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PEPSICO REPORTS THIRD QUARTER RESULTS

 PURCHASE, N.Y., Oct. 12 /PRNewswire/ -- Today PepsiCo, Inc. (NYSE: PEP) announced record results for the third quarter ended Sept. 4, 1993. The following are highlights of the quarter:
 Sales rose 14 percent to $6.3 billion.
 Operating profit from our three lines of business advanced 20 percent to $886 million with each line growing at 17 percent or more.
 Net income advanced 17 percent to $495 million excluding the $37 million impact of the new U.S. tax legislation. Including the new taxes, reported net income grew nine percent to $458 million.
 Earnings per share grew 15 percent to $.61 per share excluding the impact of the new U.S. taxes. Including the impact of the new taxes, reported earnings were $.56 per share, a six percent increase.
 Year-to-date investments in the business totaled $2.1 billion including $1.1 billion of capital spending and $1.0 billion in acquisitions, most of which were for cash.
 As of October 1, 12.4 million shares of stock had been repurchased in 1993. Excluding acquisitions within the last year, sales and operating profit improved nine and 18 percent, respectively. The acquisitions did not impact the growth in net income or earnings per share. Wayne Calloway, PepsiCo's chairman and chief executive officer, said, "Operating earnings from our three lines of business are strong, up 16 percent so far this year; the opportunities for future growth have never been greater; and we continue to deal very effectively with competitive challenges. Although changes in the U.S. tax laws will slow our bottom line growth this year and next, in the marketplace we're as vigorous and competitive as ever."
 Beverages
 In the quarter, worldwide beverage profits grew 22 percent to $355 million on sales growth of 18 percent to $2.3 billion. This reflects strong results in both the international and domestic businesses.
 Domestic profits increased 21 percent to $279 million and sales grew 13 percent to $1.6 billion. Sales growth was driven by acquisitions, strong volume growth and a mix shift to higher priced products. Profits were led by strong volume and lower packaging and ingredient costs.
 Despite the product tampering incident in mid-June, U.S. bottler case sales increased more than five percent for the quarter, bringing year-to-date growth to almost four percent. This growth reflects the impact of new beverages such as the Lipton Tea products and Crystal Pepsi as well as a particularly strong performance by Mountain Dew.
 It should be noted that domestic and international bottler case sales for the quarter include the months of June, July and August, a practice consistent with prior years.
 International beverage revenues grew 31 percent to $744 million and profits rose 28 percent to $76 million. Excluding acquisitions, primarily the recent bottler acquisition in Spain (KESA), revenues grew three percent and profits rose five percent. Profit growth reflected higher concentrate pricing and volumes, but this was largely offset by an unfavorable exchange translation impact in Europe and Canada. On a year-to-date basis, excluding acquisitions, international beverage profits have grown 25 percent.
 International bottler case sales rose six percent in the quarter. This performance reflects strong growth in the Middle East, Asia Pacific and Eastern Europe regions as well as advances in Latin America. Year- to-date bottler case sales also grew six percent. The recently acquired KAS brands in Spain contributed two percent to the growth for the quarter and year-to-date.
 Snack Foods
 Worldwide snack food operating profits increased 19 percent to $309 million on sales growth of eight percent to $1.7 billion.
 Domestic profits increased 17 percent to $240 million on a sales advance of 10 percent to $1.1 billion. Both profit and sales advances were driven by continued strong volume growth. Higher effective pricing was partially offset by a sales mix shift to larger value-oriented packages. Pounds grew seven percent in the quarter and year-to-date driven by strong growth in Lays, Doritos, Tostitos and Rold Gold pretzels.
 International snack food profits advanced 30 percent in the quarter to $69 million on a sales increase of six percent to $615 million. Profit growth was driven by Sabritas, our Mexican snack chip and candy business. Trends at Walkers Smiths, our U.K. snack chip business, continued to show steady improvement with a double digit gain in profits despite an unfavorable exchange translation effect.
