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PepsiCo

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MISSION

To be the world's premier consumer productscompany focused on convenient foods andbeverages. We seek to produce financial rewardsto investors as we provide opportunities forgrowth and enrichment to our employees, ourbusiness partners and the communities in which

we operate. And in everything we do, we strive forhonesty, fairness and integrity.

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VISION

Focus on environmental stewardship, activitiesthat benefit society, and a commitment to build

shareholder value by making PepsiCo a trulysustainable company.

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Headquarters: Purchase, NY

Symbol: PEP Exchange: NYSE

Stock Price: $62.23

Number of Employees: 198,000

Industry: Snacks and Beverages

COMPANY PROFILE

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COMPANY HISTORY

o 1965 - PepsiCo, Inc. is founded by Donald M. KendallPresident and Chief Executive Officer of Pepsi-Cola andHerman W. Lay, Chairman and Chief Executive Officer ofFrito-Lay, through the merger of the two companies.

o 1976 - Pepsi-Cola becomes the single largest selling soft

drink brand sold in U.S. supermarkets.o 1984 - PepsiCo is restructured to focus on its three core

businesses: soft drinks, snack foods and restaurants.Transportation and sporting goods businesses are sold.

o 1990 - PepsiCo profits exceed $1 billion for the first time.

o 2001 - PepsiCo merges with The Quaker Oats Companyo 2008 - PepsiCo announces plans to invest $1 billion in China

over next four years as part of the strategy to expand inemerging markets and broaden the portfolio of locally-relevantproducts

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BRANDS

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BRANDS

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FINANCIAL HIGHLIGHTS

2008 2007 ChgSummary of OperationsTotal net revenue $ 43,251 $ 39,474 10%Core division operating profit $ 8,475 $ 8,025 6%Core total operating profit $ 7,824 $ 7,253 8%Core net income $ 5,887 $ 5,587 5%Core earnings per share $ 3.68 $ 3.37 9%Other DataManagement operating cash flow $ 4,651 $ 4,551 2%Net cash provided by operating activities $ 6,999 $ 6,934 1%Capital spending $ 2,446 $ 2,430 1%Common share repurchases $ 4,720 $ 4,300 10%Dividends paid $ 2,541 $ 2,204 15%Long-term debt $ 7,858 $ 4,203 87%

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Period Ending 12/27/2008 12/29/2007 12/30/2006 12/31/2005Total Revenue $43,251,000 $39,474,000 $35,137,000 $32,562,000Cost of Revenue $20,351,000 $18,038,000 $15,762,000 $14,176,000

Gross Profit $22,900,000 $21,436,000 $19,375,000 $18,386,000Operating Expenses

Sales, General and Admin. $15,901,000 $14,208,000 $12,774,000 $12,314,000Other Operating Items $64,000 $58,000 $162,000 $150,000

Operating Income $6,935,000 $7,170,000 $6,439,000 $5,922,000Add'l income/expense items $41,000 $685,000 $173,000 $716,000Earnings Before Interest and Tax $7,350,000 $7,855,000 $7,228,000 $6,638,000

Interest Expense $329,000 $224,000 $239,000 $256,000Earnings Before Tax $7,021,000 $7,631,000 $6,989,000 $6,382,000

Income Tax $1,879,000 $1,973,000 $1,347,000 $2,304,000Equity Earnings UnconsolidatedSubsidiary $374,000 $0 $616,000 $0Net Income-Cont. Operations $5,142,000 $5,658,000 $5,642,000 $4,078,000

Net Income $5,142,000 $5,658,000 $5,642,000 $4,078,000

Net Income Applicable toCommon Shareholders $5,142,000 $5,658,000 $5,642,000 $4,078,000

INCOME STATEMENT

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STATEMENTOF CASHFLOWS

Period Ending: 12/27/2008 12/29/2007 12/30/2006 12/31/2005Net Income $5,142,000 $5,658,000 $5,642,000 $4,078,000

Cash Flows-Operating ActivitiesDepreciation $1,543,000 $1,426,000 $1,406,000 $1,308,000Net Income Adjustments $1,105,000 ($46,000) ($408,000) $50,000

Changes in Operating ActivitiesAccounts Receivable ($549,000) ($405,000) ($330,000) ($272,000)Inventory ($345,000) ($204,000) ($186,000) ($132,000)Other Operating Activities ($435,000) ($123,000) $32,000 $23,000Liabilities $538,000 $628,000 ($72,000) $797,000

Net Cash Flow-Operating $6,999,000 $6,934,000 $6,084,000 $5,852,000

Cash Flows-Investing ActivitiesCapital Expenditures ($2,446,000) ($2,430,000) ($2,068,000) ($1,736,000)Investments $1,282,000 ($356,000) $2,017,000 ($991,000)Other Investing Activities ($1,503,000) ($958,000) ($143,000) ($790,000)

Net Cash Flows-Investing ($2,667,000) ($3,744,000) ($194,000) ($3,517,000)

Cash Flows-Financing ActivitiesDividends Paid ($2,541,000) ($2,204,000) ($1,854,000) ($1,642,000)

Sale and Purchase of Stock ($4,106,000) ($3,204,000) ($1,816,000) ($1,932,000)Net Borrowings $3,515,000 $1,194,000 ($2,447,000) $1,696,000Other Financing Activities $107,000 $208,000 $134,000 $0

Net Cash Flows-Financing ($3,025,000) ($4,006,000) ($5,983,000) ($1,878,000)

Effect of Exchange Rate ($153,000) $75,000 $28,000 ($21,000)Net Cash Flow $1,154,000 ($741,000) ($65,000) $436,000

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PERFORMANCE CHART

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Strengths

oThe company has its strong point in the 18 brands itowns, with sales over $1 billion each. These brandsare leaders in their respective categories, second only,once again, to Coca-Cola.

oDistribution network - The Companys go-to-marketsystems like the direct store delivery gives an addedbonus to the flexibility and power of the PepsiCosdistribution network.

oThe almost non-stop ability to innovate and diversify,gives PepsiCo the cutting edge it most definitely needsin a company of its size and calibre.

Weaknesses

oPepsiCo is far away from leader Coca-cola in the international

market.

oAll PepsiCo products bear the company name

SWOT

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SWOT

Opportunities

oThere are increasing trend toward healthy foods

oNoncarbonated drinks are the fastest-growing part of

the industry

oFood division should expand internationally

Threats

oPepsi is blamed for pesticide residues in their

products in one of their most promising emerging

market

oCompetitors

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FIVEFORCE MODEL

Degree of Rivalry: Fierce, itis a very competitive

industry

Threat of new Entrants:Weak, it is a cutthroatindustry and mainly

dominated by certain brandnames.

Buyer power: Strong,unless consumerswant product they

will not sell

Threat of Substiutes: Strong.Anyone can take their

product and tweak it to sell itfor less.

Supplier Power:Strong, good

relationships withdistributors will make

transaction easier

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STRATEGY

Power of One Alliance

Development of Good-for-You and Better-for-You

products

o Pepsi and Frito Lay brands hold large market sharein both domestic and international markets

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PepsiCo, Inc. has 18 mega-brands that generate $1billion or more each in annual retail sales

$43 billion in revenues

185,000 employees

Product innovation

Acquisitions and partnerships

Environmentally, socially and economically

responsible company

KEY SUCCESS FACTORS

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WORKS CITED

www.finance.yahoo.com

www.moneycentral.msn.com

www.pepsico.com

www.nyse.com

www.coca-cola.com