North Carolina | 1-1183 | 13-1584302 | ||
(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)) |
Emerging growth company ¨ |
Exhibit No. | Description | |
99.1 |
PEPSICO, INC. | ||
Date: February 13, 2018 | By: | /s/ David Yawman |
Name: | David Yawman | |
Title: | Executive Vice President, Government Affairs, General Counsel and Corporate Secretary | |
Fourth Quarter | Full-Year | |
Net revenue change | —% | 1.2% |
Foreign exchange impact on net revenue | 1% | —% |
Loss/Earnings per share (L/EPS) | $(0.50)* | $3.38 |
L/EPS change | Not meaningful** | (23)% |
Foreign exchange impact on L/EPS | 1% | (1)% |
Fourth Quarter | Full-Year | |
Organic revenue growth | 2.3% | 2.3% |
Core EPS | $1.31 | $5.23 |
Core constant currency EPS growth | 8% | 9% |
Revenue | Volume | |||||||
GAAP Reported % Change | Percentage Point Impact | Organic % Change | Organic Volume % Growth | |||||
Foreign Exchange Translation | Acquisitions, Divestitures and Structural Changes | 53rd Reporting Week | Food/Snacks | Beverages | ||||
FLNA | (1) | — | — | 6 | 5 | 3 | ||
QFNA | (5) | (0.5) | — | 5 | — | 0.5 | ||
NAB | (6) | — | (1) | 5 | (3) | (2) | ||
Latin America | 6 | (3) | — | — | 3 | (4) | (3) | |
ESSA | 11 | (6) | — | 1 | 6 | 7 | 2 | |
AMENA | — | 5.5 | — | — | 6 | 5 | (3) | |
Total | — | (1) | — | 3.5 | 2 | 2 | (2) |
Operating Profit and EPS | ||||
GAAP Reported % Change | Percentage Point Impact | Core Constant Currency % Change | ||
Items Affecting Comparability | Foreign Exchange Translation | |||
FLNA | (1) | 3.5 | — | 3 |
QFNA | (6) | 5 | — | (1) |
NAB | (29) | 6 | — | (23) |
Latin America | 20 | 8 | (6) | 22 |
ESSA | — | 3.5 | (5.5) | (2) |
AMENA | 173 | (4) | 18 | 187 |
Corporate Unallocated | (31) | 28 | — | (3) |
Total | 9 | (2) | (1) | 6 |
L/EPS | (152) | 161 | (1) | 8 |
• | Reported fourth quarter 2017 and 2016 results were impacted by: |
• | A provisional net tax expense of $2.5 billion associated with the enactment of the TCJ Act in the fourth quarter of 2017. Included in the net tax expense is a provisional mandatory one-time transition tax of approximately $4.0 billion on undistributed international earnings, partially offset by a provisional benefit of $1.5 billion resulting from the required remeasurement of our deferred tax assets and liabilities to the new, lower U.S. corporate income tax rate; |
• | Restructuring charges of $226 million which include an expansion and extension of the multi-year productivity plan we publicly announced in 2014, compared to $54 million in the prior-year period; |
• | Commodity mark-to-market impacts; |
• | A 2016 charge resulting from the redemption of certain senior notes in accordance with the “make-whole” redemption provisions (debt redemption charge); |
• | A 2016 pension-related settlement charge; and |
• | A 53rd reporting week and the reinvestment of the corresponding operating profit benefit in certain productivity and growth initiatives (incremental investments) in 2016. |
• | See A-6 to A-8 for further details on the above items. |
• | Reported net revenue was even with the prior year. Organic revenue, which excludes the impacts of foreign exchange translation, structural changes and the 53rd reporting week in the prior year, grew 2.3 percent. |
• | Reported gross margin contracted 65 basis points and core gross margin contracted 50 basis points. Reported operating margin expanded 110 basis points and core operating margin expanded 90 basis points. |
• | Reported operating profit increased 9 percent and core constant currency operating profit increased 6 percent. Items impacting reported operating profit included a pension-related settlement charge in the prior year, which contributed 14 percentage points to reported operating profit growth, partially offset by higher restructuring charges and commodity mark-to-market impacts which reduced reported operating profit growth by 10 percentage points and 2 percentage points, respectively. In addition, a gain from the refranchising of our bottling operations in Jordan (Jordan refranchising gain) contributed 6 percentage points. The benefit from the 53rd reporting week in the prior-year period was offset by incremental investments. Foreign currency translation increased reported operating profit growth by 1 percentage point. |
• | The reported effective tax rate was 129.8 percent in the fourth quarter of 2017 and 22.7 percent in the fourth quarter of 2016. The fourth quarter 2017 reported tax rate reflects the impact of the provisional net tax expense of $2.5 billion as a result of the TCJ Act. The core effective tax rate was 25.0 percent in the fourth quarter of 2017 and 24.0 percent in the fourth quarter of 2016. |
• | Reported loss per share was $0.50, a decrease of 152 percent, primarily reflecting the impact of the $2.5 billion provisional net tax expense ($1.73 per share) as a result of the TCJ Act. Foreign exchange translation positively impacted EPS by 1 percentage point. |
