Pepsi Tax Boon Offsets Frito-Layoffs

An audit settlement brings in $600 million.
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PepsiCo (PEP) - Get Report boosted its full-year earnings expectations, due to a $600 million tax settlement with the Internal Revenue Service.

The Purchase, N.Y., beverage giant said Friday that the recently concluded audit agreement would result in a noncash benefit 36 cents a share, offsetting a just-announced plan to consolidate its Frito-Lay North America division into 32 sites from 34 sites.

The downsizing will result in the cutting of 387 jobs, and a charge of about $66 million, or 3 cents a share, in the fourth quarter.

Taken together, both items will now result in full-year EPS of at least $3.31, Pepsi said. The company's core EPS guidance of at least $2.98 is unchanged.

The company also reaffirmed its full-year 2006 cash flow guidance of approximately $6.2 billion in cash from operating activities, $2.2 billion in capital spending and $3 billion in share repurchases.

Shares of Pepsi were recently up 19 cents in after-hours trading to $63.