01—Abstract
Summary
Summary of the 10-K filed February 18, 2011. Cited figures are marked; the original filing is the authoritative source.
PepsiCo, Inc. reported its fiscal year 2010 results, highlighting significant strategic progress and the successful integration of major acquisitions.
The company completed the acquisitions of The Pepsi Bottling Group, Inc. (PBG) and PepsiAmericas, Inc. (PAS) in February 2010, which significantly expanded its beverage distribution network and contributed substantially to revenue growth. PepsiCo also announced its acquisition of a controlling stake in Wimm-Bill-Dann Foods OJSC (WBD) in Russia, further diversifying its international presence. These strategic moves underscore PepsiCo's commitment to strengthening its global position in both food and beverage categories.
Financially, the company navigated a dynamic economic environment, demonstrating resilience. The report details a focus on strategic imperatives such as building its macro snack portfolio, sustainably growing its beverage business, enhancing customer value through "Power of One," expanding its nutrition business, cherishing its employees, and achieving excellent performance. Investors should note the significant impact of acquisition-related charges and integration costs on the current year's results, alongside the substantial gains from previously held equity interests in PBG and PAS.
02—Key points
Key Highlights
- Completed significant acquisitions of The Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) in February 2010, integrating them to enhance beverage distribution and create a more unified supply chain.
- Announced the acquisition of a controlling stake (approximately 77%) in Wimm-Bill-Dann Foods OJSC (WBD) in Russia for approximately $3.8 billion, expanding its international footprint.
- Reported a 34% increase in total net revenue to $57.8 billion, largely driven by the PBG and PAS acquisitions and organic growth across divisions.
- Operating profit increased by 4% to $8.3 billion, although operating margin decreased significantly due to substantial merger and integration charges and other items affecting comparability.
- Recorded a substantial gain of $958 million ($0.60 per share) from the revaluation of previously held equity interests in PBG and PAS upon acquisition.
- Invested in strategic initiatives, including R&D for the Global Nutrition Group and ongoing business transformation for SAP system migration.
- Maintained a strong commitment to shareholder returns, with significant dividend payments and share repurchases during the year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Pepsico Inc kept $0.11.
- Revenue$57.84B100.0%
- Cost of revenue−$26.57B45.9%
- Gross profit$31.26B54.1%
- Operating costs−$22.93B39.6%
- Operating income$8.33B14.4%
- Interest, other & tax−$2.01B3.5%
- Net income$6.32B10.9%
Where FY2010 revenue went
$57.84B- Cost of revenue: $26.57B, 46% of revenue
- SG&A: $22.81B, 39% of revenue
- Net income: $6.32B, 11% of revenue
- R&D: $488.0M, 0.8% of revenue
- Interest, other & tax: $2.01B, 3.5% of revenue
Kept 11% as net incomeNet income $6.32B · 11%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 18, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $57.84B$43.23B | +33.8% |
| Cost of Revenue | $26.57B$20.10B | +32.2% |
| Gross Profit | $31.26B$23.13B | +35.1% |
| R&D Expenses | $488.00M$414.00M | +17.9% |
| SG&A Expenses | $22.81B$15.03B | +51.8% |
| Operating Income | $8.33B$8.04B | +3.6% |
| Interest Expense | $903.00M$397.00M | +127.5% |
| Net Income | $6.32B$5.95B | +6.3% |
| EPS (Basic) | $3.97$3.81 | +4.2% |
| EPS (Diluted) | $3.91$3.77 | +3.7% |
| Shares Outstanding (Basic) | 1.59B1.56B | +2.1% |
| Shares Outstanding (Diluted) | 1.61B1.58B | +2.3% |
05—Questions
Frequently Asked Questions
What were the major strategic moves by PepsiCo in 2010?
PepsiCo's primary strategic moves in 2010 included the significant acquisitions of The Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) in February, which consolidated its beverage operations. Additionally, the company announced its intention to acquire a controlling stake in Wimm-Bill-Dann Foods OJSC (WBD) in Russia, signaling a push into key emerging markets.
How did the PBG and PAS acquisitions impact PepsiCo's financial results?
The acquisitions of PBG and PAS significantly boosted PepsiCo's net revenue, contributing to a 34% year-over-year increase. However, these acquisitions also led to substantial merger and integration charges of $799 million, which impacted reported operating profit and net income. The company also recognized a significant gain of $958 million from revaluing its previously held equity interests in these acquired companies.
What is PepsiCo's "Performance with Purpose" initiative?
Performance with Purpose is PepsiCo's overarching strategy focused on delivering sustainable growth by investing in a healthier future for people and the planet. This includes building a balanced portfolio of nutritious and enjoyable foods and beverages, reducing environmental impact (energy, water, packaging), and supporting local communities. The company was recognized for these efforts by being included in the Dow Jones Sustainability North America and World Indices.
How did currency fluctuations affect PepsiCo's financial performance in 2010?
In 2010, favorable foreign currency movements contributed positively to net revenue growth, with foreign currency translation adding 1 percentage point to overall net revenue growth. This was primarily due to the appreciation of currencies in Mexico, Canada, and Brazil, which offset the depreciation of the Venezuelan bolivar. However, unfavorable currency impacts were noted in specific divisions like Europe and AMEA.
06—Continue