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PEPSICO REPORTS RESULTS

    PURCHASE, N.Y., April 27 /PRNewswire/ -- PepsiCo (NYSE: PEP) today announced record results for the first quarter ended March 20, 1993. The following are highlights of the quarter (excluding 1992's one-time charge for required accounting changes).
    -- Sales rose 13 percent to $5.1 billion.
    -- All three lines of business had double-digit profit growth.
    -- Operating profits advanced 16 percent.
    -- Net income advanced 11 percent to $260.4 million.
    -- Earnings per share rose 10 percent to 32 cents per share.
    -- Profit growth was hampered by dilution of about $.02 per share from recent international acquisitions.
    -- As of April 23, five million shares have been repurchased this year.
    Wayne Calloway, chairman and chief executive officer of PepsiCo, said, "Our domestic business had a big quarter with profits rising 23 percent.  It's our strongest growth in ongoing domestic profits in nine quarters and good evidence that big brand name products like ours can produce plenty of profit growth when they also provide good consumer value.
    We were held back by our international businesses which were affected by weak economies in the U.K. and Australia, an unusual combination of factors involving some recent acquisitions and the unfavorable impact from currency translation.  Without the acquisitions, international profits were up two percent in the first quarter.  All in all, it looks like 1993 will be another record year for PepsiCo."
    Snack Foods
    Worldwide snack food sales increased 21 percent to $1.5 billion and operating profits jumped 16 percent to $217.5 million driven by strong results in the domestic business.
    Domestic profits rose 26 percent to $171.5 million on a sales increase of 12 percent to $937.8 million.  Although reported profit growth in the first quarter of last year was just two percent when restated for the required accounting changes, over a two year period profits advanced at a very solid 14 percent compound annual growth rate. The profit and sales increases this quarter were both led by strong volume gains with a modest increase in effective prices.
    Domestic pound volume increased by more than nine percent driven by double-digit gains in Lay's, Tostitos and Sunchips as well as strong growth in Doritos, thereby continuing our strong market share growth for the tenth consecutive quarter.
    International profits declined 10 percent to $46.0 million on a sales increase of 41 percent to $536.7 million.  The sales increase was largely driven by acquisitions in Mexico (Gamesa) and Canada (Hostess Frito-Lay).  The profit decline primarily reflects losses at Gamesa due to the expenses being incurred to upgrade the operations and soft volume.  Excluding the acquisitions, sales and profits advanced three percent despite an unfavorable impact from currency translation.  This reflects solid snack chip volume-driven gains at Sabritas in Mexico and lower administrative costs at headquarters, partially offset by a decline in the U.K. where sales remained soft.  The previously announced consolidation of Smiths and Walkers in the U.K. commenced at the end of the quarter and therefore has not yet provided any cost savings.
    Systemwide kilo growth in international snack chips was one percent in the quarter led by a double-digit gain in Canada and solid growth in Mexico, partially offset by a decline in the U.K. despite share gains by Walkers.
    Beverages
    Worldwide beverage sales rose 9 percent to $1.7 billion, and operating profits rose 18 percent to $180.2 million.  The sales advance was driven primarily by domestic and international acquisitions while the profit increase was driven by a very strong performance in the domestic business.
    Domestic beverage profits rose 22 percent to $171.9 million on a sales advance of five percent to $1.2 billion.
    The increase in sales reflected bottler acquisitions, lower discounts to retailers and volume growth.  Profit growth was primarily the result of lower ingredient costs and lower discounts to retailers. Although the performance comparison to last year's first quarter is relatively easy, over a two year period profits advanced at a solid nine percent compound annual growth rate.
    An increase of three percent in domestic bottler case sales volume was driven by packaged products and reflected the national roll-out of Crystal Pepsi, growth in the Mountain Dew brands and the partial roll- out of the Lipton tea and Ocean Spray products.  Excluding the Lipton tea and Ocean Spray products, bottler case sales grew two percent.  The Pepsi megabrand, which includes all regular and diet versions of Pepsi and Crystal Pepsi, grew two percent adding more than one point to our supermarket share this quarter.
    Sales in international beverages advanced 22 percent in the quarter to $479.1 million primarily reflecting bottler acquisitions in Spain and Canada.
    Profits decreased 28 percent to $8.3 million due primarily to the impact of acquired businesses in Spain reflecting the profit-in- inventory adjustment related to the acquisition and a normal seasonal low-point.  Excluding the acquisitions, sales increased one percent and profits advanced more than 50 percent.  This strong profit increase was led by gains in Latin America where we had both higher concentrate pricing and strong volume growth.  Balance of the year results should be impacted positively by cost savings measures previously announced.
