PepsiCo, Inc. is an American beverage and food company headquartered in Purchase, New York. PepsiCo is currently the Coca-Cola Company's biggest competitor.
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 21, 1998 (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 [GRAPHIC OMITTED] PEPSICO, INC. (Exact name of registrant as specified in its charter) North Carolina 13-1584302 (State or other jurisdiction of (I.R.S. Employer incorporate 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 17, 1998: 1,491,032,028
PEPSICO, INC. AND SUBSIDIARIES INDEX Page No. Part I Financial Information Condensed Consolidated Statement of Income - 12 weeks ended March 21, 1998 and March 22, 1997 ...... 2 Condensed Consolidated Statement of Comprehensive Income - 12 weeks ended March 21, 1998 and March 22, 1997 ...... 3 Condensed Consolidated Statement of Cash Flows - 12 weeks ended March 21, 1998 and March 22, 1997 ...... 4-5 Condensed Consolidated Balance Sheet - March 21, 1998 and December 27, 1997 .................. 6-7 Notes to Condensed Consolidated Financial Statements ..... 8-9 Management's Discussion and Analysis of Operations, Cash Flows and Liquidity and Capital Resources ........ 10-18 Independent Accountants' Review Report ................... 19 Part II Other Information and Signatures.......................... 20-21 -1-
PART I - FINANCIAL INFORMATION PEPSICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF INCOME (in millions except per share amounts, unaudited) 12 Weeks Ended 3/21/98 3/22/97 Net Sales ............................................ $ 4,353 $ 4,213 Costs and Expenses, net Cost of sales ...................................... 1,750 1,721 Selling, general and administrative expenses ....... 1,969 1,867 Amortization of intangible assets .................. 44 44 ------- ------- Operating Profit...................................... 590 581 Interest expense.................................... (76) (115) Interest income..................................... 32 12 ------- ------- Income from Continuing Operations Before Income Taxes................................. 546 478 Provision for Income Taxes............................ 169 160 ------- ------- Income from Continuing Operations..................... 377 318 Income from Discontinued Operations, net of tax....... - 109 ------- ------- Net Income ........................................... $ 377 $ 427 ======= ======= Income Per Share - Basic Continuing Operations .............................. $ 0.25 $ 0.21 Discontinued Operations............................. - 0.07 ------- ------- Net Income ......................................... $ 0.25 $ 0.28 ======= ======= Average shares outstanding.......................... 1,496 1,544 Income Per Share - Assuming Dilution Continuing Operations .............................. $ 0.24 $ 0.20 Discontinued Operations............................. - 0.07 ------- ------- Net Income ......................................... $ 0.24 $ 0.27 ======= ======= Average shares outstanding.......................... 1,539 1,583 Cash Dividends Declared Per Share .................... $ 0.125 $ 0.115 See accompanying notes. -2-
PEPSICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (in millions, unaudited) 12 Weeks Ended 3/21/98 3/22/97 Net Income................................................ $ 377 $ 427 Other Comprehensive Income/(Loss) Currency translation adjustment (net of tax expense of $1 - 3/97)...................... (19) (143) Less: Reclassification adjustment for items realized in net income............................................. - 29 ----- ----- (19) (114) ----- ----- Comprehensive Income...................................... $ 358 $ 313 ===== ===== See accompanying notes. -3-
PEPSICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (in millions, unaudited) 12 Weeks Ended 3/21/98 3/22/97 Cash Flows - Operating Activities Income from Continuing Operations ..................... $ 377 $ 318 Adjustments to reconcile income from continuing operations to net cash provided by operating activities Depreciation and amortization..................... 246 231 Deferred income taxes............................. 16 5 Other noncash charges and credits, net............ 73 29 Changes in operating working capital, excluding effects of acquisitions and dispositions Accounts and notes receivable.................. 2 73 Inventories.................................... (69) 20 Prepaid expenses, deferred income taxes and other current assets.......................... (70) (97) Accounts payable and other current liabilities. (503) (581) Income taxes payable........................... 