2005 Annual Report
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coverL01OBCv3.qxd 3/6/06 9:17 PM Page 1 coverL01IFCv3.qxd 3/6/06 9:48 PM Page ifc2 On any day, around the Common Stock Information Shareholder Information PepsiCo Stock Purchase Program – for Canadian employees: world, at any moment and Stock Trading Symbol – PEP Annual Meeting Fidelity Stock Plan Services Stock Exchange Listings The Annual Meeting of Shareholders will be held at P.O. Box 5000 places, millions The New York Stock Exchange is the principal market Frito-Lay Corporate Headquarters, 7701 Legacy Drive, Cincinnati, OH 45273-8398 in many Contents for PepsiCo common stock, which is also listed on the Plano, Texas, on Wednesday, May 3, 2006, at 9 a.m. local Telephone: 800-544-0275 enjoy our Amsterdam, Chicago and Swiss Stock Exchanges. time. Proxies for the meeting will be solicited by an inde- Website: www.iStockPlan.com/ESPP of consumers PepsiCo at a Glance . 1 pendent proxy solicitor. This Annual Report is not part of Shareholders the proxy solicitation. Please have a copy of your most recent statement brands. Here’s how we keep Letter to Shareholders . 2 At year-end 2005, there were approximately 197,500 available when calling with inquiries. Growth . 6 shareholders of record. Inquiries Regarding Your Stock Holdings If using overnight or certified mail send to: the momentum going. Health & Wellness . 8 Beneficial Shareholders (shares held by your broker in Dividend Policy the name of the brokerage house) should direct communi- Innovation . 10 We target an annual dividend payout of approximately 45% Fidelity Investments cations on all administrative matters to your stockbroker. of prior year’s net income from continuing operations. 100 Crosby Parkway Execution . 12 Registered Shareholders (shares held by you in your Dividends are usually declared in late January or early Mail Zone KC1F-L International . 14 name) should address communications concerning February, May, July and November and paid at the end of Covington, KY 41015 Sustainability . 16 statements, dividend payments, address changes, lost March, June and September and the beginning of January. certificates and other administrative matters to: Corporate Officers and Principal Divisions . 20 The dividend record dates for these payments are March 10 Shareholder Services PepsiCo Board of Directors . 21 and, subject to approval by the Board of Directors, expected The Bank of New York to be June 9, September 8 and December 8, 2006. We have Dividend Reinvestment Plan Advisory Boards Shareholder Services Department paid consecutive quarterly cash dividends since 1965. A brochure explaining this convenient plan, for which Financial Highlights African American Advisory Board . 22 P.O. Box 11258 Amounts in the chart reflect pre-merger PepsiCo for the PepsiCo pays all administrative costs, is available on our Latino/Hispanic Advisory Board . 23 Church Street Station website www.pepsico.com or from our transfer agent: PepsiCo, Inc. and Subsidiaries dates prior to its merger with The Quaker Oats Company. Blue Ribbon Health and New York, NY 10286-1258 ($ in millions except per share amounts; all per share amounts assume dilution) Telephone: 800-226-0083 Wellness Advisory Board . 24 The Bank of New York Cash Dividends Declared 1.01 212-815-3700 (Outside the U.S.) Dividend Reinvestment Department Per Share (In $) E-mail: [email protected] P.O. Box 1958 Financial Review .850 Website: www.stockbny.com Newark, NJ 07101-9774 Net Revenue Division Operating Profit Management’s Discussion and Analysis or Telephone: 800-226-0083 Total: $32,562 Total: $6,710 and Consolidated Financial Statements . 25 Manager Shareholder Relations .630 Direct Deposit of Dividends Our Business . 26 .575 .595 PepsiCo, Inc. 700 Anderson Hill Road Information on the Direct Deposit service is available PepsiCo International PepsiCo International Our Critical Accounting Policies . 34 from our transfer agent: 24% Purchase, NY 10577 35% Our Financial Results . 40 Quaker Foods North America 8% Quaker Foods North America Telephone: 914-253-3055 5% Consolidated Statement of Income . 50 The Bank of New York Shareholder Services Department Consolidated Statement of Cash Flows . 51 In all correspondence or telephone inquiries, please mention PepsiCo, your name as printed on your stock P.O. Box 11258 30% Consolidated Balance Sheet . 52 certificate, your Social Security number, your address and Church Street Station 28% 32% Frito-Lay North America 38% Frito-Lay North America Consolidated Statement of telephone number. New York, NY 10286-1258 Common Shareholders’ Equity . 53 01 02 03 04 05 Telephone: 800-226-0083 PepsiCo Beverages North America PepsiCo Beverages North America Notes to Consolidated Financial Statements . 54 SharePower Participants (employees with SharePower 212-815-3700 (Outside the U.S.) Management’s Responsibility for Stock Performance options) should address all questions regarding your account, outstanding options or shares received through Financial and Other Information PepsiCo was formed through the 1965 merger of PepsiCo’s 2006 quarterly earnings releases are expected Financial Reporting . 