• | Core EPS was $1.31, an increase of 9 percent. Excluding the impact of foreign exchange translation, core constant currency EPS increased 8 percent (see schedule A-10 for a reconciliation to reported LPS, the comparable GAAP measure). |
• | Net cash provided by operating activities was $3.9 billion. |
Revenue | Volume | |||||||
GAAP Reported % Change | Percentage Point Impact | Organic % Change | Organic Volume % Growth | |||||
Foreign Exchange Translation | Acquisitions, Divestitures and Structural Changes | 53rd Reporting Week | Snacks | Beverages | ||||
FLNA | 2 | — | — | 2 | 3 | 1 | ||
QFNA | (2) | — | — | 2 | (1) | — | ||
NAB | (2) | — | (1) | 1 | (2) | (2) | ||
Latin America | 6 | (1) | 0.5 | — | 5 | (1.5) | (2) | |
ESSA | 8 | (3) | — | — | 6 | 5.5 | 1 | |
AMENA | (5) | 10 | — | — | 5 | 5 | (1) | |
Total | 1 | — | — | 1 | 2 | 2 | (1) |
Operating Profit and EPS | ||||
GAAP Reported % Change | Percentage Point Impact | Core Constant Currency % Change | ||
Items Affecting Comparability | Foreign Exchange Translation | |||
FLNA | 3.5 | 1 | — | 4.5 |
QFNA | (2) | 1.5 | — | — |
NAB | (9) | 1 | — | (8) |
Latin America | 2 | 4 | 1 | 7 |
ESSA | 22 | (2) | — | 20 |
AMENA | 73 | (67) | 8 | 15 |
Corporate Unallocated | (9) | 4 | — | (5) |
Total | 7 | (4) | 1 | 5 |
L/EPS | (23) | 30 | 1 | 9 |
• | Reported full-year 2017 and 2016 results were impacted by: |
• | A provisional net tax expense of $2.5 billion associated with the enactment of the TCJ Act; |
• | Restructuring charges of $295 million which include an expansion and extension of the multi-year productivity plan we publicly announced in 2014, compared to $160 million in 2016; |
• | Commodity mark-to-market impacts; |
• | A 2016 debt redemption charge; |
• | A 2016 pension-related settlement charge; |
• | A 53rd reporting week and related incremental investments in 2016; and |
• | A prior-year impairment charge to reduce the holding value of our 5% indirect equity interest in Tingyi-Asahi Beverages Holding Co. Ltd. to its estimated fair value (charge related to the transaction with Tingyi). |
• | See A-6 to A-8 for further details on the above items. |
• | Reported net revenue increased 1.2 percent. Organic revenue, which excludes the impacts of foreign exchange translation, structural changes and the 53rd reporting week in the prior year, grew 2.3 percent. |
• | Reported gross margin contracted 40 basis points and core gross margin contracted 30 basis points. Reported operating margin expanded 95 basis points and core operating margin expanded 45 basis points. Reported operating margin expansion reflects the impacts of the prior-year charge related to the transaction with Tingyi and the pension-related settlement charge. Reported and core operating margin expansions reflect the Jordan refranchising gain in the fourth quarter and a gain associated with the sale of our minority stake in Britvic plc (Britvic gain) in the second quarter of 2017. |
• | Reported operating profit increased 7 percent and core constant currency operating profit increased 5 percent. The impacts of the charge related to the transaction with Tingyi and a pension-related settlement charge, both in the prior year, contributed 4 percentage points and 3 percentage points, respectively, to reported operating profit growth. Higher commodity mark-to-market impacts and restructuring charges reduced reported operating growth by 2 percentage points and 1.5 percentage points, respectively. Unfavorable foreign exchange translation reduced reported operating profit growth by 1 percentage point. |
• | The reported effective tax rate was 48.9 percent in 2017 and 25.4 percent in 2016. The reported 2017 tax rate reflects the impact of the provisional net tax expense of $2.5 billion as result of the TCJ Act. The reported 2016 tax rate was negatively impacted by the charge related to the transaction with Tingyi, which had no corresponding tax benefit. The core |
• | Reported EPS was $3.38, a 23 percent decrease from the prior year, primarily reflecting the $2.5 billion provisional net tax expense as a result of the TCJ Act in 2017 and partially offset by the prior-year charge related to the transaction with Tingyi, a pension-related settlement charge and the debt redemption charge. Foreign exchange translation reduced reported EPS growth by 1 percentage point. |
• | Core EPS was $5.23, an increase of 8 percent. Excluding the impact of foreign exchange translation, core constant currency EPS increased 9 percent (see schedule A-10 for a reconciliation to reported EPS, the comparable GAAP measure). |
• | Net cash provided by operating activities was $10 billion. Free cash flow (excluding certain items) was $7.3 billion. |
• | Full-year organic revenue growth to be at least in line with the 2017 growth rate. |
• | Based on current market consensus rates, foreign exchange translation to have a neutral impact on revenue and earnings per share. |
