Subsequent to March 25, 1995, PepsiCo repaid upon maturity:
- $15 million of Zero Coupon Bonds.
- $600 million of variable rate Notes.
- -6-
(3) At March 25, 1995, $3.5 billion of short-term borrowings were included
in the Condensed Consolidated Balance Sheet under the caption "Long-term
Debt", reflecting PepsiCo's intent and ability, through the existence of
unused revolving credit facilities, to refinance these borrowings on a long-
term basis. At March 25, 1995, PepsiCo had unused revolving credit
facilities covering potential borrowings aggregating $4.5 billion, of which
$1.0 billion expire in January 1996 and $3.5 billion expire in January
2000.
(4) Through May 5, 1995, PepsiCo repurchased 4.8 million shares of its
capital stock at a cost of $175 million.
(5) As described in Note 14 to the Consolidated Financial Statements in
PepsiCo's 1994 Annual Report, effective the beginning of fiscal year 1994,
PepsiCo adopted Statement of Financial Accounting Standards No. 112 (SFAS
112), "Employers' Accounting for Postemployment Benefits." The cumulative
effect noncash charge upon adoption of SFAS 112, which relates to years
prior to 1994, was $84.6 million ($55.3 million after-tax or $0.07 per
share).
(6) As described in Note 13 to the Consolidated Financial Statements in
PepsiCo's 1994 Annual Report, effective the beginning of fiscal year 1994,
PepsiCo changed the method for calculating the market-related value of plan
assets used in determining the return-on-asset component of annual pension
expense and the cumulative net unrecognized gain or loss subject to
amortization. The cumulative effect noncash credit upon adoption of this
change, which relates to years prior to 1994, was $37.8 million ($23.3
million after-tax or $0.03 per share).
(7) Statement of Financial Accounting Standards No. 121 (SFAS 121),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," was issued in March 1995. SFAS 121 requires
that long-lived assets, certain identifiable intangibles and goodwill
related to those assets to be held and used, be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of the asset may not be recoverable. Absent a market price
established in an active market for the asset, SFAS 121 requires a forecast
of undiscounted future operating cash flows including disposal value, if
any, to be produced by the asset be compared to its carrying amount to
determine whether an impairment exists. Further, if an asset is determined
to be impaired, the loss is measured based on discounted cash flows as if
the decision to continue to use the impaired asset is a new investment
decision. PepsiCo currently measures impairment primarily by use of
current or forecasted operating income from the asset.
SFAS 121 also requires that long-lived assets and certain identifiable
intangibles to be disposed of that are not covered by APB Opinion No. 30,
"Reporting the Results of Operations - Reporting the Effects of Disposal of
a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions," be reported at the lower of the asset's
carrying amount or its fair value less cost to sell. PepsiCo currently
reports an asset to be disposed of at the lower of its carrying amount or
its estimated net realizable value.
- -7-
PepsiCo is currently evaluating a variety of implementation issues,
including the appropriate grouping of assets for each of our business
segments, the appropriate cash flow models to be used and the impact of
changing the carrying amounts for assets currently held for disposal from
their estimated net realizable values to their estimated fair values.
PepsiCo has not yet estimated the cumulative noncash impact, if any, of
adopting SFAS 121. PepsiCo's decision regarding early adoption will not be
made until evaluation of these implementation issues has been completed.
SFAS 121 is required to be adopted beginning in 1996.
- -8-
MANAGEMENT'S ANALYSIS OF OPERATIONS, CASH FLOWS AND FINANCIAL CONDITION
To improve comparability, Management's Analysis includes analytical data to
indicate the impact, where significant, of beverage and snack food
acquisitions, net of operations sold or contributed to joint ventures
(collectively, "net acquisitions"). The impact of acquisitions represents
the results of the acquired businesses for periods in the current year
corresponding to the prior year periods that did not include the results of
the businesses. Restaurant units acquired, principally from franchisees,
and constructed units, net of units closed or sold, are treated the same
for purposes of this analysis and are collectively referred to as
"additional units."
Analysis of Consolidated Operations
Net sales rose $462 million or 8% to $6.2 billion. This increase reflected
volume gains of $351 million, driven by worldwide snack foods and
beverages, $181 million from additional restaurant units and higher net
pricing in worldwide snack foods and domestic beverages. These benefits
were partially offset by unfavorable currency translation impacts,
primarily related to international snack foods as a result of the
devaluation of the Mexican peso. International net sales grew 9% in 1995
and represented 27% of total net sales in 1995 and 1994.
Cost of sales as a percentage of net sales was 48.8% and 48.6% in 1995
and 1994, respectively. The modest increase in the 1995 percentage was
primarily due to higher cost of sales in domestic beverages that was
substantially offset by lower cost of sales in snack foods. Although
offset by increased pricing, higher packaging costs caused the higher
domestic beverage cost of sales.
