PepsiCo 2009 Annual Report

PepsiCo Delivered Solid Financial Performance in 2009

Amidst the most challenging global macroeconomic environment in decades, we demonstrated the strength and resilience of both our people and portfolio by delivering solid operating performance and generating significant operating cash flow.

• Net revenue grew 5% on a constant currency basis.*
• Core division operating profit rose 6% on a constant currency basis.*
• Core EPS grew 6% on a constant currency basis.*
• Management operating cash flow, excluding certain items, reached $5.6 billion, up 16%.*
• And, we raised the annual dividend by 6%.

Let me offer a few highlights from 2009:

PepsiCo Americas Foods (PAF) had another exceptional year with strong net revenue and operating profit growth despite significant commodity inflation. We held or grew share across the region, sustaining consumer momentum with solid innovation and targeted value offerings.

Although all of Europe was hit hard by the economic recession, PepsiCo Europe outpaced its peers and delivered solid results through excellent revenue management, tight 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 (PAB), which faced considerable category pressures in North America, continued to make significant progress in rejuvenating the entire beverage portfolio. We successfully launched the Pepsi "Refresh Everything" campaign, gained traction on our Gatorade transformation to "G," and brought exciting innovation to market with the launch of zero-calorie SoBe Lifewater and Trop50 orange juice beverage, both naturally sweetened with purified stevia extract. We also reached agreement on merging into PepsiCo our two anchor bottlers, Pepsi Bottling Group and PepsiAmericas, in order to create a more agile, efficient, innovative and competitive beverage system, which will enable us to extend our leadership position in the North American Liquid Refreshment Beverage business.

With the merger of our anchor bottlers, PepsiCo will be a nearly $60 billion company in terms of annual revenue. We are the largest food and beverage business in North America and the second-largest food and beverage business in the world, making us a critical partner for all retailers. We will have a new business structure and, as outlined below, clear strategies to support continued strong growth–growth that will enable us to continue to be both an attractive place to work and an attractive investment.

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