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Table of Contents
Filed Pursuant to Rule 424(b)(2)
File No. 333-197640
The information in this preliminary prospectus supplement and
the accompanying prospectus is not complete and may be changed.
This preliminary prospectus supplement and the accompanying
prospectus are not an offer to sell these securities and are not
soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED OCTOBER 8, 2015
PROSPECTUS SUPPLEMENT
(To Prospectus Dated July 25, 2014)
$
PepsiCo, Inc.
% Senior Notes due 20
We are offering $ of our % senior notes due 20 (the "notes").
The notes will bear interest at a fixed rate of % per annum and
will mature on , 20 . We will pay interest on the notes on and of
each year until maturity, beginning on , 2016. We may redeem some
or all of the notes at any time and from time to time at the
redemption prices described in this prospectus supplement. The
notes will be unsecured obligations and rank equally with all of
our other unsecured senior indebtedness from time to time
outstanding. The notes will be issued only in registered form in
denominations of $2,000 and integral multiples of $1,000 in excess
thereof.
Investing in the notes involves risks. See "Risk Factors" and
"Our Business Risks" included in our annual report on Form 10-K for
the fiscal year ended December 27, 2014, in our quarterly report on
Form 10-Q for the 12 weeks ended March 21, 2015, in our quarterly
report on Form 10-Q for the 12 and 24 weeks ended June 13, 2015,
and in our quarterly report on Form 10-Q for the 12 and 36 weeks
ended September 5, 2015, and "Our Business Risks" in Item 7 in
Exhibit 99.1 to our current report on Form 8-K filed with the U.S.
Securities and Exchange Commission on October 7, 2015.
Plus accrued interest from October , 2015, if settlement occurs
after that date.
See "Underwriting."
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
The notes will not be listed on any securities exchange.
Currently there is no public market for the notes.
The notes will be ready for delivery in book-entry form only
through The Depository Trust Company, Clearstream Banking, société
anonyme, and Euroclear Bank, S.A./N.V., as operator of the
Euroclear System, against payment in New York, New York on or about
October , 2015.
Joint Book-Running Managers
The date of this prospectus supplement is October , 2015.
We have not authorized anyone to provide any information other
than that contained or incorporated by reference in this prospectus
supplement, the accompanying prospectus or in any free writing
prospectus filed by us with the U.S. Securities and Exchange
Commission (the "SEC"). We take no responsibility for, and can
provide no assurance as to the reliability of, any other
information that others may give you. We are not, and the
underwriters are not, making an offer to sell the notes in any
jurisdiction where the offer and sale is not permitted. You should
not assume that the information contained in this prospectus
supplement, the accompanying prospectus, any free writing
prospectus or any document incorporated by reference is accurate as
of any date other than their respective dates. Our business,
financial condition, results of operations and prospects may have
changed since those dates.
TABLE OF CONTENTS
As used in this prospectus supplement, unless otherwise
specified or where it is clear from the context that the term only
means issuer, the terms "PepsiCo," the "Company," "we," "us," and
"our" refer to PepsiCo, Inc. and its consolidated subsidiaries. Our
principal executive offices are located at 700 Anderson Hill Road,
Purchase, New York 10577, and our telephone number is (914)
253-2000. We maintain a website at
www.pepsico.comwhere general information about us is available.
We are not incorporating the contents of the website into this
prospectus supplement or the accompanying prospectus.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS AND RISK FACTORS
Certain sections of this prospectus supplement, including the
documents incorporated by reference herein, contain statements
reflecting our views about our future performance that constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Reform Act").
Statements that constitute forward-looking statements within the
meaning of the Reform Act are generally identified through the
inclusion of words such as "aim," "anticipate," "believe," "drive,"
"estimate," "expect," "expressed confidence," "forecast," "future,"
"goals," "guidance," "intend," "may," "objectives," "outlook,"
"plan," "position," "potential," "project," "seek," "should,"
"strategy," "target," "will" or similar statements or variations of
such words and other similar expressions. All statements addressing
our future operating performance, and statements addressing events
and developments that we expect or anticipate will occur in the
future, are forward-looking statements within the meaning of the
Reform Act. These forward-looking statements are based on currently
available information, operating plans and projections about future
events and trends. They inherently involve risks and uncertainties
that could cause actual results to differ materially from those
predicted in any such forward-looking statement. These risks and
uncertainties include, but are not limited to, those described in
"Risk Factors" and "Our Business Risks" in our annual report on
Form 10-K for the fiscal year ended December 27, 2014, our
quarterly report on Form 10-Q for the 12 weeks ended March 21,
2015, our quarterly report on Form 10-Q for the 12 and 24 weeks
ended June 13, 2015, and our quarterly report on Form 10-Q for the
12 and 36 weeks ended September 5, 2015, and in "Our Business
Risks" in Item 7 in Exhibit 99.1 to our current report on Form 8-K
filed with the SEC on October 7, 2015, and in any subsequent annual
report on Form 10-K, quarterly report on Form 10-Q or current
report on Form 8-K incorporated by reference herein. Investors are
cautioned not to place undue reliance on any such forward-looking
statements, which speak only as of the date they are made. We
undertake no obligation to update any forward-looking statement,
whether as a result of new information, future events or otherwise.
