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Pepsi Profits Rise


Pepsico Inc. yesterday reported a 14 percent rise in third-quarter profits and forecast strong earnings growth in coming years as its soft drink, cereal and snack-food businesses remain resilient amid the economic downturn.

The world's fifth-largest food-and-beverage company, with products including Pepsi sodas, Frito-Lay snacks and Quaker cereals, said it is still "committed" to earnings-per-share increases of 13 percent to 14 percent in 2002 and beyond. For the third quarter, Pepsico earned $866 million, or 48 cents per share, before $248 million in charges related to its integration of Quaker Oats Co. operations. Pepsico acquired Quaker Oats on Aug. 2.

The results, which met the high end of analysts' expectations of 44 cents to 48 cents a share, are up from year-ago earnings of $759 million, or 43 cents a share, calculated as if Pepsi and Quaker had already merged at that time. Third-quarter net income, including the one-time items, fell 17 percent to $627 million, or 34 cents a share, from $755 million, or 42 cents a share, a year earlier.

Pepsico, number-two in soft drinks behind perennial leader Atlanta-based Coca-Cola Co. , said net sales climbed 8 percent to $6.91 billion from $6.42 billion a year earlier.

"The integration of the Gatorade and Quaker businesses has brought no surprises," Chairman and Chief Executive Steve Reinemund said in a statement. Gatorade, the leading sports drink, was among the brands Pepsi acquired as part of the Quaker deal.

The company did not specifically address the Sept. 11 attacks' impact on the economy or its outlook, but Reinemund did say it does not expect "current events" to materially affect the current fourth quarter.

"We haven't seen any revenue momentum slowing," Reinemund said in a conference call with analysts. "However, if that were to happen and we had a slight slowdown at the top line, we're comfortable that we could make the necessary adjustments to deliver our forecasted profit."
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