8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant To Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): February 7, 2012

PepsiCo, Inc.

(Exact Name of Registrant as Specified in Charter)

North Carolina	1-1183	13-1584302
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

700 Anderson Hill Road

Purchase, New York 10577

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (914) 253-2000

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

The information in this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, except as otherwise expressly stated in such filing.

Attached as Exhibit 99.1 and incorporated by reference into this Item 2.02 is a copy of the press release issued by PepsiCo, Inc. (“PepsiCo”), dated February 9, 2012, reporting PepsiCo’s financial results for the 17 and 53 weeks ended December 31, 2011.

Item 2.05. Costs Associated with Exit or Disposal Activities.

PepsiCo today announced that on February 8, 2012 it committed to a multi-year productivity plan (the “Productivity Plan”), which includes actions in every aspect of its business, that PepsiCo believes will strengthen its complementary food, snack and beverage businesses by leveraging new technologies and processes across PepsiCo’s operations, go-to-market and information systems; heightening the focus on best practice sharing across the globe; consolidating manufacturing, warehouse and sales facilities; and implementing simplified organization structures, with wider spans of control and fewer layers of management. The Productivity Plan is expected to enhance PepsiCo’s cost-competitiveness, provide a source of funding for future brand-building and innovation initiatives, and serve as a financial cushion for potential macroeconomic uncertainty beyond 2012. As a result, PepsiCo expects to incur pre-tax charges of approximately $910 million, $383 million of which is reflected in its fourth quarter 2011 results, approximately $425 million of which will be reflected in its 2012 results and approximately $100 million of which will be reflected in its 2013, 2014 and 2015 results. These charges will be comprised of approximately $500 million of severance and other employee-related costs; approximately $325 million for other costs, including consulting-related costs and the termination of leases and other contracts; and approximately $85 million for asset impairments (all non-cash) resulting from plant closures and related actions. These charges resulted in cash expenditures of $30 million in the fourth quarter of 2011, and PepsiCo anticipates approximately $550 million of related cash expenditures during 2012, with the balance of approximately $175 million of related cash expenditures in 2013 through 2015. PepsiCo also expects the Productivity Plan will be substantially completed by the end of 2012 with incremental productivity initiatives continuing through the end of 2015.

The information in this Item 2.05 contains certain forward-looking statements based on PepsiCo’s current expectations and projections about future events. Terminology such as “believe,” “expect,” “intend,” “estimate,” “project,” “anticipate,” “will” or similar statements or variations of such terms are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in demand for PepsiCo’s products, as a result of changes in consumer preferences and tastes or otherwise; PepsiCo’s ability to compete effectively; unfavorable economic conditions in the countries in which PepsiCo operates; damage to PepsiCo’s reputation; PepsiCo’s ability to grow its business in developing and emerging markets or unstable political conditions, civil unrest or other developments and risks in the countries where PepsiCo operates; trade consolidation or the loss of any key customer; changes in the legal and regulatory environment; PepsiCo’s ability to build and sustain proper information technology infrastructure, successfully implement its ongoing business transformation initiative or outsource certain functions effectively; fluctuations in foreign exchange rates; increased costs, disruption of supply or shortages of raw materials and other supplies; disruption of PepsiCo’s supply chain; climate change, or legal, regulatory or market measures to address climate change; PepsiCo’s ability to hire or retain key employees or a highly skilled and diverse workforce; failure to successfully renew collective bargaining agreements or strikes or work stoppages; failure to successfully complete or integrate acquisitions and joint ventures into PepsiCo’s existing operations; failure to successfully implement PepsiCo’s global operating model; failure to realize anticipated benefits from our productivity plan; any downgrade of our credit ratings; and any infringement of or challenge to PepsiCo’s intellectual property rights.