202 99 ---- ---- Net change in operating working capital........... (438) (486) ---- ---- Net Cash Provided by Operating Activities................. 274 97 ---- ---- Cash Flows - Investing Activities Capital spending....................................... (228) (291) Acquisitions and investments in unconsolidated affiliates ........................................... (192) (2) Sales of businesses.................................... - 62 Sales of property, plant and equipment................. 13 15 Short-term investments, by original maturity More than three months - purchases............... (170) (16) More than three months - maturities................. 217 67 Three months or less, net........................... 736 5 Other, net............................................. (63) 48 ---- ---- Net Cash Provided by (Used for) Investing Activities...... 313 (112) ---- ---- Continued on next page. -4-
PEPSICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Continued) (in millions, unaudited) 12 Weeks Ended 3/21/98 3/22/97 Cash Flows - Financing Activities Proceeds from issuances of long-term debt................ 544 - Payments of long-term debt............................. (785) (927) Short-term borrowings, by original maturity More than three months - proceeds................... 49 33 More than three months - payments................... (22) (127) Three months or less, net........................... (29) 1,076 Proceeds from formation of REIT........................ - 296 Cash dividends paid.................................... (188) (172) Share repurchases...................................... (877) (378) Proceeds from exercises of stock options............... 192 72 ------- ------- Net Cash Used for Financing Activities.................... (1,116) (127) ------- ------- Net Cash Provided by Discontinued Operations.............. - 158 Effect of Exchange Rate Changes on Cash and Cash Equivalents ............................................. (1) (1) ------- ------- Net (Decrease) Increase in Cash and Cash Equivalents...... (530) 15 Cash and Cash Equivalents - Beginning of year ............ 1,928 307 ------- ------- Cash and Cash Equivalents - End of period ................ $ 1,398 $ 322 ======= ======= See accompanying notes. -5-
PEPSICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (in millions) ASSETS (Unaudited) 3/21/98 12/27/97 Current Assets Cash and cash equivalents ......................... $ 1,398 $ 1,928 Short-term investments, at cost.................... 172 955 -------- -------- 1,570 2,883 Accounts and notes receivable, less allowance: 3/98 - $123, 12/97 - $125............ 2,132 2,150 Inventories Raw materials and supplies..................... 426 400 Finished goods................................. 379 332 -------- -------- 805 732 Prepaid expenses, deferred income taxes and other current assets............................. 556 486 -------- -------- Total Current Assets....................... 5,063 6,251 Property, Plant and Equipment ........................ 11,493 11,294 Accumulated Depreciation.............................. (5,189) (5,033) -------- -------- 6,304 6,261 Intangible Assets, net................................ 5,889 5,855 Investments in Unconsolidated Affiliates.............. 1,183 1,201 Other Assets.......................................... 746 533 -------- -------- Total Assets ............................... $ 19,185 $ 20,101 ======== ======== Continued on next page. -6-
PEPSICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (continued) (in millions except per share amount) LIABILITIES AND SHAREHOLDERS' EQUITY (Unaudited) 3/21/98 12/27/97 Current Liabilities Accounts payable and other current liabilities ........ $ 3,065 $ 3,617 Income taxes payable................................... 756 640 -------- -------- Total Current Liabilities....................... 3,821 4,257 Long-term Debt............................................ 4,715 4,946 Other Liabilities......................................... 2,406 2,265 Deferred Income Taxes..................................... 1,724 1,697 Shareholders' Equity Capital stock, par value 1 2/3 cents per share: authorized 3,600 shares, issued 3/98 and 12/97 - 1,726 shares............................ 29 29 Capital in excess of par value......................... 1,290 1,314 Retained earnings ..................................... 11,758 11,567 Currency translation adjustment........................ (1,007) (988) -------- -------- 12,070 11,922 Less: Treasury Stock, at Cost: 3/98 - 235 shares, 12/97 - 224 shares............... (5,551) (4,986) -------- -------- Total Shareholders' Equity...................... 6,519 6,936 -------- -------- Total Liabilities and Shareholders' Equity . $ 19,185 $ 20,101 ======== ======== See accompanying notes. -7-