• | A core effective tax rate in the “low 20s,” reflecting benefits of the TCJ Act. |
• | The benefit of the TCJ Act to be substantially reinvested in initiatives to benefit the Company’s U.S.-based front line workforce and to otherwise increase the Company’s capabilities. |
• | Core earnings per share of $5.70, a 9 percent increase compared to 2017 core earnings per share of $5.23. |
• | Approximately $9 billion in cash from operating activities and free cash flow of approximately $6 billion, which assumes net capital spending of approximately $3.6 billion and a discretionary pension contribution of $1.4 billion. |
• | Total cash returns to shareholders of approximately $7 billion. |
Contacts: | Investors | Media | |
Jamie Caulfield | Carrie Ratner | ||
Investor Relations | Communications | ||
914-253-3035 | 914-253-3817 | ||
jamie.caulfield@pepsico.com | carrie.ratner@pepsico.com |
Quarter Ended | Year Ended | ||||||||||||||||||||
12/30/2017 | 12/31/2016 | Change | 12/30/2017 | 12/31/2016 | Change | ||||||||||||||||
Net Revenue | $ | 19,526 | $ | 19,515 | — | % | $ | 63,525 | $ | 62,799 | 1 | % | |||||||||
Cost of sales | 9,077 | 8,944 | 1.5 | % | 28,785 | 28,209 | 2 | % | |||||||||||||
Gross profit | 10,449 | 10,571 | (1 | )% | 34,740 | 34,590 | — | % | |||||||||||||
Selling, general and administrative expenses | 7,856 | 8,190 | (4 | )% | 24,231 | 24,805 | (2 | )% | |||||||||||||
Operating Profit | 2,593 | 2,381 | 9 | % | 10,509 | 9,785 | 7 | % | |||||||||||||
Interest expense | (365 | ) | (594 | ) | (39 | )% | (1,151 | ) | (1,342 | ) | (14 | )% | |||||||||
Interest income and other | 103 | 44 | 133 | % | 244 | 110 | 122 | % | |||||||||||||
Income before income taxes | 2,331 | 1,831 | 27 | % | 9,602 | 8,553 | 12 | % | |||||||||||||
Provision for income taxes | 3,026 | (a) | 414 | 629 | % | 4,694 | (a) | 2,174 | 116 | % | |||||||||||
Net (loss)/income | (695 | ) | 1,417 | (149 | )% | 4,908 | 6,379 | (23 | )% | ||||||||||||
Less: Net income attributable to noncontrolling interests | 15 | 16 | (6 | )% | 51 | 50 | 2.5 | % | |||||||||||||
Net (Loss)/Income Attributable to PepsiCo | $ | (710 | ) | $ | 1,401 | (151 | )% | $ | 4,857 | $ | 6,329 | (23 | )% | ||||||||
Diluted | |||||||||||||||||||||
Net (Loss)/Income Attributable to PepsiCo per Common Share | $ | (0.50 | ) | $ | 0.97 | (152 | )% | $ | 3.38 | $ | 4.36 | (23 | )% | ||||||||
Weighted-average common shares outstanding | 1,421 | 1,444 | 1,438 | 1,452 | |||||||||||||||||
Cash dividends declared per common share | $ | 0.805 | $ | 0.7525 | $ | 3.1675 | $ | 2.96 |
Quarter Ended | Year Ended | ||||||||||||||||||||
12/30/2017 | 12/31/2016 | Change | 12/30/2017 | 12/31/2016 | Change | ||||||||||||||||
Net Revenue | |||||||||||||||||||||
Frito-Lay North America | $ | 4,829 | $ | 4,891 | (1 | )% | $ | 15,798 | $ | 15,549 | 2 | % | |||||||||
Quaker Foods North America | 774 | 815 | (5 | )% | 2,503 | 2,564 | (2 | )% | |||||||||||||
North America Beverages | 5,902 | 6,288 | (6 | )% | 20,936 | 21,312 | (2 | )% | |||||||||||||
Latin America | 2,435 | 2,299 | 6 | % | 7,208 | 6,820 | 6 | % | |||||||||||||
Europe Sub-Saharan Africa | 3,695 | 3,333 | 11 | % | 11,050 | 10,216 | 8 | % | |||||||||||||
Asia, Middle East and North Africa | 1,891 | 1,889 | — | % | 6,030 | 6,338 | (5 | )% | |||||||||||||
Total Net Revenue | $ | 19,526 | $ | 19,515 | — | % | $ | 63,525 | $ | 62,799 | 1 | % | |||||||||
Operating Profit | |||||||||||||||||||||
Frito-Lay North America | $ | 1,402 | $ | 1,410 | (1 | )% | $ | 4,823 | $ | 4,659 | 3.5 | % | |||||||||
Quaker Foods North America | 186 | 197 | (6 | )% | 642 | 653 | (2 | )% | |||||||||||||
North America Beverages | 491 | 689 | (29 | )% | 2,707 | 2,959 | (9 | )% | |||||||||||||
Latin America | 267 | 223 | 20 | % | 908 | 887 | 2 | % | |||||||||||||
Europe Sub-Saharan Africa | 315 | 316 | — | % | 1,354 | 1,108 | 22 | % | |||||||||||||
Asia, Middle East and North Africa | 328 | 120 | 173 | % | 1,073 | 619 | 73 | % | |||||||||||||
Corporate Unallocated | (396 | ) | (574 | ) | (31 | )% | (998 | ) | (1,100 | ) | (9 | )% | |||||||||
Total Operating Profit | $ | 2,593 | $ | 2,381 | 9 | % | $ | 10,509 | $ | 9,785 | 7 | % |
PepsiCo, Inc. and Subsidiaries Consolidated Statement of Cash Flows (in millions) | |||||||
Year Ended | |||||||
12/30/2017 | 12/31/2016 | ||||||
(unaudited) | |||||||
Operating Activities | |||||||
Net income | $ | 4,908 | $ | 6,379 | |||
Depreciation and amortization | 2,369 | 2,368 | |||||
Share-based compensation expense | 292 | 284 | |||||
Restructuring and impairment charges | 295 | 160 | |||||
Cash payments for restructuring charges | (113 | ) | (125 | ) | |||
Charge related to the transaction with Tingyi (Cayman Islands) Holding Corp. (Tingyi) | — | 373 | |||||
Pension and retiree medical plan expenses | 221 | 501 | |||||
Pension and retiree medical plan contributions | (220 | ) | (695 | ) | |||