The discussion of risks included or incorporated by reference in
this prospectus supplement is by no means all-inclusive but is
designed to highlight what we believe are important factors to
consider when evaluating our future performance.
We have not authorized anyone to provide any information other
than that contained in this prospectus supplement, the accompanying
prospectus, the documents incorporated by reference herein and
therein and any free writing prospectus filed by us with the SEC.
We take no responsibility for, and can provide no assurance as to
the reliability of, any other information that others may give
you.
We are offering to sell, and seeking offers to buy, the notes
described in this prospectus supplement and the accompanying
prospectus only where offers and sales are permitted. Since
information that we file with the SEC in the future will
automatically update and supersede information contained in this
prospectus supplement and the accompanying prospectus, you should
not assume that the information contained herein or therein is
accurate as of any date other than the date on the front of the
applicable document.
S-1
PEPSICO, INC.
PepsiCo, Inc. was incorporated in Delaware in 1919 and was
reincorporated in North Carolina in 1986. We are a leading global
food and beverage company with a complementary portfolio of
enjoyable brands, including Frito-Lay, Gatorade, Pepsi-Cola, Quaker
and Tropicana. Through our operations, authorized bottlers,
contract manufacturers and other third parties, we make, market,
distribute and sell a wide variety of convenient and enjoyable
beverages, foods and snacks, serving customers and consumers in
more than 200 countries and territories.
Our Operations
We are organized into six reportable segments (also referred to
as divisions), as follows:
1)
Frito-Lay North America (FLNA);
2)
Quaker Foods North America (QFNA);
3)
North America Beverages (NAB), which includes all of our
beverage businesses in the United States and Canada (North
America);
4)
Latin America, which includes all of our beverage, food and
snack businesses in Latin America;
5)
Europe Sub-Saharan Africa (ESSA), which includes all of our
beverage, food and snack businesses in Europe and Sub-Saharan
Africa; and
6)
Asia, Middle East and North Africa (AMENA), which includes all
of our beverage, food and snack businesses in Asia, Middle East and
North Africa.
Frito-Lay North America
Either independently or in conjunction with third parties, FLNA
makes, markets, distributes and sells branded snack foods. These
foods include Lay's potato chips, Doritos tortilla chips, Cheetos
cheese-flavored snacks, Tostitos tortilla chips, branded dips,
Ruffles potato chips, Fritos corn chips and Santitas tortilla
chips. FLNA's branded products are sold to independent distributors
and retailers. In addition, FLNA's joint venture with Strauss Group
makes, markets, distributes and sells Sabra refrigerated dips and
spreads.
Quaker Foods North America
Either independently or in conjunction with third parties, QFNA
makes, markets, distributes and sells cereals, rice, pasta, dairy
and other branded products. QFNA's products include Quaker oatmeal,
Aunt Jemima mixes and syrups, Quaker Chewy granola bars, Quaker
grits, Cap'n Crunch cereal, Life cereal, Rice-A-Roni side dishes,
Quaker rice cakes, Quaker oat squares and Quaker natural granola.
These branded products are sold to independent distributors and
retailers.