 Systemwide international kilo volume for snack chips grew six percent driven by double digit advances in Canada and Korea. Year-to-date kilo growth was five percent.
 Restaurants
 Worldwide restaurant sales grew 14 percent to $2.3 billion and earnings advanced 17 percent to $222 million.
 Pizza Hut - Worldwide Pizza Hut sales grew 15 percent to $993 million and profits grew 30 percent to $101 million with strong showings on both the domestic and international sides of the business.
 The domestic profit growth was the result of a nine percent increase in same store sales, additional units and lower cheese costs.
 International profits were driven by unit additions partially offset by weaker same store results in key markets.
 The nine percent advance in same store sales for domestic company owned units reflects growth in all distribution channels: dine-in, delivery and carryout. This performance was driven by the impact of the Bigfoot pizza launch, particularly in the delivery and carryout results, and the continued success of the lunch buffet. Year-to-date same store sales are up six percent.
 "Bigfoot pizza has turned out to be a real winner," said Mr. Calloway. "Although it was just launched in May, the U.S. Pizza Hut system has already sold more than 20 million pizzas, worth over $200 million. It's also rejuvenated our delivery and carryout business and firmly established Pizza Hut as a player in the value arena. We're very excited about the momentum it's giving Pizza Hut."
 KFC - Worldwide profits for KFC were down 15 percent to $44 million on a sales increase of six percent to $572 million. This reflects profit declines in both the domestic and international businesses.
 Domestic profits declined as a result of start-up costs to launch a new non-fried chicken product, the Colonel's Rotisserie Gold, as well as a number of new side items. Profits were also affected by sales softness in the markets where the new products had not yet been launched. Lower international profits were due primarily to a continued decline in Australia where the company recently responded with a new roasted chicken product.
 Same store sales for domestic company-owned units were down two percent in the quarter and four percent year-to-date.
 Taco Bell - Worldwide earnings advanced 27 percent to $77 million on a sales increase of 20 percent to $731 million.
 Both profits and sales benefited from additional restaurant units and a solid five percent increase in same store sales for company-owned units. The same store sales increase was driven by their continued focus on value and their two summer promotions, one, featuring especially hot and spicy versions of the product line and the other featuring the "supreme" or heavy topping variations of the line. Year-to-date same store sales advanced four percent.
 Tax Rate Changes
 The impact of the new U.S. tax legislation took effect this quarter. The impact on 1993 full year earnings is expected to be $40 million or $.05 per share.
 Of this, $30 million, or $.04, represents a one-time noncash charge taken in the third quarter for the adjustment of net deferred tax liabilities as of year-end 1992 as required under SFAS 109, the new accounting rules adopted last year. The remaining $10 million, or $.01, per share reflects the impact on 1993 earnings of the legislation, primarily the one percent increase in the statutory rate somewhat offset by the reinstatement of the Targeted Jobs Tax Credit program. Since both of these were retroactive to the beginning of the year, most of the $.01 full year impact was reflected in the third quarter results.
 All of these changes increased the effective tax rate from 33.1 percent to 35.1 percent for the year-to-date and from 33.2 percent to 37.8 percent for the quarter. For the year, the effective rate is expected to be approximately 34.7 percent.
 Year-to-Date
 Earnings: Excluding 1992's one-time charge for required accounting changes and the 1993 impact of the new tax law, year-to-date net income increased 14 percent to $1.2 billion and earnings per share grew 13 percent to $1.46. Including the $.05 per share for the U.S. tax increase, earnings per share increased nine percent to $1.41 and net income grew 11 percent to $1.1 billion. Sales increased 14 percent to $17.3 billion.
 Investments: PepsiCo has continued to invest aggressively in its businesses. As of the end of the third quarter, we've used $1.1 billion in cash for capital spending, most of which is focused on increasing distribution, improving productivity or adding capacity in our businesses.
 In addition, to date, we've completed more than 30 acquisitions and announced plans to invest aggressively in both our U.S. and international markets as shown below.
