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BREAKING NEWS / URGENT: The State Supreme Court upholds Act 10, Voter ID, and the state's domestic partnership registry

MADISON, Wis (WSAU)  - The Wisconsin State Supreme Court upheld Act 10, the state law that limits the collective bargaining rights of state employees. The law from three years ago sparked protests at the state capital and led to the recall attempt against Governor Scott Walker. The court's ruling in favor of Act 10 was 5-2. Justice Michael Gableman wrote the lead opinion, which was also signed by Justices David Prosser, Pat Roggensack and Annette Ziegler. Justice Patrick Crooks concurre...

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PepsiCo beats Street; CFO backs current portfolio

A variety of soft drinks produced by Pepsico are seen on a kitchen counter in Golden, Colorado October 8, 2009. REUTERS/Rick Wilking
A variety of soft drinks produced by Pepsico are seen on a kitchen counter in Golden, Colorado October 8, 2009. REUTERS/Rick Wilking

(Reuters) - PepsiCo Inc reported higher-than-expected quarterly earnings on Wednesday, as price increases and productivity improvements helped margins in the face of weak soft-drink sales in North America and Europe.

In addition, the company cited a lower tax rate and a $137 million gain related to refranchising its bottling operations in Vietnam - issues that one analyst said made the results look better than they are.

"The headline is much better than the net result," said JP Morgan analyst John Faucher.

Smaller soft-drink company Dr Pepper Snapple also released results on Wednesday, saying profit fell on weak sales volume.

Both companies' results came a week after Coca-Cola reported disappointing sales, blaming poor weather, and activist shareholder Nelson Peltz said that PepsiCo should buy Oreo cookie-maker Mondelez International and split off its soft-drink business.

Despite the beat, the maker of Pepsi-Cola, Frito-Lay snacks and Tropicana juice stood by its outlook for 2013, which calls for earnings growth of 7 percent.

Net income was $2.01 billion, or $1.28 per share in PepsiCo's second quarter, up from $1.49 billion, or 94 cents per share a year earlier.

Excluding items such as restructuring and integration charges, earnings were $1.31 per share. On that basis, analysts on average were expecting $1.19 per share, according to Thomson Reuters I/B/E/S.

Net revenue rose 2 percent to $16.81 billion, topping analysts' estimate of $16.79 billion.

Sales volume rose 3 percent for the food business and 1.5 percent for the beverage business. Volume tracks the amount of product sold.

On the food side, volume in the Americas rose 2 percent. In Latin America, it gained 1 percent, while in North America, it rose 3 percent for Frito-Lay and 1 percent for Quaker Foods. Snack volume increased 3 percent in Europe and 6 percent in the Asia, Middle East and Africa segment.

On the more challenged drinks side, volume in the Americas fell 3.5 percent, was flat in Europe and rose 9 percent in Asia, the Middle East and Africa.

Like Coca-Cola, PepsiCo's drinks business was hurt by an unusually cool and wet spring, Chief Financial Officer Hugh Johnston told CNBC-TV. But the company's broad portfolio played a role in its strong performance, he said, and dismissed Peltz's notion that the company should buy Mondelez.

"We think PepsiCo as a portfolio is working so well right now and the complexity of taking on an $80 billion acquisition and somehow trying to do all that integration, frankly, will distract the business from doing what it is that we're doing right now, which is creating a lot of value for shareholders," Johnston said.

He added that when someone advocates for the deal, "more often than not it's someone who's got a bigger stake in Mondelez."

PepsiCo shares were little changed at about $86.22 in early New York Stock Exchange trading. They are up 26 percent so far this year.

(Reporting by Martinne Geller in New York; Editing by Maureen Bavdek)