For additional information on these and other factors that could cause PepsiCo’s actual results to materially differ from those set forth herein, please see PepsiCo’s filings with the SEC, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. PepsiCo undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Massimo d’Amore will step down from his position as President, PepsiCo Global Beverages Group, as of February 29, 2012 (the “Transition Date”), and will retire from PepsiCo effective February 28, 2013.

Mr. d’Amore and PepsiCo have entered into a retirement agreement, pursuant to which Mr. d’Amore has agreed to make himself available to perform services for PepsiCo upon request for a one-year transition period. During the transition period, Mr. d’Amore will receive bi-weekly transition payments of $79,400 and will continue to participate in certain retirement and health and welfare plans. The retirement agreement also includes customary non-competition and non-solicitation provisions that apply through the second anniversary of the Transition Date.

A copy of the retirement agreement between Mr. d’Amore and PepsiCo is attached hereto as Exhibit 10.1 and is incorporated herein by reference, and the foregoing summary of its terms and conditions is qualified in its entirety by reference thereto.

Item 7.01. Regulation FD Disclosure.

The information in this Item 7.01, including Exhibit 99.2 attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Item 7.01 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, except as otherwise expressly stated in such filing.

Attached as Exhibit 99.2 and incorporated by reference into this Item 7.01 is a copy of the press release dated February 9, 2012 issued by PepsiCo, Inc., providing PepsiCo’s outlook for 2012.

Item 8.01. Other Events.

PepsiCo announced today that it will raise the dividend payable on its common stock, effective with the dividend payable in June 2012, by 4 percent to $2.15 per share.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

10.1 Retirement Agreement, dated as of February 7, 2012, between Massimo d’Amore and PepsiCo, Inc.

99.1 Press Release issued by PepsiCo, Inc., dated February 9, 2012, reporting PepsiCo’s financial results for the 17 and 53 weeks ended December 31, 2011.

99.2 Press Release issued by PepsiCo, Inc., dated February 9, 2012 providing PepsiCo’s outlook for 2012.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PEPSICO, INC.
Date: February 9, 2012	By:	/s/    Maura Abeln Smith
	Name:	Maura Abeln Smith
	Title:	Executive Vice President, Government Affairs, General Counsel and Corporate Secretary

INDEX TO EXHIBITS

10.1	Retirement Agreement, dated as of February 7, 2012, between Massimo d’Amore and PepsiCo, Inc.
99.1	Press Release issued by PepsiCo, Inc., dated February 9, 2012, reporting PepsiCo’s financial results for the 17 and 53 weeks ended December 31, 2011.
99.2	Press Release issued by PepsiCo, Inc., dated February 9, 2012 providing PepsiCo’s outlook for 2012.

EX-10.1

Exhibit 10.1

700 Anderson Hill Road, Purchase, New York, 10577 www.pepsico.com

February 7, 2012

BY HAND

Massimo d’Amore

co/PepsiCo, Inc.

700 Anderson Hill Road

Purchase, NY 10577

Dear Mr. d’Amore:

This letter agreement (this “Agreement”) describes the terms and conditions of your continued active employment with PepsiCo, Inc. (“PepsiCo” and, together with its subsidiaries, divisions, affiliates, predecessors and successors, the “Company”) and confirms the arrangements relating to your separation from the Company. The material terms and conditions of this Agreement have been approved by the Compensation Committee of the Board of Directors of PepsiCo.

After the date of this Agreement, you will not be entitled to receive any further payments or benefits from the Company, except as specifically set forth in this Agreement or except as provided under the indemnity provisions of PepsiCo’s By-Laws and director and officer and professional liability insurance policies.

1. Status and Responsibilities.

(a) Your active employment with the Company will continue through, and will cease on, February 29, 2012 (your “Effective Date”). Effective as of your Effective Date, you will relinquish your position as President, PepsiCo Global Beverages Group, all other appointments and offices you hold with the Company and your position with any third-party organizations in which you represent the Company. Contingent upon your timely signing and not revoking this Agreement, your “Transition Period” will begin on your Effective Date and end on February 28, 2013 (your “Retirement Date”) and you will be eligible for the transition payments and benefits continuation described in Section 2. Your employment with the Company will terminate on your Retirement Date.

