Pepsi Aces Pop Quiz

"I'd like to buy the world a Coke," as the old marketing jingle goes. (The name of the sponsor escapes me ...) But today, PepsiCo (NYSE: PEP) should be buying a round for the global consumer, for -- pardon my French -- pulling Pepsi's Fritos out of the fire in 2007.

That's my take on yesterday's fiscal 2007 earnings report from the global pop 'n' chips powerhouse. Overall, Pepsi produced respectable results last year:

• Revenue rose 12%.
• Operating profit increased 10% (on margins squeezed by continuing pressure from rising raw materials costs).
• "Core" earnings per share rose 13% (helped by share buybacks that concentrated profits among fewer shares).
• Actual earnings-per-share growth was limited to just 2%, for $3.41 per share, thanks to 2006 tax benefits that didn't repeat in 2007.

The world is not flat
With all due respect to The World is Flat author Tom Friedman, it ain't. For Pepsi, at least, the world is full of hills and valleys. Here in the U.S., we're living in the valley, and without some serious inclines elsewhere in the world, Pepsi's profits picture would look a lot different.

Referring to volume sales, rather than dollar sales or profits, Pepsi's PepsiCo International division posted 8% snack growth (nearly three times that of Frito-Lay North America) and 9% beverage growth (where PepsiCo Beverages North America was nearly flat).

What's more, management confided that "foreign currency translation contributed about 2 points of growth to net revenue and operating profit." In other words, most of the growth Pepsi encountered last year came from abroad. That's where the company sold more stuff, and collected payment in rock-solid currencies like the Thai baht and Croatian kuna, which apparently hold their values better than the Monopoly money we ply around these parts.

I can only imagine how much better Pepsi would have done with less resemblance to Kraft (NYSE: KFT) and more in common with Cadbury Schweppes (NYSE: CSG) and archrival Coca-Cola  (NYSE: KO) -- ah, that's who did the jingle! -- by collecting the majority of its revenue outside U.S. borders.

Then again, if growth rates keep following the trends we saw last year, that just might happen sooner we think.

What did we expect when we popped the top on Pepsi last quarter, and what did we get? Find out in:

• Foolish Forecast: Pepsi's All Shook Up
• Pepsi Loses Some Fizz