    International bottler case sales increased more than five percent, overlapping double-digit growth a year ago.  This was driven by the acquisition of the KAf?lavor brands in Spain, which contributed one percentage point to growth; solid advances in Latin America, particularly Mexico and Argentina which were both lapping strong volume results last year;and strong results in most of the Eastern European countries, in the Middle East, and in several Asian countries. Partially offsetting these strong results was softness in Canada as well as in several western European countries.
    Restaurants
    Worldwide restaurant earnings rose 11 percent to $145.4 million on an 11 percent sales increase to $1.9 billion.  The profit increase reflects excellent performance by the domestic Pizza Hut and KFC businesses.
    Pizza Hut - Profits at Pizza Hut grew 15 percent to $81.9 million on a sales increase of 13 percent to $893.6 million.  Worldwide sales growth came from both the domestic and international businesses whereas profit growth was the result of a strong domestic performance.
    The domestic sales and profit advances were led by additional units and solid volume growth in both the dine-in and delivery operations. The favorable impact from cheese costs, which were down from a year ago, was offset by higher meat costs.  Lower international profits reflected volume declines in Australia due to strong competitive activity.
    Same store sales for domestic company-owned units grew over three percent in the quarter driven by solid growth in both the delivery and dine-in operations.  As in the fourth quarter, growth in the dine-in units was spurred by the Lunch Buffet.  The carry-out trends improved this quarter although there was still a slight decline year-over-year.
    Taco Bell - Operating profits decreased four percent to $31.1 million on a sales increase of 14 percent to $551.0 million. Sales growth was driven by additional units.  Higher insurance costs and continued investment in the Hot 'n Now concept depressed profits. Same store sales for domestic company-owned restaurants advanced two percent in the quarter driven by a shift in the product mix to higher priced menu items.
    Wayne Calloway, said, "This is the 18th consecutive quarter of same store sales growth for Taco Bell and the beginning of their fifth year with no price increases.  Taco Bell's committed to their customers and we're very confident that Taco Bell will have another year of excellent profit growth in 1993."
    KFC - Operating profits advanced 20 percent to $32.4 million at KFC on a sales increase of 6 percent to $491.6 million.  Worldwide sales advanced primarily as a result of additional units, most of which were international.  Profits advanced strongly due to extraordinary growth in the U.S., where profits more than tripled, partially offset by declines on the international side.
    Domestic profit growth reflected improved store margins driven by a shift to higher margin menu items and lower levels of price promotion, partially offset by lower volumes.  Profit growth was also aided by cost savings from last year's restructuring.  Same store sales for domestic company-owned restaurants declined three percent.  The international profit decline was primarily caused by volume declines in Australia where pricing has become very competitive in the restaurant industry.
    Other
    Though operating profits from our three lines of business rose 16 percent, earnings per share rose only 10 percent.  This was due in part to lower equity income from joint ventures and increased foreign exchange losses resulting from balance sheet translation which are reflected in other corporate expenses.  Earnings per share growth was also reduced by a higher effective tax rate as well as a two percent increase in the number of average shares outstanding due to stock option exercises and acquisitions paid for by stock in 1992.
    Impact of Accounting Changes in 1992
    Results for the first quarter of 1992 were depressed by $927.4 million in noncash charges for the one-time catch-up impact of the required new accounting rules for retiree health benefits and income taxes.  As a result a net loss of $692.4 million or $.86 per share was reported for the quarter in 1992.