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(b) Through your Effective Date, you must be available to perform services for the Company upon request and must do so in a diligent and professional manner. During your Transition Period, you agree to respond to inquiries or reasonable requests from the Company for services or assistance related to matters arising during your employment with the Company. You will be reimbursed for pre-approved reasonable and appropriate business expenses incurred by you during your Transition Period in connection with such services as the Company requests, subject to the submission by you of appropriate documentation, and to Company-paid or provided travel, in each instance in accordance with Company policy. For the avoidance of doubt, it is intended that you will “separate from service” within the meaning of Section 409A of the Internal Revenue Code of 1986 (“Section 409A”) on your Effective Date, and that your services during the Transition Period shall not exceed 20% of the average level of services you performed for the Company over the immediately preceding 36-month period measured from your Effective Date.

2. Payments and Benefits.

(a) Base Salary. Your base salary will continue at the current rate, and be paid according to normal payroll procedures, through your Effective Date.

(b) Transition Payments. Commencing on your Effective Date and for the duration of your Transition Period, you will receive from the Company twenty-six (26) bi-weekly payments equal to $79,400 each, less applicable withholdings and according to normal payroll procedures.

(c) Annual Bonus. Pursuant to the terms of the PepsiCo, Inc. Executive Incentive Compensation Plan, you will be eligible for a 2011 annual bonus, calculated and paid in the normal course based on actual performance, determined under the same evaluation process that applies to other senior executives. The amount of your 2011 annual bonus is subject to approval by the Compensation Committee at its regularly scheduled February 2012 meeting. You will not be eligible for an annual bonus for 2012 or thereafter.

(d) Continued Welfare Benefits. You and your eligible dependents will continue to be covered under the Company’s following group benefit plans applicable to active employees through your Retirement Date and subject to your benefit elections: medical, dental, vision, health care reimbursement account, life insurance, accident insurance, and group legal services. Your cost for benefits will be the normal cost for an active executive at your level, and any benefits costs you owe the Company will be deducted from your transition payments in the normal course. Your eligibility under the following programs will end on your Effective Date: short- and long-term disability, dependent care reimbursement account, workers’ compensation insurance, business travel accident insurance, matching gifts program, scholarship program, adoption assistance, tuition reimbursement, and service awards. After your Retirement Date, you and your covered dependents will be eligible for continued health benefits in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).

(e) Retirement Plans. You will continue to earn credited service in the PepsiCo Salaried Employees Retirement Plan and the PepsiCo Pension Equalization Plan (together, the “Retirement Plans”) until your Retirement Date; however, only $33,100 of each bi-weekly transition payment as described in Section 2(b) will be included as pension eligible compensation. As of your Retirement Date, you will be eligible to receive the early retirement benefits provided under the Retirement Plans. The Company has provided you with information

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regarding your estimated benefits and payment schedule under the Retirement Plans. You may make contributions to the PepsiCo Savings Plan (the “Savings Plan”) through your Effective Date in accordance with the terms of the Savings Plan. After your Effective Date, you may continue to participate in the Savings Plan in accordance with its terms; however, you will not be entitled to make any additional contributions. Beginning on your Retirement Date, you and your eligible dependents will be eligible for the retiree medical and life insurance coverage that is in effect for retirees under the Company’s benefit plans from time to time. Retiree medical coverage and retiree life insurance are neither fixed nor guaranteed. The Company reserves the right to terminate or change in any way and at any time the coverage provided to retirees.

