Pepsi Reports Strong Fourth Quarter

12/02/07 PepsiCo has reported continued strong performance in the fourth quarter of 2006. Reported net revenue increased 3% in the quarter. Excluding the impact of an extra reporting week in the prior year, net revenue increased over 7%. Earnings of $1.06 per share grew 63% versus $0.65 per share reported in the fourth quarter of 2005. Excluding the impacts of the extra reporting week in 2005 and previously announced tax items and restructuring actions in 2006 and 2005, the Company generated earnings of $0.72 per share in 2006, an increase of 11%.

PepsiCo President and CEO Indra Nooyi said, "We are pleased with our performance for the quarter and the full year. Our international business performed particularly well, delivering double-digit revenue and operating profit growth, and Frito-Lay North America delivered robust sales and profit results. The performance demonstrated the power of PepsiCo's portfolio -- balancing opportunities and challenges across our businesses to deliver consistently strong financial results."

Ms. Nooyi continued, "We also made good progress on our key strategic initiatives: providing greater choices to consumers in the area of healthier snacks and beverages; strengthening our international presence; and advancing our business process transformation project, including our SAP systems implementation." For the full year, reported net revenue was up 8% and, excluding the impact of the extra reporting week in 2005, net revenue increased more than 9%. Operating margins improved compared to the prior year as pricing and lower corporate unallocated costs more than offset the impact of higher input costs.

The impact of lower advertising and marketing expense was offset by higher trade spending. Earnings per share of $3.34 for the full year 2006 included tax benefits of $0.37 per share, related principally to the Internal Revenue Service's examination of prior years' tax returns, and a charge of $0.03 per share related to Frito-Lay North America's manufacturing network consolidation. Reported results for 2005 included the net impact of a $0.27 per share charge related to the Company's repatriation of international cash, the extra reporting week and restructuring actions. Excluding all these items for 2006 and 2005, the Company's earnings were $3.00 per share in 2006, an increase of 13%.