Continuing the Journey...Performance with a Purpose

Pepsico2004 Annual Report

Table of Contents:

The Journey Continues...

1...... Letter to Shareholder2...... Financial Highlights7...... Questions and Answers 10.... Leadership Team12.... PepsiCo Americas Foods14.... PepsiCo Americas Beverage16.... PepsiCo International19.... Purpose: Human, Environment29.... PepsiCo Board of Directors30.... Executive Officers31.... Financial Overview

Dear Shareholders:

We have titled this year’s annual report “Performance with Purpose: The Journey Continues.” That’s because in 2007 PepsiCo made great progress toward the long-term corporate objectives we set for oursleves last year: To achieve cusiness and financial success while leaving a positive imprint on society.

What makes me particularly proud is that our 2007 performance was strong- not just measure by these short-term metrics-but also with the long-term equally in mind.

In the next few pages you’ll learn a lot more about the performance of our individual biusiness from the leaders of PepsiCo Americas Foods, PeppsiCo Americas Bever-ages and PepsiCo International.

Our busines is well-balanced betwee developed and developing nations. And our ex-pandind product portfolio, offering benefits ranging from simple refreshment to basic nutrition, positions us well to serve a wide range of consumer needs.

Once more, our extraordinary associates around the world delivered terrific perfor-mance, and I am delighted to share with you the following 2004 Financial results in this year’s annual report. As always, we are eager to serve the public and take you on our journey as we continue to deliver performance with a purpose.

Indra K. NooyiChairman and Chief Executive Officer

Performance with Purpose...The Journey Continues...

Delivering Performance:

• We increased capital expenditures in plant and equipment world-wide to enable growth of core brands and expand into new platforms such as baked and crisp-bread snacks and non-carbonated beverages.

• We added several tuck-in acquisitions in key markets and seg-ments, and we further expanded our successful coffee and tea joint ventures

• We created the Chief Scientific Officer position to ensure our tech-nical capabilities keep pace with increasingly sophisticated consumer demand; and we cunded incremental investment to explore break-through R&D opportunities.

• We maintained focus on building next-generation IT capabilities with Project One Up, to support our long-term growth prospects worldwide.