Pepsico CEO Indra Nooyi Delivers Again: Taking Flat 4Q 2017 Revenues and Wisely Converting That To 27% Pretax Income Growth, Which Was Up By $500 Mil Over the 4Q 2016 ....................................................................................... How Did She Do It? ....................................................................................... First, She Kept 4Q 2017 Selling, General and Administrative Expenses Under Wraps, Down 4% Or Down By $334 Mil From the 4Q 2016, Resulting in 4Q 2017 Operating Profit Up 9% Over the 4Q 2016 ....................................................................................... And Second, She Puts on Her Finance Hat and Delivers an Incredible 4Q 2017 Interest Expense Decline of 39% or Down By a Huge $229 Mil From the 4Q 2016 ....................................................................................... OK, So That Covers the Reason For the 27% Pretax Income Growth of $500 Mil, But Then Just What is Going On With the 4Q 2017 After-Tax Net Income Decline of $2.112 Bil or Down By an Eye-opening 149% Over the 4Q 2016? ....................................................................................... Having Worked There For a Short Spell Many Years Ago, Pepsico Has Always Had a Strong International Presence and Also a Very Strong Finance Group (After All, 4Q 2017 Interest Expense Declined By 39%) ....................................................................................... The Key Footnote To Look at is Their Most Recent Income Tax Footnote Accompanying Its 2016 Annual Report Filed With the SEC ....................................................................................... It Shows That a Massive 69% of Its 2016 Worldwide Pretax Income Was Earned Outside the US, That Its Consolidated Effective Income Tax Rate Has Been Reduced From the 35% US Federal Statutory Income Tax Rate By an Average of 9.2% in the Most Recent Three Years Just Due To Its Lower Foreign Income Tax Rates, That It Has Cumulative Unremitted International Earnings of $44.9 Bil at Dec 31, 2016 Which Are Locked Up Overseas and Also That It Has a Highly Coveted Net Deferred Income Tax Liabilities Balance of $4.434 Bil at Dec 31, 2016: These Facts Provide the Key To Successfully Navigating the Initial Stages of the US Trump Tax Cuts Act ....................................................................................... So Pepsico Is Able To Pull Out This $44.9 Bil of Cumulative International International Earnings at a Tax Cost of $4.0 Bil, Which Yields a Transition Toll Tax of Only 8.9%, Which is An Outright Steal ....................................................................................... Bit It Gets Even Better For PepsiCo ....................................................................................... $1.5 Bil or 37.5% of This $4.0 Bil Transition Toll Tax is Funded By the Reduction in Its Net Deferred Income Taxes Liabilities Balance Due to the US Federal Income Tax Rate Dropping By 40% From 35% Down to 21%, or More To The Point, a 4Q 2017 Income Tax Expense Reduction of $1.5 Bil Just Resulting From the US Federal Income Tax Debt Forgiveness Feature Included in US Trump Tax Cuts Act ....................................................................................... So Pepsico Takes a 4Q 2017 Income Tax Expense Charge of a Net of $2.5 Bil, Which More Than Explains Its $2.1 Bil Increase in 4Q 2017 Income Tax Expense From the 4Q 2016, and Is Able To Free Up $44.9 Bil of International Earnings Locked Up Overseas: I Say This is a Very Good Day For PepsiCo's Finance Group