The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from PR Newswire

PepsiCo Reports Fourth Quarter and Full Year 2011 Results

Thursday, February 09, 2012

PepsiCo Reports Fourth Quarter and Full Year 2011 Results06:59 EST Thursday, February 09, 2012PURCHASE, N.Y., Feb. 9, 2012 /PRNewswire/ -- Worldwide snacks volume(1) grew 8 percent in the quarter and the full year Worldwide beverage volume(1) grew 3 percent in the quarter and 5 percent for the full yearReported net revenue increased 11 percent in the quarter to $20.2 billion.  Full-year reported net revenue increased 15 percent to $66.5 billionReported net income increased 4 percent in the quarter and 2 percent for the full-year; core(2) net income increased 8 percent in the quarter and 5 percent for the full-year Reported EPS increased 5 percent to $0.89 in the quarter and 3 percent to $4.03 for the full-year.  Core EPS grew 9 percent to $1.15 in the quarter and full-year core EPS grew 7 percent to $4.40PepsiCo, Inc. (NYSE: PEP) today reported growth in volume, net revenue, operating profit and earnings per share for the fourth quarter and the full-year 2011.  The results reflect top-line gains across its worldwide snacks and beverage businesses, the acquisition of Wimm-Bill-Dann (WBD), gains from sales of certain businesses and the favorable impact of an extra reporting week offset by high commodity costs. (Logo: http://photos.prnewswire.com/prnh/20111212/NY20842LOGO )?In 2011, we delivered solid top- and bottom-line growth,? said PepsiCo Chairman and CEO Indra Nooyi.  ?We continued to stimulate strong consumer demand for our products, and our successful pricing and productivity programs partially offset the impacts of inflation.  Importantly, in a year characterized by a challenging macroeconomic environment and political turbulence, we took advantage of gains from strategic adjustments to our portfolio to reinvest in key capabilities and markets.??At the same time, we improved our long-term competitiveness in key emerging and developing markets through: Our acquisition of Wimm-Bill-Dann, which further strengthened our position in Russia,Pursuing new franchise models for our beverage operations in Mexico and China as we look to create more-advantaged businesses in these important markets, andOur acquisition of Mabel which extended our macrosnack position in Brazil?PepsiCo has great brands and strong brand-building capabilities, innovative products and tremendous global reach, advantages we will continue to build upon.  These strengths, coupled with strategic initiatives we separately announced today, will improve our ability to drive growth and generate shareholder value in the years ahead.?In the quarter, an extra reporting week increased reported net revenue by 3 percentage points and reported total operating profit by 5 percentage points.  On a full-year basis, the extra reporting week added 1 percentage point to both reported net revenue and reported total operating profit.  Unless otherwise noted, the following discussion excludes the impact of the extra reporting week.Full-year worldwide snacks volume increased 2.5 percent on an organic basis, reflecting broad-based gains in the snacks portfolio.  Full-year worldwide beverage volume increased 1 percent on an organic basis.  Full-year volume performance was led by growth in emerging markets, where volume increased 8 percent in snacks and 3 percent in beverages on an organic basis.  Full-year net revenue increased 14 percent, driven by the benefits of volume growth, effective net pricing, favorable foreign exchange and the impact of the acquisitions of our North American anchor bottlers and WBD.  Reported full-year operating profit increased 16 percent including the extra reporting week and core operating profit for the year increased 6 percent.  Full-year division core operating profit increased 7 percent, reflecting effective net pricing, synergies from the bottler acquisition and the impact of the WBD acquisition, partially offset by higher commodity costs.(1) All 2011 volume growth measures reflect an adjustment to the base year (2010) for divestitures that occurred in 2011 and exclude the impact of an extra reporting week in 2011.(2) Please refer to the Glossary for the definition of core. Core results are non-GAAP financial measures that exclude certain items. Please refer to "Reconciliation of GAAP and Non-GAAP information" in the attached exhibits for a description of these items.  Summary Fourth Quarter 2011 Performance (Percent Growth)Core (a)Constant Currency (a)  Volume (b)(ex. extra wk)RevenueOperating ProfitRevenueOperating ProfitRevenueOperating ProfitPAF110571159     FLNA11310610610     LAF67(8)121274     QFNA(9)49(2)11(2)11PAB(1.5)01(4)(6)(4)(7)Europe36/22 (c)32034383136AMEA15/3 (c)162091723216227Total Divisions8/3 (c)117912810Total PepsiCo1 (d)11Summary Full Year 2011 Performance (Percent Growth)Core (a)Constant Currency (a)Volume (b)(ex. extra wk)RevenueOperating ProfitRevenueOperating ProfitRevenueOperating ProfitPAF1775868     FLNA1673.5747     LAF513711111312     QFNA(6)08(2)8(2)8PAB110188(4)8(4)Europe35/21 (c)411538144118AMEA15/5 (c)172516241727Total Divisions8/5 (c)1513136147Total PepsiCo16 (d)6(a) The above core results and core constant currency results are non-GAAP financial measures that exclude certain items affecting comparability.  For more information about our core results and core constant currency results, see ?Reconciliation of GAAP and Non-GAAP Information? in the attached exhibits.  Please refer to the Glossary for definitions of ?Constant Currency? and ?Core?.(b) Volume growth measures reflect an adjustment to the base year (2010) for divestitures that occurred in 2011, as applicable.(c) Snacks/Beverage.(d) The reported operating profit growth was impacted by certain items excluded from our core results in both 2011 and 2010.  See ?Reconciliation of GAAP and Non-GAAP Information? in the attached exhibits for more information about these items.  Please refer to the Glossary for the definition of ?Core?.All comparisons are on a core year-over-year basis and exclude the extra reporting week in 2011 unless otherwise noted.Division Operating SummariesPepsiCo Americas Foods (PAF)  Frito-Lay North America (FLNA)FLNA net revenue grew 6 percent in the quarter, reflecting volume growth of 1 percent, effective net pricing, product innovation and marketplace execution.  Each of the division?s six largest brands ? Lay?s, Doritos, Cheetos, Ruffles, Tostitos and Fritos ? posted strong revenue growth.  Net revenue growth and cost control more than offset the impact of high commodity cost inflation, resulting in 10 percent operating profit growth.  For the full-year, FLNA net revenue grew 4 percent, reflecting volume growth of 1 percent and effective net pricing.  Operating profit grew 7 percent for the full year on the revenue gains and strong cost control, and despite high levels of commodity cost inflation.Latin America Foods (LAF)Net revenue growth of 7 percent in the quarter was driven by positive price realization across LAF and reflected volume growth of 6 percent in the quarter with solid gains in the division?s largest markets, Mexico and Brazil, and strong growth in some key markets across Central and South America. Profit growth was muted due to high commodity inflation and the adverse impact of foreign exchange. A gain from the sale of a fish business in Brazil contributed 12 percentage points of operating profit growth and reduced net revenue growth by 2 percentage points in the quarter. For the full-year, volume growth of 5 percent and strong price realization led to double-digit net revenue and operating profit growth, although operating profit growth was adversely impacted by high commodity cost inflation. The gain from the sale of the fish business in Brazil contributed 5 percentage points of profit growth for the year and reduced net revenue growth by 1 percentage point.Quaker Foods North America (QFNA)QFNA net revenue declined 2 percent in the quarter.  Operating profit grew 11 percent in the quarter driven by gains from the disposal of certain assets coupled with solid cost controls and productivity initiatives offsetting high commodity cost inflation and volume declines.  