01—Abstract
Summary
Summary of the 10-K filed February 27, 2012. Cited figures are marked; the original filing is the authoritative source.
PepsiCo's 2011 10-K highlights a year of strategic growth and integration, marked by significant acquisitions and a forward-looking productivity plan.
The company demonstrated robust revenue growth across its diverse segments, particularly in Latin America Foods and Asia, Middle East & Africa. The integration of The Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) in 2010 continued to bolster the beverage segment, while the acquisition of Wimm-Bill-Dann Foods (WBD) in Russia significantly expanded the European segment. Management focused on five strategic imperatives: expanding the macrosnacks portfolio globally, sustainably growing the beverage business, building the nutrition business, capitalizing on snack-beverage consumption synergy, and maintaining prudent financial management.
The company announced increased investment in brands and marketing for 2012 and is implementing a multi-year productivity program aimed at enhancing cost-competitiveness and funding future innovation. Despite economic uncertainties, PepsiCo maintained a strong balance sheet and continued its commitment to shareholder returns through dividends and share repurchases.
02—Key points
Key Highlights
- PepsiCo reported a 15% increase in net revenue to $66.5 billion in 2011, driven by a combination of volume growth, effective net pricing, and the impact of acquisitions.
- The company's 'Performance with Purpose' initiative, focusing on health and sustainability, was recognized by its inclusion in the Dow Jones Sustainability World Index.
- Key acquisitions in 2010 (PBG, PAS) and 2011 (WBD) significantly expanded the company's global footprint and capabilities, particularly in beverage distribution and the Russian food and beverage market.
- A multi-year productivity plan was initiated, projected to enhance cost-competitiveness and fund future brand building and innovation initiatives.
- The company plans to increase advertising and marketing spending in 2012 by approximately $500-600 million, primarily in North America, to support brand growth.
- PepsiCo maintained a strong financial position, with operating profit increasing by 16% to $9.6 billion and continuing its long history of consistent dividend payments.
- The company's diverse business units—Frito-Lay North America, Quaker Foods North America, Latin America Foods, PepsiCo Americas Beverages, Europe, and Asia, Middle East & Africa—all contributed to the overall performance, with particular strength noted in LAF and AMEA.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Pepsico Inc kept $0.10.
- Revenue$66.50B100.0%
- Cost of revenue−$31.59B47.5%
- Gross profit$34.91B52.5%
- Operating costs−$25.28B38.0%
- Operating income$9.63B14.5%
- Interest, other & tax−$3.19B4.8%
- Net income$6.44B9.7%
Where FY2011 revenue went
$66.50B- Cost of revenue: $31.59B, 48% of revenue
- SG&A: $25.14B, 38% of revenue
- Net income: $6.44B, 9.7% of revenue
- R&D: $525.0M, 0.8% of revenue
- Interest, other & tax: $3.19B, 4.8% of revenue
Kept 9.7% as net incomeNet income $6.44B · 9.7%R&D $525.0M · 0.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 27, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $66.50B$57.84B | +15.0% |
| Cost of Revenue | $31.59B$26.57B | +18.9% |
| Gross Profit | $34.91B$31.26B | +11.7% |
| R&D Expenses | $525.00M$488.00M | +7.6% |
| SG&A Expenses | $25.14B$22.81B | +10.2% |
| Operating Income | $9.63B$8.33B | +15.6% |
| Interest Expense | $856.00M$903.00M | −5.2% |
| Net Income | $6.44B$6.32B | +1.9% |
| EPS (Basic) | $4.08$3.97 | +2.8% |
| EPS (Diluted) | $4.03$3.91 | +3.1% |
| Shares Outstanding (Basic) | 1.58B1.59B | −0.9% |
| Shares Outstanding (Diluted) | 1.60B1.61B | −1.1% |
05—Questions
Frequently Asked Questions
What were PepsiCo's key strategic priorities highlighted in the 2011 10-K?
PepsiCo's strategic priorities centered around five key imperatives: expanding its global macrosnacks portfolio, growing its beverage business profitably and sustainably, building its nutrition business, capitalizing on the synergy between snack and beverage consumption, and maintaining prudent financial management. These strategies were supported by increased investment in brands, innovation, and a new multi-year productivity program.
How did the company's major acquisitions in 2010 and 2011 impact its financial performance?
The acquisitions of The Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) in 2010 significantly integrated the company's beverage distribution and contributed to revenue growth. The acquisition of Wimm-Bill-Dann Foods (WBD) in Russia in 2011 expanded its European operations and product offerings. These acquisitions resulted in significant increases in net revenue and operating profit, although they also involved substantial merger and integration charges in the respective reporting periods.
What are the primary risks and challenges facing PepsiCo according to the filing?
PepsiCo identified several key risks, including adverse effects from changes in consumer preferences and tastes, intense competition, unfavorable economic conditions globally, damage to its reputation, challenges in growing in developing and emerging markets, trade consolidation and loss of key customers, regulatory changes, disruptions to its supply chain, and commodity price volatility. The company also highlighted risks related to its information technology infrastructure and currency exchange rate fluctuations.
How did PepsiCo manage its commodity costs and market risks?
PepsiCo managed commodity price risk through a combination of fixed-price purchase orders, pricing agreements, and the use of derivatives. For foreign exchange risk, it employed forward contracts. Interest rate risk was managed through various interest rate derivative instruments. The company stated it does not use derivative instruments for trading or speculative purposes.
06—Continue