PepsiCo’s Cash Automation through Kofax

1. PepsiCo’s Cash Automation through Kofax PEPSICO FINANCIAL SHARED SERVICES – CUSTOMER FINANCIAL SERVICES

2. Introductions • What is PepsiCo? • 2012 G&A Challenges • Reduce the manual cash application • Getting Started and Key Solution/Success Criteria • Project Implementation • “We got a long way to go and a short time to get there” • PepsiCo’s Prior Solution and New Solution with Kofax • Bottom-line • Did we meet the challenge?

3. What is PepsiCo? PepsiCo, Inc. engages in the manufacture and sale of snacks, carbonated and non-carbonated beverages, dairy products, and other foods worldwide. It operates in four divisions: PepsiCo Americas Foods (PAF); PepsiCo Americas Beverages (PAB); PepsiCo Europe; and PepsiCo Asia, Middle East, and Africa (AMEA). Industry: Consumer Goods (2nd largest) World Headquarters: Purchase, NY NYSE Symbol: PEP Fortune Ranking: 41 FTE’s: 297,000 (worldwide) 2011 Total Revenue: 65.70B

4. 2012 G&A Challenges • PepsiCo Globally • Invest heavily into marketing of core beverage products (Pepsi, Mountain Dew, etc…) • Restructure the entire organization • Save $1.5 billion by 2014 • Reduce workforce by 3% spread-out over 30 countries • PepsiCo Financial Shared Services – Customer Financial Services (AR) • Reduce overall expenses by 10% vs. 2011 actuals • 95% of total cost in PFSS is directly related to headcount • CFS (Plano) receives on average 66,000 checks per period • Current automation efforts applied approx. 83% of the total volume, but that still left on average 11,000 payments to be applied manually • Total cash application headcount was 30 which also included individuals processing cash through an OCR (AnyDoc) process that was template based

5. Getting Started & Solution/Success Criteria • Lean Six Sigma Project • Through the process of an LSS project, the following was determined: • Consolidate banks/lockboxes for purposes of AR (3 banks down to 2 banks) to reduce bank fees • Begin to image checks for AR Legacy (Frito-Lay, Tropicana Chilled DSD) rather than shipments of paper checks • For PQTG (Pepsi, Quaker, Tropicana, Gatorade) where the bank was keying remittance data, bring that in-house • Solution Criteria • Keep current productivity produced by algorithms/auto matching • Must be able to integrate to multiple ERP’s (i.e. SAP & C2C) • Must be able to integrate with multiple banks (i.e. Northern Trust & PNC) • Bypass % must be high in order to eliminate the shifting of work without creating templates (unstructured OCR) • Ability to learn and continually increase bypass rate • Be the footprint for the PepsiCo Global solution • Success Criteria (Goals) • Auto-apply the cash for 60% of the remittance passed through the solution • Replace current template based AnyDoc solution • Increase cash application cycle-time • Reduce bank fees associated with data entry they provided • Become a paperless environment and no longer require storage for checks

6. Project Implementation Dec. ‘11 Jan. ’12 Feb. ’12 Mar. ’12 Apr. ’12 May ‘12 Jun. ‘12 Jul. ‘12 Aug. ‘12 • “We got a long way to go and a short time to get there” 1/30 – Begin Blueprint Phase (3 wks) 2/20 – Begin Design Phase (3 wks) 5/21 – AR Legacy Go Live (P6 Day 1) 3/12 – Begin Construct Phase (3 wks) 1/5 – Finalized “To-Be” Process for LSS Lockbox Project 6/11 – Begin PQTG Design Phase 8/27 – PQTG Go-Live 5/17 – “Go” or “No-Go” Decision 4/2 – Begin Testing Phase (5 wks) 4/2 – Begin Testing Phase (5 wks) 12/14 – Start Project/ICR Review Meeting • Implementation • 2 Phased approach; AR Legacy (FLNA & Chilled DSD) and PQTG (Pepsi, Quaker, Tropicana, Gatorade) • Full implementation including both phases is 8 months • AR Legacy Go-Live – 5/21/2012 • PQTG Go-Live – 8/27/2012 • Project Team made up of 16 PepsiCo team members (6 core) and 2 Kofax team members (PM & Developer) • Go-live not flexible in order to meet G&A cost savings expectations and BIS hard freeze at end of year 5/7 – Final Preparation & Training Phase (2 wks) 2/27 –1stday Kofax on-site