Gains from a divestiture and an asset sale contributed 14 percentage points of profit growth in the quarter. For the full-year, QFNA delivered 8 percent operating profit growth, reflecting the asset sale gains which contributed 4 percentage points of growth and an inventory accounting change in the first quarter which contributed 2 percentage points.  Efforts throughout the year on cost controls and pricing actions fully offset weak consumer demand and commodity cost inflation. PepsiCo Americas Beverages (PAB)Net revenue in the quarter was reduced by 4 percentage points by the refranchising of the division?s beverage business in Mexico.  On a full-year basis, net revenue grew 8 percent, reflecting effective net pricing and the impact of the bottler acquisition.  The refranchising of Mexico reduced full-year net revenue by more than 1 percentage point.  PAB volume declined 1.5 percent in the quarter but was up 1 percent for the full-year, with growth in non-carbonated beverages offset by declines in carbonated soft drinks (CSDs).  In North America, net revenue declined 1 percent for the quarter and increased 9 percent for the full-year.  Volume declined 4 percent for the quarter and, on an organic basis, declined 1 percent for the year, in part reflecting the impact on consumer demand of pricing actions taken to offset commodity cost inflation.  For the year, non-carbonated beverage volume in North America grew low-single-digits with Gatorade growth of high-single-digits behind product innovation and the benefit of implementing direct-store-delivery to small format stores.  The company?s successful Trop 50 product continued to perform well in its second year since introduction, increasing volume over 35 percent, and trademark Lipton increased volume 6 percent.  CSD volume in North America declined mid-single-digits on an organic basis for the year. Latin America Beverages delivered solid volume growth in the quarter and for the year driven primarily by strength in Mexico and Central America.Operating profit declined in the quarter and for the year primarily as a result of increased commodity costs which offset the benefits of net pricing, productivity, synergies from the anchor bottler acquisitions and a gain associated with the refranchising of the division?s Mexico bottling operations, which contributed 5 percentage points of operating profit growth in the quarter.EuropeEurope net revenue increased 31 percent, primarily reflecting the benefit of the WBD acquisition as well as effective net pricing. Volume increased double-digits in both snacks and beverages for the fourth quarter and full-year, including the impact of the WBD acquisition.  In the fourth quarter, snacks volume increased 2 percent on an organic basis, led by high-single-digit growth in South Africa and Turkey.  Beverage volume declined 1 percent on an organic basis.  Fourth quarter operating profit growth of 36 percent benefited from the impact of the WBD acquisition and effective net pricing, offset somewhat by high levels of commodity and other cost inflation. Full-year net revenue increased 41 percent, 12 percent excluding the impact of the WBD acquisition.  Full-year operating profit increased 18 percent.Asia, Middle East & Africa (AMEA)Fourth quarter net revenue increased 16 percent, driven by effective net pricing and the volume growth.  Fourth quarter snacks volume increased 15 percent and beverage volume grew 3 percent, led by strong performance in key emerging markets.In the fourth quarter, snacks volume grew double digits in China, India and the Middle East.  Beverage volume growth was driven by double-digit gains in India, Saudi Arabia and Vietnam.  China beverage volume growth was impacted by the introduction of a consumer-preferred 500ml PET value package in the third quarter, which drove strong unit growth and a double-digit net revenue increase but adversely impacted reported volume growth.  Fourth quarter operating profit growth of 227 percent almost entirely reflected the gain associated with the sale of the division?s minority investment in its franchise bottler in Thailand.  The impact on profitability of the volume growth and effective net pricing was offset by higher commodity costs, the impact of civil unrest in certain countries in the Middle East, and by increased marketing support in key countries. On a full year basis, snacks volume grew 15 percent and beverage volume grew 5 percent.  Full-year net revenue increased 17 percent and operating profit grew 27 percent.  Restructuring PepsiCo separately announced today that on February 8, 2012, it committed to a multi-year productivity program.  As a result, the Company incurred pre-tax non-core restructuring charges of $383 million in the fourth quarter of 2011 and it anticipates additional charges of approximately $425 million in 2012 and another $100 million from 2013 through 2015.  These charges resulted in cash expenditures of $30 million in the fourth quarter of 2011, and the Company anticipates approximately $550 million of related cash expenditures during 2012, with the balance of approximately $175 million of related cash expenditures in 2013 through 2015.  Tax RatePepsiCo?s reported tax rate was 29.9 percent in the fourth quarter, and its core tax rate was 28.4%.  The core tax rate in the fourth quarter was 1.5 percentage points higher versus prior year primarily due to tax expenses related to certain asset dispositions.For the full year 2011, the reported tax rate was 26.8 percent and the core tax rate was 26.5 percent.Cash FlowFull-year cash flow from operating activities was $8.9 billion. Management operating cash flow, which is net of capital expenditures, was $5.7 billion and included: $283 million of merger and integration payments associated with the bottler and WBD acquisitions and $108 million of capital spending related to the bottler integrations; and other items as set out in the attached financial schedules. Management operating cash flow excluding these items was $6.1 billion.  The company returned $5.6 billion of cash to shareholders in 2011 through share repurchases of $2.5 billion and dividends of $3.2 billion.2012 OutlookPepsiCo announced today its outlook for 2012 and beyond in a separate press release.  Please see release titled ?PepsiCo Announces Strategic Investment to Drive Growth? for information on the company?s outlook.Investor MeetingAt 8 a.m. (Eastern Time) today, the company will host a meeting with investors to discuss fourth-quarter and full-year 2011 results and its outlook for 2012 and beyond.  The meeting, including a slide presentation, will be webcast live on the company?s website at www.pepsico.com/investors.  About PepsiCo In its global portfolio of food and beverage brands, PepsiCo has 22 different brands that generate more than $1 billion each in annual retail sales. Our main businesses also make hundreds of other enjoyable foods and beverages that are respected household names throughout the world. With net revenues of over $65 billion, PepsiCo?s people are united by our unique commitment to sustainable growth by investing in a healthier future for people and our planet, which we believe also means a more successful future for PepsiCo. We call this commitment Performance with Purpose: PepsiCo?s promise to provide a wide range of foods and beverages for local tastes; to find innovative ways to minimize our impact on the environment, including by conserving energy and water usage, and reducing packaging volume; to provide a great workplace for our associates; and to respect, support, and invest in the local communities where we operate. For more information, please visit www.pepsico.com.Cautionary Statement Statements in this communication that are "forward-looking statements,? are based on currently available information, operating plans and projections about future events and trends. Terminology such as ?believe,? ?expect,? ?intend,? ?estimate,? ?project,? ?anticipate,? ?will? or similar statements or variations of such terms are intended to identify forward-looking statements, although not all forward-looking statements contain such terms.  Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements.  