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59PepsiCo, Inc. 2008 Annual Report
RESULTS OF OPERATIONS – DIVISION REVIEW
The results and discussions below are based on how our Chief Executive Ofcer monitors the performance of our divisions. In addition,
our operating prot and growth, excluding the impact of restructuring and impairment charges, are not measures dened by accounting
principles generally accepted in the U.S. However, we believe investors should consider these measures as they are more indicative
of our ongoing performance and with how management evaluates our operating results and trends. For additional information on our
divisions, see Note 1 and for additional information on our restructuring and impairment charges, see Note 3.
FLNA QFNA LAF PAB UKEU MEAA Total
Net Revenue, 2008 $12,507 $1,902 $5,895 $10,937 $6,435 $5,575 $43,251
Net Revenue, 2007 $11,586 $1,860 $4,872 $11,090 $5,492 $4,574 $39,474
% Impact of:
Volume (a) –% (1.5)«% –% (4.5)«% 4% 13% 1%
Effective net pricing (b) 74113466
Foreign exchange ––––211
Acquisitions ––9–822
% Change (c) 8% 2% 21% (1)«% 17% 22% 10%
Net Revenue, 2007 $11,586 $1,860 $4,872 $11,090 $5,492 $4,574 $39,474
Net Revenue, 2006 $10,844 $1,769 $3,972 $10,362 $4,750 $3,440 $35,137
% Impact of:
Volume (a) 3% 2% 5% (1)«% 4% 12% 3%
Effective net pricing (b) 4355354
Foreign exchange 0.5 1 2 0.5 9 5.5 2
Acquisitions – – 11 2 – 11 3
% Change (c) 7% 5% 23% 7% 16% 33% 12%
(a) Excludes the impact of acquisitions. In certain instances, volume growth varies from the amounts disclosed in the following divisional discussions due to non-consolidated joint venture volume, and, for
our beverage businesses, temporary timing differences between BCS and CSE. Our net revenue excludes non-consolidated joint venture volume, and, for our beverage businesses, is based on CSE.
(b) Includes the year-over-year impact of discrete pricing actions, sales incentive activities and mix resulting from selling varying products in different package sizes and in different countries.
(c) Amounts may not sum due to rounding.
Frito-Lay North America
% Change
2008 2007 2006 2008 2007
Net revenue $12,507 $11,586 $10,844 87
Operating prot $÷2,959 $÷2,845 $÷2,615 49
Impact of restructuring and
impairment charges 108 28 67
Operating prot, excluding
restructuring and
impairment charges $÷3,067 $÷2,873 $÷2,682 77
2008
Net revenue grew 8% and pound volume grew 1%. The volume
growth reects our 2008 Sabra joint venture and mid-single-digit
growth in trademark Cheetos, Rufes and dips. These volume gains
were largely offset by mid-single-digit declines in trademark Lay’s
and Doritos. Net revenue growth beneted from pricing actions.
Foreign currency had a nominal impact on net revenue growth.
FLNA’s net revenue grew 8% and 7% in 2008 and 2007, respectively.
Operating prot grew 4%, reecting the net revenue growth.
This growth was partially offset by higher commodity costs,
primarily cooking oil and fuel. Operating prot growth was
negatively impacted by 3 percentage points, resulting from
higher fourth quarter restructuring and impairment charges in
2008 related to the Productivity for Growth program. Foreign
currency and acquisitions each had a nominal impact on operat-
ing prot growth. Operating prot, excluding restructuring and
impairment charges, grew 7%.
2007
Net revenue grew 7%, reecting volume growth of 3% and posi-
tive effective net pricing due to pricing actions and favorable mix.
Pound volume grew primarily due to high-single-digit growth in
trademark Doritos and double-digit growth in dips, SunChips
and multipack. These volume gains were partially offset by a
mid-single-digit decline in trademark Lay’s.