North America Beverages
Either independently or in conjunction with third parties, NAB
makes, markets, distributes and sells beverage concentrates,
fountain syrups and finished goods under various beverage brands
including Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, Diet
Mountain Dew, Tropicana Pure Premium, Sierra Mist and Mug. NAB
also, either independently or in conjunction with third parties,
makes, markets and sells ready-to-drink tea and coffee products
through joint ventures with Unilever (under the Lipton brand name)
and Starbucks, respectively. Further, NAB manufactures and
distributes certain brands licensed from Dr Pepper Snapple Group,
Inc., including Dr Pepper, Crush and Schweppes, and certain juice
brands licensed from Dole Food Company, Inc. and Ocean Spray
Cranberries, Inc. NAB
S-2
operates its own bottling plants and distribution facilities and
sells branded finished goods directly to independent distributors
and retailers. NAB also sells concentrate and finished goods for
our brands to authorized and independent bottlers, who in turn sell
our branded finished goods to independent distributors and
retailers in certain markets.
Latin America
Either independently or in conjunction with third parties, Latin
America makes, markets, distributes and sells a number of snack
food brands including Doritos, Cheetos, Marias Gamesa, Ruffles,
Emperador, Saladitas, Lay's, Rosquinhas Mabel, Elma Chips and
Sabritas, as well as many Quaker-branded cereals and snacks. Latin
America also, either independently or in conjunction with third
parties, makes, markets, distributes and sells beverage
concentrates, fountain syrups and finished goods under various
beverage brands including Pepsi, 7UP, Gatorade, Mirinda, Diet 7UP,
Manzanita Sol and Diet Pepsi. These branded products are sold to
authorized bottlers, independent distributors and retailers. Latin
America also, either independently or in conjunction with third
parties, makes, markets and sells ready-to-drink tea through an
international joint venture with Unilever (under the Lipton brand
name).
Europe Sub-Saharan Africa
Either independently or in conjunction with third parties, ESSA
makes, markets, distributes and sells a number of leading snack
food brands including Lay's, Walkers, Doritos, Cheetos and Ruffles,
as well as many Quaker-branded cereals and snacks, through
consolidated businesses as well as through noncontrolled
affiliates. ESSA also, either independently or in conjunction with
third parties, makes, markets, distributes and sells beverage
concentrates, fountain syrups and finished goods under various
beverage brands including Pepsi, 7UP, Pepsi Max, Mirinda, Diet
Pepsi and Tropicana. These branded products are sold to authorized
bottlers, independent distributors and retailers. In certain
markets, however, ESSA operates its own bottling plants and
distribution facilities. ESSA also, either independently or in
conjunction with third parties, makes, markets and sells
ready-to-drink tea products through an international joint venture
with Unilever (under the Lipton brand name). In addition, ESSA
makes, markets, sells and distributes a number of leading dairy
products including Domik v Derevne, Chudo and Agusha.
Asia, Middle East and North Africa
Either independently or in conjunction with third parties, AMENA
makes, markets, distributes and sells a number of leading snack
food brands including Lay's, Kurkure, Chipsy, Doritos, Cheetos and
Crunchy through consolidated businesses as well as through
noncontrolled affiliates. Further, either independently or in
conjunction with third parties, AMENA makes, markets, distributes
and sells many Quaker-branded cereals and snacks. AMENA also makes,
markets, distributes and sells beverage concentrates, fountain
syrups and finished goods under various beverage brands including
Pepsi, Mirinda, 7UP, Mountain Dew, Aquafina and Tropicana. These
branded products are sold to authorized bottlers, independent
distributors and retailers. However, in certain markets, AMENA
operates its own bottling plants and distribution facilities. AMENA
also, either independently or in conjunction with third parties,
makes, markets, distributes and sells ready-to-drink tea products
through an international joint venture with Unilever (under the
Lipton brand name). Further, we license the Tropicana brand for use
in China on co-branded juice products in connection with a
strategic alliance with Tingyi (Cayman Islands) Holding Corp.
S-3
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed
charges for the periods indicated. "Fixed charges" consist of
interest expense, capitalized interest, net amortization of debt
premium/discount, and the interest portion of rent expense which is
deemed to be representative of the interest factor. The ratio of
earnings to fixed charges is calculated as income from continuing
operations, before provision for income taxes and cumulative effect
of accounting changes, where applicable, less net unconsolidated
affiliates' interests, plus fixed charges (excluding capitalized
interest), plus amortization of capitalized interest, with the sum
divided by fixed charges.
USE OF PROCEEDS
The net proceeds to us from this offering are estimated to be
approximately $ , after deducting underwriting discounts and
estimated offering expenses payable by us. We intend to use the net
proceeds from this offering for general corporate purposes,
including the repayment of commercial paper.