Deferred income taxes and other tax charges and credits | 619 | 452 | |||||
Provisional net tax expense related to the TCJ Act | 2,451 | — | |||||
Change in assets and liabilities: | |||||||
Accounts and notes receivable | (202 | ) | (349 | ) | |||
Inventories | (168 | ) | (75 | ) | |||
Prepaid expenses and other current assets | 20 | 10 | |||||
Accounts payable and other current liabilities | 201 | 997 | |||||
Income taxes payable | (338 | ) | 329 | ||||
Other, net | (341 | ) | 64 | ||||
Net Cash Provided by Operating Activities | 9,994 | 10,673 | |||||
Investing Activities | |||||||
Capital spending | (2,969 | ) | (3,040 | ) | |||
Sales of property, plant and equipment | 180 | 99 | |||||
Acquisitions and investments in noncontrolled affiliates | (61 | ) | (212 | ) | |||
Divestitures | 267 | 85 | |||||
Short-term investments, by original maturity: | |||||||
More than three months - purchases | (18,385 | ) | (12,504 | ) | |||
More than three months - maturities | 15,744 | 8,399 | |||||
More than three months - sales | 790 | — | |||||
Three months or less, net | 2 | 16 | |||||
Other investing, net | 29 | 9 | |||||
Net Cash Used for Investing Activities | (4,403 | ) | (7,148 | ) | |||
Financing Activities | |||||||
Proceeds from issuances of long-term debt | 7,509 | 7,818 | |||||
Payments of long-term debt | (4,406 | ) | (3,105 | ) | |||
Debt redemptions | — | (2,504 | ) | ||||
Short-term borrowings, by original maturity: | |||||||
More than three months - proceeds | 91 | 59 | |||||
More than three months - payments | (128 | ) | (27 | ) | |||
Three months or less, net | (1,016 | ) | 1,505 | ||||
Cash dividends paid | (4,472 | ) | (4,227 | ) | |||
Share repurchases - common | (2,000 | ) | (3,000 | ) | |||
Share repurchases - preferred | (5 | ) | (7 | ) | |||
Proceeds from exercises of stock options | 462 | 465 | |||||
Withholding tax payments on Restricted Stock Units (RSUs), Performance Stock Units (PSUs) and PepsiCo Equity Performance Units (PEPunits) converted | (145 | ) | (130 | ) | |||
Other financing | (76 | ) | (58 | ) | |||
Net Cash Used for Financing Activities | (4,186 | ) | (3,211 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 47 | (252 | ) | ||||
Net Increase in Cash and Cash Equivalents | 1,452 | 62 | |||||
Cash and Cash Equivalents, Beginning of Year | 9,158 | 9,096 | |||||
Cash and Cash Equivalents, End of Year | $ | 10,610 | $ | 9,158 |
PepsiCo, Inc. and Subsidiaries Consolidated Balance Sheet (in millions except per share amounts) | |||||||
12/30/2017 | 12/31/2016 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 10,610 | $ | 9,158 | |||
Short-term investments | 8,900 | 6,967 | |||||
Accounts and notes receivable, net | 7,024 | 6,694 | |||||
Inventories; | |||||||
Raw materials and packaging | 1,344 | 1,315 | |||||
Work-in-process | 167 | 150 | |||||
Finished goods | 1,436 | 1,258 | |||||
2,947 | 2,723 | ||||||
Prepaid expenses and other current assets | 1,546 | 908 | |||||
Total Current Assets | 31,027 | 26,450 | |||||
Property, plant and equipment, net | 17,240 | 16,591 | |||||
Amortizable intangible assets, net | 1,268 | 1,237 | |||||
Goodwill | 14,744 | 14,430 | |||||
Other nonamortizable intangible assets | 12,570 | 12,196 | |||||
Nonamortizable Intangible Assets | 27,314 | 26,626 | |||||
Investments in Noncontrolled Affiliates | 2,042 | 1,950 | |||||
Other Assets | 913 | 636 | |||||
Total Assets | $ | 79,804 | $ | 73,490 | |||
LIABILITIES AND EQUITY | |||||||
Current Liabilities | |||||||
Short-term debt obligations | $ | 5,485 | $ | 6,892 | |||
Accounts payable and other current liabilities | 15,017 | 14,243 | |||||
Total Current Liabilities | 20,502 | 21,135 | |||||
Long-term Debt Obligations | 33,796 | 30,053 | |||||
Other Liabilities | 11,283 | 6,669 | |||||
Deferred Income Taxes | 3,242 | 4,434 | |||||
Total Liabilities | 68,823 | 62,291 | |||||
Commitments and Contingencies | |||||||
Preferred Stock, no par value | 41 | 41 | |||||
Repurchased Preferred Stock | (197 | ) | (192 | ) | |||
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: 1,420 and 1,428 shares, respectively) | 24 | 24 | |||||
Capital in excess of par value | 3,996 | 4,091 | |||||
Retained earnings | 52,839 | 52,518 | |||||
Accumulated other comprehensive loss | (13,057 | ) | (13,919 | ) | |||
Repurchased common stock, in excess of par value (446 and 438 shares, respectively) | (32,757 | ) | (31,468 | ) | |||
Total PepsiCo Common Shareholders’ Equity | 11,045 | 11,246 | |||||
Noncontrolling interests | 92 | 104 | |||||
Total Equity | 10,981 | 11,199 | |||||
Total Liabilities and Equity | $ | 79,804 | $ | 73,490 |
Quarter Ended | Year Ended | ||||||||||||||
12/30/2017 | 12/31/2016 | 12/30/2017 | 12/31/2016 | ||||||||||||
Beginning Net Shares Outstanding | 1,423 | 1,436 | 1,428 | 1,448 | |||||||||||
Options Exercised, RSUs, PSUs and PEPunits Converted | 2 | — | 10 | 9 | |||||||||||
