8-KRegulation FDExhibits & Filings

PEPSICO INC 8-K Report, Regulation FD Disclosure (Nov 29, 2005)

Filed November 29, 2005For Securities:PEP

Summary

PepsiCo Inc. (PEP) filed an 8-K on November 28, 2005, to provide updated guidance for its 2005 fiscal year ahead of an investor conference. The company reaffirmed its expectation for reported diluted earnings per share (EPS) to be between $2.38 and $2.39. More importantly for investors tracking core performance, PepsiCo reiterated its guidance for core EPS, excluding certain non-recurring items, to be in the range of $2.64 to $2.65. The filing also provided context for these figures, detailing expected impacts from a tax charge related to repatriating international earnings under the American Jobs Creation Act (AJCA), a projected restructuring charge to reduce costs, and the effect of a 53rd fiscal week in 2005. Management emphasized that excluding these items provides a clearer view of ongoing operational performance. The company's substantial revenue base of $29 billion and a portfolio of 16 brands each exceeding $1 billion in annual sales underscore its significant market presence.

Key Highlights

  • 1PepsiCo reaffirms 2005 reported diluted EPS guidance of $2.38 to $2.39.
  • 2PepsiCo reaffirms 2005 core diluted EPS guidance (excluding specific charges) of $2.64 to $2.65.
  • 3The company expects to record a tax charge related to repatriating $7.5 billion of international earnings under the AJCA.
  • 4A restructuring charge is anticipated in Q4 2005 to reduce operational costs.
  • 5The 2005 fiscal year will include an extra week (53rd week), which is expected to have a minor negative impact on EPS ($0.04).
  • 6Management believes core EPS, excluding the AJCA tax charge, 53rd week, and restructuring charge, is a better indicator of ongoing performance.
  • 7PepsiCo's extensive business includes Frito-Lay, Pepsi-Cola, Gatorade, Tropicana, and Quaker, with 16 brands generating over $1 billion each in sales.

Frequently Asked Questions

The primary purpose of this 8-K filing is to reaffirm PepsiCo's financial guidance for the full fiscal year 2005 to investors and to provide context regarding certain financial items that will impact reported earnings. This information is being shared ahead of an investor conference.

Reported diluted EPS is expected to be between $2.38 and $2.39. Core diluted EPS, which management believes is more indicative of ongoing performance, is expected to be between $2.64 and $2.65. The difference is due to the exclusion of a tax charge related to repatriating international earnings (AJCA), a projected restructuring charge, and the impact of an extra fiscal week in 2005.

The AJCA tax charge relates to PepsiCo's intention to repatriate $7.5 billion of international earnings under the provisions of the American Jobs Creation Act (AJCA). This repatriation is expected to result in a tax charge of approximately $0.27 per diluted share in 2005.

Yes, the 53rd fiscal week, which occurs roughly every five or six years, will result in an additional week of results for 2005. While it adds to revenue, it is expected to have a minor negative impact of approximately $0.04 per diluted share on EPS, and management suggests excluding it for a clearer view of ongoing performance.