S-4
DESCRIPTION OF NOTES
General
The notes offered hereby will initially be limited to aggregate
principal amount of $ . The notes will bear interest from October ,
2015, payable semi-annually on each and , beginning on , 2016, to
the persons in whose names the notes are registered at the close of
business on each and , as the case may be (whether or not a
business day), immediately preceding such and . The notes will
mature on , 20 .
The notes constitute a single series of debt securities to be
issued under an indenture dated May 21, 2007, between us and The
Bank of New York Mellon, as trustee. The indenture is more fully
described in the accompanying prospectus.
The notes are not subject to any sinking fund.
We may, without the consent of the existing holders of the
notes, issue additional notes having the same terms (except issue
date, date from which interest accrues and, in some cases, the
first interest payment date) so that the existing notes and the new
notes form a single series under the indenture.
The notes will be issued only in registered form in
denominations of $2,000 and integral multiples of $1,000 in excess
thereof.
We may redeem some or all of the notes at any time and from time
to time at the redemption prices described under "Optional
Redemption."
Defeasance
The notes will be subject to defeasance and discharge (but not
with respect to certain covenants) and to defeasance of certain
covenants as set forth in the indenture. See "Description of Debt
SecuritiesSatisfaction, Discharge and Covenant Defeasance" in the
accompanying prospectus.
Optional Redemption
The notes will be redeemable as a whole or in part, at our
option at any time and from time to time prior to , 20 ( month
prior to the maturity date of the notes), at a redemption price
equal to the greater of
(i) 100% of the principal amount of such notes and
(ii) the sum of the present values of the remaining scheduled
payments of principal and interest thereon (exclusive of interest
accrued to the date of redemption) discounted to the redemption
date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate plus basis points,
plus in each case accrued and unpaid interest to the date of
redemption.
The notes will be redeemable as a whole or in part, at our
option at any time and from time to time on or after , 20 ( month
prior to the maturity date of the notes), at a redemption price
equal to 100% of the principal amount of the notes being redeemed,
plus accrued and unpaid interest to the date of redemption.
"Comparable Treasury Issue" means the United States Treasury
security or securities selected by an Independent Investment Banker
as having an actual or interpolated maturity comparable to the
remaining term of the notes to be redeemed that would be utilized,
at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of a
comparable maturity to the remaining term of such notes.
S-5
"Comparable Treasury Price" means, with respect to any
redemption date for the notes, (A) the average of the Reference
Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Independent Investment Banker obtains
fewer than four such Reference Treasury Dealer Quotations, the
average of all such quotations.
"Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by us.
"Reference Treasury Dealer" means each of any four primary U.S.
Government securities dealers in the United States of America
selected by us.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any redemption date, the
average, as determined by the Independent Investment Banker, of the
bid and asked prices for the Comparable Treasury Issue (expressed
in each case as a percentage of its principal amount) quoted in
writing to the Independent Investment Banker by such Reference
Treasury Dealer at 3:30 p.m. New York time on the third business
day preceding such redemption date.
"Treasury Rate" means, with respect to any redemption date for
the notes, the rate per annum equal to the semiannual equivalent
yield to maturity or interpolated (on a day count basis) of the
Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption
date.
Notice of any redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each holder of
notes to be redeemed. If fewer than all of the notes are to be
redeemed, the particular notes to be redeemed shall be selected by
the trustee by such method as the trustee shall deem fair and
appropriate. If any note is to be redeemed only in part, the notice
of redemption that relates to such note shall state the principal
amount thereof to be redeemed. A new note in principal amount equal
to and in exchange for the unredeemed portion of the principal of
the note surrendered will be issued in the name of the holder of
the note upon surrender of the original note.
Unless we default in payment of the redemption price, on and
after the redemption date interest will cease to accrue on the
notes or portions thereof called for redemption.
Book-Entry System
The notes will be issued in fully registered form in the name of
Cede & Co., as nominee of The Depository Trust Company ("DTC").
One or more fully registered certificates will be issued as global
notes in the aggregate principal amount of the notes. Such global
notes will be deposited with or on behalf of DTC and may not be
transferred except as a whole by DTC to a nominee of DTC or by a
nominee of DTC to DTC or another nominee of DTC or by DTC or any
nominee to a successor of DTC or a nominee of such successor.
