Pepsi 2014 Annual Report Download - page 56

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Our discussion and analysis is intended to help the reader understand our results of operations and financial
condition 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 120. Tabular dollars are presented in millions, except per share amounts. All per share amounts reflect
common stock 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 a complementary portfolio of enjoyable brands,
including Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana. Through our operations, authorized
bottlers, contract manufacturers and other third parties, we make, market, distribute and sell a wide variety
of convenient and enjoyable beverages, foods and snacks, 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, organic revenue, operating profit, EPS (as
reported and excluding certain items and the impact of foreign exchange translation), retail sales, market
share, safety, innovation, product and service quality, organizational health, brand equity, media viewership
and engagement, 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, return on invested capital (ROIC), and gross
and operating margin change.
During 2014, we continued to take steps to position ourselves for sustainable value creation over the long-
term and continued our progress against our key business priorities - brand building, innovation, productivity,
execution and talent management. For example, in 2014 we:
• Drove growth for our retail customers. Among the largest 30 food and beverage manufacturers,
PepsiCo was the largest contributor to U.S. retail sales in 2014.
• Continued to increase our investment in global research and development. Innovation in 2014
accounted for 9% of our net revenue in 2014, up from approximately 8% since 2012.
• Continued our multi-year productivity programs. In 2014, we delivered over $1 billion in productivity
savings.
• Continued our efforts to harmonize our food and beverage businesses, enhancing the effectiveness
of our execution and driving growth for PepsiCo and our customers. In 2014, we launched our largest-
ever global campaign for Pepsi and Lay’s, cross-promoting these brands in 28 markets.
• Continued to expand our globally integrated talent management infrastructure that provides insight
into our workforce planning at the global and local levels. In 2014, we continued to enhance PepsiCo
University, which helps our associates develop the leadership and functional skills they, and PepsiCo,
need to succeed and grow.
We successfully continued these initiatives during 2014 while returning $8.7 billion to shareholders through
dividends and share repurchases.
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