updated 4/1/2004 2:44:06 PM ET 2004-04-01T19:44:06

PepsiCo Inc., the world’s No. 2 soft drink maker, Monday forecast strong first-quarter results on higher revenue and said it would spend more than $2.5 billion on stock buybacks this year.

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The Purchase, New York-based maker of Pepsi soft drinks and Frito-Lay snack foods, also raised its annual dividend by 44 percent to 92 cents a share, and said its board has authorized an additional $7 billion stock repurchase plan for the next three years.

“Our strong cash generation, coupled with our low debt levels, allows us to retain financial flexibility to fund future growth opportunities and, at the same time, significantly increase our cash returned to shareholders,” Chairman and Chief Executive Officer Steve Reinemund said in a statement.

PepsiCo forecast a 10 percent increase in first-quarter revenue and said its performance across all businesses was strong. The company added it now expects earnings per share of about 46 cents for the quarter.

For the full year, it said earnings would likely be at the high-end of the previously forecast range of $2.27-$2.29 per share.

Analysts on average were expecting the company to post a first quarter profit of 44 cents a share with estimates ranging from 42 cents to 46 cents, according to Reuters Research, a unit of Reuters Group Plc.

PepsiCo stock closed up 2.25 percent to $52.21 in trading on Monday on the New York Stock Exchange.  REUTERS

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