Asia PR News

PURCHASE, N.Y., Sept. 29 /PRNewswire-AsiaNet/ –

EPS of $0.51 Includes Tax Charge Related to International
Cash Repatriation

PepsiCo reported 13% net sales growth and a 14% increase in third quarter
Division operating profit. Worldwide snacks volume increased 4.5% and worldwide
beverage volume grew 10%. The results were largely driven by strong
performances in the Company’s North American beverage business and its
international operations.

Earnings per share were $0.51 in the quarter, including a $0.27 charge
related to the Company’s intent to repatriate $7.5 billion of international
earnings under the provisions of the American Jobs Creation Act. The third
quarter of last year included tax benefits of $221 million, or $0.13 per share.
Excluding these tax items, earnings were $0.78 per share, an increase of 18%
compared to the third quarter of last year.

Chairman and CEO Steve Reinemund said, "We are very pleased with our
performance for the quarter, especially on the top line. Each of our operating
divisions contributed to the very positive overall results. Our international
operations, in particular, continue to perform very well, and our North
American beverage business capitalized on strong weather-driven demand to
deliver an outstanding quarter."

Reinemund continued, "Looking ahead to the fourth quarter, we are
encouraged by the momentum in our businesses, but we expect the recent
hurricanes to negatively affect some key input costs and, potentially, consumer
spending. We are not unique in having to address these challenges, but clearly
must acknowledge them."

"All that said, given the strength of our third quarter, and recognizing
the near-term cost- and economic challenges, I believe we will exceed our
previously stated 2005 operating and financial objectives."

Summary of PepsiCo Third Quarter 2005 Results

% Growth Rate
Quarter Alone Year to Date
Volume (Servings) 8 6
Revenue 13 10
Division Operating Profit 14 12

Net Income (37) (8)
Net Income Excluding Tax Items 17 14

Earnings Per Share (36) (7)
Earnings Per Share Excluding Tax Items 18 16

Summary of Division Third Quarter 2005 Results

% Growth Rate
FLNA PBNA PI QFNA Total PepsiCo
Volume 2 8 7/13(1) — 4.5/10(1)
Revenue 6 17 17 2 13
Division Operating Profit 6 16 28 — 14

(1) Snacks/beverages

Summary of Division Third Quarter 2005 Year-to-Date Results

% Growth Rate
FLNA PBNA PI QFNA Total PepsiCo
Volume 2.5 3.5 4/11(1) 6 4/7(1)
Revenue 6 9 15 9 10
Division Operating Profit 6 10 24 13 12

(1) Snacks/beverages

Frito-Lay North America (FLNA) net revenue increased 6%, led by growth of
Lay’s, Cheetos, Tostitos and Quaker snacks.

Core salty snacks revenue grew 5% on volume growth of over 2%. Solid volume
growth in trademark Lay’s, Cheetos, Tostitos and Sunchips was partially offset
by a slight decline in trademark Doritos.

Revenues from the division’s other macro snacks products grew almost 10%,
driven by double-digit growth in Quaker Chewy Granola bars and rice cakes
products, and the strength of the cookie, cracker and meat snack lines.

Revenue growth outpaced volume growth as a result of favorable pricing and
mix. Operating profit grew 6%. Operating margins were affected by higher labor
and benefits costs, write-offs associated with damage from Hurricane Katrina,
and increased advertising and marketing costs, offset somewhat by favorable
settlement of prior-year trade accruals.

PepsiCo Beverages North America (PBNA) volume increased 8%, led by Gatorade
growth; net revenue and operating profit grew at mid-teens rate.

PBNA reported record volume growth of 8%, fueled by 24% growth in its
non-carbonated beverage portfolio. Non-carbonated beverage results were driven
by strong double-digit growth in Gatorade, trademark Aquafina, and Propel.
These products benefited from above-average temperatures across North America,
which created strong consumer demand, and from successful new products such as
Gatorade Lemonade and Aquafina Flavorsplash. Trademark Tropicana non-carbonated
beverages grew in the low double-digits, led by the Tropicana fruit drinks line
and reflecting volume trends on Tropicana Pure Premium that, while down
slightly, showed sequential improvement from the first half of the year.

Carbonated soft drink (CSD) volumes were unchanged from prior year.
Trademarks Pepsi and Mountain Dew experienced low single-digit declines, offset
by mid single-digit growth in trademark Sierra Mist. Across the trademarks,
diet CSDs experienced mid single-digit growth, boosted by the relaunch of Diet
Wild Cherry Pepsi, Pepsi One with Splenda, Diet Mountain Dew and Sierra Mist
Free. Regular CSDs posted a low single-digit decline.