Shares Repurchased | (5 | ) | (8 | ) | (18 | ) | (29 | ) | |||||||
Ending Net Shares Outstanding | 1,420 | 1,428 | 1,420 | 1,428 | |||||||||||
Weighted Average Basic | 1,421 | 1,431 | 1,425 | 1,439 | |||||||||||
Dilutive Securities: | |||||||||||||||
Options | — | 6 | 7 | 7 | |||||||||||
RSUs, PSUs, PEPunits and Other | — | 6 | 5 | 5 | |||||||||||
ESOP Convertible Preferred Stock | — | 1 | 1 | 1 | |||||||||||
Weighted Average Diluted | 1,421 | 1,444 | 1,438 | 1,452 | |||||||||||
Average Share Price for the Period | $ | 114.03 | $ | 105.15 | $ | 112.93 | $ | 103.59 | |||||||
Growth versus Prior Year | 8 | % | 7 | % | 9 | % | 7 | % | |||||||
Options Outstanding | 19 | 25 | 21 | 27 | |||||||||||
Options in the Money | 19 | 25 | 20 | 26 | |||||||||||
Dilutive Shares from Options | — | 6 | 7 | 7 | |||||||||||
Dilutive Shares from Options as a % of Options in the Money | — | % | 26 | % | 35 | % | 26 | % | |||||||
Average Exercise Price of Options in the Money | $ | 74.05 | $ | 69.46 | $ | 72.84 | $ | 68.51 | |||||||
RSUs, PSUs, PEPunits and Other Outstanding | 8 | 9 | 8 | 9 | |||||||||||
Dilutive Shares from RSUs, PSUs, PEPunits and Other | — | 6 | 5 | 5 | |||||||||||
Weighted-Average Grant-Date Fair Value of RSUs and PSUs Outstanding | $ | 102.30 | $ | 91.81 | $ | 102.05 | $ | 91.55 | |||||||
Weighted-Average Grant-Date Fair Value of PEPunits Outstanding | $ | 68.94 | $ | 59.86 | $ | 68.94 | $ | 59.88 |
Percent Impact | GAAP Measure | Non-GAAP Measure | ||||||||||||||||||
Reported % Change | Organic % Change(a) | |||||||||||||||||||
Net Revenue Year over Year % Change | Volume | Effective net pricing | Acquisitions and divestitures and other structural changes | Foreign exchange translation | 53rd reporting week(b) | Quarter Ended 12/30/2017 | Quarter Ended 12/30/2017 | |||||||||||||
Frito-Lay North America | 3 | 2 | — | — | (6 | ) | (1 | ) | 5 | |||||||||||
Quaker Foods North America | 0.5 | (1 | ) | — | 0.5 | (5 | ) | (5 | ) | — | ||||||||||
North America Beverages | (3 | ) | — | 1 | — | (5 | ) | (6 | ) | (3 | ) | |||||||||
Latin America | (4 | ) | 7 | — | 3 | — | 6 | 3 | ||||||||||||
Europe Sub-Saharan Africa | 5 | 1 | — | 6 | (1 | ) | 11 | 6 | ||||||||||||
Asia, Middle East and North Africa | — | 6 | — | (5.5 | ) | — | — | 6 | ||||||||||||
Total PepsiCo | — | 2 | — | 1 | (3.5 | ) | — | 2 |
Percent Impact | GAAP Measure | Non-GAAP Measure | ||||||||||||||||||
Reported % Change | Organic % Change(a) | |||||||||||||||||||
Net Revenue Year over Year % Change | Volume | Effective net pricing | Acquisitions and divestitures and other structural changes | Foreign exchange translation | 53rd reporting week(b) | Year Ended 12/30/2017 | Year Ended 12/30/2017 | |||||||||||||
Frito-Lay North America | 1 | 2.5 | — | — | (2 | ) | 2 | 3 | ||||||||||||
Quaker Foods North America | — | (1 | ) | — | — | (2 | ) | (2 | ) | (1 | ) | |||||||||
North America Beverages | (2.5 | ) | 1 | 1 | — | (1 | ) | (2 | ) | (2 | ) | |||||||||
Latin America | (2 | ) | 7 | (0.5 | ) | 1 | — | 6 | 5 | |||||||||||
Europe Sub-Saharan Africa | 3 | 2 | — | 3 | — | 8 | 6 | |||||||||||||
Asia, Middle East and North Africa | — | 5 | — | (10 | ) | — | (5 | ) | 5 | |||||||||||
Total PepsiCo | — | 3 | — | — | (1 | ) | 1 | 2 |
(a) | Organic percent change is a financial measure that is not in accordance with GAAP and is calculated by excluding the impact of foreign exchange translation, acquisitions, divestitures and other structural changes, as well as the 53rd reporting week in 2016, from reported growth. |
(b) | Represents the impact of the exclusion of the 53rd reporting week from 2016 results. |
GAAP Measure | Non-GAAP Measure | Non-GAAP Measure | ||||||||||||||||||||||
Reported % Change | Percent Impact of Items Affecting Comparability | Core(a) % Change | Percent Impact of | Core Constant Currency(a) % Change | ||||||||||||||||||||
Operating Profit Year over Year % Change | Quarter Ended 12/30/2017 | Commodity mark-to- market net impact | Restructuring and impairment charges(b) | Provisional net tax expense related to the TCJ Act | Charge related to debt redemption | Pension-related settlement charge | Quarter Ended 12/30/2017 | Foreign exchange translation | Quarter Ended 12/30/2017 | |||||||||||||||
Frito-Lay North America | (1 | ) | — | 3.5 | — | — | — | 3 | — | 3 | ||||||||||||||
Quaker Foods North America | (6 | ) | — | 5 | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||
North America Beverages | (29 | ) | — | 6 | — | — | — | (23 | ) | — | (23 | ) | ||||||||||||
Latin America | 20 | — | 8 | — | — | — | 28 | (6 | ) | 22 | ||||||||||||||
Europe Sub-Saharan Africa | — | — | 3.5 | — | — | — | 3.5 | (5.5 | ) | (2 | ) | |||||||||||||
Asia, Middle East and North Africa | 173 | — | (4 | ) | — | — | — | 169 | 18 | 187 | ||||||||||||||
Corporate Unallocated | (31 | ) | (5.5 | ) | (7 | ) | — | — | 41 | (3 | ) | — | (3 | ) | ||||||||||
Total Operating Profit | 9 | 2 | 10 | — | — | (14 | ) | 7 | (1 | ) | 6 | |||||||||||||
