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2009 Annual Report
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Table of contents

  • Page 1
    0 1 2 0 1 3 0 3 2009 Annual Report

  • Page 2

  • Page 3
    ...At PepsiCo, Performance with Purpose means delivering sustainable growth by investing in a healthier future for people and our planet. As a global food and beverage company with brands that stand for quality and are respected household names-Quaker Oats, Tropicana, Gatorade, Lay's and Pepsi-Cola, to...

  • Page 4
    ... in customer (retail partner) surveys where third-party measures exist. BOTTOM LINE: • Continue to expand division operating margins. • Increase cash ï¬,ow in proportion to net income growth over three-year windows. • Deliver total shareholder returns in the top quartile of our industry group...

  • Page 5
    ...the globe by 2012. • Increase the range of foods and beverages that offer solutions for managing calories, like portion sizes. COMMUNITY: Actively work with global and local partners to help address global nutrition challenges. • Invest in our business and research and development to expand our...

  • Page 6
    ... WATER: Respect the human right to water through world-class efficiency in our operations, preserving water resources and enabling access to safe water. • Improve our water use efficiency by 20 percent per unit of production by 2015. • Strive for positive water balance in our operations in water...

  • Page 7
    ... reduce lost time injury rates, while striving to improve other occupational health and safety metrics through best practices. • Support ethical and legal compliance through annual training in our code of conduct, which outlines PepsiCo's unwavering commitment to its human rights policy, including...

  • Page 8
    ... through rough waters. Well, this year has seen some of the roughest possible waters. The economic tempest of 2008 turned into the perfect storm of 2009. Business was battered by volatile commodity costs, frozen credit markets, ï¬,uctuating currencies and negative GDP rates. At PepsiCo, it seemed...

  • Page 9
    ... cost controls and outstanding productivity. PepsiCo Asia Middle East and Africa (AMEA) had another excellent year, with solid net revenue and operating profit growth driven by strong volume growth across the region, with exceptional growth in our India beverage business. PepsiCo Americas Beverages...

  • Page 10
    ...manufacturing facilities, our sales and distribution organizations, our marketing groups, our staff functions and with our general managers. As we expand our businesses, we are placing heightened focus on ensuring that we maintain an inclusive environment and on 4 PepsiCo, Inc. 2009 Annual Report

  • Page 11
    ... our bottling company. Massimo, with his 30 years in the global consumer space and 15 years with PepsiCo, provides leadership for all brands as well as operational leadership for Gatorade, Tropicana and our Latin America franchise business. • Zein Abdalla, with more than 30 years in consumer goods...

  • Page 12
    ... 2009 2008 Chg (a) Core Earnings Per Share* Management Operating Cash Flow, Excluding Certain Items** (in millions) Summary of Operations Total net revenue Core division operating profit (b) Core total operating profit (c) Core net income attributable to PepsiCo (c) Core earnings per share...

  • Page 13
    ... Currency Earnings Per Share* Total Return to Shareholders Core Return on Invested Capital* # *See pages 91 and 92 for a reconciliation to the most directly comparable financial measure in accordance with GAAP. 1 7 *U.S. (Source: IRI GDMxC 52 weeks ending 12/27/09) Based on Dollar Sales...

  • Page 14
    ... the nutritional benefits of healthier foods and beverages. Our increased commitments to nutrition education, more transparent labeling, responsible marketing, and partnerships advocating basic facts about nutrition and exercise help people and communities make healthier, more informed choices. And...

  • Page 15

  • Page 16
    Fresh, wholesome snacking (Sabra) Refreshing burst of juice (Tropicana juicy pulp sacs) 0 grams trans fat (Quaker Oats rice) Light and natural, smoothly carbonated (H2Oh!) 100% natural whole grain oats (Quaker Oats) 0 calories, 0 grams of sugar (Pepsi Light)

  • Page 17
    Full day's supply of vitamin C (Trop50) Harvested from nature (Lipton Iced Tea) Lower in fat because they're baked (Baked! Lay's crisps) Nourish your body (Cao Ben Le) All-natural, zero-calorie sweetener (SoBe Lifewater)

  • Page 18
    ...a bright spot in 2009, with approximately 12 percent volume growth, demonstrating its real potential as a scalable global brand.  After earning top honors for most successful new product in the 2008 IRI New Product Pacesetters Report, G2 now appears in Ad Age's prestigious "Marketing Top 50" list...