Net revenue grew 17% reflecting the volume gains, positive mix and pricing,
and approximately one point from foreign exchange. Operating profit grew 16%,
reflecting the revenue gain, partly offset by higher raw material, energy and
transportation costs, as well as by higher advertising and marketing expenses.

PepsiCo International (PI) profits grew 28% on broad-based gains in both
snacks and beverages.

Snacks volume growth of 7% in the quarter was driven by strong double-digit
growth in India, Turkey, Russia and China, along with low single-digit growth
at Gamesa in Mexico. These gains were partially offset by declines of less than
1% at Sabritas in Mexico and Walkers in the UK. Both Sabritas and Walkers
volume trends improved sequentially from the second quarter. Combined
acquisition and divestiture activity had no net impact on PI’s overall snack
volume growth rate.

Beverage volume grew 13%. Broad-based growth was led by double-digit growth
in the Middle East, China, Russia, Venezuela and Argentina. Both carbonated
soft drinks and non-carbonated beverages grew at double-digit rates.

PI Regional Volume Growth Third Quarter 2005

% Growth Rate
Snacks Beverages

Quarter Year to Date Quarter Year to Date
Latin America 3 2 8 6
Europe, Middle East
and Africa* 14 9 15 13
Asia Pacific** 3.5 1.5 13 11
Total PI 7 4 13 11

* Snacks growth ex acquisition: 10% for the quarter and 6% year to date
** Snacks growth ex divestiture: 22% for the quarter and 20% year to date

Net revenue grew 17%, driven by the volume gains. Foreign currency
translation contributed 4 points of net revenue growth, reflecting the
favorable Mexican peso and Brazilian real, partially offset by the unfavorable
British pound. Acquisitions contributed two points of growth.

Operating profit grew 28%, driven largely by the volume growth, offset
somewhat by higher energy and raw material costs. Foreign currency contributed
6 percentage points of growth. The net favorable impact from acquisition and
divestiture activity contributed 3 percentage points of growth.

Quaker Foods North America (QFNA) had 2% net revenue increase, driven by
growth of Rice-A-Roni and Life cereal.

Net revenue grew 2% and volume was even with the year-ago quarter. The
volume performance reflects double-digit growth in Rice-A-Roni,
high-single-digit growth in Life cereal and low single-digit growth in Cap’n
Crunch cereal and Quaker Oatmeal. These gains were offset by low single digit
declines in Aunt Jemima syrups and mixes, as well as declines in other
breakfast foods.

Favorable product mix, price increases on ready-to-eat cereals taken in the
second half of 2004, and favorable Canadian foreign exchange rates contributed
two points to revenue growth. Operating profit was flat, as increased
advertising and marketing expenses and higher cost of sales offset revenue
gains.

Benefit of PBG share sales, share repurchases, and strong equity bottler
results were partially offset by higher corporate unallocated costs.

Earnings per share growth for the quarter was bolstered by a $41 million
pre-tax gain recognized on the sale of shares in The Pepsi Bottling Group, a 1%
reduction in the number of weighted average shares outstanding and strong
equity bottler results.

Corporate unallocated expenses increased by $60 million in the quarter.
This increase primarily reflects a $45 million non-cash charge associated with
conforming the Company’s method of accounting for certain freight, distribution
and employee benefits costs across all Divisions. Support of health and
wellness and innovation initiatives increased $10 million, costs associated
with the Company’s Business Process Transformation Initiative (BPT) increased
$7 million, and employee-related costs increased $6 million. These increases
were partially offset by a $23 million gain on the settlement of a class action
lawsuit related to the Company’s purchases of high fructose corn syrup from
1991 through 1995.

Company’s intention to repatriate $7.5 billion of undistributed
international earnings resulted in $468 million tax charge.

Consistent with its July 22 announcement, the Company intends to repatriate
$7.5 billion of undistributed international earnings under the provisions of
the American Jobs Creation Act (AJCA) in 2005. The third quarter results
include a tax charge of $468 million, or $0.27 per share, associated with this
action.

Management updates full-year 2005 earnings outlook.
The Company updated its full-year earnings outlook, stating it now expects
earnings per share for 2005 of $2.41 to $2.42, including the impact of the 53rd
week (see note under "Miscellaneous Disclosures," below) and the tax charge
related to its intended repatriation of international earnings. The Company
expects the impact of the 53rd week to increase earnings per share by $0.04.