Selling, general and administrative (S,G&A) expenses rose 6% in 1995,
reflecting base business growth. S,G&A expenses as a percentage of net
sales were 39.9% and 40.6% in 1995 and 1994, respectively. Selling and
distribution expenses grew at a slightly faster rate than sales, primarily
reflecting new units in domestic restaurants, partially offset by savings
from a previously disclosed 1994 domestic beverage reorganization.
Advertising and marketing expenditures grew at a slower rate than sales
reflecting lower spending in domestic beverages and restaurants, partially
offset by a higher rate of spending in worldwide snack foods. General and
administrative expenses grew at a substantially slower rate than sales
reflecting a reduced rate of spending in all segments, led by domestic
beverages which primarily benefited from savings attributable to the 1994
reorganization. In addition, all domestic businesses benefited from an
unusual $11 million favorable settlement of certain prior year casualty
insurance programs as a result of an agreement with an insurance company to
assume any liability with respect to those programs.
Amortization of intangible assets rose 3%. This noncash expense
reduced net income per share by $0.07 and $0.06 in 1995 and 1994,
respectively.
- -9-
Operating profit increased $79 million or 14%, driven by segment
operating profit growth of $83 million or 15%. The segment profit
performance benefited from volume growth of $132 million driven by
worldwide snack foods and beverages and additional restaurant units that
contributed $23 million. These advances were partially offset by the
unfavorable currency translation impacts, driven by the devaluation of the
Mexican peso, and a domestic mix shift to lower-margin, value-oriented
packages in snack foods and increased restaurants promotions. In worldwide
snack foods and beverages, higher net pricing was offset by increased
product and operating costs. International segment profits declined 2%,
reflecting a sharp decline in beverages and a small decline in snack foods,
substantially offset by a strong double-digit increase in restaurants.
International profits represented 16% and 18% of segment operating profits
in 1995 and 1994, respectively. The benefit of a net foreign exchange gain
of $9.9 million in 1995 compared to a loss of $5.7 million in 1994 was
substantially offset by a $1.5 million loss in equity in net income of
affiliates in 1995 compared to $13.2 million in earnings in the prior year.
The favorable foreign exchange effect included the devaluation of the
Mexican peso on U.S. dollar denominated bank deposits. The decline in
equity in net income of affiliates primarily reflected the effects of the
devaluation of the peso on our bottling joint ventures in Mexico.
Interest expense, net of interest income, increased 18% reflecting
higher average interest rates on borrowings. Excluding the impact of net
acquisitions, net interest expense increased 15%.
Provision for income taxes as a percentage of pretax income was 35.3%
and 35.5% in 1995 and 1994, respectively. The modest decline in 1995
reflected an increase in the proportion of income taxed at lower foreign
rates substantially offset by higher U.S. and foreign effective rates. The
higher foreign effective rate is primarily due to a provision in the 1993
U.S. tax legislation which reduced the tax credit associated with beverage
concentrate operations in Puerto Rico and became effective for PepsiCo on
December 1, 1994. This provision limited the tax credit on income earned
in Puerto Rico in the first year to 60% of the amount under the previous
tax law, with the limit further reduced ratably over the following four
years to 40%.
Income and income per share before cumulative effect of accounting
changes increased 14% to $321 million and $0.40, respectively. Including
the cumulative effect of the accounting changes, income and income per
share rose 28% and 29%, respectively. Growth in income per share was
depressed by estimated dilution of $0.01 or 3 points, due to acquisitions
in international beverages and snack foods.
- -10-
In 1994, Mexico represented our largest international market,
contributing $261 million, or 8% of full year 1994 segment operating
profits and an estimated $175 million ($0.22 per share) or 10% of full year
1994 net income. As disclosed in our 1994 Annual Report, we expect to
report lower earnings from Mexico in 1995 than we otherwise would have
because of the devaluation of the Mexican peso and its related effects.
Compared to the first quarter of 1994, the peso has devalued almost 50%.
PepsiCo's operations in Mexico contributed $35.4 million of segment
operating profits in the first quarter of 1995, a decline of $31.3 million,
or nearly 50%, compared to a year ago. Increased pricing, cost savings
initiatives and slightly higher volumes were unable to offset the
unfavorable translation effect of the weaker peso and higher operating
costs on most products. We estimate that net income contributed by Mexico
decreased by $16 million ($0.02 per share) compared to the prior year, as
declines in Mexico segment operating profits and additional losses in
equity in net income of our Mexican affiliates were only slightly offset by
foreign exchange gains. Although difficult to forecast, the adverse year-
over-year impact of the devaluation and its related effects is expected to
accelerate over the balance of the year as we anticipate further softening
of demand and the effect of additional cost increases. Also, the first
quarter benefited from price increases which preceded corresponding cost
increases and lower cost of sales as a result of utilizing inventories that
were purchased at lower, pre-devalued peso prices. In addition to our
actions in other businesses to mitigate the profit impact of the
devaluation, each of our operations in Mexico will take additional actions,
when possible, to prudently price, mitigate cost increases, reduce capital
spending and drive volumes. Significant uncertainties still remain in
Mexico and it is not possible to reliably quantify the full year impact of
the devaluation. All amounts for Mexico presented above include an
allocation of the international divisions' headquarters expenses, but
exclude any allocation of PepsiCo's corporate expenses and financing costs.