Such risks and uncertainties include, but are not limited to: changes in demand for PepsiCo?s products, as a result of changes in consumer preferences and tastes or otherwise; PepsiCo?s ability to compete effectively; unfavorable economic conditions in the countries in which PepsiCo operates; damage to PepsiCo?s reputation; PepsiCo?s ability to grow its business in developing and emerging markets or unstable political conditions, civil unrest or other developments and risks in the countries where PepsiCo operates; trade consolidation or the loss of any key customer; changes in the legal and regulatory environment; PepsiCo?s ability to build and sustain proper information technology infrastructure, successfully implement its ongoing business transformation initiative or outsource certain functions effectively; fluctuations in foreign exchange rates; increased costs, disruption of supply or shortages of raw materials and other supplies; disruption of PepsiCo?s supply chain; climate change, or legal, regulatory or market measures to address climate change; PepsiCo?s ability to hire or retain key employees or a highly skilled and diverse workforce; failure to successfully renew collective bargaining agreements or strikes or work stoppages; failure to successfully complete or integrate acquisitions and joint ventures into PepsiCo?s existing operations; failure to successfully implement PepsiCo?s global operating model; failure to realize anticipated benefits from our productivity plan; any downgrade of our credit ratings; and any infringement of or challenge to PepsiCo?s intellectual property rights.For additional information on these and other factors that could cause PepsiCo?s actual results to materially differ from those set forth herein, please see PepsiCo?s filings with the SEC, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K.  Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made.  PepsiCo undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.Miscellaneous Disclosures In discussing financial results and guidance, the company may refer to certain non-GAAP measures. Reconciliations of any such non-GAAP measures to the most directly comparable financial measures in accordance with GAAP can be found in the attached exhibits, as well as on the company?s website at www.pepsico.com in the ?Investors? section under ?Investor Presentations.? Our non-GAAP measures exclude from reported results those items that management believes are not indicative of our ongoing performance and how management evaluates our operating results and trends.     Glossary  Beverage volume: Volume shipped to retailers and independent distributors from both PepsiCo and our bottlers.   Core: Core results are non-GAAP financial measures which exclude certain items from our historical results.  In 2011, core results exclude the commodity mark-to-market net impact included in corporate unallocated expenses, restructuring charges, an extra week of results, as well as merger and integration costs and certain inventory fair value adjustments in connection with our acquisitions of The Pepsi Bottling Group, Inc. (PBG), PepsiAmericas, Inc. (PAS) and WBD.  In 2010, core results exclude the commodity mark-to-market net impact included in corporate unallocated expenses, a one-time net charge related to the change to hyperinflationary accounting and currency devaluation in Venezuela, a contribution to The PepsiCo Foundation, Inc., an asset write-off charge for SAP software and interest expense incurred in connection with our cash tender offer to repurchase debt.  Additionally, with respect to our acquisitions of PBG and PAS, 2010 core results also exclude our gain on previously held equity interests, merger and integration costs, as well as our share of PBG?s and PAS?s respective merger and integration costs, and certain inventory fair value adjustments.  For more details and reconciliations of our 2011 and 2010 core and core constant currency results, see ?Reconciliation of GAAP and Non-GAAP Information? in the exhibits attached hereto.Constant currency: Financial results assuming constant foreign currency exchange rates used for translation based on the rates in effect for the comparable prior-year period.  In order to compute our constant currency results, we multiply or divide, as appropriate, our current year U.S. dollar results by the current year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior year average foreign exchange rates.Division operating profit: The aggregation of the operating profit for each of our reportable segments, which excludes the impact of corporate unallocated expenses.   Effective net pricing: The combined impact of mix and price.   Management operating cash flow: Net cash provided by operating activities less capital spending plus sales of property, plant and equipment. This non-GAAP financial measure is our primary measure used to monitor cash flow performance. See the attached exhibits for a reconciliation of this measure to the most directly comparable financial measure in accordance with GAAP (operating cash flow).    Management operating cash flow, excluding certain items: Management operating cash flow, excluding: (1) a discretionary pension contribution,  (2) restructuring payments, (3) merger and integration payments in connection with the PBG, PAS and WBD acquisitions, (4) capital investments related to the bottling integration, and (5) the tax impacts associated with each of these items, as applicable. See the attached exhibits for a reconciliation of this non-GAAP financial measure to the most directly comparable financial measure in accordance with GAAP (operating cash flow). Mark-to-market gain or loss or net impact: Change in market value for commodity contracts that we purchase to mitigate the volatility in costs of energy and raw materials that we consume. The market value is determined based on average prices on national exchanges and recently reported transactions in the marketplace.   Net pricing: The combined impact of list price changes, weight changes per package, discounts and allowances.   Net capital spending: Capital spending less cash proceeds from sales of property, plant and equipment.  Organic: A measure that excludes the impact of acquisitions.Pricing: The impact of list price changes and weight changes per package.   Transaction foreign exchange: The foreign exchange impact on our financial results of transactions, such as purchases of imported raw materials, commodities, or services, occurring in currencies other than the local, functional currency.PepsiCo, Inc. and SubsidiariesSummary of PepsiCo 2011 Results(unaudited)Quarter Ended 12/31/11Year Ended 12/31/11Reported Growth (%)Core*Growth (%)Core Constant Currency*Growth (%)ReportedGrowth (%)Core* Growth (%)Core Constant Currency*Growth (%)Volume (Servings)7465Net Revenue1189151413Division Operating   Profit710121376Total Operating   Profit111166Net Income   Attributable to     PepsiCo489254Earnings per Share   (EPS)5911375*Core results and core constant currency results are financial measures that are not in accordance with Generally Accepted Accounting Principles (GAAP) and, in 2011, exclude the commodity mark-to-market net impact included in corporate unallocated expenses, restructuring charges, an additional week of results (53rd week), as well as merger and integration costs and certain inventory fair value adjustments in connection with our acquisitions of The Pepsi Bottling Group, Inc. (PBG), PepsiAmericas, Inc. (PAS) and Wimm-Bill-Dann Foods OJSC (WBD).  Core results also exclude, in 2010, the commodity mark-to-market net impact included in corporate unallocated expenses, a one-time net charge related to the change to hyperinflationary accounting and currency devaluation in Venezuela, a contribution to The PepsiCo Foundation, Inc., an asset write-off charge for SAP software and interest expense incurred in connection with our cash tender offer to repurchase debt.  Additionally, with respect to our acquisitions of PBG and PAS, 2010 core results also exclude our gain on previously held equity interests, merger and integration costs, as well as our share of PBG's and PAS's respective merger and integration costs, and certain inventory fair value adjustments.  Core growth, on a constant currency basis, assumes constant foreign currency exchange rates used for translation based on the rates in effect for the comparable period during 2010.  In order to compute our constant currency results, we multiply or divide, as appropriate, our current year U.S. dollar results by the current year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior year average foreign exchange rates.  