Excluding the impact of the 53rd week and the repatriation tax charge, the
Company expects full year earnings per share of $2.64 to $2.65.

About PepsiCo
PepsiCo is one of the world’s largest food and beverage companies with
annual revenues of $29 billion. Its principal businesses include Frito-Lay
snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and
Quaker foods. Its portfolio includes 16 brands that generate $1 billion or more
each in annual retail sales.

Cautionary Statement
This release contains statements concerning PepsiCo’s expectations for
future performance. Any such forward-looking statements are inherently
speculative and are based on currently available information, operating plans
and projections about future events and trends. As such, they are subject to
numerous risks and uncertainties. Actual results and performance may be
significantly different from expectations. Please see the Company’s filings
with the Securities and Exchange Commission, including the Annual Report on
Form 10-K, for a discussion of specific risks that may affect performance.

Miscellaneous Disclosures
Conference Call. At 11 a.m. (Eastern Time) today, the Company will host a
conference call with investors to discuss third quarter 2005 results and the
outlook for the full year 2005. For details, visit the Company’s website at
http://www.pepsico.com

Reconciliation. In discussing financial results and guidance, the Company
may refer to certain non-GAAP measures. A reconciliation of any such non-GAAP
measures to reported financial statements can be found under "PepsiCo Financial
Press Releases" on the Company’s website at http://www.pepsico.com in the
"Investors" section.

Bottler Volume. Volume for products sold by PepsiCo’s bottlers is reported
by PepsiCo on a monthly basis, with the third quarter comprising June, July and
August.

53rd Week in 2005. PepsiCo’s fiscal year ends on the last Saturday in
December. As a result, most fiscal years contain 52 weeks, and a 53rd week is
added every five or six years. For purposes of comparability, the Company
provides guidance that excludes the 53rd week. The Company provides guidance
that excludes the estimated impact of the 53rd week as management believes it
is more indicative of the Company’s ongoing performance.

PepsiCo, Inc. and Subsidiaries
Condensed Consolidated Statement of Income
(in millions except per share amounts, unaudited)

12 Weeks Ended 36 Weeks Ended
9/3/05 9/4/04 9/3/05 9/4/04

Net Revenue $8,184 $7,257 $22,466 $20,458

Cost and Expenses
Cost of sales 3,733 3,300 10,255 9,324
Selling, general and
administrative expenses 2,734 2,410 7,625 6,974
Amortization of intangible
assets 37 35 103 100

Operating Profit 1,680 1,512 4,483 4,060

Bottling Equity Income 209 147 430 292
Interest Expense (58) (41) (161) (113)
Interest Income 37 15 88 37

Income before Income Taxes 1,868 1,633 4,840 4,276

Provision for Income Taxes 1,004 269 1,870 1,049

Net Income $ 864 $1,364 $ 2,970 $ 3,227

Diluted
Net Income Per Common Share $ 0.51 $ 0.79 $ 1.74 $ 1.86
Average Shares Outstanding 1,703 1,727 1,709 1,735

PepsiCo, Inc. and Subsidiaries
Supplemental Financial Information
(in millions, unaudited)

12 Weeks Ended 36 Weeks Ended
9/3/05 9/4/04 9/3/05 9/4/04
Net Revenue

Frito-Lay North America $2,461 $2,325 $ 7,097 $ 6,704

PepsiCo Beverages
North America 2,520 2,147 6,522 5,999

PepsiCo International 2,839 2,430 7,716 6,719

Quaker Foods North America 364 355 1,131 1,036

Total Net Revenue $8,184 $7,257 $22,466 $20,458

Operating Profit

Frito-Lay North America $655 $616 $ 1,788 $ 1,686

PepsiCo Beverages
North America 628 542 1,598 1,460

PepsiCo International 473 370 1,232 995

Quaker Foods North America 111 111 369 325

Division Operating Profit 1,867 1,639 4,987 4,466

Corporate Unallocated (187) (127) (504) (406)

Total Operating Profit $1,680 $1,512 $ 4,483 $ 4,060

PepsiCo, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(in millions, unaudited)

36 Weeks Ended
9/3/05 9/4/04
Operating Activities
Net income $ 2,970 $ 3,227

Adjustments
Depreciation and amortization 896 863

Stock-based compensation expense 215 261

Cash payments for merger-related costs
and other restructuring charges (21) (57)

Bottling equity income, net of dividends (345) (248)

Deferred income taxes 101 62

Net change in operating working capital(a) 251 (659)