So long as DTC, or its nominee, is the registered owner of a
global note, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the notes represented by
such global note for all purposes under the indenture. Except as
set forth in the accompanying prospectus, owners of beneficial
interests in a global note will not be entitled to have the notes
represented by such global note registered in their names, will not
receive or be entitled to receive physical delivery of such notes
in definitive form and will not be considered the owners or holders
thereof under the indenture. Accordingly, each person owning a
beneficial interest in a global note must rely on the procedures of
DTC for such global note and, if such person is not a participant
in DTC (as described below), on the procedures of the participant
through which such person owns its interest, to exercise any rights
of a holder under the indenture.
Owners of beneficial interests in a global note may elect to
hold their interests in such global note either in the United
States through DTC or outside the United States through Clearstream
Banking, société anonyme ("Clearstream") or Euroclear Bank,
S.A./N.V., or its successor, as operator of the
S-6
Euroclear System ("Euroclear"), if they are a participant of
such system, or indirectly through organizations that are
participants in such systems. Interests held through Clearstream
and Euroclear will be recorded on DTC's books as being held by the
U.S. depositary for each of Clearstream and Euroclear, which U.S.
depositaries will in turn hold interests on behalf of their
participants' customers' securities accounts. Citibank, N.A. will
act as depositary for Clearstream and JPMorgan Chase Bank, N.A.
will act as depositary for Euroclear (in such capacities, the "U.S.
Depositaries").
As long as the notes are represented by the global notes, we
will pay principal of and interest on those notes to or as directed
by DTC as the registered holder of the global notes. Payments to
DTC will be in immediately available funds by wire transfer. DTC
will credit the relevant accounts of their participants on the
applicable date. Neither we nor the trustee will be responsible for
making any payments to participants or customers of participants or
for maintaining any records relating to the holdings of
participants and their customers, and each person owning a
beneficial interest will have to rely on the procedures of the
depositary and its participants.
We have been advised by DTC, Clearstream and Euroclear,
respectively, as follows:
DTC
DTC has advised us that it is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning
of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
DTC holds securities deposited with it by its participants and
facilitates the settlement of transactions among its participants
in such securities through electronic computerized book-entry
changes in accounts of the participants, thereby eliminating the
need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations,
some of whom (and/or their representatives) own DTC. Access to
DTC's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or
indirectly. According to DTC, the foregoing information with
respect to DTC has been provided to the financial community for
informational purposes only and is not intended to serve as a
representation, warranty or contract modification of any kind.
Clearstream
Clearstream advises that it is incorporated under the laws of
Luxembourg as a professional depositary. Clearstream holds
securities for its participating organizations ("Clearstream
Participants") and facilitates the clearance and settlement of
securities transactions between Clearstream Participants through
electronic book-entry changes in accounts of Clearstream
Participants, thereby eliminating the need for physical movement of
certificates. Clearstream, Luxembourg provides to Clearstream
Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Clearstream
interfaces with domestic markets in several countries. As a
professional depositary, Clearstream is subject to regulation by
the Luxembourg Commission for the Supervision of the Financial
Sector (Commission de Surveillance du Secteur Financier).
Clearstream Participants are recognized financial institutions
around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the underwriters. Indirect
access to Clearstream is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a Clearstream Participant, either
directly or indirectly.
S-7
Distributions with respect to interests in the notes held
beneficially through Clearstream will be credited to cash accounts
of Clearstream Participants in accordance with its rules and
procedures, to the extent received by the U.S. Depositary for
Clearstream.
Euroclear
Euroclear advises that it was created in 1968 to hold securities
for participants of Euroclear ("Euroclear Participants") and to
clear and settle transactions between Euroclear Participants
through simultaneous electronic book-entry delivery against
payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services,
including securities lending and borrowing and interfaces with
domestic markets in several countries. Euroclear is operated by
Euroclear Bank S.A./N.V. (the "Euroclear Operator"). All operations
are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear Operator. Euroclear Participants
include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may
include the underwriters. Indirect access to Euroclear is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or
indirectly.
The Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, or the
Euroclear Terms and Conditions, and applicable Belgian law govern
securities clearance accounts and cash accounts with the Euroclear
Operator. Specifically, these terms and conditions govern:
transfers of securities and cash within Euroclear;
withdrawal of securities and cash from Euroclear; and
receipt of payments with respect to securities in
Euroclear.
All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities
clearance accounts. The Euroclear Operator acts under the terms and
conditions only on behalf of Euroclear Participants and has no
record of or relationship with persons holding securities through
Euroclear Participants.