Net Income Attributable to PepsiCo | (151 | ) | 9 | (1 | ) | 8 | ||||||||||||||||||
Net Income Attributable to PepsiCo per common share - diluted | (152 | ) | 9 | (1 | ) | 8 |
GAAP Measure | Non-GAAP Measure | Non-GAAP Measure | |||||||||||||||||||||||||
Reported % Change | Percent Impact of Items Affecting Comparability | Core(a) % Change | Percent Impact of | Core Constant Currency(a) % Change | |||||||||||||||||||||||
Operating Profit Year over Year % Change | Year Ended 12/30/2017 | Commodity mark-to- market net impact | Restructuring and impairment charges(b) | Provisional net tax expense related to the TCJ Act | Charge related to the transaction with Tingyi | Charge related to debt redemption | Pension-related settlement charge | Year Ended 12/30/2017 | Foreign exchange translation | Year Ended 12/30/2017 | |||||||||||||||||
Frito-Lay North America | 3.5 | — | 1 | — | — | — | — | 5 | — | 4.5 | |||||||||||||||||
Quaker Foods North America | (2 | ) | — | 1.5 | — | — | — | — | — | — | — | ||||||||||||||||
North America Beverages | (9 | ) | — | 1 | — | — | — | — | (8 | ) | — | (8 | ) | ||||||||||||||
Latin America | 2 | — | 4 | — | — | — | — | 6 | 1 | 7 | |||||||||||||||||
Europe Sub-Saharan Africa | 22 | — | (2 | ) | — | — | — | — | 20 | — | 20 | ||||||||||||||||
Asia, Middle East and North Africa | 73 | — | (3 | ) | — | (64 | ) | — | — | 6 | 8 | 15 | |||||||||||||||
Corporate Unallocated | (9 | ) | (13 | ) | (3 | ) | — | — | — | 20 | (5 | ) | — | (5 | ) | ||||||||||||
Total Operating Profit | 7 | 2 | 1.5 | — | (4 | ) | — | (3 | ) | 4 | 1 | 5 | |||||||||||||||
Net Income Attributable to PepsiCo | (23 | ) | 7 | 1 | 8 | ||||||||||||||||||||||
Net Income Attributable to PepsiCo per common share - diluted | (23 | ) | 8 | 1 | 9 |
(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-6 through A-7 for a discussion of each of these adjustments. |
(b) | Restructuring and impairment charges include costs associated with the 2014 Multi-Year Productivity Plan. See A-6 through A-7 for a discussion of this plan. |
Quarter Ended 12/30/2017 | ||||||||||||||||||||||||||||||
Cost of sales | Gross profit | Selling, general and administrative expenses | Operating profit | Provision for income taxes(a) | Net (loss)/income attributable to PepsiCo | Net (loss)/income attributable to PepsiCo per common share - diluted | Effective tax rate(b) | |||||||||||||||||||||||
Reported, GAAP Measure | $ | 9,077 | $ | 10,449 | $ | 7,856 | $ | 2,593 | $ | 3,026 | $ | (710 | ) | $ | (0.50 | ) | 129.8 | % | ||||||||||||
Items Affecting Comparability | ||||||||||||||||||||||||||||||
Commodity mark-to-market net impact | 1 | (1 | ) | 27 | (28 | ) | (9 | ) | (19 | ) | (0.01 | ) | (0.1 | ) | ||||||||||||||||
Restructuring and impairment charges (c) | — | — | (226 | ) | 226 | 67 | 159 | 0.11 | 0.4 | |||||||||||||||||||||
Provisional net tax expense related to the TCJ Act (d) | — | — | — | — | (2,451 | ) | 2,451 | 1.73 | (105.2 | ) | ||||||||||||||||||||
Core, Non-GAAP Measure (e) | $ | 9,078 | $ | 10,448 | $ | 7,657 | $ | 2,791 | $ | 633 | $ | 1,881 | $ | 1.31 | (f) | 25.0 | % |
Quarter Ended 12/31/2016 | ||||||||||||||||||||||||||||||||||
Cost of sales | Gross profit | Selling, general and administrative expenses | Operating profit | Interest expense | Provision for income taxes(a) | Net income attributable to PepsiCo | Net income attributable to PepsiCo per common share - diluted | Effective tax rate(b) | ||||||||||||||||||||||||||
Reported, GAAP Measure | $ | 8,944 | $ | 10,571 | $ | 8,190 | $ | 2,381 | $ | 594 | $ | 414 | $ | 1,401 | $ | 0.97 | 22.7 | % | ||||||||||||||||
Items Affecting Comparability | ||||||||||||||||||||||||||||||||||
Commodity mark-to-market net impact | 30 | (30 | ) | 30 | (60 | ) | — | (19 | ) | (41 | ) | (0.03 | ) | (0.3 | ) | |||||||||||||||||||
Restructuring and impairment charges (c) | — | — | (54 | ) | 54 | — | (1 | ) | 55 | 0.04 | (0.7 | ) | ||||||||||||||||||||||
Charge related to debt redemption | — | — | — | — | (233 | ) | 77 | 156 | 0.11 | 1.2 | ||||||||||||||||||||||||
Pension-related settlement charge | — | — | (242 | ) | 242 | — | 80 | 162 | 0.11 | 1.2 | ||||||||||||||||||||||||
Core, Non-GAAP Measure (e) | $ | 8,974 | $ | 10,541 | $ | 7,924 | $ | 2,617 | $ | 361 | $ | 551 | $ | 1,733 | $ | 1.20 | 24.0 | % |
(a) | 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 and tax year and, in 2017, the impact of the TCJ Act is presented separately. |
(b) | 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. |
(c) | Restructuring and impairment charges include costs associated with the 2014 Multi-Year Productivity Plan. See A-6 through A-7 for a discussion of this plan. |
(d) | Recorded a provisional net tax expense associated with the enactment of the TCJ Act. See A-7 for a discussion of this expense. |
(e) | Core results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-6 through A-7 for a discussion of each of these adjustments. |
