Summary
PepsiCo, Inc. (PEP) filed an 8-K on February 22, 2007, to reaffirm its 2007 financial guidance. The company expects 2007 diluted earnings per share (EPS) to be at least $3.30, representing growth of at least 10%. Additionally, PepsiCo anticipates mid-single-digit growth in both volume and net revenue for the fiscal year 2007. The filing also provides a reconciliation of GAAP and non-GAAP measures, detailing adjustments made in 2006. These include non-cash tax benefits totaling $602 million related to IRS examinations for prior years, as well as PepsiCo's share of tax benefits from Pepsi Bottling Group (PBG). The company also recorded restructuring and impairment charges in 2006 associated with consolidating manufacturing operations at Frito-Lay North America, aimed at improving efficiency. When excluding these 2006 items, the adjusted EPS for 2006 was $3.00, supporting the 2007 guidance of at least 10% growth.
Key Highlights
- 1PepsiCo reaffirms 2007 diluted EPS guidance of at least $3.30 per share, indicating anticipated growth of at least 10%.
- 2The company expects mid-single-digit growth in both volume and net revenue for the fiscal year 2007.
- 3The filing clarifies 2006 financial events, including significant non-cash tax benefits ($602 million) from IRS settlements for 1998-2002.
- 4PepsiCo's share of tax benefits from Pepsi Bottling Group (PBG) related to IRS examinations are noted.
- 5Restructuring and impairment charges were recorded in 2006 related to Frito-Lay North America's manufacturing consolidation.
- 6An adjusted 2006 diluted EPS, excluding these specific items, was $3.00, which forms the basis for the 2007 growth projection.
- 7The company emphasizes that the non-GAAP EPS measure (excluding specific items) is considered more indicative of ongoing performance by management.