PepsiCo subsequently filed a more complete 10-Q for the quarter. We examined the 10-Q and determined that the data it contained did not significantly alter the original analysis, nor did it change the gauge scores.
- Cash Management: 13 of 25 (up from 11 in December)
- Growth: 0 of 25 (down from 1)
- Profitability: 11 of 25 (down from 17)
- Value: 16 of 25 (up from 14)
- Overall: 49 of 100 (down from 52)
When reviewing Cash Management earlier, we pointed out that PepsiCo continues to add to its long-term debt. Debt rose from $4.2 billion to $7.9 billion during 2008, and it increased to $9.2 billion in March. From the 10-Q, we learn that PepsiCo issued $1.0 billion of senior unsecured five-year notes, bearing interest at 3.75 percent, in the first quarter of 2009.
While additional debt helped fund share repurchases in 2008, PepsiCo might also have been gathering the funds it would need for its just-issued offer to purchase the common shares it does not already own in its two largest bottlers: Pepsi Bottling Group, Inc. (NYSE: PBG) and PepsiAmericas, Inc., (NYSE: PAS). If PepsiCo's offers are accepted, the total cost will be approximately $6 billion.
At the time the offer was made, PepsiCo owned about 33 percent of Pepsi Bottling Group and 43 percent of PepsiAmericas.
In some previous periods, PepsiCo sold shares in its bottlers and included the profits in the Bottling Equity Income line on the Income Statement.
Although PepsiCo's Revenue in the first quarter was 0.8 percent less than in the year-earlier quarter, the depreciation of various currencies (primarily the Mexican peso, Canadian dollar, British pound and Brazilian real) relative to the U.S. dollar, reduced Revenue by 7 percent.
The 10-Q also makes it clear that the reason Cash Flow from Operations was minus $266 million in the first quarter is that PepsiCo made a "discretionary" contribution of $1 billion to its pension plan. Restructuring payment of $124 million also reduced CFO.
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