(Updated - October 9, 2014 6:45 AM EDT)

Pepsi (NYSE: PEP) reported Q3 EPS of $1.36, $0.07 better than the analyst estimate of $1.29. Revenue for the quarter came in at $17.22 billion versus the consensus estimate of $17.13 billion.

"We delivered good third quarter results in the face of an ongoing challenged macroeconomic environment driven by increasing volatility in the emerging markets and continued sluggish consumer demand in developed markets," said Chairman and CEO Indra Nooyi.

"Our organic revenue grew three percent and we achieved positive effective net pricing through strong price/pack revenue management. Together with our relentless focus on productivity, this translated to both gross margin and operating margin expansion.

"We achieved these results because our brands are strong, our product portfolio is on-trend, our geographic footprint is broad and diverse, and we are executing well in the marketplace."

Q3 Performance Metrics:

• Organic revenue grew 3.1 percent and reported net revenue grew 2 percent. Foreign exchange translation had a 1-percentage-point unfavorable impact on reported net revenue.
• Developing and emerging market organic revenue grew 8 percent. On a reported basis, developing and emerging market net revenue grew 3 percent, reflecting unfavorable foreign exchange translation.
• Core gross margin and core operating margin expanded 45 basis points reflecting the implementation of effective revenue management strategies and productivity initiatives. Reported gross margin increased 55 basis points and reported operating margin increased 10 basis points.
• Core constant currency operating profit increased 5.5 percent. Results reflect gains associated with divestitures of $20 million in QFNA and $15 million in AMEA partially offset by a $23 million impairment charge in Europe associated with a brand in Greece in the current-year quarter, and the lapping of $28 million in incremental investments as well as net gains associated with divestitures in AMEA of $11 million recorded in the prior-year quarter. Reported operating profit increased 2 percent and included the net impact of mark-to-market losses on commodity hedges and restructuring and impairment charges.
• The company's core effective tax rate was 24.2 percent and the reported effective tax rate was 24 percent, both below the prior-year quarter.
• On track to deliver targeted $1 billion of productivity savings in 2014.
• Cash flow provided by operating activities was $6.7 billion year to date. Free cash flow (excluding certain items) was $5.4 billion year to date.
• The company expects to return a total of $8.7 billion to shareholders in 2014 through approximately $3.7 billion in dividends and $5.0 billion in share repurchases.

2014 Guidance and Outlook:

The company now expects 9 percent (an increase from the company's previous target of 8 percent) core constant currency EPS growth in fiscal 2014 versus its fiscal 2013 core EPS of $4.37. Based on the current foreign exchange market consensus, the company expects foreign exchange translation to have an unfavorable impact of approximately 4 percentage points on full year core EPS growth in 2014.

Excluding the impact of structural changes and foreign exchange translation, organic revenue in 2014 is expected to grow mid-single digits versus 2013, consistent with the company's long-term target. Based on the current foreign exchange market consensus, the company expects foreign exchange translation to have an unfavorable impact of approximately 3 percentage points on full year net revenue growth in 2014.

For 2014, the company expects low-single-digit commodity inflation and productivity savings of approximately $1 billion. The company expects higher interest expense driven by increased debt balances and a core effective tax rate of approximately 25 percent.

The company is targeting over $10 billion in cash flow from operating activities and more than $7 billion in free cash flow (excluding certain items) in 2014. Net capital spending is expected to be approximately $3 billion in 2014, within the company's long-term capital spending target of less than or equal to 5 percent of net revenue.

The company expects to return a total of $8.7 billion to shareholders in 2014 through dividends of approximately $3.7 billion and share repurchases of approximately $5.0 billion.

For earnings history and earnings-related data on Pepsi (PEP) click here.