Distributions with respect to interests in the notes held
beneficially through Euroclear will be credited to the cash
accounts of Euroclear Participants in accordance with the Euroclear
Terms and Conditions, to the extent received by the U.S. Depositary
for the Euroclear Operator.
Settlement
Investors in the notes will be required to make their initial
payment for the notes in immediately available funds. Secondary
market trading between DTC participants will occur in the ordinary
way in accordance with DTC rules and will be settled in immediately
available funds. Secondary market trading between Clearstream
Participants and/or Euroclear Participants will occur in the
ordinary way in accordance with the applicable rules and operating
procedures of Clearstream and Euroclear and will be settled using
the procedures applicable to conventional eurobonds in immediately
available funds.
Cross-market transfers between persons holding directly or
indirectly through DTC, on the one hand, and directly or indirectly
through Clearstream Participants or Euroclear Participants, on the
other, will be effected in DTC in accordance with DTC rules on
behalf of the relevant European international clearing system by
the U.S. depositary for such clearing system; however, such
cross-market transactions will require delivery of instructions to
the relevant European international clearing system by the
counterparty in such system in accordance with its rules and
procedures and within its established deadlines (based on European
time). The relevant European international clearing system
S-8
will, if the transaction meets its settlement requirements,
deliver instructions to the U.S. Depositary to take action to
effect final settlement on its behalf by delivering or receiving
notes in DTC, and making or receiving payment in accordance with
normal procedures for same-day funds settlement applicable to DTC.
Clearstream Participants and Euroclear Participants may not deliver
instructions directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of notes received in
Clearstream or Euroclear as a result of a transaction with a DTC
participant will be made during subsequent securities settlement
processing and dated the business day following the DTC settlement
date. Such credits or any transactions in such notes settled during
such processing will be reported to the relevant Clearstream
Participants or Euroclear Participants on such business day. Cash
received in Clearstream or Euroclear as a result of sales of notes
by or through a Clearstream Participant or a Euroclear Participant
to a DTC participant will be received with value on the DTC
settlement date but will be available in the relevant Clearstream
or Euroclear cash account only as of the business day following
settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of notes
among participants of DTC, Clearstream and Euroclear, they are
under no obligation to perform or continue to perform such
procedures and such procedures may be discontinued at any time. See
"Forms of Securities" in the accompanying prospectus.
The information in this section concerning DTC, Clearstream,
Euroclear and DTC's book-entry system has been obtained from
sources that PepsiCo believes to be reliable (including DTC,
Clearstream and Euroclear), but PepsiCo takes no responsibility for
the accuracy thereof.
Neither PepsiCo, the trustee nor the underwriters will have any
responsibility or obligation to participants, or the persons for
whom they act as nominees, with respect to the accuracy of the
records of DTC, its nominee or any participant with respect to any
ownership interest in the notes or payments to, or the providing of
notice to participants or beneficial owners.
For other terms of the notes, see "Description of Debt
Securities" in the accompanying prospectus.
S-9
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following sets forth the material U.S. federal income tax
consequences of ownership and disposition of the notes, but does
not purport to be a complete analysis of all potential tax
considerations. This summary is based upon the Internal Revenue
Code of 1986, as amended (the "Code"), the Treasury Regulations
promulgated or proposed thereunder, administrative pronouncements
and judicial decisions, all as of the date hereof and all of which
are subject to change, possibly on a retroactive basis. This
discussion applies only to notes that meet the following
conditions:
they are purchased by those initial holders who purchase notes
at the "issue price," which will equal the first price to the
public (not including bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters, placement
agents or wholesalers) at which a substantial amount of the notes
is sold for money; and
they are held as capital assets within the meaning of Section
1221 of the Code (generally, for investment).
This discussion does not describe all of the tax consequences
that may be relevant to investors in light of their particular
circumstances or that are subject to special rules, such as:
tax-exempt organizations;
regulated investment companies;
real estate investment trusts;
dealers or traders subject to a mark-to-market method of tax
accounting with respect to the notes;
certain former citizens and long-term residents of the United
States;
certain financial institutions;
insurance companies;
persons holding notes as part of a hedge, straddle or other
integrated transaction for U.S. federal income tax purposes;
U.S. Holders (as defined below) whose functional currency is
not the U.S. dollar;
partnerships or other entities classified as partnerships for
U.S. federal income tax purposes; and
persons subject to the alternative minimum tax.
This discussion does not address any aspect of state, local or
non-U.S. taxation, any taxes other than income taxes or the
potential application of the Medicare contribution tax.
