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  • PERFORMANCEWITH PURPOSE

    2006

    267419_L01_CRVS.v2 3/3/07 11:30 PM Page 1

  • Common Stock InformationStock Trading Symbol PEP Stock Exchange ListingsThe New York Stock Exchange is the principal market forPepsiCo common stock, which is also listed on theAmsterdam, Chicago and Swiss Stock Exchanges.

    ShareholdersAt year-end 2006, there were approximately 190,000shareholders of record.

    Dividend PolicyWe target an annual dividend payout of approximately45% of prior years net income from continuing opera-tions. Dividends are usually declared in January, May, Julyand November and paid at the end of March, June andSeptember and the beginning of January. The dividendrecord dates for these payments are March 9, and, subjectto approval of the Board of Directors, expected to be June 8, September 7 and December 7, 2007. We havepaid quarterly cash dividends since 1965.

    Stock PerformancePepsiCo was formed through the 1965 merger of Pepsi-ColaCompany and Frito-Lay, Inc. A $1,000 investment in ourstock made on December 31, 2001 was worth about$1,393 on December 31, 2006, assuming the reinvestmentof dividends into PepsiCo stock. This performance represents a compounded annual growth rate of 7%.

    The closing price for a share of PepsiCo common stockon the New York Stock Exchange was the price as reportedby Bloomberg for the years ending 2002-2006. Past performance is not necessarily indicative of future returnson investments in PepsiCo common stock.

    Shareholder InformationAnnual MeetingThe Annual Meeting of Shareholders will be held at Frito-Lay Corporate Headquarters, 7701 Legacy Drive,Plano, Texas, on Wednesday, May 2, 2007, at 9 a.m. localtime. Proxies for the meeting will be solicited by an independent proxy solicitor. This Annual Report is not part of the proxy solicitation.

    Inquiries Regarding Your Stock HoldingsRegistered Shareholders (shares held by you inyour name) should address communications concerningtransfers, statements, dividend payments, address changes,lost certificates and other administrative matters to:

    The Bank of New YorkShareholder Services DepartmentP.O. Box 11258Church Street StationNew York, NY 10286-1258Telephone: 800-226-0083

    212-815-3700 (Outside the U.S.)E-mail: shareowners@bankofny.comWebsite: www.stockbny.comorManager Shareholder RelationsPepsiCo, Inc.700 Anderson Hill RoadPurchase, NY 10577Telephone: 914-253-3055

    In all correspondence or telephone inquiries, pleasemention PepsiCo, your name as printed on your stock certificate, your Social Security number, your address andtelephone number.

    SharePower Participants (employees withSharePower options) should address all questions regard-ing your account, outstanding options or shares receivedthrough option exercises to:

    Merrill Lynch/SharePower Stock Option Unit1600 Merrill Lynch DriveMail Stop 06-02-SOPPennington, NJ 08534Telephone: 800-637-6713 (U.S., Puerto Rico

    and Canada)609-818-8800 (all other locations)

    In all correspondence, please provide your account number(for U.S. citizens, this is your Social Security number), youraddress, your telephone number and mention PepsiCoSharePower. For telephone inquiries, please have a copy ofyour most recent statement available.

    Employee Benefit Plan ParticipantsPepsiCo 401(k) Plan & PepsiCo Stock Purchase Program

    The PepsiCo Savings & Retirement Center at FidelityP.O. Box 770003Cincinnati, OH 45277-0065Telephone: 800-632-2014(Overseas: Dial your countrys AT&T Access Number+800-632-2014. In the U.S., access numbers are avail-able by calling 800-331-1140. From anywhere in theworld, access numbers are available online atwww.att.com/traveler.)Website: www.netbenefits.fidelity.com

    PepsiCo Stock Purchase Program for Canadian employees:Fidelity Stock Plan Services

    P.O. Box 5000Cincinnati, OH 45273-8398Telephone: 800-544-0275Website: www.iStockPlan.com/ESPP

    Please have a copy of your most recent statement available when calling with inquiries.

    If using overnight or certified mail send to:Fidelity Investments100 Crosby ParkwayMail Zone KC1F-LCovington, KY 41015

    Shareholder ServicesBuyDIRECT PlanInterested investors can make their initial purchase directlythrough The Bank of New York, transfer agent for PepsiCo,and Administrator for the Plan. A brochure detailing thePlan is available on our website www.pepsico.com or fromour transfer agent:

    The Bank of New YorkPepsiCo PlanChurch Street StationP.O. Box 1958Newark, NJ 07101-9774Telephone: 800-226-0083212-815-3700 (Outside the U.S.)Website: www.stockbny.comE-mail: shareowners@bankofny.com

    Other services include dividend reinvestment, optionalcash investments by electronic funds transfer or checkdrawn on a U.S. bank, sale of shares, online accountaccess, and electronic delivery of shareholder materials.