See schedules A-7 through A-19 for a discussion of these items and reconciliations to the most directly comparable financial measures in accordance with GAAP.                                                                                                                             A ? 1                                                                                                                              PepsiCo, Inc. and SubsidiariesCondensed Consolidated Statement of Income(in millions, except per share amounts, and unaudited, except year-ended 12/25/10 amounts)Quarter EndedYear Ended12/31/1112/25/10Change  12/31/1112/25/10ChangeNet Revenue$ 20,158$18,15511%$66,504$57,83815%Cost of sales9,7318,35916%31,59326,57519%Selling, general and administrative    expenses8,1507,5268%25,14522,81410%Amortization of intangible assets3039(21)%13311714%Operating Profit2,2472,2311%9,6338,33216%Bottling equity income-7 n/m-735n/mInterest expense(272)(408)(33)%(856)(903)(5)%Interest income and other2442(44)%5768(16)%Income before income taxes1,9991,8727%8,8348,2327%Provision for income taxes59751117%2,3721,89425%Net income1,4021,3613%6,4626,3382%Less:  Net income attributable to    noncontrolling interests(13)(4)283%19184%Net Income Attributable to   PepsiCo$ 1,415$  1,3654%$ 6,443$  6,3202%DilutedNet Income Attributable to   PepsiCo per Common Share$0.89$0.855%$4.03$3.913%Average Shares Outstanding1,5841,6071,5971,614Cash dividends declared per   common share$0.515$0.48$2.025$1.89n/m = not meaningful                                                                                                                             A ? 2                                                                                                                              PepsiCo, Inc. and SubsidiariesSupplemental Financial Information(in millions and unaudited, except year-ended 12/25/10 amounts)Quarter EndedYear Ended12/31/11 12/25/10 Change12/31/11 12/25/10 ChangeNet RevenueFrito-Lay North America$ 4,155$  3,66713%$13,322$12,5736%Quaker Foods North America8197904%2,6562,656-Latin America Foods2,3992,2527%7,1566,31513%   PepsiCo Americas Foods7,3736,70910%23,13421,5447%PepsiCo Americas Beverages6,3116,296-22,41820,40110%Europe4,2313,21232%13,5609,60241%Asia, Middle East & Africa2,2431,93816%7,3926,29117%Total Net Revenue$20,158$18,15511%$66,504$57,83815%Operating ProfitFrito-Lay North America$1,076$  98210%$ 3,621$ 3,3767%Quaker Foods North America2392209%7977418%Latin America Foods358388(8)%1,0781,0047%   PepsiCo Americas Foods1,6731,5905%5,4965,1217%PepsiCo Americas Beverages7407341%3,2732,77618%Europe226228-1,2101,05415%Asia, Middle East & Africa15751209%88770825%Division Operating Profit2,7962,6037%10,8669,65913%Corporate Unallocated   53rd Week(18)-n/m(18)-n/m   Net Impact of Mark-to-Market     on Commodity Hedges(71)33n/m(102)91n/m   Merger and Integration Charges(14)(63)(78)%(78)(191)(59)%   Restructuring Charges(74)-n/m(74)-n/m   Venezuela Currency Devaluation----(129)n/m   Asset Write-Off----(145)n/m   Foundation Contribution----(100)n/m   Other(372)(342)9%(961)(853)13%(549)(372)48%(1,233)(1,327)(7)%Total Operating Profit$2,247$2,2311%$  9,633$ 8,33216%n/m = not meaningful                                                                                                                             A ? 3                                                                                                                              PepsiCo, Inc. and SubsidiariesCondensed Consolidated Statement of Cash Flows(in millions)Year Ended12/31/1112/25/10(unaudited)Operating Activities      Net income$ 6,462$ 6,338      Depreciation and amortization2,7372,327      Stock-based compensation expense326299      Restructuring and impairment charges383-      Cash payments for restructuring charges(31)(31)      Merger and integration costs329808      Cash payments for merger and integration costs(377)(385)Gain on previously held equity interests in PBG and PAS-(958)      Asset write-off-145      Non-cash foreign exchange loss related to Venezuela devaluation-120      Excess tax benefits from share-based payment arrangements(70)(107)      Pension and retiree medical plan contributions(349)(1,734)      Pension and retiree medical plan expenses571453      Bottling equity income, net of dividends-42      Deferred income taxes and other tax charges and credits495500      Change in accounts and notes receivable(666)(268)      Change in inventories(331)276      Change in prepaid expenses and other current assets(27)144      Change in accounts payable and other current liabilities520488      Change in income taxes payable(340)123      Other, net(688)(132)Net Cash Provided by Operating Activities8,9448,448Investing ActivitiesCapital spending(3,339)(3,253)Sales of property, plant and equipment8481Acquisitions of PBG and PAS, net of cash and cash equivalents acquired-(2,833)Acquisition of manufacturing and distribution rights from Dr Pepper Snapple Group, Inc.   (DPSG)-(900)Acquisition of WBD, net of cash and cash equivalents acquired(2,428)-Investment in WBD(164)(463)Other acquisitions and investments in noncontrolled affiliates(601)(83)Divestitures78012Short-term investments, net66(212)Other investing, net(16)(17)Net Cash Used for Investing Activities(5,618)(7,668)Financing ActivitiesProceeds from issuances of long-term debt3,0006,451Payments of long-term debt(1,596)(59)Debt repurchase(771)(500)Short-term borrowings, net3032,482Cash dividends paid(3,157)(2,978)Share repurchases ? common(2,489)(4,978)Share repurchases ? preferred(7)(5)Proceeds from exercises of stock options9451,038Excess tax benefits from share-based payment arrangements70107Acquisition of noncontrolling interests(1,406)(159)Other financing(27)(13)Net Cash (Used for)/Provided by Financing Activities(5,135)1,386Effect of exchange rate changes on cash and cash equivalents(67)(166)Net (Decrease)/Increase in Cash and Cash Equivalents(1,876)2,000Cash and Cash Equivalents ? Beginning of Year5,9433,943Cash and Cash Equivalents ? End of Period$ 4,067$ 5,943Non-cash activity:Issuance of common stock and equity awards in connection with our acquisitions of PBG and   PAS, as reflected in investing and financing activities-$4,451                                                                                                                             A ? 4                                                                                                                              PepsiCo, Inc. and SubsidiariesCondensed Consolidated Balance Sheet(in millions, except per share amounts)12/31/1112/25/10Assets(unaudited)Current Assets   Cash and cash equivalents$ 4,067$ 5,943   Short-term investments358426   Accounts and notes receivable, net6,9126,323   Inventories     Raw materials1,8831,654     Work-in-process207128     Finished goods1,7371,5903,8273,372   Prepaid expenses and other current assets2,2771,505        Total Current Assets 17,44117,569Property, plant and equipment, net19,69819,058Amortizable intangible assets, net1,8882,025Goodwill16,80014,661Other nonamortizable intangible assets14,55711,783        Nonamortizable Intangible Assets31,35726,444Investments in noncontrolled affiliates1,4771,368Other assets1,0211,689           Total Assets$72,882$68,153Liabilities and EquityCurrent Liabilities   Short-term obligations$   6,205$   4,898   Accounts payable and other current liabilities11,75710,923   Income taxes payable19271        Total Current Liabilities18,15415,892Long-term debt obligations20,56819,999Other liabilities8,2666,729Deferred income taxes4,9954,057        Total Liabilities51,98346,677Commitments and ContingenciesPreferred stock, no par value4141Repurchased preferred stock(157)(150)PepsiCo Common Shareholders' Equity   Common stock, par value 1 2/3 cents per share (authorized 3,600   shares, issued 1,865 shares)3131   Capital in excess of par value4,4614,527   Retained earnings40,31637,090   Accumulated other comprehensive loss(6,229)(3,630)   Repurchased common stock, at cost (301 and 284 shares, respectively)(17,875)(16,745)        Total PepsiCo Common Shareholders' Equity20,70421,273Noncontrolling interests311312       Total Equity20,89921,476           Total Liabilities and Equity$ 72,882$ 68,153                                                                                                                             A ? 