Persons considering the purchase of notes are urged to consult
their tax advisors with regard to the application of the U.S.
federal tax laws to their particular situations, as well as any tax
consequences arising under the laws of any state, local or non-U.S.
taxing jurisdiction.
Tax Consequences to U.S. Holders
As used herein, the term "U.S. Holder" means a beneficial owner
of a note that is, for U.S. federal income tax purposes:
an individual citizen or resident of the United States;
a corporation, or other entity taxable as a corporation,
created or organized in or under the laws of the United States, any
state thereof or the District of Columbia; or
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an estate or trust the income of which is subject to U.S.
federal income taxation regardless of its source.
Payments of interest
Interest paid on a note will be taxable to a U.S. Holder as
ordinary interest income at the time it accrues or is received in
accordance with the U.S. Holder's method of accounting for U.S.
federal income tax purposes. It is expected, and this discussion
assumes, that the notes will be issued without original issue
discount for U.S. federal income tax purposes.
Sale, exchange or other taxable disposition of the notes
Upon the sale, exchange or other taxable disposition of a note,
a U.S. Holder will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or
other taxable disposition and the U.S. Holder's adjusted tax basis
in the note. For these purposes, the amount realized does not
include any amount attributable to accrued interest. Amounts
attributable to accrued interest are treated as interest and taxed
as described under "Payments of interest" above.
Gain or loss realized on the sale, exchange or other taxable
disposition of a note will generally be capital gain or loss and
will be long-term capital gain or loss if at the time of the sale,
exchange or other taxable disposition the note has been held by the
U.S. Holder for more than one year. The deductibility of capital
losses is subject to limitations under the Code.
Backup withholding and information reporting
Information returns will be filed with the Internal Revenue
Service (the "IRS") in connection with payments on the notes and
the payment of proceeds from a sale or other disposition of the
notes, unless the U.S. Holder is an exempt recipient. A U.S. Holder
will be subject to backup withholding, currently at a rate of 28
percent, on these payments if the U.S. Holder fails to provide its
taxpayer identification number to the withholding agent and comply
with certain certification procedures or otherwise establish an
exemption from backup withholding. Backup withholding is not an
additional tax. The amount of any backup withholding from a payment
to a U.S. Holder will be allowed as a credit against the U.S.
Holder's U.S. federal income tax liability and may entitle the U.S.
Holder to a refund, provided that the required information is
timely furnished to the IRS.
Tax Consequences to Non-U.S. Holders
As used herein, the term "Non-U.S. Holder" means a beneficial
owner of a note that is, for U.S. federal income tax purposes:
a nonresident alien individual;
a foreign corporation; or
a foreign estate or trust.
"Non-U.S. Holder" does not include a holder who is an individual
present in the United States for 183 days or more in the taxable
year of disposition of a note. Such a holder is urged to consult
his or her tax advisor regarding the U.S. federal income tax
consequences of the sale, exchange or other disposition of a
note.
Payments on the notes
Subject to the discussions below concerning backup withholding
and FATCA, payments of principal and interest on the notes by us or
any paying agent to any Non-U.S. Holder will not be subject to U.S.
federal withholding tax, provided that, in the case of
interest,
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the Non-U.S. Holder does not own, actually or constructively,
10 percent or more of the total combined voting power of all
classes of our stock entitled to vote, is not a controlled foreign
corporation related, directly or indirectly, to us through stock
ownership, and is not a bank whose receipt of interest is described
in Section 881(c)(3)(A) of the Code; and
the certification requirement described below has been
fulfilled with respect to the beneficial owner, as discussed
below.
If a Non-U.S. Holder cannot satisfy the requirements described
above (and is not exempt from withholding because the interest is
effectively connected with a U.S. trade or business, as described
below), payments of interest on the notes to such Non-U.S. Holder
will be subject to 30 percent U.S. federal withholding tax, unless
the Non-U.S. Holder timely provides a properly executed IRS Form
W-8 appropriate to the Non-U.S. Holder's circumstances claiming an
exemption from or reduction in withholding under an applicable
income tax treaty.
Except as provided below in "Income or gain effectively
connected with a United States trade or business," interest on a
note generally will not be exempt from withholding unless the
Non-U.S. Holder properly certifies on an IRS Form W-8 appropriate
to the Non-U.S. Holder's circumstances, under penalties of perjury,
that it is not a United States person. Special certification rules
apply to...
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