See each industry segment discussion below for additional information.
- -11-
PEPSICO, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULE OF NET SALES AND OPERATING PROFITS
($ in millions, unaudited)
Net Sales Operating Profits
12 Weeks Ended % 12 Weeks Ended %
3/25/95 3/19/94 Change 3/25/95 3/19/94 Change
Beverages-Dom $1,397.3 $1,289.3 8 $ 209.5 $ 165.7 26
-Int'l 569.8 520.2 10 1.5 11.4 (87)
1,967.1 1,809.5 9 211.0 177.1 19
Snack Foods-Dom 1,176.4 1,048.3 12 231.9 197.6 17
-Int'l 647.3 663.6 (2) 70.8 72.9 (3)
1,823.7 1,711.9 7 302.7 270.5 12
Restaurants-Dom 1,930.6 1,840.2 5 112.0 104.8 7
-Int'l 469.4 367.3 28 30.3 20.5 48
2,400.0 2,207.5 9 142.3 125.3 14
Total-Dom 4,504.3 4,177.8 8 553.4 468.1 18
-Int'l 1,686.5 1,551.1 9 102.6 104.8 (2)
$6,190.8 $5,728.9 8 656.0 572.9 15
Equity Income (1.5) 13.2 -
Unallocated Expenses, net (25.4) (35.6) (29)
Operating Profit $ 629.1 $ 550.5 14
Results by Restaurant Chain:
Pizza Hut $1,061.9 $ 984.6 8 $ 78.0 $ 66.8 17
Taco Bell 741.0 673.7 10 31.9 33.7 (5)
KFC 597.1 549.2 9 32.4 24.8 31
$2,400.0 $2,207.5 9 $ 142.3 $ 125.3 14
- -12-
Segments Of The Business
The following discussion and analysis should be read in conjunction with
the Supplemental Schedule of Net Sales and Operating Profits on page 12.
For purposes of the Restaurants analysis, net sales by PFS, PepsiCo's
restaurant distribution operation, to the franchisees of each restaurant
chain, and the related estimated operating profits have been allocated to
each restaurant chain. All amounts for Mexico provided in the following
discussion include an allocation of the international divisions'
headquarters expenses, but exclude any allocation of PepsiCo's corporate
expenses.
Beverages
Worldwide net sales increased $158 million or 9% to $2.0 billion.
Domestic sales rose $108 million or 8% to $1.4 billion. Volume growth
contributed $72 million, driven by carbonated soft drink (CSD) packaged
products. Sales growth also benefited from higher pricing on most CSD
packages.
System bottler case sales of Pepsi Corporate brands (case sales)
consist of sales of packaged products to retailers and through vending
machines and fountain syrup by company-owned and franchised bottlers.
Previously existing Ocean Spray products sold to retailers under a
distribution agreement are not included in reported case sales growth.
Domestic case sales increased 3%, reflecting double-digit growth in the
Mountain Dew brand and modest gains in Brand Pepsi, partially offset by a
small decline in Diet Pepsi. Case sales growth also benefited from strong
double-digit growth in Lipton brand tea. These advances, combined with the
expanded distribution of All Sport which was launched nationally in April
1994, were partially offset by declines in the Crystal and Slice brands.
Total alternative beverages, which include Lipton brand tea, All Sport and
Ocean Spray Lemonade products, grew at a strong double-digit rate, and
contributed 0.6 of a point to the case sales growth. Case sales of
fountain syrup grew at a slightly slower rate than packaged products.
International sales rose $50 million or 10% to $570 million.
Comparisons are affected by the impact of start-up of company-owned
bottling and distribution operations within the past twelve months ("Start-
up Operations"), principally in Eastern Europe, as well as acquisitions,
consisting primarily of franchised bottling operations in Latin America and
Asia. Start-up Operations and acquisitions contributed $13 million and $8
million, respectively, or 5 points to the sales growth on a combined basis.
Sales growth also reflected higher volume of both packaged product sales
and concentrate shipments totaling $48 million, partially offset by lower
1995 sales of Stolichnaya vodka compared to the large 1994 initial sale of
Stolichnaya vodka under the appointment of an affiliate of Grand
Metropolitan PLC as the exclusive U.S. and Canadian distributor. Higher
effective concentrate pricing was partially offset by lower effective net
pricing on packaged products. Unfavorable currency translation impacts,
primarily due to a weaker Mexican peso and Canadian dollar, were partially
offset by the strength of Western European currencies and the Japanese yen.