  • Page 19
    ... snack and food choices for every occasion. Frito-Lay led the industry as the first to remove trans fats from all its snack chip products. Today, whether it's Quaker Oatmeal or Lay's potato chips, consumers around the world can choose products that are right for them and good for their families...

  • Page 20
    ... years, we've generated solid revenue growth by bringing innovation to ï¬,avors, textures, forms and packaging through our go-to-market system. And our nuts and seeds products stand out on grocery shelves, sold under the brands consumers have come to know and trust-Frito-Lay in the United States...

  • Page 21
    ... juices, enhanced waters and other noncarbonated beverages for their natural ingredients and benefits. In Russia, where we are the No. 1 juice business, our Lebedyansky juice company has introduced new products and strengthened its go-to-market system to meet this growing demand. Health-conscious...

  • Page 22
    ... milk, an apple and a Quaker Oatmeal bar and snacks consisting of a Tropicana juice and a baked Frito-Lay product. Hope for Accessible Nutrition PepsiCo is promoting healthy eating worldwide by developing new products rich in whole grains, fruits, vegetables, fiber, key vitamins and nutrients. We...

  • Page 23
    ... product lines and create new ones. PepsiCo also created platforms for future innovation of more nutritious, locally relevant products. In 2009, we established a joint venture with Calbee Foods, Japan's leading snack company, and we acquired Amacoco, Brazil's largest coconut water company. Russia...

  • Page 24
    ...access to safe water. We are deploying processes and technologies that reduce the amount of energy and water required to manufacture our products, and that make use of alternative energy sources. This careful management of resources drives healthy business results and helps create a healthier future...

  • Page 25

  • Page 26
    ... PET bottle (Naked Juice) First national juice brand in the U.S. to publish a third-party verified carbon footprint (64 oz. Tropicana Pure Premium Original Orange Juice) 100% British-grown potatoes (Walkers crisps) Launched the lightest-weight national brand water bottle in the U.S. in 2009 (Aqua...

  • Page 27
    ... 20% less plastic in packaging than the leading competitor (Lipton) First fully compostable chip bag of its kind (SunChips snacks) 33% reduction in overall packaging materials (Quaker Chewy Rip 'n Go) Uses solar-generated steam to help cook the snacks at the Modesto, CA plant, one of eight SunChips...

  • Page 28
    ... its innovative environmental management system to monitor water and energy use on every production line and every piece of equipment in real time. These technologies will help the plant reduce carbon emissions by an estimated 3,100 tons and conserve 100 million liters of water each year. Working...

  • Page 29
    ... content in our carbonated soft drink (CSD) plastic bottles in the United States. The new 32-ounce bottles of Naked Juice "reNEWabottle" is made from 100 percent post-consumer recycled PET resin, a first for a nationally distributed brand in the United States. PepsiCo, Inc. 2009 Annual Report 19

  • Page 30
    ... Counts We recognize water as a basic human right. It is essential to our food and beverage business. That's why our goal is to achieve positive water balance across all our businesses. For every liter of water we use, we intend to return one to the earth. Our India beverage operations have already...

  • Page 31
    ... environmentally friendly irrigation and crop rotation practices that save water and help local potato farmers grow thriving crops in the middle of the desert. These farmers are better able to make a sustainable living by selling their crops at competitive prices. PepsiCo, Inc. 2009 Annual Report 21

  • Page 32
    ...a Reduced Carbon Footprint Market leadership is a familiar position for the Tropicana brand. So it's no surprise that North America's juice leader would also become the first brand in the United States to certify with the Carbon Trust the carbon footprint of a product-in this case a 64-ounce carton...

  • Page 33
    ...lls around the globe. PepsiCo UK pledged in 2008 to achieve zero landfill waste across its total supply chain within 10 years. To date, it has focused on reducing waste at its manufacturing sites. With aggressive programs to recycle and reuse materials, eight of these sites in 2009 had already met...

  • Page 34
    ... to invest in our associates to help them develop their skills and to sustain PepsiCo's leadership pipeline. We also are focused on increasing associate engagement and satisfaction so that we maintain our position as an employer of choice. By providing good jobs, an inclusive workplace, training and...

