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2014 ANNUAL REPORT  7
77companies, PepsiCo ranks in the top quartile
in Total Shareholder Returns— a performance
history we reflect on with pride as we celebrate
our50th year.
2014 — A Strong Performance Year
PepsiCo delivered strong performance in 2014,
meeting or exceeding all of our full-year finan-
cial targets.
• Organic revenue grew 4%, with PepsiCo
outpacing other Consumer Packaged Goods
companies in organic revenue growth.
• Core gross margins improved by 55 basis
points, and core operating margins improved
by30basis points.
• Core net return on invested capital (ROIC)
improved 110 basis points, to 17.5%.
• Core constant currency earnings per share
(EPS)grew 9%.
• Free cash flow excluding certain items was
strong at $8.3billion.
• PepsiCo increased its annual dividend for
the 42nd consecutive year in 2014 and returned
$8.7billion to our shareholders through share repur-
chases and dividends, a 36% increase over 2013.
While delivering this strong financial perfor-
mance, we continue to deliver progress on the
fundamental global capabilities that underpin our
long-term competitiveness and resilience in the
transformation journey we have been on.
First, our investment in innovation resulted in
strong retail sales in North America. Thanks to our
world-class research and development capabili-
ties and the strength of our new product pipeline,
innovation accounted for more than 9% of our net
revenue in 2014, versus more than 7% in 2012. These
efforts, combined with new best-in-class selling
tools and technologies, made PepsiCo the largest
contributor to U.S. retail sales growth among all food
and beverage manufacturers, with nearly $1billion of
retail sales growth in all measured channels — more
than the next 27 largest manufacturers combined.
Innovation is a critical
building block in our growth
model. Pictured: PepsiCo
innovation in North America.
>9%
Innovation accounted
for more than 9% of our
net revenue in 2014.
3. This comparison is based on publicly available data for the period
January2, 1974 through December31, 2014 and reects dividend
reinvestment and adjustments for stock splits.
4. Organic, core and constant currency results, as well as free cash ow
excluding certain items, are non-GAAP nancial measures. Please refer
to “Reconciliation of GAAP and Non-GAAP Information” beginning on
page141of this Annual Report for more information about these results,
including a reconciliation to the most directly comparable nancial
measuresin accordance with GAAP.
5. Our organic revenue calculation may dier from similar measures as
reported by other companies.
6. Based in part on data reported by Information Resources, Inc. through
itsSyndicated Advantage Service for the Total US Multi-Outlet Plus
Convenience for all Food & Beverage categories for the 52-week period
ending December28, 2014, including PepsiCo’s custom research denitions.