- -13-
International case sales increased 9%, reflecting strong double-digit
growth in Asia, led by gains in China, Thailand and India, and solid
advances in Latin America, due to near triple-digit growth in Brazil,
partially offset by a slight decline in Mexico. Latin America and Mexico
represent our largest international case sales region and country,
respectively. Case sales growth was also aided by double-digit advances in
the Middle East and Eastern Europe, and a slight increase in Western
Europe.
Worldwide operating profits increased $34 million or 19% to $211
million.
Domestic profits increased $44 million or 26% to $210 million. Volume
growth, driven by packaged products, contributed $42 million to profit
gains. The benefit of the higher net pricing was substantially offset by
increased product costs, primarily reflecting higher packaging costs.
Selling and distribution expenses grew at a slower rate than sales.
Advertising and marketing expenses declined slightly. Double-digit
declines in administrative expenses reflected savings from a previously
disclosed 1994 consolidation of headquarters and field operations. Profit
growth was mitigated by the absence of 1994 gains totaling $8.9 million
resulting from sales of bottling businesses. The domestic profit margin
grew 2 points to 15.0%.
International profits declined $10 million or 87% to $1 million.
Start-up operations and acquisitions reduced profits by $6 million and $3
million, respectively. The profit decline also reflected increased field
and headquarters administrative expenses and unfavorable currency
translation impacts, principally due to the devaluation of the Mexican
peso. The increased field administrative expenses primarily reflected
costs to support expansion in developing markets. Profit growth was also
hampered by the lower Stolichnaya sales. These unfavorable impacts were
partially offset by volume gains of $14 million, reflecting higher
concentrate shipments, the decline in advertising and marketing expenses
not attributed to volume growth, higher effective pricing on concentrate
and packaged products and a favorable adjustment of a 1992 restructuring
accrual discussed below.
On a regional basis, the profit decline reflected the start-up losses
in Eastern Europe, and a decline in Latin America, reflecting significantly
lower profits in Mexico and Argentina. Losses in Asia increased slightly,
reflecting acquisition related losses in India, partially offset by reduced
seasonal losses in Japan. Profits grew sharply in the Middle East,
reflecting strong results from Saudi Arabia. Profits were aided by
advances in Western Europe, reflecting reduced losses in Germany, and in
Canada. The international profit margin declined 2 points to 0.3%.
Mexico operated at about break-even in the first quarter of 1995 and
contributed approximately $5 million or 42% to international beverage
operating profits in the first quarter of 1994. Mexico represented
approximately 22% of operating profits for the full year 1994. As
discussed on page 11, the decline primarily reflected the effects of the
significant devaluation of the Mexican peso.
- -14-
As a result of a 1995 decision to continue to operate a plant in Spain
that was originally scheduled for closure, international beverages reversed
into income the remaining $3.1 million of a 1992 restructuring accrual.
Consequently, the estimated annual benefits of the completed restructuring
activities have been reduced from $20 million to $16 million. These
savings will continue to be reinvested in our businesses to strengthen our
competitive position.
Snack Foods
Worldwide net sales rose $112 million or 7% to $1.8 billion.
Domestic sales grew $128 million or 12% to $1.2 billion, reflecting
volume growth of $120 million. Volume growth reflected gains in most major
brands, led by our low-fat and no-fat snacks and line extensions. Volume
growth was aided by increased promotional price allowances and
merchandising programs to retailers, which are reported as marketing
expenses and therefore do not reduce reported sales. Modestly increased
pricing on certain brands was partially offset by a sales mix shift to
value-oriented packages.
Domestic pound volume advanced 12%. This performance was led by
strong double-digit growth in Rold Gold brand pretzels, reflecting gains in
the Rold Gold Fat Free Thins brand, and Tostitos brand tortilla chips,
driven by the expanded distribution of Baked Tostitos brand introduced in
the first quarter of 1994. Tostitos brand salsa volume more than doubled.
Doritos brand tortilla chips, Lay's brand potato chips, led by Lay's KC
Masterpiece Barbecue Flavor brand potato chips introduced late in the
first quarter 1994, and Chee.tos cheese flavored snacks had solid single-
digit pound growth. Gains in the Taco Bell line of snack foods also aided
the growth. Ruffles brand potato chips showed slight growth while Fritos
brand corn chips declined slightly.
International sales decreased $16 million or 2% to $647 million. A
net unfavorable currency translation impact, principally due to the
devaluation of the Mexican peso, was largely offset by higher volumes of
$118 million, led by Brazil, Mexico and the U.K., higher pricing,
principally in Mexico and, to a lesser extent, in Canada and Poland, and
acquisitions, principally in Venezuela and Ecuador.
International kilo growth is reported on a systemwide basis, which
includes both consolidated businesses and joint ventures operating for at
least one year. Snack chip kilos rose 12%, as volumes more than doubled in
Brazil; in addition, the U.K. and Spain achieved double-digit growth.