72 Pepsi-Cola Company and Frito-Lay, Inc. A $1,000 option exercises to: Management’s Report on Internal Control to be issued the weeks of April 24, July 10, October 9, investment in our stock made on December 31, 2000 2006, and February 5, 2007. (a) Merrill Lynch/SharePower 2005 2004 % Chg over Financial Reporting . 73 was worth about $1,284 on December 31, 2005, Copies of PepsiCo’s SEC reports, earnings and other Stock Option Unit Report of Independent Registered assuming the reinvestment of dividends into PepsiCo financial releases, corporate news and additional 1600 Merrill Lynch Drive Summary of Operations stock. This performance represents a compounded company information are available on our website Public Accounting Firm . 74 Mail Stop 06-02-SOP annual growth rate of 5%. www.pepsico.com. Total net revenue $32,562 $29,261 11 Selected Financial Data . 75 Pennington, NJ 08534 The closing price for a share of PepsiCo common stock If you have questions regarding PepsiCo’s financial Reconciliation of GAAP and Telephone: 800-637-6713 (U.S., Puerto Rico Division operating profit $6,710 $6,098 10 on the New York Stock Exchange was the price as report- performance contact: Non-GAAP Information . 76 ed by Bloomberg for the years ending 2001-2005. These and Canada) 609-818-8800 (all other locations) Total operating profit $5,922 $5,259 13 Glossary . 76 amounts reflect the closing price of pre-merger PepsiCo Jamie Caulfield prior to our merger with The Quaker Oats Company. Past Vice President, Investor Relations (b) In all correspondence, please provide your account number Net income $4,536 $4,004 13 performance is not necessarily indicative of future PepsiCo, Inc. (for U.S. citizens, this is your Social Security number), your returns on investments in PepsiCo common stock. 700 Anderson Hill Road Earnings per share(b) $2.66 $2.32 15 address, your telephone number and mention PepsiCo Purchase, NY 10577 SharePower. For telephone inquiries, please have a copy of Year-end Market Price of Stock Telephone: 914-253-3035 your most recent statement available. Other Data Primary Websites Based on calendar year-end (In $) PepsiCo, Inc. — www.pepsico.com Employee Benefit Plan Participants Independent Auditors (c) 60 KPMG LLP Management operating cash flow $4,204 $3,705 13 PepsiCo 401(k) Plan & PepsiCo Stock Purchase Program Frito-Lay North America — www.fritolay.com 345 Park Avenue New York, NY 10154-0102 Net cash provided by The PepsiCo Savings & Retirement Center at Fidelity Pepsi-Cola North America — www.pepsiworld.com Telephone: 212-758-9700 40 P.O. Box 770003 operating activities $5,852 $5,054 16 Tropicana North America — www.tropicana.com Cincinnati, OH 45277-0065 Corporate Headquarters Capital spending $1,736 $1,387 25 Quaker Foods — www.quakeroats.com Telephone: 800-632-2014 PepsiCo, Inc. (Overseas: Dial your country’s AT&T Access Number 700 Anderson Hill Road Gatorade — www.gatorade.com 20 Common share repurchases $3,012 $3,028 (0.5) +800-632-2014. In the U.S., access numbers are Purchase, NY 10577 Smart Spot — www.smartspot.com available by calling 800-331-1140. From anywhere in Telephone: 914-253-2000 Dividends paid $1,642 $1,329 24 the world, access numbers are available online at PepsiCo Website: www.pepsico.com 0 www.att.com/traveler.) Long-term debt $2,313 $2,397 (3.5) 01 02 03 04 05 Website: www.netbenefits.fidelity.com © 2006 PepsiCo, Inc. (a) Percentage changes above and in text are based on unrounded amounts. When market or market share is referred to in this PepsiCo’s Annual Report contains many of the valuable trademarks owned and/or used by PepsiCo and its subsidiaries and affiliates in the United States and internationally to distinguish products and services of (b) In 2005, excludes the impact of AJCA tax charge, the 53rd week and restructuring charges. report, the markets and share are defined by the outstanding quality. WEIGHT WATCHERS and its POINTS values are registered trademarks of Weight Watchers. STAR WARS, EPISODE III, REVENGE OF THE SITH, YODA and DARTH VADER are trademarks owned by In 2004, excludes certain prior year tax benefits, and restructuring and impairment charges. Lucasfilm Ltd. XBOX 360 is a trademark of Microsoft Corporation. TREASURYVISION is a service mark owned by Citicorp Corporation. America On the MoveTM is an initiative of the nonprofit organization, The Partnership sources of the information, primarily Information to Promote Healthy Eating and Active Living (The Partnership: www.americaonthemove.org). See page 76 for reconciliation to net income and earnings per share on a GAAP basis. Resources, Inc. and ACNielsen. The Measured Channel (c) Includes the impact of net capital spending. Also, see “Our Liquidity, Capital Resources Information excludes certain customers such as Design: Eisenman Associates. Printing: L.P. Thebault. Photography: Stephen Wilkes, Ben Rosenthal, PhotoBureau, Andy Robinson, Nellie Solitrenick, Charlie Samuels, Jonathan Kirn.