Why does PepsiCo expect its core EPS to decrease in 2012?

PepsiCo expects its core constant currency earnings per share (EPS) to decrease by 5% in 2012 primarily due to an anticipated unfavorable foreign exchange translation impact. This currency fluctuation is projected to reduce the full-year core EPS performance by approximately three percentage points.

What does 'Core' mean in PepsiCo's financial reporting?

In PepsiCo's reporting, 'Core' results are non-GAAP financial measures that exclude certain items from historical results. For 2012 and longer-term guidance, these exclusions include commodity mark-to-market net impact, merger and integration charges, restructuring and impairment charges, and the loss on the Tingyi transaction. This aims to provide a clearer view of ongoing operational performance.

What is the significance of 'Constant Currency'?

'Constant Currency' refers to financial results presented as if foreign currency exchange rates remained the same as in the comparable prior-year period. This measure helps investors understand the underlying business performance without the impact of fluctuations in foreign exchange rates.

PEP 8-K: Regulation FD — Jun 19, 2012

Q: What are PepsiCo's long-term growth targets?

PepsiCo is targeting mid-single-digit constant currency net revenue growth and high-single-digit core constant currency EPS growth in the long term, following what they described as a transition year in 2012.

Summary

PepsiCo, Inc. (PEP) issued this 8-K filing on June 19, 2012, to provide updated financial guidance and reiterate long-term targets. The company announced that it expects its core constant currency earnings per share (EPS) to decrease by 5% in 2012, compared to its fiscal 2011 core EPS of $4.40. This expected decline is partly due to an anticipated unfavorable foreign exchange translation impact of approximately three percentage points on full-year core EPS. Despite the short-term EPS outlook, PepsiCo reaffirmed its commitment to mid-single-digit constant currency net revenue growth and targeted high-single-digit core constant currency EPS growth in the long term, following this transition year. The filing also provided a glossary defining "Core" and "Constant Currency" measures, crucial for understanding PepsiCo's performance metrics. It also included a reconciliation of GAAP and non-GAAP information, highlighting adjustments made for factors such as the 53rd week in 2011, commodity mark-to-market impacts, merger and integration charges, and restructuring charges related to their productivity plan.

Key Highlights

1PepsiCo reiterated its 2012 core constant currency EPS guidance, projecting a 5% decrease from the 2011 figure of $4.40.
2Foreign exchange translation is expected to have an unfavorable impact of approximately 3 percentage points on the full-year 2012 core EPS.
3The company reaffirmed its long-term target of mid-single-digit constant currency net revenue growth.
4PepsiCo is targeting long-term high-single-digit core constant currency EPS growth after the 2012 transition year.
5The filing includes definitions for "Core" and "Constant Currency" financial measures, which exclude certain items and currency fluctuations.
6A reconciliation of GAAP and non-GAAP information is provided, detailing adjustments for the 53rd week, commodity hedging, merger/integration costs, and restructuring charges.
7The report emphasizes that forward-looking statements are subject to risks and uncertainties that could materially affect actual results.

PEPSICO INC 8-K Report, Regulation FD Disclosure (Jun 19, 2012)

Summary

Key Highlights

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