(f) | Does not sum due to impact of diluted shares and rounding. |
Year Ended 12/30/2017 | ||||||||||||||||||||||||||||||
Cost of sales | Gross profit | Selling, general and administrative expenses | Operating profit | Provision for income taxes(a) | Net income attributable to PepsiCo | Net income attributable to PepsiCo per common share - diluted | Effective tax rate(b) | |||||||||||||||||||||||
Reported, GAAP Measure | $ | 28,785 | $ | 34,740 | $ | 24,231 | $ | 10,509 | $ | 4,694 | $ | 4,857 | $ | 3.38 | 48.9 | % | ||||||||||||||
Items Affecting Comparability | ||||||||||||||||||||||||||||||
Commodity mark-to-market net impact | 8 | (8 | ) | 7 | (15 | ) | (7 | ) | (8 | ) | (0.01 | ) | — | |||||||||||||||||
Restructuring and impairment charges (c) | — | — | (295 | ) | 295 | 71 | 224 | 0.16 | — | |||||||||||||||||||||
Provisional net tax expense related to the TCJ Act (d) | — | — | — | — | (2,451 | ) | 2,451 | 1.70 | (25.5 | ) | ||||||||||||||||||||
Core, Non-GAAP Measure (e) | $ | 28,793 | $ | 34,732 | $ | 23,943 | $ | 10,789 | $ | 2,307 | $ | 7,524 | $ | 5.23 | 23.3 | % |
Year Ended 12/31/2016 | ||||||||||||||||||||||||||||||||||||||
Cost of sales | Gross profit | Selling, general and administrative expenses | Operating profit | Interest expense | Provision for income taxes(a) | Net income attributable to noncontrolling interests | Net income attributable to PepsiCo | Net income attributable to PepsiCo per common share - diluted | Effective tax rate(b) | |||||||||||||||||||||||||||||
Reported, GAAP Measure | $ | 28,209 | $ | 34,590 | $ | 24,805 | $ | 9,785 | $ | 1,342 | $ | 2,174 | $ | 50 | $ | 6,329 | $ | 4.36 | 25.4 | % | ||||||||||||||||||
Items Affecting Comparability | ||||||||||||||||||||||||||||||||||||||
Commodity mark-to-market net impact | 78 | (78 | ) | 89 | (167 | ) | — | (56 | ) | — | (111 | ) | (0.08 | ) | (0.2 | ) | ||||||||||||||||||||||
Restructuring and impairment charges (c) | — | — | (160 | ) | 160 | — | 26 | 3 | 131 | 0.09 | (0.2 | ) | ||||||||||||||||||||||||||
Charge related to the transaction with Tingyi | — | — | (373 | ) | 373 | — | — | — | 373 | 0.26 | (1.1 | ) | ||||||||||||||||||||||||||
Charge related to debt redemption | — | — | — | — | (233 | ) | 77 | — | 156 | 0.11 | 0.2 | |||||||||||||||||||||||||||
Pension-related settlement charge | — | — | (242 | ) | 242 | — | 80 | — | 162 | 0.11 | 0.2 | |||||||||||||||||||||||||||
Core, Non-GAAP Measure (e) | $ | 28,287 | $ | 34,512 | $ | 24,119 | $ | 10,393 | $ | 1,109 | $ | 2,301 | $ | 53 | $ | 7,040 | $ | 4.85 | 24.5 | % |
(a) | 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 and tax year and, in 2017, the impact of the TCJ Act is presented separately. |
(b) | 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. |
(c) | Restructuring and impairment charges include costs associated with the 2014 Multi-Year Productivity Plan. See A-6 through A-7 for a discussion of this plan. |
(d) | Recorded a provisional net tax expense associated with the enactment of the TCJ Act. See A-7 for a discussion of this expense. |
(e) | Core results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-6 through A-7 for a discussion of each of these adjustments. |
GAAP Measure | Items Affecting Comparability | Non-GAAP Measure | |||||||||||||
Reported | Core(a) | ||||||||||||||
Operating Profit | Quarter Ended 12/30/2017 | Commodity mark-to-market net impact | Restructuring and impairment charges(b) | Quarter Ended 12/30/2017 | |||||||||||
Frito-Lay North America | $ | 1,402 | $ | — | $ | 61 | $ | 1,463 | |||||||
Quaker Foods North America | 186 | — | 11 | 197 | |||||||||||
North America Beverages | 491 | — | 55 | 546 | |||||||||||
Latin America | 267 | — | 16 | 283 | |||||||||||
Europe Sub-Saharan Africa | 315 | — | 34 | 349 | |||||||||||
Asia, Middle East and North Africa | 328 | — | 4 | 332 | |||||||||||
Division Operating Profit | 2,989 | — | 181 | 3,170 | |||||||||||
Corporate Unallocated | (396 | ) | (28 | ) | 45 | (379 | ) | ||||||||
Total Operating Profit | $ | 2,593 | $ | (28 | ) | $ | 226 | $ | 2,791 |
GAAP Measure | Items Affecting Comparability | Non-GAAP Measure | |||||||||||||||||
Reported | Core(a) | ||||||||||||||||||
Operating Profit | Quarter Ended 12/31/2016 | Commodity mark-to-market net impact | Restructuring and impairment charges(b) | Pension-related settlement charge | Quarter Ended 12/31/2016 | ||||||||||||||
Frito-Lay North America | $ | 1,410 | $ | — | $ | 12 | $ | — | $ | 1,422 | |||||||||
Quaker Foods North America | 197 | — | — | — | 197 | ||||||||||||||
North America Beverages | 689 | — | 16 | — | 705 | ||||||||||||||
Latin America | 223 | — | (1 | ) | — | 222 | |||||||||||||
Europe Sub-Saharan Africa | 316 | — | 22 | — | 338 | ||||||||||||||
Asia, Middle East and North Africa | 120 | — | 3 | — | 123 | ||||||||||||||
Division Operating Profit | 2,955 | — | 52 | — | 3,007 | ||||||||||||||
