Pepsi 2013 Annual Report Download - page 50

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Our discussion and analysis is an integral part of our consolidated financial statements and is provided as
an addition to, and should be read in connection with, our consolidated financial statements and the
accompanying notes. Definitions of key terms can be found in the glossary beginning on page 119. Tabular
dollars are presented in millions, except per share amounts. All per share amounts reflect common per share
amounts, assume dilution unless otherwise noted, and are based on unrounded amounts. Percentage changes
are based on unrounded amounts.
OUR BUSINESS
Executive Overview
We are a leading global food and beverage company with brands that are respected household names
throughout the world. Through our operations, authorized bottlers, contract manufacturers and other third
parties, we make, market, sell and distribute a wide variety of convenient and enjoyable foods and beverages,
serving customers and consumers in more than 200 countries and territories.
Our management monitors a variety of key indicators to evaluate our business results and financial condition.
These indicators include growth in volume, revenue and organic revenue, growth in operating profit and EPS
(as reported and excluding certain items and the impact of foreign exchange translation), market share, safety,
product and service quality, organizational health, brand equity, employee diversity, net commodity inflation,
productivity savings, net capital spending, free cash flow and free cash flow excluding certain items, cash
returned to shareholders in the forms of share repurchases and dividends, advertising and marketing expenses,
ROIC, and gross and operating margin change.
During 2013, we continued to reinforce the initiatives we undertook in 2012 that we believe will position us
for future success. These initiatives included increasing our investments in our largest global brands; stepping
up our innovation program, including the successful launch of Mountain Dew Kickstart; increasing our
spending on research and development, including opening a new state-of-the-art food and beverage innovation
center in Shanghai, China; and continuing our multi-year productivity program that resulted in over $900
million in savings in 2013. We successfully continued these initiatives during 2013 while returning $6.4
billion to shareholders through share repurchases and dividends.
As we look to 2014 and beyond, we remain focused on positioning our Company for long-term success while
continuing to deliver strong, consistent financial results. Our business strategies are designed to address key
challenges facing our Company, including: continuing to strengthen our presence in high growth developing
and emerging markets and providing products in these markets that will be accepted and successful; continued
consumer focus on nutritious products; geopolitical and social instability and commodity cost volatility. We
believe that many of these challenges create new growth opportunities for our Company. For example, we
believe that a favorable outlook for growth in developing and emerging markets creates opportunities for
further growth of our products in those markets. We also believe that continued consumer focus on more
nutritious products creates an opportunity for us to expand our offerings in this arena. In order to address
these challenges and capitalize on these opportunities, we plan to do the following:
Continue to invest in developing and emerging markets.
We expect that developing and emerging markets will continue to represent an attractive high growth space
for our Company, but will require us to make significant investments to develop the skills, tools and people
necessary to continue to compete effectively in these markets. PepsiCo already has a strong presence in
developing and emerging markets and we believe it will be important for us to continue to invest in these
markets to continue to grow our business.