7. PepsiCo’s Prior Solution Image Retrieval from JPMC REDGE No Image Retrieval C2C

8. PepsiCo’s New Solution with Kofax C2C Image Retrieval

9. PepsiCo’s Solution with Kofax P-QTG Sample Images AR Legacy Sample Images • Frito-Lay Kofax General Rules • Check amount must match the remittance total amount • Extract the data for at least two of the following four columns: Store, Dollar, Amount, Invoice Number, and Invoice Date. • Dollar Amount is a mandatory column • Invoice Number must be no greater than eight numeric characters • Store Number must be no greater than six numeric characters • Net Amount equals Gross Amount minus Discount Amount • P-QTG Kofax General Rules • Check amount must match the remittance total amount • Extract the data for two columns – Invoice Amount , and Dollar Amount Check: Check: Remittance: Remittance:

10. PepsiCo’s Solution with Kofax KTM Validation Module

11. Bottom-Line • AR Legacy (FLNA Retail, CDSD, & Non-DSD) • KOFAX growth throughput is an average of 1,649 batches per period • KOFAX bypass rate started at 19%, and the YTD average rate is 32% • 31,684 batches (checks) have been processed through KOFAX, resulting in an average of 64% batches matching at a 100% and an average of 94% matching at an invoice level • Manual effort to complete a batch was 5 batches per hour, and with the use of KTM Validation we improved the throughput by 136 batches per hour • YTD, KOFAX eliminated 2,186 hours of manual effort • The KTM validation volume of 210 batches per day is fulfilled with 1.5 hours of manual intervention • PQTG AR (Pepsi, Quaker, Tropicana, & Gatorade) • KOFAX growth throughput is an average of 553 batches per period • KOFAX bypass rate started at 39%, and the YTD average rate is 38%. The rapid success rate is related to Frito-Lay’s learning • 2,024 batches have been processed through KOFAX, resulting in a match of an average of 55% • The KTM validation volume of 51 batches per day is fulfilled with 0.54 hours of manual intervention AR Legacy KOFAX Transformation Statistics P-QTG KOFAX Transformation Statistics

12. Bottom-Line • Did we meet the challenge and solution/success criteria? • Kofax • Delivered OCR solution to automate payments that require invoice level remittance processing for customers that lack EDI capabilities. • Total cost of solution: • One-time charges$370.8K • Average Annual recurring charges$32K AR Legacy Auto vs. Manual Cash Application 30 Cash FTE’s • Solution Criteria • Keep current productivity produced by algorithms/auto matching • Must be able to integrate to multiple ERP’s (i.e. SAP & C2C) • Must be able to integrate with multiple banks (i.e. Northern Trust & PNC) • Bypass % must be high in order to eliminate the shifting of work without templates – averaging 35% • Ability to learn and continually increase bypass rate • Success Criteria • Auto-apply 60% of the remittance passed through the solution – averaging 64% • Replace current template based AnyDoc solution – 62% of the accounts converted • Increase cash application cycle-time – 93% applied within 3 days vs. 88% prior to go-live • Reduce bank fees associated with data entry they provided • Become a paperless environment and no longer require storage for checks Less 12 12 Cash FTE’s Reallocated 2 Level 1 / 2 Level 2 Less 6 Anticipated FTE Reduction by 2013 PQTG Exceptions Level 1 • Estimated Cost Savings (2013) • G&A savings of $913K annually • FTE’s savings of $858K • Check Retention savings of $55K • Lockbox check remittance fee savings of $17K annually Level 2 FLNA Exceptions No remit Q4 Q2 2011 2012 2013

13. Questions?