(f) Equity Awards. The Company has provided you with a schedule of your outstanding awards under the PepsiCo long-term incentive plans (collectively, the “LTIP”), and you and the Company have confirmed the accuracy of that schedule. In accordance with the original terms and conditions of your LTIP agreements:

(i) your options to purchase PepsiCo common stock (“Options”) awarded under the LTIP that are vested as of your Effective Date will continue to be exercisable until, and will expire upon, the applicable expiration date;

(ii) the number of performance stock units (“PSUs”) granted to you as part of your 2009 annual LTIP award that are earned will be determined by the Compensation Committee and paid on the same basis as for other senior executives, and the remaining PSUs granted to you in 2009 that are not earned will be forfeited and cancelled;

(iii) a pro rata portion of the Options and PSUs granted as part of your 2010 and 2011 annual LTIP awards will vest on your Effective Date, with such number determined in proportion to your active service from the applicable grant date to your Effective Date over the applicable vesting period; provided that such PSUs that vest on your Effective Date will be settled on the applicable normal vesting date subject to the level of achievement of the applicable performance targets as determined by the Compensation Committee on the same basis as for other senior executives and (b) such Options that vest on your Effective Date will not become exercisable until the applicable normal vesting date and will thereafter continue to be exercisable until, and will expire upon, the applicable expiration date; and

(iv) the remaining portions of your 2010 and 2011 annual LTIP awards that do not vest on your Effective Date and your LTIP retention awards granted in 2006 and 2011 that are unvested as of your Effective Date will be forfeited and cancelled on your Effective Date.

You will not receive an LTIP award in 2012 or thereafter. Through the close of the first quarter 2012 trading window, you will continue to be subject to PepsiCo’s Insider Trading Policy.

(g) Ownership Guidelines and Exercise & Hold Policy. You will remain subject to PepsiCo’s Stock Ownership Guidelines and Exercise & Hold Policy for eighteen (18) months following your Effective Date. Under the terms of the Stock Ownership Guidelines, you are

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required to continue to hold shares of PepsiCo Common Stock needed to meet 100% of your stock ownership level (four (4) times your annual base salary) until six months after your Effective Date and to continue to hold shares equal to 50% of this stock ownership level from six months to eighteen (18) months after your Effective Date. Under the terms of the Exercise & Hold Policy, the aggregate amount of cash that you may receive upon the exercise of Options during each calendar year is limited to 20% of the pre-tax gains on all your vested outstanding Options as of February 1 of that year. You will be exempt from this requirement once you have met, and continue to meet, your ownership level under PepsiCo’s Stock Ownership Guidelines.

3. Non-Disclosure.

In the course of your employment with the Company, you have been provided access to and have received and developed Confidential Information. “Confidential Information” consists of information relating to the Company’s business that derives economic value, actual or potential, from not being generally known to others, including, but not limited to, technical or non-technical data, a formula (including cost and/or pricing formula), pattern (including pricing and discount history), compilation, program, device, method (including cost and/or pricing methods, marketing programs and operating methods), technique, drawing, process, financial data, or a list of actual or potential customers or suppliers. You agree that, unless such information has become generally known to others without your assistance or has been independently developed by others without your assistance, you will not use Confidential Information for, or disclose any Confidential Information to, any third party except (i) with the prior written consent of the Company, or (ii) as legally required after notice by you to the Company of such legally required disclosure. You further agree to return all Confidential Information to the Company upon termination of your employment for any reason or upon earlier request of the Company. To the extent that Confidential Information resides on non-Company computers, personal digital assistants, or other digital storage media that you use or to which you have access or in non-Company e-mail accounts, you will so advise the Company upon the termination of your employment for any reason and will follow and cooperate with all instructions provided by the Company with respect to transferring, preserving or eradicating such Confidential Information. You further acknowledge and agree that you are not authorized to use the Company’s computer systems to transfer Confidential Information to yourself or to third parties except in furtherance of your job duties for the Company or as authorized in writing by the Company. You understand that violating any of subject you to legal penalties.