  • Page 35

  • Page 36
    The perfect size chip every time* (Tostitos) Good traditional taste that people like* (Mirinda) Prompting millions of Brits to smile* (Walkers) Tastes better than homemade* (Tostitos Restaurant Salsa) It feels really good to know you're eating natural ingredients* (Red Sky) We all love the ...

  • Page 37
    ... fruit from a glass* (Dole) The perfect mix of sweet and salty* (Rold Gold pretzels) Helped me finish my first-ever marathon* (Gatorade) By far the best chip ever* (Lay's) I love that we can now get the benefits of Quaker Oatmeal in a pancake* (Quaker Pancakes) A Pepsi always brightens my day...

  • Page 38
    ... the brands they love, to grow our customers' businesses and to enable associates to build their careers. We will be better able to create value for PepsiCo shareholders and to improve the communities in which we work. Delivering Success for Four Generations Independent bottlers and distributors...

  • Page 39
    ... Yep, Ph.D., Global Vice President R&D, Long-Term Research; George A. Mensah, MD, FACC, FACP, Director, Heart Health & Global Health Policy; Jonathan C. McIntyre, Ph.D., Senior Vice President, R&D Global Beverages; Heidi Kleinbach-Sauter, Ph.D., Senior Vice President, PepsiCo Global Foods R&D; Mannu...

  • Page 40
    ... a "nice" (sweet) or "naughty" (chili) creature comes alive on the screen. Programs like these place our global brands at the center of popular culture, where they can continue to energize new generations of consumers. * trademark of Twitter, Inc. and ® Registered Registered trademark of Facebook...

  • Page 41
    ... and families across 1,700 YMCAs and taught valuable lessons about health and activity. We're also addressing health and wellness issues on a global scale. PepsiCo is supporting the U.N. Millennium Development Goals through our nutrition programs, investments in education, research on sustainable...

  • Page 42
    ...-and helps PepsiCo control its health care costs. In the United States, where 93 percent of HealthRoads participants and their partners have completed a personal health assessment, more than 31,000 have engaged in a wellness program to eliminate a health risk. 30 PepsiCo, Inc. 2009 Annual Report

  • Page 43
    ... Magazine • America's Most Reputable Companies-Forbes.com • Global 2000 World's Biggest Companies-Forbes The World Is Noticing • Community Partnership Awards-Food and Drink Federation • Best Foods for Women-Women's Health • "Product of the Year" Awards-Russian National Trade Association...

  • Page 44
    ... Distribution Network 37 Our Competition 37 Other Relationships 37 Our Business Risks 37 Risks Relating to the Mergers 42 OUR CRITICAL ACCOUNTING POLICIES Revenue Recognition 46 Brand and Goodwill Valuations 46 Income Tax Expense and Accruals 47 Pension and Retiree Medical Plans 48 Recent...

  • Page 45
    ...revenue, operating profit, management operating cash flow, earnings per share and return on invested capital. Key challenges and Strategies for Driving Growth We remain focused on growing our business with the objectives of improving our financial results and increasing returns for our shareholders...

  • Page 46
    ...local good-foryou products and brands. We intend to build on this core with an increasing stream of science-based innovation derived from the research and development capabilities that we have been ramping up over the past couple of years, as well as from targeted acquisitions and joint ventures. We...

  • Page 47
    ...Pepsi, 7UP and Tropicana. These brands are sold to authorized bottlers, independent We are organized into three business units, as follows: (1) PepsiCo Americas Foods (PAF), which includes Frito-Lay North America (FLNA), Quaker Foods North America (QFNA) and all of our Latin American food and snack...

  • Page 48
    ... bearing Company-owned or licensed trademarks to independent distributors and retailers (see PepsiCo Americas Beverages above). See also "Acquisition of Common Stock of PBG and PAS" below. Asia, Middle East & Africa AMEA makes, markets and sells a number of leading snack food brands including Lay...

  • Page 49
    ...and retail stores. These less costly systems generally work best for products that are less fragile and perishable, have lower turnover, and are less likely to be impulse purchases. Fmmdservice and Vending Our foodservice and vending sales force distributes snacks, foods and beverages to third-party...

  • Page 50
    ... adverse effect on our business, financial condition and results of operations, as well as require additional resources to rebuild our reputation. Trade consolidation, the loss of any key customer, or failure to maintain good relationships with our bottling partners could adversely affect our...