PEPSICO, INC. AND SUBSIDIARIES (unaudited) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) Our Condensed Consolidated Balance Sheet at March 21, 1998 and the Condensed Consolidated Statements of Income, Comprehensive Income and Cash Flows for the 12 weeks ended March 21, 1998 and March 22, 1997 have not been audited, and all but the Condensed Consolidated Statement of Comprehensive Income (Note 2) have been prepared in conformity with the accounting principles applied in our 1997 Annual Report on Form 10-K (Annual Report) for the year ended December 27, 1997. In our opinion, this information includes all material adjustments, which are of a normal and recurring nature, necessary for a fair presentation. The results for the 12 weeks are not necessarily indicative of the results expected for the year. (2) As of December 28, 1997, PepsiCo adopted Statement of Position 98-1 (SOP), "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," issued by The American Institute of Certified Public Accountants in March, 1998. The SOP requires capitalization of certain costs related to computer software developed or obtained for internal use which PepsiCo had previously expensed in selling, general and administrative expenses. The amount capitalized under the SOP in the first quarter of 1998 was immaterial. PepsiCo does not expect the full-year impact of adopting the SOP to be material to its consolidated results. As of December 28, 1997, PepsiCo adopted Statement of Financial Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income," issued in June 1997. SFAS 130 requires the reporting and display of comprehensive income, which is composed of net income and other comprehensive income items, in a full set of general purpose financial statements. Other comprehensive income items are revenues, expenses, gains and losses that under generally accepted accounting principles are excluded from net income and reflected as a component of equity; such as currency translation and minimum pension liability adjustments. (3) Through the 12 weeks ended March 21, 1998, PepsiCo repurchased 24.4 million shares of its capital stock at a cost of $877 million. From March 22, 1998 through May 4, 1998, PepsiCo repurchased 4.0 million shares at a cost of $169 million. -8-
(4) Supplemental Cash Flow Information 12 Weeks Ended 3/21/98 3/22/97 Cash Flow Data Interest paid.................................... $ 64 $121 Income taxes paid................................ $ 51 $ 63 -9-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS, CASH FLOWS AND LIQUIDITY AND CAPITAL RESOURCES Cautionary Statements From time to time, in written reports and oral statements, we discuss our expectations regarding PepsiCo's future performance. These "forward-looking statements" are based on currently available competitive, financial and economic data and our operating plans. They are also inherently uncertain, and investors must recognize that events could turn out to be significantly different from what we expect. General All per share information is computed using average shares outstanding, assuming dilution. Volume is the estimated dollar effect of the year-over-year change in case sales by company-owned bottling operations and concentrate unit sales to franchisees in Beverages, and pound or kilo sales of salty and sweet snacks in Snack Foods. Effective net pricing includes price changes and the effect of product, package and country mix. Analysis of Consolidated Operations Net sales rose $140 million or 3% reflecting volume gains in all businesses and higher effective net pricing by Worldwide Snack Foods, partially offset by an unfavorable foreign currency translation impact and the absence of sales resulting from the refranchising of our Japanese bottler late in 1997. Cost of sales as a percent of net sales decreased 0.6 points to 40.2% primarily due to lower product costs in Worldwide Beverages and higher effective net pricing in International Snack Foods, partially offset by lower potato yields in Europe. Selling, general and administrative expenses (SG&A) comprises selling and distribution expenses (S&D), advertising and marketing expenses (A&M), general and administrative expenses (G&A), other income and expense and equity income or loss from investments in unconsolidated affiliates. SG&A grew 5%, a faster rate than sales. This primarily reflects A&M growing at a significantly faster rate than sales driven by Worldwide Beverages and North American Snack Foods, as well as an increase in G&A. The increased G&A reflects higher executive compensation expense resulting from our deferred compensation liability, which is indexed to various investment options, including PepsiCo capital stock. S&D grew slightly slower than sales. -10-