5                                                                                                                              PepsiCo, Inc. and SubsidiariesSupplemental Share and Stock-Based Compensation Data(in millions, except dollar amounts, and unaudited)Quarter EndedYear Ended12/31/1112/25/1012/31/1112/25/10Beginning Net Shares Outstanding 1,5681,5831,5821,565Shares Issued in Connection with our Acquisitions of PBG    and PAS---67Options Exercised/Restricted Stock Units Converted582226Shares Repurchased(8)(9)(39)(76)Ending Net Shares Outstanding1,5651,5821,5651,582Weighted Average Basic1,5641,5821,5761,590Dilutive securities:  Options12181418  Restricted Stock Units7665  ESOP Convertible Preferred Stock/Other1111Weighted Average Diluted1,5841,6071,5971,614Average Share Price for the period$62.92$65.56$65.25$64.35Growth Versus Prior Year(4)%8%1%16%Options Outstanding9110697112Options in the Money55847288Dilutive Shares from Options12181418Dilutive Shares from Options as a % of Options in the Money22%21%20%21%Average Exercise Price of Options in the Money$48.93$50.36$51.36$49.14Restricted Stock Units Outstanding1211139Dilutive Shares from Restricted Stock Units7665Average Intrinsic Value of Restricted Stock Units   Outstanding*$62.96$63.27$62.93$62.50*Weighted-average intrinsic value at grant date.                                                                                                                             A ? 6                                                                                                                              Reconciliation of GAAP and Non-GAAP Information(unaudited)Net revenue excluding the impact of WBD, division operating profit, core results and core constant currency results are non-GAAP financial measures as they exclude certain items noted below.  However, we believe investors should consider these measures as they are more indicative of our ongoing performance and with how management evaluates our operational results and trends.  53rd week impactIn 2011, we had an additional week of results (53rd week).  Our fiscal year ends on the last Saturday of each December, resulting in an additional week of results every five or six years.  The 53rd week increased net revenue by $623 million and operating profit by $109 million in the quarter and year ended December 31, 2011.Commodity mark-to-market net impactIn the quarter and year ended December 31, 2011, we recognized $71 million and $102 million, respectively, of mark-to-market net losses on commodity hedges in corporate unallocated expenses.  In the quarter and year ended December 25, 2010, we recognized $33 million and $91 million, respectively, of mark-to-market net gains on commodity hedges in corporate unallocated expenses.  We centrally manage commodity derivatives on behalf of our divisions.  Certain of these commodity derivatives do not qualify for hedge accounting treatment and are marked to market with the resulting gains and losses recognized in corporate unallocated expenses.  These gains and losses are subsequently reflected in division results when the divisions take delivery of the underlying commodity.   Merger and integration chargesIn the quarter ended December 31, 2011, we incurred merger and integration charges of $155 million related to our acquisitions of PBG, PAS and WBD, including $35 million recorded in the PAB segment, $106 million recorded in the Europe segment and $14 million recorded in corporate unallocated expenses.  In the year ended December 31, 2011, we incurred merger and integration charges of $329 million related to our acquisitions of PBG, PAS and WBD, including $112 million recorded in the PAB segment, $123 million recorded in the Europe segment, $78 million recorded in corporate unallocated expenses and $16 million recorded in interest expense.  These charges also include closing costs and advisory fees related to our acquisition of WBD.  In the quarter ended December 25, 2010, we incurred merger and integration charges of $263 million related to our acquisitions of PBG and PAS, as well as advisory fees in connection with our acquisition of WBD, including $133 million recorded in the PAB segment, $67 million recorded in the Europe segment and $63 million recorded in corporate unallocated expenses.  In the year ended December 25, 2010, we incurred merger and integration charges of $799 million related to our acquisitions of PBG and PAS, as well as advisory fees in connection with our acquisition of WBD, including $467 million recorded in the PAB segment, $111 million recorded in the Europe segment, $191 million recorded in corporate unallocated expenses and $30 million recorded in interest expense.  These charges also include closing costs, one-time financing costs and advisory fees related to our acquisitions of PBG and PAS.  In addition, in the year ended December 25, 2010, we recorded $9 million of merger-related charges, representing our share of the respective merger costs of PBG and PAS, in bottling equity income.  Restructuring chargesIn the quarter and year ended December 31, 2011, we incurred charges of $383 million in conjunction with our multi-year productivity plan (Productivity Plan), including $76 million recorded in the FLNA segment, $18 million recorded in the QFNA segment, $48 million recorded in the LAF segment, $81 million recorded in the PAB segment, $77 million recorded in the Europe segment, $9 million recorded in the AMEA segment and $74 million recorded in corporate unallocated expenses.  The Productivity Plan includes actions in all segments of our business that we believe will strengthen our complementary food, snack and beverage businesses through a new integrated operating model designed to streamline our organization, accelerate information sharing, facilitate timely decision-making and drive operational productivity.Gain on previously held equity interests in PBG and PASIn the first quarter of 2010, in connection with our acquisitions of PBG and PAS, we recorded a gain on our previously held equity interests of $958 million, comprising $735 million which is non-taxable and recorded in bottling equity income and $223 million related to the reversal of deferred tax liabilities associated with these previously held equity interests.                                                                                                                             A ? 7                                                                                                                              Reconciliation of GAAP and Non-GAAP Information (cont.)(unaudited)Inventory fair value adjustmentsIn the quarter ended December 31, 2011, we recorded $5 million of incremental costs in cost of sales related to hedging contracts included in PBG's and PAS's balance sheets at the acquisition date.  In the year ended December 31, 2011, we recorded $46 million of incremental costs in cost of sales related to fair value adjustments to the acquired inventory included in WBD's balance sheet at the acquisition date and hedging contracts included in PBG's and PAS's balance sheets at the acquisition date.  In the quarter ended December 25, 2010, in the PAB segment, we recorded $24 million of incremental costs, substantially all in costs of sales, related to hedging contracts included in PBG's and PAS's balance sheets at the acquisition date.  In the year ended December 25, 2010, we recorded $398 million of incremental costs, substantially all in cost of sales, related to fair value adjustments to the acquired inventory and other related hedging contracts included in PBG's and PAS's balance sheets at the acquisition date, including $358 million recorded in the PAB segment and $40 million recorded in the Europe segment.Venezuela currency devaluationAs of the beginning of our 2010 fiscal year, we recorded a one-time $120 million net charge related to our change to hyperinflationary accounting for our Venezuelan businesses and the related devaluation of the bolivar fuerte (bolivar).  $129 million of this net charge was recorded in corporate unallocated expenses, with the balance (income of $9 million) recorded in our PAB segment.  Asset write-off  In the first quarter of 2010, we recorded a $145 million charge related to a change in scope of one release in our ongoing migration to SAP software.  This change was driven, in part, by a review of our North America systems strategy following our acquisitions of PBG and PAS.  