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PEPSICO TO ADOPT ACCOUNTING CHANGES

 PURCHASE, N.Y., Nov. 30 ~PRNewswire~ -- PepsiCo, Inc. (NYSE: PEP) announced today that it would elect to adopt the two mandated non-cash accounting changes, SFAS 106 (retiree health benefits) and SFAS 109 (income taxes), in the fourth quarter of 1992 and further clarified the impact of these and other actions disclosed in the third quarter 10Q filing with the Securities and Exchange Commission.
 Wayne Calloway, chairman and chief executive officer, said, "Our earnings momentum continues to be very good, our cash flow is solid and our balance sheet is strong. This has allowed us to get these required accounting changes behind us and still take whatever actions are necessary in the operations of the business. We're looking forward to closing out a very good 1992 and continuing that solid operating momentum into 1993."
 The effects of the adoption of both SFAS 106 and SFAS 109 fall into two categories. The first is a one-time charge to reflect the application of these changes to prior years (the "catchup" charge.) The second category is the annual impact on after-tax operating profits starting in the year of adoption (1992). Both categories are non-cash in nature.
 The "catchup" charge for SFAS 106 (retiree health benefits) is estimated to be $575 million pre-tax ($357 million after-tax or $.44 per share). The "catchup" charge for SFAS 109 (income taxes) is estimated to be in the range of $400-$550 million after-tax ($.49-$.68 per share).
 The size of the "catchup" charge for SFAS 109 is principally related to the significant increase in intangible assets arising from the large number of acquisitions PepsiCo has made. SFAS 109 requires the recording of deferred tax liabilities as if these intangibles were to be sold. PepsiCo, of course, has no intention at this time to sell these assets.
 The impact of SFAS 106 on operating results for 1992 is a decrease in net income of $.04 per share. The impact of SFAS 109 on operating results for 1992 is an estimated increase in net income of $.02 per share.
 In 1993, the cost of SFAS 106 will be reduced and should be fully offset by the positive impact of SFAS 109 and therefore there should be no impact on net income.
 Although SFAS 106 and SFAS 109 will be adopted in the fourth quarter of 1992, the changes are required to be retroactive to the beginning of 1992. The first three quarters will therefore be restated to properly reflect these changes.
 In addition to these required accounting changes, fourth quarter unusual charges for the restructuring of the domestic beverage operations and several international operations are contemplated which, in the aggregate, will be approximately $125 million after-tax or $.15 per share. A preliminary estimate of the annual savings from these restructuring actions when fully implemented is approximately $150 million pre-tax.
 -0- 11~30~92
 ~CONTACT: Richard M. Detwiler Jr., director - public relations of PepsiCo, 914-253-2725~
 (PEP)


CO: PepsiCo, Inc. ST: New York IN: FOD SU:

GK-SS -- NY001 -- 4020 11~30~92 08:55 EST
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Publication:PR Newswire
Date:Nov 30, 1992
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