Pepsico reported sharply higher profits for 1985. The parent of Pepsi-Cola, Frito-Lay, Pizza Hut and Taco Bell said net income from continuing operations rose 25% from 1984 to $420 million. Income from discontinued operations sent total profit for the year to $544 million, up nearly 62% from $212.5 million in 1984. For the fourth quarter, net income fell slightly to $89.3 million. "Pepsi-Cola emerged as the clear winner in the U.S. marketplace," Chairman Donald Kendall said. Pepsico's results do not reflect its $380-million purchase of Seven-Up in January. That purchase must still be approved by federal antitrust regulators. The company said its restaurant earnings were up 11%, with 571 new Taco Bell and Pizza Hut restaurants opened.