    Financial and Other InformationPepsiCos 2007 quarterly earnings releases are expectedto be issued the weeks of April 23, July 23, October 8,2007, and February 4, 2008.

    Copies of PepsiCos SEC reports, earnings and otherfinancial releases, corporate news and additional companyinformation are available on our website www.pepsico.com.

    Our CEO and CFO Certifications required underSarbanes-Oxley Section 302 were filed as an exhibit to ourForm 10-K filed on February 20, 2007. Our 2006 DomesticCompany Section 303A CEO Certification was filed withthe New York Stock Exchange (NYSE).

    If you have questions regarding PepsiCos financial performance contact:

    Jamie CaulfieldVice President, Investor RelationsPepsiCo, Inc.Purchase, NY 10577Telephone: 914-253-3035

    Independent AuditorsKPMG LLP345 Park AvenueNew York, NY 10154-0102Telephone: 212-758-9700

    Corporate HeadquartersPepsiCo, Inc.700 Anderson Hill RoadPurchase, NY 10577Telephone: 914-253-2000

    PepsiCo Website: www.pepsico.com

    2007 PepsiCo, Inc.

    02

    .595

    03

    .630

    04 05 06

    .850

    1.01

    1.16Cash Dividends DeclaredPer Share (In $)

    0

    20

    40

    60

    02 03 04 05 06

    Year-end Market Price of StockBased on calendar year-end (In $)

    PepsiCos 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 outstanding quality. America On the Move is an initiative of the nonprofit organization, The Partnership to Promote Healthy Eating and Active Living (The Partnership:www.americaonthemove.org). Komen Race for the Cure is an initiative of the National Volunteer Recognition Program.

    Design: Eisenman Associates. Cover concept: Sondra Greenspan, Arcanna, Inc. Cover illustrations: 3DI Studio. Printing: L.P. Thebault. Photography: Stephen Wilkes, Ben Rosenthal, Grover Sterling,Steve Bonini, Kayte Deioma, PhotoBureau. Special thanks to Starbucks.

    This report is entirely recyclable. The cover and editorial pages are printed on Sterling Ultra Recycled Cover and Sterling Ultra Recycled Dull Text. That paper was manufactured by NewPage withwood procurement certified by the Sustainable Forestry Initiative. The financial pages are printed on Plainfield Smooth Opaque Text. That paper was manufactured by Domtar Inc., using sustainableenergy sources and wood procurement practices certified by the Forest Stewardship Council.

    2006 2005 % Chg(a)

    Summary of OperationsTotal net revenue $35,137 $32,562 8Division operating profit(b) $7,172 $6,710 7Total operating profit $6,439 $5,922 9Net income(c) $5,065 $4,536 12Earnings per share(c) $3.00 $2.66 13

    Other DataManagement operating cash flow(d) $4,065 $4,204 (3)Net cash provided by

    operating activities $6,084 $5,852 4Capital spending $2,068 $1,736 19Common share repurchases $3,000 $3,012 Dividends paid $1,854 $1,642 13Long-term debt $2,550 $2,313 10

    (a) Percentage changes above and in text are based on unrounded amounts.(b) Excludes corporate unallocated expenses. See page 82 for a reconciliation to the most directly

    comparable financial measure in accordance with GAAP.(c) In 2006, excludes restructuring and impairment charges and certain tax items. In 2005, excludes

    the impact of the American Jobs Creation Act (AJCA) tax charge, the 53rd week and restructuringcharges. See page 82 for a reconciliation to the most directly comparable financial measure in accordance with GAAP.

    (d) Includes the impact of net capital spending. Also, see Our Liquidity and Capital Resources inManagements Discussion and Analysis.

    We believe Performance achievingfinancial results matters mostwhen it is combined with Purpose improving peoples lives.

    PepsiCo International37%

    PepsiCo Beverages North America27%

    Frito-Lay North America31%

    Quaker Foods North America5% 8%

    PepsiCo International27%

    PepsiCo Beverages North America29%

    Frito-Lay North America36%

    Quaker Foods North America

    Division Operating ProfitTotal: $7,172

    Net RevenueTotal: $35,137

    PepsiCo, Inc. and Subsidiaries ($ in millions except per share amounts; all per share amounts assume dilution)

    Financial Highlights

    ContentsPepsiCo at a Glance . . . . . . . . . . . . . . . . . . . . . . 1Letter to Shareholders . . . . . . . . . . . . . . . . . . . . 2Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Corporate Officers and Principal Divisions . . . . 22PepsiCo Board of Directors . . . . . . . . . . . . . . . . 23Advisory Boards

    African American Advisory Board . . . . . . . . . 24Latino/Hispanic Advisory Board . . . . . . . . . . . 25Blue Ribbon Health and Wellness

    Advisory Board . . . . . . . . . . . . . . . . . . . . . . . 26

    Financial ReviewManagements Discussion and Analysis and