Amortization of intangible assets remained even with the prior year as the effect of reducing intangible assets, as part of the unusual charges recorded during the second quarter of 1997, was offset by an increase in intangible assets resulting from our recent Snack Foods acquisitions. Operating Profit increased $9 million or 2% to $590 million reflecting segment operating profit growth of $11 million or 2%, partially offset by a $2 million or 6% increase in unallocated expenses. The segment operating profit growth reflects the increased volume and higher effective net pricing, which was substantially offset by increased operating costs. Segment operating profit growth also benefited from non-operating gains in North American Beverages and North American Snack Foods, which were mostly offset by lapping a 1997 gain from the sale of an investment in a non-core international snack food business. Unallocated expenses include the increased executive compensation partially offset by credits related to centrally managed insurance programs. Interest expense, net of interest income, declined $59 million or 57%, primarily due to lower average U.S. debt levels and higher average worldwide investment levels reflecting the significant cash flows received from discontinued operations in the latter half of 1997. Provision for Income Taxes increased by $9 million or 6%. The effective tax rate decreased 2.5 points to 31.0% primarily reflecting reserve reversals related to settlement of prior years' audit issues and lapping the high effective tax rate associated with the 1997 gain arising from the sale of the non-core investment partially offset by an increase in foreign tax expense. Income from Continuing Operations increased $59 million or 19% while Income Per Share from Continuing Operations increased $0.04 or 20% to $0.24. The increases were due to the lower net interest expense, the non-operating gains and the lower effective tax rate. In addition, income per share benefited from a 3% reduction in average shares outstanding. Comprehensive Income increased $45 million or 14% due to a decline in other comprehensive losses, driven by lapping unfavorable 1997 currency translation effects of rate devaluations in the UK and Spain, partially offset by lower net income, reflecting the absence of income from discontinued operations. -11- PEPSICO, INC. AND SUBSIDIARIES SUPPLEMENTAL SCHEDULE OF NET SALES AND OPERATING PROFIT (a) ($ in millions, unaudited) Net Sales Operating Profit (b) % % 12 Weeks Ended Change 12 Weeks Ended Change 3/21/98 3/22/97 B/(W) 3/21/98 3/22/97 B/(W) Beverages - - North America $1,653 $1,609 3 $ 258 $ 258 - - - International 311 361 (14) (18) (27) 33 ------ ------ ----- ----- 1,964 1,970 - 240 231 4 Snack Foods - - North America $1,631 1,523 7 308 283 9 - - International 758 720 5 76 99 (23) ------ ----- ----- ----- 2,389 2,243 7 384 382 1 Combined Segments $4,353 $4,213 3 624 613 2 ====== ====== Unallocated Expenses (34) (32) (6) ----- ----- Operating Profit $ 590 $ 581 2 ===== ===== Notes: (a) This schedule should be read in conjunction with Management's Analysis beginning on page 13. Certain reclassifications were made to prior year amounts to conform with the 1998 presentation. (b) Non-operating gains are included in North American Beverages and North American Snack Foods in 1998 and in International Snack Foods in 1997. The percent change in combined segments operating profit was not materially affected by these non-operating gains. -12-
