Organizational Analysis

Analysis of Operations

PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with the Quaker Oats Company, including Gatorade, in 2001.

PepsiCo’s operations consist of the following segments:

• PepsiCo Americas Beverages (PAB)

• Frito-Lay North America (FLNA)

• Quaker Foods North America (QFNA)

• Latin America Foods (LAF)

• Europe

• Asia, Middle East & Africa

PepsiCo’s operating divisions report volume based on the following measures:

Division Volume Measure

FLNA Pounds

PAB 8 oz equivalent cases (192 oz per case)

QFNA Pounds

Europe & AMEA

Int'l Beverages 8 oz equivalent cases (192 oz per case)

Int'l Snacks Kilos

Int'l Foods Kilos

PepsiCo's fiscal year consists of 52 weeks and is divided into 13 4-week periods. Our fiscal year ends on the last Saturday in December and, as a result, a 53rd week is added every five or six years.

Dec 31, 2011 Dec 25, 2010 Dec 26, 2009 Dec 27, 2008 Dec 29, 2007

Selected Financial Data (USD $ in millions)

Operating profit 9,633 8,332 8,044 6,959 7,182

Net revenue 66,504 57,838 43,232 43,251 39,474

Operating Profit Margin, Comparison to Industry

PepsiCo Inc.1 14.48% 14.41% 18.61% 16.09% 18.19%

Industry, Consumer Goods 10.01% 9.26% 7.52% 11.87% 12.16%

Source: Based on data from PepsiCo Inc. Annual Reports

2011 Calculations

1 Operating profit margin = 100 × Operating profit ÷ Net revenue

= 100 × 9,633 ÷ 66,504 = 14.48%

Ratio Description The company

Operating profit margin A profitability ratio calculated as operating income divided by revenue. PepsiCo Inc.'s operating profit margin deteriorated from 2009 to 2010 but then slightly improved from 2010 to 2011.

Most of PepsiCo’s volume and financial results are reported based on fiscal quarters, with some exceptions, as described in the chart and notes below:

Division Q1 Q2 Q3 Q4

FLNA 3 fiscal periods 3 fiscal periods 3 fiscal...