  • Page 51
    ... or social events. Such regulatory environment changes may include changes in: food and drug laws; laws related to advertising and deceptive marketing practices; accounting standards; taxation requirements, including taxes specifically targeting the consumption of our products; competition laws; and...

  • Page 52
    ... as weff as regionaf, focaf and private fabef manufacturers. In many countries where we do business, incfuding the United States, The Coca-Cofa Company, is our primary beverage competitor. We compete on the basis of price, quafity, product variety, distribution, 40 PepsiCo, Inc. 2009 Annual Report

  • Page 53
    ....," "Market Risks" and Note 1 to our consolidated financial statements. Disruption of our supply chain could have an adverse impact on our business, financial condition and results of operations. Our ability and that of our suppliers, business partners, including bottlers, contract manufacturers...

  • Page 54
    ... retaining executives and key employees; • conforming standards, controls, procedures and policies, business cultures and compensation structures among the companies; • consolidating and streamlining corporate and administrative infrastructures; • consolidating sales and marketing operations...

  • Page 55
    ...such as our business outlook, in our annual and quarterly reports, press releases, and other written and oral statements. "hese "forward-looking statements" are based on currently available information, operating plans and projections about future events and trends. "hey inherently involve risks and...

  • Page 56
    ... the underlying commodity price, would have increased our net losses in 2009 by $17 million. Foreign Exchange Financial statements of foreign subsidiaries are translated into U.S. dollars using period-end exchange rates for assets and liabilities and weighted-average exchange rates for revenues and...

  • Page 57
    ... quarter of 2010. In 2009, our operations in Venezuela comprised 7% of our cash and cash equivalents balance and generated less than 2% of our net revenue. Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses in our income statement as...

  • Page 58
    ... critical accounting policies arise in conjunction with the following: • revenue recognition, • brand and goodwill valuations, • income tax expense and accruals, and • pension and retiree medical plans. REVENUE RECOGNITION Our products are sold for cash or on credit terms. Our credit terms...

  • Page 59
    ..., such as forecasted growth rates and our cost of capital, are based on the best available market information and are consistent with our internal forecasts and operating plans. These assumptions could be adversely impacted by certain of the risks discussed in "Our Business Risks." We did not...

  • Page 60
    ... employee-related factors, such as turnover, retirement age and mortality; • for pension expense, the expected return on assets in our funded plans and the rate of salary increases for plans where benefits are based on earnings; and • for retiree medical expense, health care cost trend rates...

  • Page 61
    ... 7. RECENT ACCOUNTING PRONOUNCEMENTS Pension Expense discount rate Expected rate of return on plan assets Expected rate of salary increases Retiree medical Expense discount rate Current health care cost trend rate 6.1% 7.6% 4.4% 6.1% 7.5% 6.2% 7.6% 4.4% 6.2% 8.0% 6.3% 7.6% 4.4% 6.4% 8.5% Based...

  • Page 62
    ... 2009 2008 2007 Operating profit Mark-to-market net impact (gain/(loss)) Restructuring and impairment charges PBG/PAS merger costs Bottling equity income PBG/PAS merger costs Net income attributable to PepsiCo Mark-to-market net impact (gain/(loss)) Restructuring and impairment charges Tax benefits...

  • Page 63
    ... profit decline and 1.8 percentage points to the margin decline. Leverage from the revenue growth was offset by the impact of higher commodity costs. Acquisitions and foreign currency each positively contributed 1 percentage point to operating profit performance. PepsiCo, Inc. 2009 Annual Report...

  • Page 64
    ... Also see "Acquisition of Common Stock of PBG and PAS." 2009 Bottling equity income decreased 2%, primarily reflecting pre-tax gains on our sales of PBG and PAS stock in the prior year, mostly offset by a prior year non-cash charge of $138 million related to our share of PBG's 2008 restructuring and...

  • Page 65
    ... due to rounding. frito-lay north america 2009 2008 2007 % Chmnge 2009 2008 oil and potatoes. Lower restructuring and impairment charges in the current year related to our Productivity for Growth program increased operating profit growth by nearly 4 percentage points. 2008 Net revenue grew 8% and...

  • Page 66
    ...of prior year restructuring and impairment charges related to our Productivity for Growth program, which increased operating profit growth by 5 percentage points. Lower advertising and marketing, and selling and distribution expenses, also contributed to the operating profit growth. 2008 Net revenue...