4. Non-Competition and Non-Solicitation.

(a) You agree that, up through twelve (12) months following your Retirement Date, you will not, without the prior written consent of the Company, either directly or indirectly:

(i) participate or have any interest in, own, manage, operate, control, be connected with as a stockholder, director, officer, employee, partner or consultant, or otherwise engage, invest or participate (collectively, “Participate”) in any Competing Entity; provided, however, with the prior written consent of the Company, which consent shall not be unreasonably withheld, you may Participate in (x) a division or subsidiary of a Competing Entity (other than a Prohibited Entity) that is not engaged in any way in marketing, selling, distributing, developing or producing Covered Products, or (y) a Competing Entity (other than a Prohibited Entity) that makes retail sales of or consumes Covered Products without in any way competing with the Company;

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(ii) Participate in any bottling entity with which the Company does business as of the date of this Agreement;

(iii) engage in any act injurious to the reputation of the Company or that diverts, or is intended to divert, customers or suppliers from the Company; and

(iv) engage in any act that diverts, or is intended to divert, employees from the Company.

(b) For purposes of this Section 4, in addition to the other terms defined under this Agreement, the following capitalized terms have the following meaning:

(i) “Competing Entity” means any firm, corporation or other entity that markets, sells, distributes, develops or produces Covered Products and that competes, anywhere in the United States or in any other country, with any business of the Company to which you provided services within the last twelve months or provide services during the Transition Period, or to which you had access to Confidential Information. Each Prohibited Entity (as defined below) shall be considered a Competing Entity.

(ii) “Covered Products” means any product that was produced, marketed, sold, licensed or, to your knowledge, under development by a business of the Company and that falls into one or more of the following categories: (1) beverages, including without limitation carbonated soft drinks, tea, water, juices, juice drinks, juice products, sports drinks, energy drinks and coffee drinks; (2) dairy products; (3) snacks, including salty snacks, sweet snacks, meat snacks, granola and cereal bars, and cookies; (4) hot cereals and ready-to-eat cereals; (5) pancake mixes and pancake syrup; (6) value-added rice products; or (7) value-added pasta products and dry pasta products.

(iii) “Prohibited Entity” means each of The Coca-Cola Company, Coca-Cola Enterprises, Inc., Nestle S.A., Dr Pepper Snapple Group, Inc., Cott Corporation, Citrus World, Inc., Groupe Danone, The Arizona Beverage Company, Sunkist, Red Bull GmbH, Hanson Natural Corporation, Starbucks Corporation, Unilever Group NV & PLC, Kraft Foods Inc., Kellogg Company, General Mills, Inc., Utz Quality Foods, Inc., Snyders of Hanover, Inc., The Procter & Gamble Company, Diamond Foods, Inc., Bahlsen, Wise Foods, Inc. or any subsidiary, affiliate, franchisee, division or other entity associated or affiliated with the foregoing entities.

(c) The provisions of this Section 4 shall not apply to prevent you and your immediate family from collectively being holders of up to five percent (5%) in the aggregate of any class of securities of any corporation engaged in the prohibited activities described above, provided that such securities are listed on a national securities exchange or registered under securities laws of Canada or the United States.

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5. Non-Disparagement.

You agree not to make any derogatory, disparaging or negative remarks, written or verbal, regarding the Company or any of its officers, directors, employees, stockholders, representatives, vendors, suppliers, customers, clients products, services to any third person or otherwise make any comment or communication casting the covered parties in a negative light; provided, however that nothing in this paragraph is intended to bar you from giving testimony pursuant to a compulsory legal process or as otherwise required by law.

The Company agrees to advise those individuals who serve as its executive officers as of the Effective Date not to make any derogatory, disparaging or negative remarks, written or verbal, regarding you to any third person, or otherwise make any comment or communication casting you in a negative light; provided, however that nothing in this paragraph is intended to bar any such person, or the Company, from giving testimony pursuant to a compulsory legal process or as otherwise required by law.