Other, net 491 268

Net Cash Provided by Operating Activities 4,558 3,717

Investing Activities
Snack Ventures Europe (SVE)
minority interest acquisition (750) -

Capital spending (796) (700)

Sales of property, plant and equipment 65 15

Other acquisitions and investments in
noncontrolled affiliates (302) (28)

Cash proceeds from sale of
The Pepsi Bottling Group (PBG) stock 177 -

Divestitures 3 -

Short-term investments, net (1,858) (86)

Net Cash Used for Investing Activities (3,461) (799)

Financing Activities
Proceeds from issuances of long-term debt 13 504

Payments of long-term debt (145) (175)

Short-term borrowings, net 1,221 15

Cash dividends paid (1,209) (940)

Share repurchases - common (2,085) (2,475)

Share repurchases - preferred (14) (20)

Proceeds from exercises of stock options 707 846

Net Cash Used for Financing Activities (1,512) (2,245)

Effect of Exchange Rate Changes on
Cash and Cash Equivalents (21) (12)

Net (Decrease)/Increase in Cash and
Cash Equivalents (436) 661

Cash and Cash Equivalents - Beginning of year 1,280 820

Cash and Cash Equivalents - End of period $ 844 $ 1,481

(a) 2004 includes a tax payment of $760 million as a result of our 2003
settlement with the Internal Revenue Service.

PepsiCo, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(in millions)

9/3/05 12/25/04
Assets (unaudited)
Current Assets
Cash and cash equivalents $ 844 $ 1,280

Short-term investments 4,028 2,165
4,872 3,445

Accounts and notes receivable, net 3,757 2,999
Inventories
Raw materials 716 665

Work-in-process 180 156

Finished goods 768 720
1,664 1,541

Prepaid expenses and other current assets 498 654

Total Current Assets 10,791 8,639

Property, plant and equipment, net 8,163 8,149

Amortizable intangible assets, net 530 598

Goodwill 3,893 3,909

Other nonamortizable intangible assets 898 933
4,791 4,842

Investments in noncontrolled affiliates 3,450 3,284

Other assets 3,173 2,475

Total Assets $30,898 $27,987

Liabilities and Shareholders’ Equity
Current Liabilities
Short-term borrowings obligations $ 2,266 $ 1,054

Accounts payable and other
current liabilities 5,860 5,599

Income taxes payable 890 99

Total Current Liabilities 9,016 6,752

Long-term debt obligations 2,300 2,397

Other liabilities 4,144 4,099

Deferred income taxes 1,338 1,216

Total Liabilities 16,798 14,464

Preferred stock, no par value 41 41

Repurchased preferred stock (104) (90)

Common Shareholders’ Equity
Common stock 30 30

Capital in excess of par value 641 618

Retained earnings 20,441 18,730

Accumulated other comprehensive loss (921) (886)
20,191 18,492

Less: Repurchased shares (6,028) (4,920)

Total Common Shareholders’ Equity 14,163 13,572

Total Liabilities and
Shareholders’ Equity $30,898 $27,987

Supplemental Share and Option Data
(in millions of shares, except average share and exercise prices)

12 Weeks Ended 36 Weeks Ended
9/3/05 9/4/04 9/3/05 9/4/04
Beginning Net Shares
Outstanding 1,673 1,697 1,679 1,705

Options Exercised 3 4 20 29

Shares Repurchased (15) (14) (38) (47)

Ending Net Shares Outstanding 1,661 1,687 1,661 1,687

Weighted Average Basic 1,668 1,692 1,674 1,701

Dilutive Securities:
Options 31 32 31 30

Restricted Stock Units 2 1 2 1

ESOP Convertible Preferred
Stock/Other 2 2 2 3

Weighted Average Diluted 1,703 1,727 1,709 1,735

Average Share Price
for the Period $54.68 $51.98 $54.40 $51.70

Growth Versus Prior Year 5% 5%

Options Outstanding 162 180 169 186

Options in the Money 162 179 165 177

Dilutive Options 31 32 31 30

Dilutive Options as % of
Options in the Money 19% 18% 19% 17%

Average Exercise Price of
Options in the Money $41.70 $39.99 $41.19 $39.20

SOURCE: PepsiCo

CONTACT: Mark D. Dollins,
Senior Vice President,
Public Relations,
+1-914-253-3249, or

Jamie Caulfield,
Vice President,
Investor Relations,
+1-914-253-3035,

both of PepsiCo

Web site: http://www.pepsico.com

(PEP)