 Beverages:
 -- acquired two large U.S. bottling operations, ALPAC in Seattle, and Beaman in Nashville;
 -- acquired the rest of our Spanish bottler, KESA, from our joint venture partner and, at the same time, purchased their KAS line of fruit flavored beverages;
 -- took equity stakes in two of our Mexican bottling operations, Grupo Rello and Grupo Protexa, and increased our stake in Grupo Geusa;
 -- purchased our Budapest bottler from the Hungarian State Property Agency;
 -- formed Pepsi & Asia Beverage Company, a new joint venture in China, which will produce and market leading local soft drinks throughout China;
 -- announced plans to increase our investment from 51 percent to 92 percent in our Indian food and beverage operation;
 -- announced the formation of a joint venture with BAESA, our Argentine bottler, to form a "superbottler" covering most of the southern cone of Latin America;
 -- purchased a state-of-the-art bottling plant near Warsaw and started a company-owned bottling operation which will significantly increase our presence in the Polish market.
 Snack Foods:
 -- purchased snack businesses in the Dominican Republic, Argentina, Uruguay and Estonia;
 -- opened a new snack chip superplant in Portugal to supply southern Europe;
 -- formed a joint venture to enter the People's Republic of China;
 -- opened our first snack chip plant in Poland;
 -- announced plans to increase our stake in our Polish confectionery company to 70 percent in 1994.
 Restaurants:
 -- added 1,034 new restaurant units to our system bringing the total system to 23,370 units worldwide;
 Number of Units As Of 9/4/93
 Company Franchisee/JV Total
 Taco Bell 2,936 1,651 4,587
 Pizza Hut 5,284 4,614 9,898
 KFC 2,855 6,030 8,885
 -- acquired Chevy's, a 37-unit Mexican dining chain based in San Francisco;
 -- opened a unit to offer all three concepts in the Moscow subway system;
 -- opened a "3-in-1" unit selling products from all three restaurant concepts in Warsaw and announced plans to open another in a Warsaw suburb;
 -- increased KFC presence in China to 15 units and announced intentions to continue aggressive unit expansion;
 -- increased KFC units in Mexico by 25 percent passing the 100 unit mark and making KFC the largest quick serve restaurant system in Mexico;
 -- added more than 50 units to the Pizza Hut system in France making us number two in the pizza segment and a clear number one in delivered pizza.
 PEPSICO, INC. AND SUBSIDIARIES
 Condensed Consolidated Statement of Income
 (In millions except per share amounts, unaudited)
 12 Weeks Ended Percent
 9/4/93 9/5/92(A) Change
 Net Sales $6,316.4 $5,548.3 14
 Costs and Expenses, net
 Cost of sales 2,994.3 2,685.6 11
 Selling, general and
 administrative expenses 2,401.7 2,076.1 16
 Amortization of intangible
 assets 68.8 61.4 12
 Interest expense 133.3 134.2 (1)
 Interest income (18.2) (25.0) (27)
 Total 5,579.9 4,932.3 13
 Income before income taxes 736.5 (B) 616.0 20
 Provision for income taxes (C) 278.3 (B) 193.7 44
 Net income $ 458.2 (B) $ 422.3 9
 Net income per share $ 0.56 (B) $ 0.53 6
 Average shares outstanding 805.1 807.2
 (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) -- Net income was reduced by $36.9 ($0.05 per share) for the impact of recently enacted U.S. tax legislation. Of this amount, $29.9 ($0.04 per share) represents adjustment of net deferred tax liabilities at year-end 1992 for the one percent statutory rate increase, including a $4.7 charge included in pretax earnings related to Safe Harbor Leases. The balance of $7.0 ($0.01 per share) represents higher taxes on current year earnings.
 (C) The effective tax rates were 37.8 percent in 1993 and 31.4 percent in 1992. Excluding the impact of the new U.S. tax legislation described in (B), the 1993 effective tax rate was 33.2 percent.
