Pepsi 2015 Annual Report Download - page 57

Table of Contents
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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 125. 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 (as reported
and excluding certain items and the impact of foreign exchange translation), 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, research and development expenditures, ROIC and net ROIC (excluding
certain items), and gross and operating margins (as reported and excluding certain items).
During 2015, we continued to take steps to position ourselves for sustainable value creation over the long
term and continued our progress against certain key business priorities – brand building and innovation,
productivity, portfolio and capability transformation, talent management and disciplined capital allocation.
For example:
• In 2015, PepsiCo was the leading contributor to food and beverage retail sales in the United States
in measured channels, according to Information Resources, Inc.
• Since 2012, we have increased spending as a percent of net revenue on both advertising and marketing
and research and development, illustrating our ability to manage costs and margins in the short run
while reinvesting in our business to drive growth over the long term.
• In 2015, excluding items affecting comparability, we achieved a net ROIC of 19.6%, reflecting our
focus on disciplined capital allocation. For further information on this non-GAAP measure, please
see “Net Return on Invested Capital.”
• PepsiCo increased its annualized dividend for the 43rd consecutive year in 2015 and returned $9
billion to our shareholders through share repurchases and dividends. Since 2012, we have delivered
$24 billion back to shareholders in the form of dividends and share repurchases.
At PepsiCo, we believe delivering strong performance and acting with a sense of purpose are intertwined –
we call this approach Performance with Purpose and it is embedded into our business. Performance with
Purpose is focused on three priorities: human sustainability (improving the nutritional profile of many of our
products while offering more choices to meet changing consumer needs), environmental sustainability
(reducing our environmental impact while lowering our operating costs), and talent sustainability (continuing