 ?                PEPSICO, INC. AND SUBSIDIARIES
             Condensed Consolidated Statement of Income
          (in millions except per share amounts, unaudited)
                                         12 Weeks Ended         Percent
                                      3/20/93       3/21/92(A)    Change
    Net Sales                        $5,091.6      $4,497.3          13
    Costs and Expenses, net:
      Cost of Sales                   2,450.2       2,193.4          12
      Selling, general and
       administrative expenses        2,070.9       1,792.6          16
      Amortization of intangible
       assets                            64.5          54.4          19
      Interest expense                  136.2         136.0           -
      Interest income                   (21.8)        (28.4)        (23)
    Total                             4,700.0       4,148.0          13
    Income Before Income Taxes and
     Cumulative Effect of Accounting
      Changes                           391.6         349.3          12
    Provision for Income Taxes (B)      131.2         114.3          15
    Income Before Cumulative Effect
     of Accounting Changes              260.4         235.0          11
    Cumulative Effect of Accounting
     Changes:
      Postretirement Benefits (net of
       tax benefit of $218.6)             --         (356.7)        --
      Income Taxes                        --         (570.7)        --
    Net Income (Loss)                $  260.4      $ (692.4)        --
    Income (Charge) Per Share:
     Before Cumulative Effect of
      Accounting Changes             $   0.32      $   0.29          10
     Cumulative Effect of Accounting
      Changes:
       Postretirement Benefits             --         (0.44)         --
       Income Taxes                        --         (0.71)         --
    Net Income (Loss) Per Share      $   0.32      $  (0.86)         --
    Average shares outstanding          814.8         802.6           2
   (A) -- As reported at year-end 1992, 1992 results were restated to (1) report under the equity method of accounting certain previously consolidated international snack food businesses contributed to the Snack Ventures Europe (SVE) joint venture in 1992, and (2) reflect the adoption of new accounting rules for retiree health benefits and income taxes.  Since year-end 1992, certain other amounts have been reclassified to conform with the 1993 presentation.
    (B) -- The effective tax rates were 33.5 percent in 1993 and 32.7 percent in 1992.
                   PEPSICO, INC. AND SUBSIDIARIES
               First Quarter Line of Business Results
          12 Weeks Ended March 20, 1993 and March 21, 1992
                      (in millions, unaudited)
                         Net Sales              Operating Profits
                12 Weeks  12 Weeks          12 Weeks  12 Weeks
                 Ended     Ended   Percent  Ended   Ended        Percent
                3/20/93   3/21/92(A) Change 3/20/93  3/21/92(A)(B)Change
    Beverages
    -Dom        $1,201.8  $1,143.7     5  $ 171.9  $ 140.6         22
    -Int'l         479.1     393.2    22      8.3     11.6        (28)
    Total        1,680.9   1,536.9     9    180.2    152.2         18
    Snack Foods
    -Dom           937.8     836.3    12    171.5    135.8         26
    -Int'l         536.7     381.8    41     46.0     51.2        (10)
    Total        1,474.5   1,218.1    21    217.5    187.0         16
    Restaurants
    -Dom         1,660.0   1,510.6    10    122.8    102.0         20
    -Int'l         276.2     231.7    19     22.6     28.5        (21)
    Total        1,936.2   1,742.3    11    145.4    130.5         11
    Total
    -Dom         3,799.6   3,490.6     9    466.2    378.4         23
    -Int'l       1,292.0   1,006.7    28     76.9     91.3        (16)
    Total       $5,091.6  $4,497.3    13    543.1    469.7         16
    Interest & Other Corporate
     Expenses, net                         (151.5)  (120.4)        26
    Income Before Income Taxes and
     Cumulative Effect of Accounting
      Changes                             $ 391.6  $ 349.3         12
    Results by Restaurant Chain:
    Pizza Hut   $  893.6  $  792.1    13  $  81.9  $  71.0         15
    Taco Bell      551.0     485.4    14     31.1     32.5         (4)
    KFC            491.6     464.8     6     32.4     27.0         20
    Total       $1,936.2  $1,742.3    11  $ 145.4  $ 130.5         11
    (A) -- As reported at year-end 1992, these amounts were restated to report under the equity method of accounting certain previously consolidated international snack food businesses contributed to the SVE joint venture in 1992.
    (B) -- As reported at year-end 1992, these amounts were restated to reflect the adoption of new accounting rules for retiree health benefits and income taxes.
                  PEPSICO, INC. AND SUBSIDIARIES
                Condensed Consolidated Balance Sheet
                            (in millions)
                                              3/20/93        12/26/92
                                            (Unaudited)
    Assets
    Cash and cash equivalents               $   122.1       $   169.9
    Short-term investments                    1,779.0         1,888.5
    Other current assets                      2,954.8         2,783.9
      Total Current Assets                    4,855.9         4,842.3
    Investments in affiliates
     and other assets                         1,768.5         1,707.9
    Property, plant and
     equipment, net                           7,798.4         7,442.0
    Intangible assets, net                    7,084.7         6,959.0
    Total Assets                            $21,507.5       $20,951.2
    Liabilities and Shareholders' Equity
    Short-term borrowings                   $ 1,088.1       $   706.8
    Other current liabilities                 3,433.3         3,617.6
      Total Current Liabilities               4,521.4         4,324.4
    Long-term debt                            8,084.9         7,964.8
    Other liabilities                         1,689.9         1,624.0
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Date:Apr 27, 1993
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