  • Page 67
    ... to the net revenue performance. Operating profit grew 2%, primarily reï¬,ecting the favorable effective net pricing and lower restructuring and impairment costs in the current year related to our Productivity for Growth program. Acquisitions positively contributed 5 percentage points to the...

  • Page 68
    ... points, resulting from higher fourth quarter restructuring and impairment charges in 2008 related to our Productivity for Growth program. Operating profit, excluding restructuring and impairment charges, grew 11%. Asia, Middle East & Africa 2009 2008 200O % Change 2009 2008 Beverage volume...

  • Page 69
    ...Our operating cash flow in 2008 reflects restructuring payments of $180 million, including $159 million related to our Productivity for Growth program, and pension and retiree medical contributions of $219 million, of which $23 million were discretionary. Investing Activities In 2009, net cash used...

  • Page 70
    ... We expect to continue to return approximately all of our management operating cash flow to our shareholders through dividends and share repurchases. However, see "Our Business Risks" for certain factors that may impact our operating cash flows. Credit Ratings Our objective is to maintain short-term...

  • Page 71
    ... income or tax benefits or to avoid recognizing or disclosing assets or liabilities. See Note 9 for a description of our off-balance-sheet arrangements. ACQUISITION OF COMMON STOCK OF PBG AND PAS On August 3, 2009, we entered into an Agreement and Plan of Merger with PBG and Pepsi-Cola Metropolitan...

  • Page 72
    ...) Fiscal years ended December 26, 2009, December 27, 2008 and December 29, 2007 2009 2008 2007 Net Revenue Cost of sales Selling, general and administrative expenses Amortization of intangible assets Operating Profit Bottling equity income Interest expense Interest income Income before Income Taxes...

  • Page 73
    .../PAS merger costs Cash payments for PBG/PAS merger costs Excess tax benefits from share-based payment arrangements Pension and retiree medical plan contributions Pension and retiree medical plan expenses Bottling equity income, net of dividends Deferred income taxes and other tax charges and credits...

  • Page 74
    ...Balance Sheet PepsiCo, Inc. and Subsidiaries (in millions except per share amounts) December 26, 2009 and December 27, 2008 2009 2008 ASSETS Current Assets Cash and cash equivalents Short-term investments Accounts and notes receivable, net Inventories Prepaid expenses and other current assets Total...

  • Page 75
    ... Balance, end of year Total Equity Comprehensive Income Net income Other Comprehensive Income/(Loss) Currency translation adjustment Cash ï¬,ow hedges, net of tax Pension and retiree medical, net of tax Net prior service (cost)/credit Net gains/(losses) Unrealized gains/(losses) on securities, net...

  • Page 76
    ... an additional week of results every five or six years. Raw materials, direct labor and plant overhead, as well as purchasing and receiving costs, costs directly related to production planning, inspection costs and raw material handling facilities, are included in cost of sales. The costs of moving...

  • Page 77
    ... 2008 Net Revenue 2009 PepsiCo Americas Beverages (PAB) PepsiCo International (PI) Europe Asia, Middle East & Africa (AMEA) 2007 2008 Operating Profit(a) 2007 FLNA QFNA LAF PAB Europe AMEA Total division Corporate-net impact of mark-to-market on commodity hedges Corporate-PBG/PAS merger costs...

  • Page 78
    ... programs, foreign exchange transaction gains and losses, certain commodity derivative gains and losses and certain other items. other DiviSioN iNFormatioN 2009 2008 Total Assets 2007 2009 2008 Capital Spending 2007 FLNA QFNA LAF PAB Europe AMEA Total division Corporate(a) Investments in bottling...

  • Page 79
    ... of December 27, 2008 are included in current assets and other assets on our balance sheet. For additional unaudited information on our sales incentives, see "Our Critical Accounting Policies" in Management's Discussion and Analysis of Financial Condition and Results of Operations. Other marketplace...

  • Page 80
    ... and value of both current and proposed product lines. Consumer research is excluded from research and development costs and included in other marketing costs. Research and development costs were $414 million in 2009, $388 million in 2008 and $364 million in 2007 and are reported within selling...

  • Page 81
    ... assets for each of the next five years, based on existing intangible assets as of December 26, 2009 and using average 2009 foreign exchange rates, is expected to be $65 million in both 2010 and 2011, $61 million in 2012, $58 million in 2013 and $52 million in 2014. PepsiCo, Inc. 2009 Annuml Report...