These advances were partially offset by double-digit declines at Sabritas
and in Korea. Confectionary kilos grew 17%, reflecting double-digit
advances at Gamesa and Sabritas partially offset by a double-digit decline
in Poland.
Worldwide operating profits increased $32 million or 12% to $303
million.
- -15-
Domestic profits grew $34 million or 17% to $232 million. This
performance reflected strong volume growth, which contributed $62 million,
and higher pricing that exceeded increased promotional price allowances and
merchandising support on certain brands. This growth was partially offset
by the impact of increased operating and manufacturing costs and the
unfavorable sales mix shift to lower-margin, value packages. Increased
operating costs were driven by higher selling and distribution expenses in
addition to increased investment in brand marketing to maintain strong
volume momentum. Higher manufacturing costs reflected increased capacity
costs and higher packaging and vegetable oil costs. Despite the
unfavorable impact in the first quarter, vegetable oil prices for the full
year are still expected to decline slightly from the high 1994 levels.
Although difficult to forecast, potato costs for full year 1995 are
expected to remain about even with the prior year. Packaging costs are
expected to increase for full year 1995. The domestic profit margin
increased almost 1 point to 19.7%.
International profits decreased $2 million or 3% to $71 million as the
effects of the peso devaluation on Mexican operations more than offset
strong performance in the U.K. and Brazil. A net unfavorable currency
translation impact and higher operating costs were substantially offset by
higher pricing and increased volumes of $20 million. The increased
operating costs reflected higher manufacturing costs as well as increased
advertising and selling and distribution expenses. The international
profit margin remained relatively unchanged at 10.9%.
Sabritas and Gamesa combined contributed $36 million or 51% and $58
million or 79% of international snack food operating profits in the first
quarter of 1995 and 1994, respectively, and represented 63% of segment
operating profits for the full year 1994. As discussed below and on page
11, the decline principally reflected the effects of the devaluation of the
Mexican peso. Confectionary kilos grew 22%, while salty kilos declined
12%.
A profit decline of almost 50% at Sabritas reflected the unfavorable
currency translation impact and increased operating costs which were only
partially offset by higher pricing and small volume gains. The increased
operating costs reflected higher ingredient and wage costs as well as
increased advertising and selling and distribution expenses. Lower-margin
confectionary kilo volume increased over 50%. Salty kilos declined 12%,
due in part to higher pricing and the absence of a successful in-bag
promotion late in the first quarter of 1994.
Despite the effects of the devaluation of the Mexican peso, Gamesa
posted strong double-digit profit growth, as higher pricing, a favorable
package mix shift to higher-margin single-serve products and increased
volumes more than offset the unfavorable currency translation impact and
higher operating and administrative expenses. The increased operating
costs reflected higher manufacturing costs and advertising expenses.
Confectionary kilo growth was 15%.
Walkers profits nearly doubled, driven by increased volumes,
reflecting gains in Walkers Crisps brand, lower operating costs and a
favorable currency translation impact from a weaker U.S. dollar. The
favorable operating costs reflected lower selling and distribution expenses
and manufacturing costs. Increased volume of Doritos brand tortilla chips,
introduced late in the second quarter 1994, represented approximately 25%
of the kilo growth in the U.K., although it did not generate incremental
profits, principally due to continued advertising and marketing investment
in the brand.
- -16-
Brazil's profits nearly quadrupled on a relatively small base, as
increased volumes and higher pricing, reflecting in part the substantially
improved strength of the country's economy, were only partially offset by
higher manufacturing costs.
Restaurants
Worldwide net sales increased $193 million or 9% to $2.4 billion, primarily
due to $181 million from additional units (units constructed and acquired,
principally from franchisees, net of units closed or sold). Domestic sales
increased $91 million or 5% to $1.9 billion and international sales rose
$102 million or 28% to $469 million.
Worldwide operating profits advanced $17 million or 14% to $142
million aided by a comparison to a weak first quarter in 1994. The
increase reflected additional units that contributed $23 million, lower
store operating costs, reflecting favorable food costs, and higher
franchise royalty revenues. These were partially offset by lower net
domestic pricing, driven by value promotions, and higher administrative and
support costs for international expansion which outpaced declines in
domestic spending.
Domestic profits increased $7 million or 7% to $112 million.
Significant unusual items impacting profits were a $4 million benefit due
to the favorable settlement of certain prior year domestic casualty
insurance programs as a result of an agreement with an insurance company to
assume all liability with respect to those programs, a $7 million gain on
the refranchising of certain Pizza Hut stores and $3 million in higher
costs for increased store closures.
International profits rose $10 million or 48% to $30 million. Mexico
reported a $0.7 million loss in the first quarter of 1995 as compared to
earnings of $4.2 million in the same period of 1994. For the full year
1994, Mexico incurred an operating loss of $9 million. As discussed on
page 11, the decline primarily reflected the effects of the significant
devaluation of the Mexican peso.
