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89PepsiCo, Inc. 2008 Annual Report
The computations of basic and diluted net income per common share are as follows:
2008 2007 2006
Income Shares(a) Income Shares(a) Income Shares(a)
Net income $5,142 $5,658 $5,642
Preferred shares:
Dividends (2) (2) (2)
Redemption premium (6) (10) (9)
Net income available for common shareholders $5,134 1,573 $5,646 1,621 $5,631 1,649
Basic net income per common share $÷3.26 $÷3.48 $÷3.42
Net income available for common shareholders $5,134 1,573 $5,646 1,621 $5,631 1,649
Dilutive securities:
Stock options and RSUs – 27 – 35 – 36
ESOP convertible preferred stock 8 2 12 2 11 2
Diluted $5,142 1,602 $5,658 1,658 $5,642 1,687
Diluted net income per common share $÷3.21 $÷3.41 $÷3.34
(a) Weighted-average common shares outstanding.
Note 12 Preferred Stock
As of December 27, 2008 and December 29, 2007, there were
3 million shares of convertible preferred stock authorized. The
preferred stock was issued only for an ESOP established by
Quaker and these shares are redeemable for common stock by
the ESOP participants. The preferred stock accrues dividends at
an annual rate of $5.46 per share. At year-end 2008 and 2007,
there were 803,953 preferred shares issued and 266,253 and
287,553 shares outstanding, respectively. The outstanding pre-
ferred shares had a fair value of $72 million as of December 27,
2008 and $108 million as of December 29, 2007. Each share is
convertible at the option of the holder into 4.9625 shares of com-
mon stock. The preferred shares may be called by us upon written
notice at $78 per share plus accrued and unpaid dividends. Quaker
made the nal award to its ESOP plan in June 2001.
2008 2007 2006
Shares Amount Shares Amount Shares Amount
Preferred stock 0.8 $÷41 0.8 $÷41 0.8 $÷41
Repurchased preferred stock
Balance, beginning of year 0.5 $132 0.5 $120 0.5 $110
Redemptions – 6 – 12 – 10
Balance, end of year 0.5 $138 0.5 $132 0.5 $120