  • Page 82
    ... Accounting Policies" in Management's Discussion and Analysis of Financial Condition and Results of Operations. Perpetual brands and goodwill are assessed for impairment at least annually. If the carrying amount of a perpetual brand exceeds its fair value, as determined by its discounted cash flows...

  • Page 83
    ... affiliates Property, plant and equipment Intangible assets other than nondeductible goodwill Other Gross deferred tax liabilities Deferred tax assets Net carryforwards Stock-based compensation Retiree medical benefits Other employee-related benefits Pension benefits Deductible state tax and...

  • Page 84
    ...of PepsiCo stock on the date of grant and is amortized over the vesting period, generally three years. Each RSU is settled in a share of our stock after the vesting period. Our weighted-average Black-Scholes fair value assumptions are as follows: 2009 2008 2007 Expected life Risk free interest rate...

  • Page 85
    ... year ended December 26, 2009 is presented below: Our Stock Option Activity Average Price(b) Average Life (years)(c) Aggregate Intrinsic Value(d) note 7 Pension, Retiree Medical and Savings Plans Our pension plans cover full-time employees in the U.S. and certain international employees. Benefits...

  • Page 86
    ... loss (pre-tax) Net loss Prior service cost/(credit) Total Components of the (decrease)/increase in net loss Measurement date change Change in discount rate Employee-related assumption changes Liability-related experience different from assumptions Actual asset return different from expected return...

  • Page 87
    ... 2007 2009 2008 International 2007 2009 Retiree Medical 2008 2007 Components of benefit expense Service cost Interest cost Expected return on plan assets Amortization of prior service cost/(credit) Amortization of net loss Settlement/curtailment (gain)/loss Special termination benefits Total...

  • Page 88
    ... plan investment strategy, our expectations for long-term rates of return and our historical experience. We also review current levels of interest rates and inflation to assess the reasonableness of the long-term rates. To calculate the expected return on pension plan assets, we use a market-related...

  • Page 89
    ... equity of Bottling Group, LLC, PBG's principal operating subsidiary. PBG's summarized financial information is as follows: 2009 2008 2007 ReTIRee MedIcal coST TRend RaTeS Current assets Noncurrent assets Total assets Current liabilities Noncurrent liabilities Total liabilities Our investment Net...

  • Page 90
    ... teas, coffees and water products) to our noncontrolled bottling affiliates. Consistent with accounting for equity method investments, our joint venture revenue is not included in our consolidated net revenue and therefore is not included in the above table. 78 PepsiCo, Inc. 2009 Annuml Report

  • Page 91
    ... outstanding commercial paper issued by us or our subsidiaries and for other general corporate purposes, including working capital, capital investments and acquisitions. This agreement is in addition to our existing $2.0 billion unsecured revolving credit agreement which expires in 2012. Our lines...

  • Page 92
    ... Financial Statements LoNg-Term CoNTraCTuaL CommiTmeNTS (a) Payments Due by Period 2011- 2013- 2015 and 2010 2012 2014 beyond Total See "Our Liquidity and Capital Resources" in Management's Discussion and Analysis of Financial Condition and Results of Operations for further unaudited information...

  • Page 93
    ... resulted in net losses of $57 million in 2009 and $343 million in 2008. FOREIGN EXCHANGE We are subject to commodity price risk because our ability to recover increased costs through higher pricing may be limited in the competitive environment in which we operate. This risk is managed through the...

  • Page 94
    ... a material impact on our financial statements. See Note 7 for the fair value framework. The fair values of our financial assets and liabilities as of December 26, 2009 are categorized as follows: total 2009 Level 1 Level 2 Level 3 assets(a) vvailable-for-sale securities(b) Short-term investments...

  • Page 95
    ... had average exercise prices of $61.52 in 2009, $67.59 in 2008 and $65.18 in 2007. The fair values of our financial assets and liabilities as of December 27, 2008 are categorized as follows: Total 2008 Level 1 Level 2 Level 3 Assets(a) Available-for-sale securities(b) Short-term investments-index...

  • Page 96
    ...by the ESOP participants. The preferred stock accrues dividends at an annual rate of $5.46 per share. At year-end 2009 and 2008, there were 803,953 preferred shares issued and 243,553 and 266,253 shares outstanding, respectively. The outstanding preferred shares had a fair value of $73 million as of...