As mentioned in our 1994 Annual Report, we are continuing to consider
actions to improve total restaurant operating results and returns on our
restaurant investments. We have taken actions during the first quarter
including the refranchising and licensing of selected domestic company-
owned stores and the closing of others. In addition, cost savings are
being generated by the continued consolidation of the headquarters and
field operations for the three international restaurant businesses. We
expect to take additional actions where appropriate, as we continue to
refine our restaurant operating and investment strategies to improve
performance.
Pizza Hut
Worldwide sales increased $78 million or 8% to $1.1 billion driven by
international operations. The domestic operations continue to represent
the major portion of worldwide Pizza Hut. The worldwide sales increase was
driven by additional units that contributed $95 million which was partially
offset by lower volumes of $30 million, reflecting domestic volume declines
that exceeded international volume gains.
- -17-
Same store sales for domestic company-owned units declined 6%,
primarily reflecting a decline in the delivery channel. The introduction
of Stuffed Crust Pizza occurred early in the second quarter and therefore
had no impact on same store sales for the first quarter.
Worldwide profits grew $11 million or 17% to $78 million aided by a
comparison to a weak 1994. This increase reflected lower store operating
costs, primarily reflecting favorable domestic food and advertising costs,
additional units that contributed $12 million, increased franchise royalty
revenues and a $4 million net gain reflecting a $7 million gain from the
refranchising of domestic company-owned restaurants, partially offset by
increased store closure costs of $3 million. The reduced food costs were
led by lower cheese and meat costs; though difficult to forecast, domestic
food costs are expected to decrease in 1995 as compared to 1994. These
benefits were partially offset by lower net domestic pricing due to value
promotions, principally the new Buffalo Wings and Large Pairs pizza
offerings, lower volumes of $9 million and increased administrative and
support spending, primarily to develop international growth markets,
partially offset by reduced domestic spending. The introduction of the new
Buffalo Wings also aided profits. The lower volumes reflected domestic
volume declines partially offset by international advances. The worldwide
profit margin increased one-half point to 7.3%.
International sales posted strong double-digit growth led by Korea,
Germany, Spain, Australia, Brazil and Poland. The sales growth reflected
additional units and volume gains. International profits nearly tripled,
reflecting additional units and increased volume, as well as higher
franchise royalty revenues. These were partially offset by increased start-
up and administrative costs to support country development strategies,
which exceeded reduced administrative spending as a result of the
consolidation of the international restaurant headquarters.
Strong profit gains in Korea primarily reflected additional units and
strong volume growth. Australia's profits improved significantly as a
result of the full implementation of its value strategy, while Canada
posted a profit decline. Additionally, international profit growth
continues to be moderated by increased losses in investment markets,
including Spain, Poland and Brazil.
Taco Bell
Worldwide sales increased $67 million or 10% to $741 million. The domestic
operations represent substantially all of worldwide Taco Bell. The
worldwide sales growth was led by additional Taco Bell units which
contributed $60 million. Same store sales for domestic company-owned Taco
Bell units declined 2%. The introduction of a portion of the new low-fat
Border Lights product line occurred too late in the quarter to have a
material impact either on total sales or on same store sales. The balance
of the product line will be introduced in the second quarter of this year.
- -18-
Worldwide profits decreased $2 million or 5% to $32 million,
reflecting increased losses at Chevys and about flat results from our core
Taco Bell business. Taco Bell was negatively affected by an unfavorable
product mix shift to lower-margin original tacos during the early part of
the quarter and a portion of the national roll-out costs of Border Lights.
The remainder of the roll-out costs are expected to occur during the second
quarter of this year. These unfavorable factors were offset by additional
Taco Bell units which contributed $4 million, increased franchise royalty
revenues and lower store operating costs, primarily the result of favorable
commodity costs. The lower commodity costs reflected lower meat, cheese
and bean prices moderated by an increase in the cost of lettuce. Although
higher lettuce prices are expected to continue into the second quarter, it
is anticipated that they will be partially offset by lower meat costs.
Taco Bell has begun to execute its plans to transition Hot 'n Now during
1995 from primarily a company-operated to a licensee/franchisee-operated
business, with several units licensed during the quarter. Taco Bell
worldwide profit margin fell more than one-half point to 4.3%.
International operations posted strong double-digit sales growth,
reflecting additional units, partially offset by an unfavorable currency
translation impact of a weaker Canadian dollar. International operating
results declined from the modest loss for the same period in 1994,
reflecting volume declines and start-up costs of new units.
KFC
Worldwide sales rose $48 million or 9% to $597 million. The sales growth
reflected additional units that contributed $27 million and volume gains of
$21 million.
Worldwide profits increased $8 million or 31% to $32 million,
reflecting higher volumes of $12 million, additional units that contributed
$4 million and increased franchise royalty revenues, partially offset by
higher field and headquarters administrative and support costs, primarily
related to the new units, and lower net pricing. Store operating costs
were about even, as lower food costs were offset with increased labor due
to the expansion of delivery service. The worldwide profit margin
increased almost 1 point to 5.4% due to domestic operations.
