Performance With Purpose: The Promise Of PepsiCo 1

PerformanceBottom Line5Continue to expanddivision operatingmargins.PepsiCo is committed to deliveringsustainable operating performance. Inorder to succeed, we know it’s importantto balance both the short and the longterm. The 2010 acquisition of ouranchor bottlers in North America andEurope, for example, enables us to drivegrowth, ensure a dynamic future forPepsiCo and create a more integratedsupply chain. As expected, the decisionto acquire these bottlers reduced overalldivision operating margins in 2010.However, we also understood that realizingoperational synergies would betterposition us to increase margins over thelong term. We also invested in some keygrowth drivers of our business, includingexpanding our business in China(one of our priority growth markets) andincreasing advertising and marketingspending in our North America beverageand U.S. Quaker Foods businesses.Through these and other investments,we expect to increase overall divisionoperating margins over time.Three yearsended 2010:operatingcash flow >net income6Increase cash flow inproportion to net incomegrowth over three-yearwindows.In the three years ended 2010, operatingcash flow significantly outpaced therate of net income. We believe that ourdisciplined approach to cash flow managementwill enable us to continue tomeet or exceed this goal in the future.7Deliver total shareholderreturns in the top quartile ofour industry group.We deliver strong returns to our shareholdersthrough substantial profitgrowth, sound investment decisionsand disciplined cash flow management.We increased our annual dividend in2010 for the 38th consecutive year, from$1.80 to $1.92, or 7 percent, and wereturned a total of $8 billion to shareholdersin the form of share repurchasesand dividends. From 2001-2005, ourtotal cash returned to shareholders was$18 billion. Over the five-year periodfrom 2006 to 2010, which included theeconomic turmoil of recent years, our24 PepsiCo, Inc. 2010 Annual Report