This change does not impact our overall commitment to continue our implementation of SAP across our global operations over the next few years.Foundation contributionIn the first quarter of 2010, we made a $100 million contribution to The PepsiCo Foundation, Inc. (Foundation), in order to fund charitable and social programs over the next several years.  This contribution was recorded in corporate unallocated expenses.Interest expense incurred in connection with debt repurchaseIn the quarter and year ended December 25, 2010, we paid $672 million in a cash tender offer to repurchase $500 million (aggregate principal amount) of our 7.90% senior unsecured notes maturing in 2018.  As a result of this debt repurchase, we recorded a $178 million charge to interest expense, primarily representing the premium paid in the tender offer.Management operating cash flowAdditionally, management operating cash flow is the primary measure management uses to monitor cash flow performance.  This is not a measure defined by GAAP.  Since net capital spending is essential to our product innovation initiatives and maintaining our operational capabilities, we believe that it is a recurring and necessary use of cash.  As such, we believe investors should also consider net capital spending when evaluating our cash from operating activities.                                                                                                                             A ? 8                                                                                                                              Reconciliation of GAAP and Non-GAAP Information (cont.)($ in millions, unaudited)Operating Profit Growth ReconciliationQuarterEndedYearEnded12/31/1112/31/11Division Operating Profit Growth7%13%Impact of Corporate Unallocated(7)3Reported Total Operating Profit Growth1%*16%*Does not sum due to rounding.Operating Profit Growth ReconciliationQuarter Ended12/31/1112/25/10GrowthReported Total Operating Profit Growth$2,247$2,2311%53rd Week(109)-Mark-to-Market Net Losses/(Gains) 71(33)Merger and Integration Charges155263Restructuring Charges383-Inventory Fair Value Adjustments524Core Total Operating Profit Growth$2,752$2,48511%Year Ended12/31/1112/25/10GrowthReported Total Operating Profit Growth$ 9,633$8,33216%53rd Week(109)-Mark-to-Market Net Losses/(Gains)102(91)Merger and Integration Charges313769Restructuring Charges383-Venezuela Currency Devaluation-120Asset Write-Off-145Foundation Contribution -100Inventory Fair Value Adjustments46398Core Total Operating Profit Growth$10,368$9,7736%Net Income Attributable to PepsiCo ReconciliationQuarter Ended12/31/1112/25/10GrowthReported Net Income Attributable to PepsiCo$1,415$1,3654%53rd Week(64)-Mark-to-Market Net Losses/(Gains)51(22)Merger and Integration Charges124217Restructuring Charges 286-Inventory Fair Value Adjustments314Debt Repurchase-114Core Net Income Attributable to PepsiCo$1,815$1,6888%Year Ended12/31/1112/25/10GrowthReported Net Income Attributable to PepsiCo$6,443$6,3202%53rd Week(64)-Mark-to-Market Net Losses/(Gains)71(58)Merger and Integration Charges271648Restructuring Charges 286-Gain on Previously Held Equity Interests-(958)Inventory Fair Value Adjustments28333Venezuela Currency Devaluation-120Asset Write-Off-92Foundation Contribution -64Debt Repurchase-114Core Net Income Attributable to PepsiCo$7,035$6,6755%                                                                                                                             A ? 9                                                                                                                              Reconciliation of GAAP and Non-GAAP Information (cont.)($ in millions, except per share amounts, unaudited)Diluted EPS ReconciliationQuarter Ended12/31/1112/25/10Growth Reported Diluted EPS$ 0.89$ 0.855%53rd Week(0.04)- Mark-to-Market Net Losses/(Gains)0.03(0.01)Merger and Integration Charges0.080.13Restructuring Charges0.18-Inventory Fair Value Adjustments-0.01Debt Repurchase-0.07Core Diluted EPS     $ 1.15*$ 1.059%*Does not sum due to rounding.Diluted EPS ReconciliationYear Ended12/31/1112/25/10GrowthReported Diluted EPS$ 4.03$ 3.913%53rd Week(0.04)-Mark-to-Market Net Losses/(Gains)0.04(0.04)Gain on Previously Held Equity Interests-(0.60)Merger and Integration Charges0.170.40Restructuring Charges0.18-Inventory Fair Value Adjustments0.020.21Venezuela Currency Devaluation-0.07Asset Write-Off-0.06Foundation Contribution -0.04Debt Repurchase-0.07Core Diluted EPS$ 4.40       $ 4.13*7%*Does not sum due to rounding.Net Cash Provided by Operating Activities ReconciliationYear Ended12/31/11Net Cash Provided by Operating Activities$ 8,944Capital Spending(3,339)Sales of Property, Plant and Equipment84Management Operating Cash Flow5,689Discretionary Pension Contributions (after-tax)44Payments Related to Restructuring Charges (after-tax)21Merger and Integration Payments (after-tax)283Capital Investments Related to the PBG/PAS Integration108Management Operating Cash Flow Excluding above Items$ 6,145Growth in Europe Net Revenue Reconciliation Year Ended12/31/11Growth in Europe Net Revenue41%Impact of WBD(29)Growth in Europe Net Revenue Excluding WBD12%                                                                                                                             A ? 10                                                                                                                              Reconciliation of GAAP and Non-GAAP Information (cont.)($ in millions, unaudited)Effective Tax Rate ReconciliationQuarter Ended12/31/11Pre-Tax IncomeIncomeTaxesEffectiveTax RateReported Effective Tax Rate$1,999$59729.9%53rd Week(94)(30)Mark-to-Market Net Losses7120Merger and Integration Charges15531Inventory Fair Value Adjustments52Restructuring Charges38397Core Effective Tax Rate$2,519$71728.4%Year Ended12/31/11Pre-Tax IncomeIncomeTaxesEffectiveTax RateReported Effective Tax Rate$8,834$2,37226.8%53rd Week(94)(30)Mark-to-Market Net Losses10231Merger and Integration Charges32958Inventory Fair Value Adjustments4612Restructuring Charges38397Core Effective Tax Rate$9,600$2,54026.5%North America Beverages Net Revenue ReconciliationQuarter EndedYearEnded12/31/1112/31/11Growth in North America Beverages Reported Net Revenue5%11%53rd Week(5)(2)Growth in North America Beverages Core Net Revenue(1)%*9%*Does not sum due to rounding.                                                                                                                             A ? 11                                                                                                                              PepsiCo, Inc. and SubsidiariesReconciliation of GAAP and Non-GAAP Information (cont.)Certain Line ItemsQuarter and Year Ended December 31, 2011(in millions, except per share amounts, and unaudited)GAAPMeasureNon-Core AdjustmentsNon-GAAPMeasureReportedCore*QuarterEnded12/31/11Inventory fairvalue adjustmentsMerger and IntegrationchargesRestructuringcharges     Commodity     mark-to-market     net losses     53rd weekQuarter Ended 12/31/11Net revenue$        20,158$              -$              -$               -$               -$      (623)$         19,535Cost of sales$          9,731$            (5)$              -$               -$               -$      (265)$           9,461Selling, general and administrative expenses$          8,150$              -$        (155)$         (383)$           (71)$      (248)$           7,293Amortization of intangible assets$               30$              -$              -$               -$               -$          (1)$                29Operating profit $          2,247$             5$         155$          383$            71$      (109)$           2,752Interest expense$            (272)$              -$              -$              -$               -$          16$            (256)Interest income and other$               24$              -$              -$              -$               -$          (1)$                23Provision for income taxes$             597$              2$           31$           97$            20$        (30)$              717Net income attributable to PepsiCo$          1,415$              3$         124$         286$            51$        (64)$           1,815Net income attributable to PepsiCo per common share - diluted$            0.89$              -$         0.08$        0.18$         0.03$     (0.04)$             1.15**GAAPMeasureNon-Core AdjustmentsNon-GAAP MeasureReportedCore*Year Ended12/31/11Inventory fairvalue adjustmentsMerger and IntegrationchargesRestructuringchargesCommoditymark-to-marketnet losses53rd weekYear Ended 12/31/11Net revenue$         66,504$               -$              -$               -$                  -$      (623)$         65,881Cost of sales$         31,593$          (46)$              -$               -$                  -$      (265)$         31,282Selling, general and administrative expenses$         25,145$              -$        (313)$         (383)$            (102)$      (248)$         24,099Amortization of intangible assets$              133$              -$              -$               -$                  -$          (1)$              132Operating profit $           9,633$            46$          313$          383$             102$      (109)$         10,368Interest expense$            (856)$              -$            16$               -$                  -$          16$            (824)Interest income and other$               57$              -$              -$               -$                  -$          (1)$                56Provision for income taxes$          2,372$           12$           58$            97$               31$        (30)$           2,540Noncontrolling interests $               19$             6$              -$               -$                  -$            -$                25Net income attributable to PepsiCo$          6,443$           28$         271$          286$               71$        (64)$           7,035Net income attributable to PepsiCo per common share - diluted$            4.03$        0.02$        0.17$         0.18$            0.04$     (0.04)$             4.40*Core results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments.  See schedules A-7 and A-8 for a discussion of each of these non-core adjustments.**Does not sum due to rounding.                                                                                                                             A ? 12                                                                                                                              PepsiCo, Inc. and SubsidiariesReconciliation of GAAP and Non-GAAP Information (cont.)Certain Line ItemsQuarter and Year Ended December 25, 2010(in millions, except per share amounts, and unaudited)GAAPMeasureNon-Core AdjustmentsNon-GAAPMeasureReportedCore*Quarter Ended 12/25/10Gain on previouslyheld equityinterests in PBGand PASInventory fairvalueadjustmentsMerger and integrationchargesAssetwrite-offFoundationcontributionVenezuelacurrencydevaluationDebt repurchase     Commodity     mark-to-market     net gains     QuarterEnded12/25/10Cost of sales$        8,359$         -$         (24)$           -$         -$            -$             -$             -$         -$       8,335Selling, general and administrative expenses$        7,526$         -$             -$     (263)$         -$            -$             -$             -$      33$       7,296Operating profit $        2,231$         -$          24$      263$         -$            -$             -$             -$     (33)$       2,485Interest expense$          (408)$         -$             -$           -$         -$            -$             -$        178$         -$        (230)Provision for income taxes$           511$         -$          10$        46$         -$            -$             -$          64$     (11)$          620Net income attributable to PepsiCo$        1,365$         -$          14$      217$         -$            -$             -$        114$     (22)$       1,688Net income attributable to PepsiCo per common share - diluted$          0.85$         -$       0.01$     0.13$         -$            -$             -$       0.07$  (0.01)$         1.05GAAP MeasureNon-Core AdjustmentsNon-GAAPMeasureReportedCore*Year Ended 12/25/10Gain on previouslyheld equityinterests in PBGand PASInventory fairValueadjustmentsMerger and IntegrationchargesAssetwrite-offFoundation contributionVenezuelaCurrencydevaluationDebtrepurchaseCommoditymark-to-marketnet gainsYear Ended12/25/10Cost of sales$         26,575$         -$        (395)$             -$             -$             -$             -$             -$         -$         26,180Selling, general and administrative expenses$         22,814$         -$            (3)$       (769)$       (145)$       (100)$       (120)$             -$      91$         21,768Operating profit $           8,332$         -$         398$         769$         145$         100$        120$             -$     (91)$           9,773Bottling equity income$              735$   (735)$             -$             9$             -$             -$             -$             -$         -$                  9Interest expense$            (903)$         -$             -$           30$             -$             -$             -$        178$         -$            (695)Provision for income taxes$           1,894$    223$          65$         160$          53$           36$             -$          64$     (33)$          2,462Net income attributable to PepsiCo$           6,320$   (958)$        333$         648$          92$           64$        120$        114$     (58)$          6,675Net income attributable to PepsiCo per common share - diluted$             3.91$  (0.60)$       0.21$        0.40$       0.06$        0.04$       0.07$       0.07$  (0.04)$            4.13***Core results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments.  See schedules A-7 and A-8 for a discussion of each of these non-core adjustments.**Does not sum due to rounding.                                                                                                                             A ? 13                                                                                                                              PepsiCo, Inc. and SubsidiariesReconciliation of GAAP and Non-GAAP Information (cont.)Operating Profit by DivisionQuarter and Year Ended December 31, 2011(in millions and unaudited)GAAPMeasureNon-Core AdjustmentsNon-GAAPMeasureReportedCore* Operating ProfitQuarterEnded 12/31/11Inventory fairvalue adjustmentsMerger andintegrationchargesRestructuringcharges     Commodity     mark-to-market     net losses     53rd week QuarterEnded12/31/11Frito-Lay North America$           1,076$                          -$                          -$              76$           -$        (72)$      1,080Quaker Foods North America239--18-(12)245Latin America Foods358--48--406   PepsiCo Americas Foods1,673--142-(84)1,731PepsiCo Americas Beverages74053581-(35)826Europe226-10677-(8)401Asia, Middle East & Africa157--9--166Division Operating Profit2,7965141309-(127)3,124Corporate Unallocated(549)-14747118(372)Total Operating Profit$           2,247$                          5$                      155$            383$        71$      (109)$      2,752GAAPMeasureNon-Core AdjustmentsNon-GAAPMeasureReported Core* Operating ProfitYear Ended12/31/11Inventory fairvalue adjustmentsMerger andintegrationchargesRestructuringcharges     Commodity     mark-to-market     net losses     53rd weekYear Ended12/31/11Frito-Lay North America$           3,621$                          -$                          -$              76$           -$        (72)$      3,625Quaker Foods North America797--18-(12)803Latin America Foods1,078--48--1,126   PepsiCo Americas Foods5,496--142-(84)5,554PepsiCo Americas Beverages           3,2732111281-(35)3,452Europe1,2102512377-(8)1,427Asia, Middle East & Africa887--9--896Division Operating Profit10,86646235309-(127)11,329Corporate Unallocated(1,233)-787410218(961)Total Operating Profit$           9,633$                        46$                      313$            383$      102$      (109)$    10,368*Core results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments.  See schedules A-7 through A-8 for a discussion of each of these non-core adjustments.                                                                                                                             A ? 