A modest improvement in KFC's domestic sales reflected volume gains
from the national introduction of the value-oriented Mega Meal late in
1994. The volume gains from the Mega Meal were partially offset by lower
net pricing, primarily due to Mega Meal price promotions. Same store sales
advanced 2% from last year. Same store sales growth was previously
reported as 3% in the first quarter 1995 earnings press release dated May
2, 1995. The correction is the result of a computational error in the
original calculation.
Domestic profits grew at a strong double-digit rate with the help of a
comparison to a weak 1994. Operating profit benefited from higher net
pricing on individual products, reduced store operating costs and increased
franchise royalty revenues. Reduced food costs drove the favorable store
operating costs, due to the reformulation of side items late in the second
quarter 1994 and reduced chicken costs, which were partially offset by
higher labor costs associated with the expansion of delivery service. The
Mega Meal value promotion also had a modest impact on operating profits
with its increased volume substantially offset by higher promotional
discounting.
- -19-
Double-digit international sales growth was led by the combined impact
of acquired units in the U.K. and new units, primarily in Mexico and
Australia, partially offset by declines in Mexico's base business as a
result of the devaluation of the Mexican peso and its related effects. The
benefit of new units in Mexico relates to units built in 1994 as there have
been minimal new units added during 1995. The balance of the sales growth
reflected volume gains due, in part, to new value-priced offerings.
International profits experienced low double-digit growth reflecting
gains from additional units, increased volumes, higher net pricing and the
net benefit of an accounting period change. The change was the result of
the headquarters operations changing its accounting period to conform with
its field operations to simplify the reporting process. This resulted in
one less month of administrative costs and franchise fee revenues this
year. These benefits were partially offset by increased store operating
costs and higher field administrative and support costs, primarily to
support unit expansion in the U.K., which outpaced the benefit of the
consolidation of the international restaurant headquarters.
Profits increased in Australia, our largest sales market, Canada, the
U.K. and New Zealand. Mexico's profits declined sharply reflecting reduced
volumes partly attributable to the impact of the devaluation of the Mexican
peso.
International sales represented about 40% of worldwide sales in the
first quarter of 1995 and 1994. International profits represented about
60% and 70% of worldwide profits in the first quarter of 1995 and 1994,
respectively.
- -20-
Cash Flows and Financial Condition
Summary of Cash Flows
In the first quarter of 1995, net proceeds of $465 million from debt
activities and cash flows from operations of $214 million substantially
funded purchases of property, plant and equipment of $399 million, dividend
payments of $140 million, share repurchases of $123 million and
acquisitions of $44 million.
In the first quarter of 1995, Mexico's cash flows from operations
declined nearly 50% from the same period in 1994, primarily due to the
decline in Mexico's decreased operating profits. For the full year 1994,
Mexico represented approximately 7% of consolidated cash flows from
operations.
Operating Activities
Net cash provided by operating activities increased $35 million or 19% over
1994 to $214 million due to a $91 million or 13% increase in income before
cumulative effect of accounting changes after adding back all three classes
of noncash charges and credits, partially offset by a $57 million or 10%
increase in net operating working capital cash outflows. The working
capital change reflected normal growth of worldwide beverage and
international snack food accounts receivable, a larger reduction in accrued
liabilities during the quarter for 1995 as compared to 1994 due, in part,
to higher year-end 1994 accruals and an insurance prepayment in 1995 for a
1995 casualty program that PepsiCo had elected to self-insure in 1994.
These impacts were partially offset by a reduction in taxes paid in 1995
reflecting, in part, a 1994 prepayment of taxes related to a federal tax
audit for the years 1985 through 1989.
Investing Activities
PepsiCo's investing activities resulted in a net cash outflow of $480
million in the first quarter of 1995 as compared to $624 million for the
same period in 1994. This decrease principally reflected a $135 million
reduction in net investment activity in PepsiCo's short-term portfolios,
which are primarily held outside the U.S. PepsiCo continually reassesses
its alternatives to redeploy its investment portfolios, considering
investment opportunities and risks, tax consequences and overall financing
strategies. The balance of the decrease was due to a reduction in
acquisitions and investments in affiliates of $57 million which exceeded
the $47 million increase in capital spending. The $44 million acquisition
activity primarily included the purchase of domestic and international
franchised restaurant businesses and a snack food business in Colombia.
The increased capital spending was primarily related to capacity expansion
in domestic snack foods.
Financing Activities
Financing activities in the first quarter of 1995 resulted in net cash
inflows of $231 million as compared to $450 million in 1994. The $219
million decline principally reflected $323 million in lower net proceeds
from debt activities, partially offset by decreased share repurchases of
$109 million.