 PEPSICO, INC. AND SUBSIDIARIES
 Condensed Consolidated Statement of Income
 (In millions except per share amounts, unaudited)
 36 Weeks Ended Percent
 9/4/93 9/5/92(A) Change
 Net Sales $17,298.3 $15,172.0 14
 Costs and Expenses, net
 Cost of sales 8,232.0 7,324.6 12
 Selling, general and
 administrative expenses 6,759.3 5,813.1 16
 Amortization of intangible
 assets 199.0 175.9 13
 Interest expense 403.5 410.5 (2)
 Interest income (59.3) (80.5) (26)
 Total 15,534.5 13,643.6 14
 Income Before Income Taxes and
 Cumulative Effect of Accounting
 Changes 1,763.8 (B) 1,528.4 15
 Provision for Income Taxes (C) 618.4 (B) 492.3 26
 Income Before Cumulative Effect
 of Accounting Changes 1,145.4 1,036.1 11
 Cumulative Effect of Accounting
 Changes:
 Postretirement Benefits (net
 of tax benefit of $218.6) --- (356.7) ---
 Income Taxes --- (570.7) ---
 Net Income $ 1,145.4 (B) $ 108.7 ---
 Income (Charge) Per Share:
 Before Cumulative Effect of
 Accounting Changes 1.41 1.29 9
 Cumulative Effect of Accounting
 Changes:
 Postretirement Benefits --- (0.44) ---
 Income Taxes --- (0.71) ---
 Net Income Per Share $ 1.41 (B) $ 0.14 ---
 Average shares outstanding 809.6 804.7 1
 (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) Net income was reduced by $36.9 ($0.05 per share) for the impact of recently enacted U.S. tax legislation. Of this amount, $29.9 ($0.04 per share) represents adjustment of net deferred tax liabilities at year-end 1992 for the one percent statutory rate increase, including a $4.7 charge included in pretax earnings related to Safe Harbor Leases. The balance of $7.0 ($0.01 per share) represents higher taxes on current year earnings.
 (C) -- The effective tax rates were 35.1 percent in 1993 and 32.2 percent in 1992. Excluding the impact of the new U.S. tax legislation described in (B), the 1993 effective tax rate was 33.1 percent.
 PEPSICO, INC. AND SUBSIDIARIES
 Supplemental Schedule of Net Sales and Operating Profits
 12 Weeks Ended September 4, 1993 and September 5, 1992
 (in millions, unaudited)
 12 Weeks Net Sales Percent Operating Profits Percent
 Ended 9/4/93 9/5/92(A)Chg. 9/4/93 9/5/92(A)(B) Change
 Beverages
 -Dom $ 1,583.7 $ 1,404.2 13 $ 278.6 $ 230.8 21
 -Int'l 744.2 569.9 31 75.9 59.1 28
 Total 2,327.9 1,974.1 18 354.5 289.9 22
 Snack Foods
 -Dom 1,077.8 983.1 10 240.3 205.8 17
 -Int'l 614.7 580.3 6 69.1 53.2 30
 Total 1,692.5 1,563.4 8 309.4 259.0 19
 Restaurants
 -Dom 1,971.7 1,738.0 13 193.1 160.7 20
 -Int'l 324.3 272.8 19 28.6 28.6 -
 Total 2,296.0 2,010.8 14 221.7 189.3 17
 Total
 -Dom 4,633.2 4,125.3 12 712.0 597.3 19
 -Int'l 1,683.2 1,423.0 18 173.6 140.9 23
 Total $ 6,316.4 $ 5,548.3 14 885.6 738.2 20
 Interest & Other Corporate
 Expenses, net (149.1)(C) (122.2) 22
 Income Before Income Taxes $ 736.5 $ 616.0 20
 Results by Restaurant Chain:
 Pizza Hut $ 992.7 $ 862.0 15 $ 100.8 $ 77.4 30
 Taco Bell 731.3 610.0 20 77.1 60.5 27
 KFC 572.0 538.8 6 43.8 51.4 (15)
 Total $ 2,296.0 $ 2,010.8 14 $ 221.7 $ 189.3 17
 (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.