14                                                                                                                              PepsiCo, Inc. and SubsidiariesReconciliation of GAAP and Non-GAAP Information (cont.)Operating Profit by DivisionQuarter and Year Ended December 25, 2010(in millions and unaudited)GAAPMeasureNon-Core AdjustmentsNon-GAAPMeasureReportedCore* Operating ProfitQuarterEnded12/25/10Inventory fairvalueadjustmentsMerger andintegrationchargesAssetwrite-offFoundationcontributionVenezuelacurrencydevaluation     Commodity     mark-to-market     net gains     Quarter Ended 12/25/10Frito-Lay North America$              982$           -$           -$           -$           -$           -$           -$         982Quaker Foods North America220------220Latin America Foods388------388   PepsiCo Americas Foods1,590------1,590PepsiCo Americas Beverages73424133----891Europe228-67----295Asia, Middle East & Africa51------51Division Operating Profit2,60324200----2,827Corporate Unallocated(372)-63---(33)(342)Total Operating Profit$           2,231$         24$        263$           -$           -$           -$      (33)$      2,485GAAPMeasureNon-Core AdjustmentsNon-GAAPMeasureReported Core* Operating ProfitYear Ended12/25/10Inventory fairvalueadjustmentsMerger andintegrationchargesAssetwrite-offFoundation contributionVenezuelacurrencydevaluationCommoditymark-to-marketnet gainsYear Ended12/25/10Frito-Lay North America$           3,376$           -$           -$           -$        -$           -$           -$      3,376Quaker Foods North America741------741Latin America Foods1,004------1,004   PepsiCo Americas Foods5,121------5,121PepsiCo Americas Beverages          2,776358467--(9)-3,592Europe1,05440111----1,205Asia, Middle East & Africa708------708Division Operating Profit9,659398578--(9)-10,626Corporate Unallocated(1,327)-191145100129(91)(853)Total Operating Profit$           8,332$       398$       769$       145$    100$        120$        (91)$      9,773*Core results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments.  See schedules A-7 through A-8 for a discussion of each of these non-core adjustments.                                                                                                                             A ? 15                                                                                                                              PepsiCo, Inc. and SubsidiariesReconciliation of GAAP and Non-GAAP Information (cont.)Core Growth and Core Constant Currency Growth*(unaudited)Quarter Ended12/31/11Net RevenueOperating ProfitFrito-Lay North AmericaReported Growth13%10%Merger and Integration Charges--Restructuring Charges-853rd Week (7)(7)Core Growth610Impact of Foreign Currency Translation--Core Constant Currency Growth6%10%Quaker Foods North AmericaReported Growth4%9%Merger and Integration Charges--Restructuring Charges-853rd Week(5)(6)Core Growth(2)11Impact of Foreign Currency Translation--Core Constant Currency Growth(2)%11%Latin America FoodsReported Growth7%(8)%Merger and Integration Charges--Restructuring Charges-1253rd Week--Core Growth74Impact of Foreign Currency Translation67Core Constant Currency Growth12%12%PepsiCo Americas FoodsReported Growth10%5%Merger and Integration Charges--Restructuring Charges-953rd Week(4.5)(5)Core Growth59Impact of Foreign Currency Translation22Core Constant Currency Growth7%11%PepsiCo Americas BeveragesReported Growth-%1%Merger and Integration Charges-(13)Inventory Fair Value Adjustments-(3)Restructuring Charges-1153rd Week(5)(5)Core Growth(4)(7)Impact of Foreign Currency Translation-1Core Constant Currency Growth(4)%(6)%*Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above non-coreadjustments.  See schedules A-7 and A-8 for a discussion of each of these non-core adjustments.Note ? certain amounts above may not sum due to rounding.                                                                                                                             A ? 16                                                                                                                              PepsiCo, Inc. and SubsidiariesReconciliation of GAAP and Non-GAAP Information (cont.)Core Growth and Core Constant Currency Growth*(unaudited)Quarter Ended12/31/11Net RevenueOperating ProfitEuropeReported Growth32%-%Merger and Integration Charges-13Restructuring Charges-2653rd Week(1)(3)Core Growth3136Impact of Foreign Currency Translation32Core Constant Currency Growth34%38%Asia, Middle East & AfricaReported Growth16%209%Merger and Integration Charges--Restructuring Charges-1953rd Week--Core Growth16227Impact of Foreign Currency Translation15Core Constant Currency Growth17%232%Total DivisionsReported Growth11%7%Merger and Integration Charges-(2)Inventory Fair Value Adjustments-(1)Restructuring Charges-1253rd Week(3)(5)Core Growth810Impact of Foreign Currency Translation1.51.5Core Constant Currency Growth9%12%*Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above non-coreadjustments.  See schedules A-7 and A-8 for a discussion of each of these non-core adjustments.Note ? certain amounts above may not sum due to rounding.                                                                                                                             A ? 17                                                                                                                              PepsiCo, Inc. and SubsidiariesReconciliation of GAAP and Non-GAAP Information (cont.)Core Growth and Core Constant Currency Growth*(unaudited)Year Ended12/31/11Net RevenueOperating ProfitFrito-Lay North AmericaReported Growth6%7%Merger and Integration Charges--Restructuring Charges-253rd Week(2)(2)Core Growth47Impact of Foreign Currency Translation--Core Constant Currency Growth3.5%7%Quaker Foods North AmericaReported Growth-%8%Merger and Integration Charges--Restructuring Charges-253rd Week(2)(2)Core Growth(2)8Impact of Foreign Currency Translation(1)(0.5)Core Constant Currency Growth(2)%8%Latin America FoodsReported Growth13%7%Merger and Integration Charges--Restructuring Charges-553rd Week--Core Growth1312Impact of Foreign Currency Translation(2)(1)Core Constant Currency Growth11%11%PepsiCo Americas FoodsReported Growth7%7%Merger and Integration Charges--Restructuring Charges-353rd Week(1)(2)Core Growth68Impact of Foreign Currency Translation(1)(0.5)Core Constant Currency Growth5%8%PepsiCo Americas BeveragesReported Growth10%18%Merger and Integration Charges-(13)Inventory Fair Value Adjustments-(12)Restructuring Charges-353rd Week(1)(1)Core Growth8(4)Impact of Foreign Currency Translation(1)(0.5)Core Constant Currency Growth8%(4)%*Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments.  See schedules A-7 and A-8 for a discussion of each of these non-core adjustments.Note ? certain amounts above may not sum due to rounding.                                                                                                                             A ? 18                                                                                                                              PepsiCo, Inc. and SubsidiariesReconciliation of GAAP and Non-GAAP Information (cont.)Core Growth and Core Constant Currency Growth*(unaudited)Year Ended12/31/11Net RevenueOperating ProfitEuropeReported Growth41%15%Merger and Integration Charges-1Inventory Fair Value Adjustments-(1)Restructuring Charges-453rd Week-(1)Core Growth4118Impact of Foreign Currency Translation(3)(4)Core Constant Currency Growth38%14%Asia, Middle East & AfricaReported Growth17%25%Merger and Integration Charges--Restructuring Charges-153rd Week--Core Growth1727Impact of Foreign Currency Translation(2)(2.5)Core Constant Currency Growth16%24%Total DivisionsReported Growth15%13%Merger and Integration Charges-(4)Inventory Fair Value Adjustments-(4)Restructuring Charges-353rd Week(1)(1)Core Growth147Impact of Foreign Currency Translation(1)(1)Core Constant Currency Growth13%6%*Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments.  See schedules A-7 and A-8 for a discussion of each of these non-core adjustments.Note ? certain amounts above may not sum due to rounding.                                                                                                                             A ? 19                                                                                                                              SOURCE PepsiCo, Inc.For further information: Investor, Jamie Caulfield, Senior Vice President, Investor Relations, +1-914-253-3035, jamie.caulfield@pepsico.com; Media, Jeff Dahncke, Senior Director, Media Bureau, +1-914-253-3941, jeff.dahncke@pepsico.com