- -21-
See Note 2 to Condensed Consolidated Financial Statements on page 6
for details of debt issuances and repayments during the quarter. As of
March 25, 1995, PepsiCo had authority from the Board of Directors to issue
$5.9 billion of long-term debt and had capacity to issue up to $2.8 billion
under facilities in place in the U.S., Europe and Japan to take advantage of
marketplace opportunities. The principal purposes of these facilities are
for financing growth activities and refinancing borrowings. PepsiCo intends
to convert any foreign currency-denominated debt obligations issued under the
facilities into U.S. dollar-denominated debt obligations through foreign
exchange derivative instruments with strong creditworthy counterparties.
Through May 5, 1995, PepsiCo has repurchased 4.8 million shares at a
cost of $175 million, which was funded by short-term borrowings. Including
these 1995 purchases of treasury stock, 20.2 million shares have been
purchased under the 50 million share repurchase authority granted by
PepsiCo's Board of Directors on July 22, 1993.
Financial Condition
At March 25, 1995 and December 31, 1994, $3.5 and $4.5 billion,
respectively, of short-term borrowings were classified as long-term,
reflecting PepsiCo's intent and ability, through the existence of its
unused revolving credit facilities, to refinance these borrowings on a long-
term basis. At March 25, 1995 and December 31, 1994, PepsiCo had unused
revolving credit agreements covering potential borrowings aggregating $4.5
billion. These unused credit facilities, of which $1.0 billion expire in
January 1996 and $3.5 billion in January 2000, provide the ability to
refinance short-term borrowings and are available for acquisitions and
other general corporate purposes.
As described in PepsiCo's 1994 Annual Report, PepsiCo measures
financial leverage on a market value basis as well as a historical cost
basis. PepsiCo believes that the market value ratio is an appropriate
measure of financial leverage. PepsiCo's market value ratio was 25% at
March 25, 1995 and 26% at December 31, 1994. The decrease was due to an
11% increase in PepsiCo's stock price partially offset by a 5% increase in
net debt. PepsiCo's historical cost ratio of net debt to net capital
employed was 50% at March 25, 1995 and 49% at December 31, 1994. The
increase was due to the growth in net debt partially offset by a lower
increase in net capital.
Because of PepsiCo's strong cash generating capability and its strong
financial condition, PepsiCo has continued access to capital markets
throughout the world.
PepsiCo's negative operating working capital position, which
principally reflects the cash sales nature of its restaurant operations,
effectively provides additional capital for investment. Operating working
capital, which excludes short-term investments and short-term borrowings,
was negative $203 million and $323 million at March 25, 1995 and March 19,
1994, respectively. The $120 million decline in negative working capital
reflected the impact of base business growth in the more working capital-
intensive bottling and snack food operations and a reclassification of
certain amounts from current liabilities to non-current liabilities
partially offset by the favorable timing of income tax payments and growth
in restaurant operations.
- -22-
Shareholders' equity declined $81 million as net income of $321
million was more than offset by a $189 million unfavorable change in the
currency translation account, driven by the devaluation of the Mexican
peso, $142 million of dividends declared and an $86 million increase in
treasury stock, driven by the share repurchases.
- -23-
<audit-report>
Independent Accountants' Review Report
The Board of Directors
PepsiCo, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
PepsiCo, Inc. and Subsidiaries as of March 25, 1995 and the related
condensed consolidated statements of income and cash flows for the twelve
week periods ended March 25, 1995 and March 19, 1994. These financial
statements are the responsibility of PepsiCo, Inc.'s management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of PepsiCo, Inc. and Subsidiaries
as of December 31, 1994, and the related consolidated statements of income,
shareholders' equity, and cash flows for the year then ended not presented
herein; and in our report dated February 7, 1995, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1994, is fairly presented, in all material
respects, in relation to the consolidated balance sheet from which it has
been derived.
Our report, referred to above, contains an explanatory paragraph that
states that PepsiCo, Inc. in 1994 adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards
No. 112, "Employers' Accounting for Postemployment Benefits" and changed
its method for calculating the market-related value of pension plan assets
used in the determination of pension expense, and in 1992, adopted the
provisions of the Financial Accounting Standards Board's Statements of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" and No. 109, "Accounting for
Income Taxes."
KPMG Peat Marwick LLP
New York, New York
May 2, 1995
- -24-
</audit-report>
PART II - OTHER INFORMATION AND SIGNATURES
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
Exhibit 11 - Computation of Net Income Per Share
of Capital Stock - Primary and Fully Diluted
Exhibit 12 - Computation of Ratio of Earnings to
Fixed Charges
Exhibit 15 - Letter from KPMG Peat Marwick LLP regarding
Unaudited Interim Financial Information
(Accountants' Acknowledgment)
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter covered
by this report.
- -25-
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned.
PEPSICO, INC.
(Registrant)
Date May 8, 1995 Robert L. Carleton
Senior Vice President and
Controller
Date May 8, 1995 Lawrence F. Dickie
Vice President, Associate General
Counsel and Assistant Secretary
- -26-