  • Page 97
    ... loss attributable to PepsiCo in 2008 due to the change in measurement date. See Note 7. Other assets Noncurrent notes and accounts receivable Deferred marketplace spending Unallocated purchase price for recent acquisitions Pension plans Other Accounts payable and other current liabilities Accounts...

  • Page 98
    ...into the right to receive either 0.6432 of a share of PepsiCo common stock or, at the election of the holder, $36.50 in cash, without interest, and in each case subject to proration procedures which provide that we will pay cash for a number of shares equal to 50% of the PBG common stock outstanding...

  • Page 99
    ... consistently at all levels and in all countries. We have maintained strong governance policies and practices for many years. The management of PepsiCo is responsible for the objectivity and integrity of our consolidated financial statements. The Audit Committee of the Board of Directors has engaged...

  • Page 100
    ...reasonably likely to materially affect, our internal control over financial reporting. Peter A. Bridgman Senior Vice President and Controller Richard Goodman Chief Financial Officer Indra K. Nooyi Chairman of the Board of Directors and Chief Executive Officer 88 PepsiCo, Inc. 2009 vnnual Report

  • Page 101
    ... 26, 2009 and December 27, 2008, and the related Consolidated Statements of Income, Cash Flows and Equity for each of the fiscal years in the three-year period ended December 26, 2009. We also have audited PepsiCo, Inc.'s internal control over financial reporting as of December 26, 2009, based on...

  • Page 102
    ... Five-Year Summary 2009 2008 2007 Quarterly Net revenue 2009 2008 Gross profit 2009 2008 Restructuring and impairment charges (a) 2009 2008 Mark-to-market net impact (b) 2009 2008 PepsiCo portion of PBG restructuring and impairment charge(c) 2008 PBG/PAS merger costs(d) 2009 Net income attributable...

  • Page 103
    ... Growth Foreign Currency Translation Net Revenue Growth, on a constant currency basis -% 5 5% Operating Profit Reconciliation 2009 2008 Growth Total PepsiCo Reported Operating Profit Mark-to-Market Net (Gains)/Losses on Commodity Hedges Restructuring and Impairment Charges PBG/PAS Merger Costs...

  • Page 104
    ...) 2009 2008 Growth 1% 5 $3.37* 6% Net Cash Provided by Operating Activities Capital Spending Sales of Property, Plant and Equipment Management Operating Cash Flow Discretionary Pension Contribution (After-Tax) Restructuring Payments (After-Tax) PBG/PAS Merger Cost Payments Management Operating...

  • Page 105
    ...-to-market net gain or loss or impact: the change in market value for commodity contracts that we purchase to mitigate the volatility in costs of energy and raw materials that we consume. The market value is determined based on average prices on national exchanges and recently reported transactions...

  • Page 106
    PepsiCo Board of Directors Shona L. Brown Senior Vice President, Business Operations, Google Inc. 44. Elected 2009. Arthur C. Martinez Former Chairman of the Board, President and Chief Executive Officer, Sears, Roebuck and Co. 70. Elected 1999. Ian M. Cook Chairman of the Board, President and Chief...

  • Page 107
    ..., PepsiCo Americas Foods PepsiCo Americas Beverages Massimo F. d'Amore Chief Executive Officer, PepsiCo Beverages Americas Eric J. Foss Chief Executive Officer, Pepsi Beverages Company Richard Goodman Chief Financial Officer, PepsiCo Hugh Johnston Executive Vice President, PepsiCo Global Operations...

  • Page 108
    ... York Stock Exchange was the price as reported by Bloomberg for the years ending 2005-2009. Past performance is not necessarily indicative of future returns on investments in PepsiCo common stock. YEAR-END MARKET PRICE OF STOCK Based on calendar year-end (in $) 80 60 40 20 0 ASSOCIATE BENEFIT PLAN...

  • Page 109
    ... to: Care for customers, consumers and the world we live in Sell only products we can be proud of Speak with truth and candor Balance short term and long term Win with diversity and inclusion Respect others and succeed together Total Environmental Profile All of this annual report paper is Forest...

  • Page 110
    Corporate Headquarters, PepsiCo, Inc. 700 Anderson Hill Road Purchase, NY 10577 www.pepsico.com 0 1 2 0 1 3 0 3