6. Irreparable Harm, Reasonableness, Other Agreements.

You acknowledge that a breach or threatened breach by you of the terms of Sections 3, 4 or 5 of this Agreement would result in material and irreparable injury to the Company, and that it would be difficult or impossible to establish the full monetary value of such damage. Therefore, the Company shall be entitled to injunctive relief in the event of any such breach or threatened breach. The undertakings and obligations contained in Sections 3, 4, 5 and 6 shall survive the termination of this Agreement.

You agree that the covenants you have made in Sections 3, 4 and 5 are reasonable with respect to their duration and description.

You acknowledge that Sections 3, 4 and 5 are not intended to supersede or limit your obligations under other agreements, which may be different from those contained in such sections. Other such agreements may include confidentiality, non-disclosure, trade secret or assignment-of-invention agreements previously executed by you in favor of the Company. Any such agreement(s) shall remain in full force and effect.

7. Future Cooperation.

You agree that you will provide accurate information or testimony or both in connection with any legal matters, if so requested by the Company. You further agree to make yourself available upon request to provide information and/or testimony, in a formal and/or informal setting in accordance with the Company’s request, subject to reasonable accommodation of your schedule and reimbursement of reasonable documented expenses incurred by you, including reasonable and necessary attorney fees (if independent legal counsel is reasonably necessary). Notwithstanding the foregoing, the Company’s agreement and obligations pursuant to the foregoing sentence shall be subject to the provisions and limitations set forth in Section 10 of this Agreement.

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8. Releases.

(a) You agree to release and discharge the Company, and all of its respective past, present and future officers, directors, employees, agents, plans, trusts, administrators, stockholders and trustees (collectively, the “Released Parties”) from any and all claims, losses or expenses you may have or have had or may later claim to have had against them, whether known or unknown, arising out of anything that has occurred up through the date you sign this Agreement (both initially and on the Effective Date), including without limitation, any claims, losses or expenses arising out of your employment with or separation from the Company; provided, however, that you expressly do not release or discharge the Company from any claims, losses or expenses you may have for (i) workers’ compensation benefits, (ii) all amounts or payments owed to you as contemplated by Section 2 of this Agreement, (iii) the indemnification or insurance described in Section 10 below or (iv) all of your accrued and vested pension benefits, health care, life insurance, or disability benefits as determined through the Retirement Date under the Company’s applicable and governing plans and programs.

(b) You understand and agree that, except for the claims expressly excluded from this release, you will not be entitled hereafter to pursue any claims arising out of any alleged violation of your rights while employed by the Company, including, but not limited to, claims for reinstatement, back pay, losses or other damages to you or your property resulting from any alleged violations of state or federal law, such as (but not limited to) claims arising under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., as amended; (prohibiting discrimination on account of race, sex, national origin or religion); the Worker Adjustment and Retraining Notification Act (requiring that advance notice be given for certain workforce reductions); the Americans With Disabilities Act of 1990, 42 U.S.C. §12101 et seq. (prohibiting discrimination on account of disability); the Age Discrimination in Employment Act, 29 U.S.C. § 621, et seq. (prohibiting discrimination on account of age); the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq.; the Equal Pay Act, 29 U.S.C. § 206(d); the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (protecting employee benefits); the New York Human Rights Law; the Westchester County Human Rights Law, as these laws may be amended from time to time; and any other federal, state or local law, rule, regulation, administrative guidance or common law doctrine claim relating to your employment.

(c) By signing this Agreement and accepting the benefits provided, you agree that, except for any claims expressly excluded from this release and except as provided in Section 8(e) below, you will not hereafter pursue any individual claims (whether brought by you, an administrative agency, or any other person on your behalf or which includes you in any class) against the Released Parties, by means of a lawsuit, complaint, charge or otherwise, in any state or federal court or before any state or federal agency, including, by way of example and not limitation, the Equal Employment Opportunity Commission, the Department of Labor or any state Human Rights Agencies, for or on account of anything, whether known or unknown, foreseen or unforeseen, which has occurred up to the date you sign this Agreement (both initially and on the Effective Date) and which relates to your employment with the Company. You agree not to seek or accept any equitable or monetary relief in any action, suit, proceeding or charge filed by you or on your behalf against the Company, and agree to opt out of any class action filed against the Company with respect to any period during which you were employed by the Company. This release does not include any claims for breach of this Agreement or any claims