Corporate Unallocated | (574 | ) | (60 | ) | 2 | 242 | (390 | ) | |||||||||||
Total Operating Profit | $ | 2,381 | $ | (60 | ) | $ | 54 | $ | 242 | $ | 2,617 |
(a) | Core results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-6 through A-7 for a discussion of each of these adjustments. |
(b) | Restructuring and impairment charges include costs associated with the 2014 Multi-Year Productivity Plan. See A-6 through A-7 for a discussion of this plan. |
GAAP Measure | Items Affecting Comparability | Non-GAAP Measure | |||||||||||||
Reported | Core(a) | ||||||||||||||
Operating Profit | Year Ended 12/30/2017 | Commodity mark-to-market net impact | Restructuring and impairment charges(b) | Year Ended 12/30/2017 | |||||||||||
Frito-Lay North America | $ | 4,823 | $ | — | $ | 67 | $ | 4,890 | |||||||
Quaker Foods North America | 642 | — | 11 | 653 | |||||||||||
North America Beverages | 2,707 | — | 54 | 2,761 | |||||||||||
Latin America | 908 | — | 63 | 971 | |||||||||||
Europe Sub-Saharan Africa | 1,354 | — | 53 | 1,407 | |||||||||||
Asia, Middle East and North Africa | 1,073 | — | (3 | ) | 1,070 | ||||||||||
Division Operating Profit | 11,507 | — | 245 | 11,752 | |||||||||||
Corporate Unallocated | (998 | ) | (15 | ) | 50 | (963 | ) | ||||||||
Total Operating Profit | $ | 10,509 | $ | (15 | ) | $ | 295 | $ | 10,789 |
GAAP Measure | Items Affecting Comparability | Non-GAAP Measure | |||||||||||||||||||||
Reported | Core(a) | ||||||||||||||||||||||
Operating Profit | Year Ended 12/31/2016 | Commodity mark-to-market net impact | Restructuring and impairment charges(b) | Charge related to the transaction with Tingyi | Pension-related settlement charge | Year Ended 12/31/2016 | |||||||||||||||||
Frito-Lay North America | $ | 4,659 | $ | — | $ | 13 | $ | — | $ | — | $ | 4,672 | |||||||||||
Quaker Foods North America | 653 | — | 1 | — | — | 654 | |||||||||||||||||
North America Beverages | 2,959 | — | 35 | — | — | 2,994 | |||||||||||||||||
Latin America | 887 | — | 27 | — | — | 914 | |||||||||||||||||
Europe Sub-Saharan Africa | 1,108 | — | 60 | — | — | 1,168 | |||||||||||||||||
Asia, Middle East and North Africa | 619 | — | 14 | 373 | — | 1,006 | |||||||||||||||||
Division Operating Profit | 10,885 | — | 150 | 373 | — | 11,408 | |||||||||||||||||
Corporate Unallocated | (1,100 | ) | (167 | ) | 10 | — | 242 | (1,015 | ) | ||||||||||||||
Total Operating Profit | $ | 9,785 | $ | (167 | ) | $ | 160 | $ | 373 | $ | 242 | $ | 10,393 |
(a) | Core results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-6 through A-7 for a discussion of each of these adjustments. |
(b) | Restructuring and impairment charges include costs associated with the 2014 Multi-Year Productivity Plan. See A-6 through A-7 for a discussion of this plan. |
Quarter Ended | Year Ended | ||||||
12/30/2017 | 12/30/2017 | ||||||
Reported Operating Profit Growth | 9 | % | 7 | % | |||
Impact of Corporate Unallocated | (8 | ) | (2 | ) | |||
Division Operating Profit Growth | 1 | 6 | |||||
Restructuring and Impairment Charges | 4 | 1 | |||||
Charge Related to the Transaction with Tingyi | — | (4 | ) | ||||
Core Division Operating Profit Growth | 5 | 3 | |||||
Foreign Exchange Translation | (0.5 | ) | 1 | ||||
Core Constant Currency Division Operating Profit Growth | 5 | % | 4 | % |
Quarter Ended | Year Ended | ||||||
12/30/2017 | 12/30/2017 | ||||||
Reported Gross Margin Performance | (66 | ) | bps | (39 | ) | bps | |
Commodity Mark-to-Market Net Impact | 15 | 11 | |||||
Core Gross Margin Performance | (50 | ) | bps | (28 | ) | bps |
Quarter Ended | Year Ended | ||||||
12/30/2017 | 12/30/2017 | ||||||
Reported Operating Margin Growth | 108 | bps | 96 | bps | |||
Commodity Mark-to-Market Net Impact | 17 | 24 | |||||
Restructuring and Impairment Charges | 88 | 21 | |||||
Pension-related Settlement Charge | (124 | ) | (39 | ) | |||
Charge Related to the Transaction with Tingyi | — | (59 | ) | ||||
Core Operating Margin Growth | 88 | bps | 43 | bps |
Year Ended | |||
12/30/2017 | |||
Net Cash Provided by Operating Activities | $ | 9,994 | |
Capital Spending | (2,969 | ) | |
Sales of Property, Plant and Equipment | 180 | ||
Free Cash Flow | 7,205 | ||
Payments Related to Restructuring Charges | 113 | ||
Net Cash Tax Benefit Related to Restructuring Charges | (30 | ) | |
Discretionary Pension Contributions | 6 | ||
Net Cash Tax Benefit Related to Discretionary Pension Contributions | (1 | ) | |
Free Cash Flow Excluding Certain Items | $ | 7,293 |
2018 Guidance | ||||
Net Cash Provided by Operating Activities | $ | ~ | 9 | |
Net Capital Spending | ~ | (4 | ) | |
Free Cash Flow | ~ | 6 | ||
Discretionary Pension Contributions | ~ | 1 | ||
Net Cash Tax Benefit Related to Discretionary Pension Contributions | ~ | — | ||
Payments Related to Restructuring Charges | ~ | — | ||
Net Cash Tax Benefit Related to Restructuring Charges | ~ | — | ||
Free Cash Flow Excluding Certain Items | $ | ~ | 7 |