Segments of The Business Beverages ($ in millions) 12 Weeks Ended % 3/21/98 3/22/97 Change Net Sales North America $1,653 $1,609 3 International 311 361 (14) ------ ------ $1,964 $1,970 - ====== ====== Operating Profit North America $ 258 $ 258 - International (18) (27) 33 ------ ------ $ 240 $ 231 4 ====== ====== - ------------------------------------------------------------------------- System bottler case sales (BCS) is our standard volume measure. It represents PepsiCo-owned brands as well as brands we have been granted the right to produce, distribute and market nationally. First quarter BCS includes the months of January, February and March. North America Net sales increased $44 million primarily reflecting packaged products volume growth. BCS increased 2.5%, led by mid-single-digit growth by our Mountain Dew brand. Non-carbonated soft drink products, led by Aquafina bottled water and Frappuccino coffee drink grew at a strong double-digit rate. Our concentrate shipments to franchisees grew at a faster rate than their BCS growth. Operating profit was even with the prior year reflecting the volume growth, non-operating gains and lower product costs, offset by increased A&M and S&D costs. S&D grew faster than sales and volume reflecting higher depreciation expense associated with an aggressive cooler and vendor placement program which commenced in the second half of 1997. A&M and G&A expenses grew significantly faster than sales and volume. The G&A growth includes the increased executive compensation and higher spending on information systems. -13-
International Net sales declined $50 million. The decline was primarily driven by the absence of sales resulting from the refranchising of our Japanese bottler late in 1997. Volume gains were substantially offset by unfavorable currency translation effects, led by Spain and Thailand. BCS increased 6% as volume more than doubled in the Philippines, while Mexico grew at a double-digit rate. In addition, BCS more than doubled in Venezuela reflecting the momentum of our joint venture. These advances were partially offset by the absence of sales volume in South Africa, due to the cessation of our joint venture operation and, significantly lower volumes in Japan. The decline in Japan reflects the elimination of certain beverages previously sold, partially offset by double-digit growth in our remaining brands. Total concentrate shipments to franchisees increased at a faster rate than their BCS. Operating losses declined $9 million. The improved operating results reflect higher volumes, lower product costs and reduced G&A, partially offset by increases in A&M. The favorable product costs were driven by reductions in certain duty rates and lower packaging costs, while efficiencies from our 1996 restructuring continue to benefit G&A. -14-
Snack Foods ($ in millions) 12 Weeks Ended % 3/21/98 3/22/97 Change Net Sales North America $1,631 $1,523 7 International 758 720 5 ------ ------ $2,389 $2,243 7 ====== ====== Operating Profit North America $ 308 $ 283 9 International 76 99 (23) ------ ------ $ 384 $ 382 1 ====== ====== - --------------------------------------------------------------------------- Pound and kilo sales are our standard volume measures. Pound and kilo growth are reported on a systemwide basis, which includes currently consolidated businesses and unconsolidated affiliates reported for at least one year. North America Net sales grew $108 million reflecting increased volume and favorable mix shifts, including the effect of our new "WOW" product introduction. Pound volume advanced 6%. Growth of our core brands, excluding their low-fat and no-fat versions, was led by high double-digit growth in Lay's brand potato chips and single-digit growth in Doritos brand tortilla chips. These gains were partially offset by declines in our "Baked" products and the elimination of Doritos Reduced Fat. Operating profit grew $25 million, reflecting volume growth and a non-operating gain, partially offset by higher A&M and S&D expenses. A&M grew at twice the rate of sales and volume due to increased promotional allowances. G&A grew slightly faster than sales due to the increased executive compensation. -15-
International Net sales increased $38 million reflecting volume gains, primarily driven by Sabritas. Higher effective net pricing was fully offset by the impact of the stronger U.S. dollar. Salty snack kilos rose 10%, led by strong double-digit growth at Sabritas and our Snack Ventures Europe joint venture, while sweet snack kilos declined 5%, due to continued market softness at Gamesa. Operating profit decreased $23 million, primarily reflecting higher operating costs and the effect of lapping the 1997 gain on the sale of a non-core investment, partially offset by the higher effective net pricing and the volume gains. Higher operating costs primarily reflect increased raw material costs resulting from lower potato yields in Europe. -16-