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that may arise after the date you sign this Agreement (both initially and on the Effective Date). You further represent and warrant that you are not aware of any facts or circumstances which might constitute either a violation of law or a violation of PepsiCo’s Code of Conduct, its corporate policies or justify a claim against the Company for a violation of the Sarbanes-Oxley Act of 2002 and/or the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and/or any rules, regulations or binding guidance thereunder.

(d) You agree that you will re-execute the release set forth above in this Section 8 on your Effective Date as a condition to receiving the transition payments referenced in Section 2(b). You further agree that you shall forfeit, and, to the extent already paid, the Company shall be entitled to repayment of the transition payments referenced in Section 2(b) and the Retirement Plan benefits referenced in Section 2(e) attributable to the Transition Period, each payable to you pursuant to this Agreement, and you and/or your dependents (as applicable) shall no longer be eligible for the continued welfare benefits coverage referenced in Section 2(d), in the event: (i) the Company terminates your employment for Cause (as defined in Section 8(f) below) prior to your Effective Date, (ii) you materially breach the terms of this Agreement, including a failure to re-execute the release set forth above in this Section 8, or (iii) you file or assert any claim related to your employment with, or separation from, the Company against the Released Parties for any reason other than claims for workers compensation benefits, or accrued and vested retirement benefits, health care benefits, life, or disability benefits as determined through the Retirement Date under the Company’s applicable and governing plans and programs or for violation of the terms of this Agreement. In addition, you agree to indemnify and hold harmless the Released Parties from any claim, loss or expense (including attorneys’ fees) incurred by them arising out of your breach of any portion of this Agreement.

(e) Nothing contained in this Section 8 or in Section 7 is intended to restrict you in any way from (i) making any disclosure of information required by law; (ii) providing information to, or testifying or otherwise assisting in any investigation or proceeding brought by any federal regulatory or law enforcement agency or legislative body, any self-regulatory organization, or the Company’s legal, compliance or human resources officers; (iii) filing, testifying or participating in or otherwise assisting in a proceeding relating to an alleged violation of any federal, state or municipal law relating to fraud or any rule or regulation of the Securities and Exchange Commission or any self-regulatory organization; or (iv) filing any claims that are not permitted to be waived or released under the Fair Labor Standards Act or other applicable law.

(f) For purposes of this Agreement, “Cause” means any of the following: (i) breaching any obligation to the Company or violating the Company’s Code of Conduct, Insider Trading Policy or any other written policies of the Company; (ii) unlawfully trading in the securities of PepsiCo or of any other company based on information gained as a result of your employment with the Company; (iii) committing a felony or other serious crime; (iv) engaging in any activity that constitutes gross misconduct in the performance of your employment duties; or (v) engaging in any action that constitutes gross negligence or misconduct and that causes or contributes to the need for an accounting adjustment to PepsiCo’s financial results.

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9. Review and Revocation.

This Agreement affects important rights and obligations, and we advise you to consult with an attorney before you sign this Agreement. In order to give you time to review and consider these arrangements, you will have twenty-one (21) calendar days from the day you receive this agreement to sign and return the agreement. For a period of up to and including seven (7) days after the date you sign this Agreement, you may revoke the release of any claims you may have under the federal Age Discrimination in Employment Act (“ADEA”). The Company shall have no obligation to make any payments under this Agreement before the end of the seven-day revocation period. All of the transition payments and benefits described herein, except for two weeks of base compensation, are allocated to the release of ADEA claims. Accordingly, if you exercise your right to revoke the release of ADEA claims, the Company will terminate your continued eligibility for the transition payments and all other benefits described herein and immediately recover all transition payments and benefits previously paid to you in excess of the sum of two weeks of base compensation. Further, if you revoke your release of ADEA claims, the waiver of all other claims shall remain in full force and effect. If you decide to revoke your release of ADEA claims, you must deliver to the undersigned a signed notice of revocation on or before the end of this seven-day period. Upon delivery to the undersigned of a timely notice of revocation, this Agreement shall be canceled and rescinded in all respects, and all benefits granted under the terms of this Agreement shall be voided in their entirety, retroactively effective as of the date you originally signed this Agreement.