 (C) -- Other corporate expenses is comprised of corporate headquarters expenses, equity in net income of affiliates, foreign exchange gains and losses and other items not allocated to the business segments, including a $4.7 charge for the impact of recently enacted U.S. tax legislation on the deferred tax liability arising from the Safe Harbor Leases.
 PEPSICO, INC. AND SUBSIDIARIES
 Supplemental Schedule of Net Sales and Operating Profits
 36 Weeks Ended September 4, 1993 and September 5, 1992
 (in millions, unaudited)
 Net Sales Operating Profits
 36 Weeks 36 Weeks 36 Weeks 36 Weeks
 Ended Ended Percent Ended Ended Percent
 9/4/93 9/5/92(A) Chg. 9/4/93 9/5/92(A)(B) Change
 Beverages
 -Dom $ 4,211.0 $ 3,895.7 8 $ 709.2 $ 604.5 17
 -Int'l 1,926.3 1,496.8 29 167.0 127.2 31
 Total 6,137.3 5,392.5 14 876.2 731.7 20
 Snack Foods
 -Dom 3,049.4 2,772.6 10 616.8 526.2 17
 -Int'l 1,769.3 1,369.4 29 186.4 153.9 21
 Total 4,818.7 4,142.0 16 803.2 680.1 18
 Restaurants
 -Dom 5,453.4 4,891.0 11 463.7 412.8 12
 -Int'l 888.9 746.5 19 69.7 81.6 (15)
 Total 6,342.3 5,637.5 13 533.4 494.4 8
 Total
 -Dom 12,713.8 11,559.3 10 1,789.7 1,543.5 16
 -Int'l 4,584.5 3,612.7 27 423.1 362.7 17
 Total $17,298.3 $15,172.0 14 2,212.8 1,906.2 16
 Interest & Other Corporate
 Expenses, net (449.0) (377.8) 19
 Income Before Income Taxes
 and Cumulative Effect of
 Accounting Changes $1,763.8 $1,528.4 15
 Results by Restaurant Chain:
 Pizza Hut $ 2,827.7 $ 2,470.1 14 $ 249.2 $ 226.7 10
 Taco Bell 1,925.4 1,647.4 17 165.6 139.6 19
 KFC 1,589.2 1,520.0 5 118.6 128.1 (7)
 Total $ 6,342.3 $ 5,637.5 13 $ 533.4 $ 494.4 8
 (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)
 9/4/93 12/26/92
 (Unaudited)
 Assets
 Cash and cash equivalents $ 209.5 $ 169.9
 Short-term investments 1,195.2 1,888.5
 Other current assets 3,354.5 2,783.9
 Total Current Assets 4,759.2 4,842.3
 Investments in affiliates
 and other assets 1,760.5 1,707.9
 Property, plant and
 equipment, net 8,341.7 7,442.0
 Intangible assets, net 7,509.2 6,959.0
 Total Assets $22,370.6 $20,951.2
 Liabilities and Shareholders' Equity
 Short-term borrowings $ 1,301.5 $ 706.8
 Other current liabilities 3,839.6 3,617.6
 Total Current Liabilities 5,141.1 4,324.4
 Long-term debt 7,675.1 7,964.8
 Other liabilities 1,806.5 1,624.0
 Deferred income taxes 1,844.8 1,682.3
 Total Liabilities 16,467.5 15,595.5
 Shareholders' Equity 5,903.1 5,355.7
 Total Liabilities and
 Shareholders' Equity $22,370.6 $20,951.2
 -0- 10/12/93
 /CONTACT: Richard Detwiler, director-public relations of PepsiCo, Inc., 914-253-2725/
 (PEP)


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

TS -- NY014 -- 0942 10/12/93 08:55 EDT
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