Cash Flows Please refer to our 1997 Annual Report on Form 10-K for information regarding our Liquidity and Capital Resources. PepsiCo's 1998 consolidated cash and cash equivalents decreased $530 million compared to a $15 million increase in 1997. The unfavorable swing primarily reflects increased share repurchases, net debt repayments in 1998 compared to net proceeds in 1997 and the absence of proceeds from the 1997 formation of a Real Estate Investment Trust (REIT). These were partially offset by increased proceeds from our investment portfolios. Net cash provided by operating activities nearly tripled to $274 million, reflecting an increase in income before all noncash charges and credits and lower operating working capital growth, driven by a first quarter tax refund that was used to offset payments. Net cash provided by (used for) investing activities reflects a favorable swing of $425 million resulting in cash provided of $313 million in 1998. The swing is due to $727 million of increased proceeds from our short-term investment portfolios, partially offset by a $190 million increase in acquisitions and investments in unconsolidated affiliates and an increase in various other investing activities, which was due to a number of individually immaterial items. In the first quarter of 1998, we purchased the Cracker Jack brand and the remaining ownership interest in a previously unconsolidated affiliate. Net cash used for financing activities increased $989 million to $1.1 billion. The increase primarily reflects increased share repurchases of $499 million and a $298 million swing in debt related cash flows, as well as the absence of the 1997 REIT proceeds of $296 million. Our share repurchase activity was as follows: 12 Weeks Ended ($ and shares in millions) 3/21/98 3/22/97 Cost $ 877 $ 378 Number of shares repurchased 24.4 11.7 % of shares outstanding at beginning of year 1.6% .8% -17-
Free cash flow is a measure we use internally to evaluate our cash flow performance and should be considered in addition to, but not as a substitute for, other measures of financial performance in accordance with generally accepted accounting principles. These funds provide us with flexibility to reduce our debt outstanding, repurchase shares or make strategic investments and acquisitions. 12 Weeks Ended ($ in millions) 3/21/98 3/22/97 Earnings before interest, taxes, depreciation and amortization $ 836 $ 812 Interest expense, net (44) (103) Provision for income taxes (169) (160) Other noncash items and working capital (349) (452) ----- ----- Net cash provided by operating activities 274 97 Investing activities Capital spending (228) (291) Sales of businesses - 62 Sales of property, plant and equipment 13 15 Other, net (63) 48 ----- ----- Free cash flow before cash dividends paid (4) (69) Cash dividends paid (188) (172) ----- ----- Free cash flow Continuing operations (192) (241) Discontinued operations - 158 ----- ----- $(192) $ (83) ===== ===== The $109 million increase in our negative free cash flow primarily reflects the absence of the cash flows from discontinued operations. The $49 million decline in our negative free cash flow from continuing operations primarily reflects the increase in net cash provided by operating activities partially offset by the unfavorable swing in other investing activities. The negative free cash flow reflects the seasonality of our business. -18-
<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 21, 1998 and the related condensed consolidated statements of income, comprehensive income and cash flows for the twelve weeks ended March 21, 1998 and March 22, 1997. 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 27, 1997, 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 3, 1998, 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 27, 1997, 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 1995 adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." KPMG Peat Marwick LLP New York, New York April 28, 1998 -19-
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PART II - OTHER INFORMATION AND SIGNATAURES Item 6. Exhibits and Reports on Form 8-K (a) Exhibits See Index to Exhibits on page 22. (b) Reports on Form 8-K None -20-
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 4, 1998 Sean F. Orr Senior Vice President and Controller Date: May 4, 1998 Lawrence F. Dickie Vice President, Associate General Counsel and Assistant Secretary -21-
INDEX TO EXHIBITS ITEM 6 (a) EXHIBITS Exhibit 11 Computation of Net Income Per Share of Capital Stock - Basic and Assuming Dilution 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 27.1 Financial Data Schedule 12 weeks ended March 21, 1998 Exhibit 27.2 Financial Data Schedule 12 weeks ended March 22, 1997 -22-