2 Pepsi Co

PepsiCo

MISSION

To be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

VISION

Focus on environmental stewardship, activities that benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.

Headquarters: Purchase, NY Symbol: PEP Exchange: NYSE Stock Price: $62.23 Number of Employees: 198,000 Industry: Snacks and Beverages

COMPANY PROFILE

COMPANY HISTORY

o 1965 - PepsiCo, Inc. is founded by Donald M. Kendall President and Chief Executive Officer of Pepsi-Cola and Herman W. Lay, Chairman and Chief Executive Officer of Frito-Lay, through the merger of the two companies.

o 1976 - Pepsi-Cola becomes the single largest selling soft drink brand sold in U.S. supermarkets.

o 1984 - PepsiCo is restructured to focus on its three core businesses: soft drinks, snack foods and restaurants. Transportation and sporting goods businesses are sold.

o 1990 - PepsiCo profits exceed $1 billion for the first time. o 2001 - PepsiCo merges with The Quaker Oats Companyo 2008 - PepsiCo announces plans to invest $1 billion in

China over next four years as part of the strategy to expand in emerging markets and broaden the portfolio of locally-relevant products

BRANDS

BRANDS

FINANCIAL HIGHLIGHTS

  2008    2007    Chg

Summary of Operations                

Total net revenue $ 43,251  $ 39,474    10%

Core division operating profit $ 8,475  $ 8,025    6%

Core total operating profit $ 7,824  $ 7,253    8%

Core net income $ 5,887  $ 5,587    5%

Core earnings per share $ 3.68  $ 3.37    9%

Other Data                

Management operating cash flow $ 4,651  $ 4,551    2%

Net cash provided by operating activities $ 6,999  $ 6,934    1%

Capital spending $ 2,446  $ 2,430    1%

Common share repurchases $ 4,720  $ 4,300    10%

Dividends paid $ 2,541  $ 2,204    15%

Long-term debt $ 7,858  $ 4,203    87%

Period Ending 12/27/2008 12/29/2007 12/30/2006 12/31/2005  

  Total Revenue $43,251,000 $39,474,000 $35,137,000 $32,562,000  

  Cost of Revenue $20,351,000 $18,038,000 $15,762,000 $14,176,000  

  Gross Profit $22,900,000 $21,436,000 $19,375,000 $18,386,000  

  Operating Expenses          

  Sales, General and Admin. $15,901,000 $14,208,000 $12,774,000 $12,314,000  

  Other Operating Items $64,000 $58,000 $162,000 $150,000  

  Operating Income $6,935,000 $7,170,000 $6,439,000 $5,922,000  

  Add'l income/expense items $41,000 $685,000 $173,000 $716,000  

  Earnings Before Interest and Tax $7,350,000 $7,855,000 $7,228,000 $6,638,000  

  Interest Expense $329,000 $224,000 $239,000 $256,000  

  Earnings Before Tax $7,021,000 $7,631,000 $6,989,000 $6,382,000  

  Income Tax $1,879,000 $1,973,000 $1,347,000 $2,304,000  

 Equity Earnings Unconsolidated Subsidiary

$374,000 $0 $616,000 $0  

  Net Income-Cont. Operations $5,142,000 $5,658,000 $5,642,000 $4,078,000  

  Net Income $5,142,000 $5,658,000 $5,642,000 $4,078,000  

 Net Income Applicable toCommon Shareholders

$5,142,000 $5,658,000 $5,642,000 $4,078,000

INCOME STATEMENT

STATEMENT OF CASH FLOWS

Management Operating Cash Flow**

Period Ending: 12/27/2008 12/29/2007 12/30/2006 12/31/2005 

  Net Income $5,142,000 $5,658,000 $5,642,000 $4,078,000 

  Cash Flows-Operating Activities         

  Depreciation $1,543,000 $1,426,000 $1,406,000 $1,308,000 

  Net Income Adjustments $1,105,000 ($46,000) ($408,000) $50,000 

  Changes in Operating Activities         

  Accounts Receivable ($549,000) ($405,000) ($330,000) ($272,000)  

  Inventory ($345,000) ($204,000) ($186,000) ($132,000)  

  Other Operating Activities ($435,000) ($123,000) $32,000 $23,000 

  Liabilities $538,000 $628,000 ($72,000) $797,000 

  Net Cash Flow-Operating $6,999,000 $6,934,000 $6,084,000 $5,852,000 

  Cash Flows-Investing Activities         

  Capital Expenditures ($2,446,000) ($2,430,000) ($2,068,000) ($1,736,000)  

  Investments $1,282,000 ($356,000) $2,017,000 ($991,000)  

  Other Investing Activities ($1,503,000) ($958,000) ($143,000) ($790,000)  

  Net Cash Flows-Investing ($2,667,000) ($3,744,000) ($194,000) ($3,517,000)  

  Cash Flows-Financing Activities         

  Dividends Paid ($2,541,000) ($2,204,000) ($1,854,000) ($1,642,000)  

  Sale and Purchase of Stock ($4,106,000) ($3,204,000) ($1,816,000) ($1,932,000)  

  Net Borrowings $3,515,000 $1,194,000 ($2,447,000) $1,696,000 

  Other Financing Activities $107,000 $208,000 $134,000 $0  

  Net Cash Flows-Financing ($3,025,000) ($4,006,000) ($5,983,000) ($1,878,000)  

  Effect of Exchange Rate ($153,000) $75,000 $28,000 ($21,000)  

  Net Cash Flow $1,154,000 ($741,000) ($65,000) $436,000

PERFORMANCE CHART

Strengths

oThe company has its strong point in the 18 brands it owns, with sales over $1 billion each. These brands are leaders in their respective categories, second only, once again, to Coca-Cola.

oDistribution network - The Company’s go-to-market systems like the direct store delivery gives an added bonus to the flexibility and power of the PepsiCo’s distribution network.

oThe almost non-stop ability to innovate and diversify, gives PepsiCo the cutting edge it most definitely needs in a company of its size and calibre.

Weaknesses

o PepsiCo is far away from leader Coca-cola in the international market.

oAll PepsiCo products bear the company name

SWOT

SWOT

Opportunities

oThere are increasing trend toward healthy foods

oNoncarbonated drinks are the fastest-growing part of the industry

oFood division should expand internationally

Threats

oPepsi is blamed for pesticide residues in their products in one of their most promising emerging marketoCompetitors

FIVE FORCE MODEL

STRATEGY

“Power of One Alliance”

Development of Good-for-You and Better-for-You products

o Pepsi and Frito Lay brands hold large market share in both domestic and international markets

PepsiCo, Inc. has 18 mega-brands that generate $1 billion or more each in annual retail sales

$43 billion in revenues 185,000 employees Product innovation Acquisitions and partnerships Environmentally, socially and economically

responsible company

KEY SUCCESS FACTORS

WORKS CITED

www.finance.yahoo.com www.moneycentral.msn.com www.pepsico.com www.nyse.com www.coca-cola.com