10. Indemnification and Insurance.

The Company shall indemnify you and provide for the advance of expenses in connection therewith, subject to and in accordance with PepsiCo’s By-Laws. The Company shall maintain customary director and officer liability insurance covering you for acts and omissions during the time of your employment with the Company to the same extent as it does so for similarly situated executives. Such indemnification and insurance coverage shall also apply to any service you perform during your Transition Period in accordance with Section 1(b) of this Agreement.

11. Miscellaneous.

(a) Anything to the contrary herein notwithstanding, the Company shall, and is hereby authorized to, withhold or deduct from any amounts payable by the Company to you, your beneficiary or your legal representative under this Agreement, any federal, state or municipal taxes, social security contributions or other amounts required to be withheld by law, and to remit such amounts to the proper authorities. The Company is also hereby authorized to withhold or deduct appropriate amounts with respect to any benefit plans or programs or other elections made by you.

(b) This Agreement contains all of the undertakings and agreements between the Company and you pertaining to your separation from the Company and supersedes all previous undertakings and agreements, whether oral or in writing, between the Company and you on the same subject. No provision of this Agreement may be changed or waived unless such change or waiver is agreed to in writing, signed by you and a duly authorized employee of the Company. Except as otherwise specifically provided in this Agreement, no waiver by either the Company or you of any breach by the other of any condition or provision shall be deemed a waiver of a similar or dissimilar provision or condition at the same time or any prior or subsequent time.

Massimo d’Amore

Page 10

(c) No rights or obligations under this Agreement can be assigned or transferred by you, except as they may be transferred by will or by operation of law. This Agreement shall be binding upon and shall be for the benefit of the Company, its successors and assigns and you and, in the event of your death, your estate or legal representative.

(d) In the event that any portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining portions of this Agreement will be unaffected thereby and will remain in full force and effect to the fullest extent permitted by law.

(e) The parties intend that this Agreement will be interpreted so that the payments and benefits provided hereunder will be exempt from Section 409A, other than the Pension Equalization Plan benefits which are intended to comply with Section 409A, and that each transition payment shall be deemed a separate payment for purposes of Section 409A. Notwithstanding the foregoing, you acknowledge and agree that the Company does not guarantee any particular tax treatment and that you are solely responsible for any taxes that you owe as a result of this Agreement.

(f) This Agreement shall be deemed a contract made under, and for all purposes to be governed by and construed in accordance with, the laws of the State of New York, without reference to principles of conflicts of laws, and any and all disputes arising under this Agreement are to be resolved exclusively by courts sitting in New York. By signing this Agreement, you consent to the jurisdiction of such courts. The captions are utilized for convenience only, and do not operate to explain or limit the provisions of this Agreement.

[rest of page intentionally left blank]

Massimo d’Amore

Page 11

By signing below, you acknowledge that you understand and voluntarily accept the arrangements described herein. You acknowledge and agree that you have had the opportunity to review this Agreement with an attorney, that you fully understand this Agreement, that you were not coerced into signing it, and that you signed it knowingly and voluntarily. You also acknowledge that you have not received any promise or inducement to sign this Agreement except as expressly set forth herein.

Very truly yours, PepsiCo, Inc.
By:	/s/ Cynthia Trudell
	Name:	Cynthia Trudell
	Title:	Executive Vice President and Chief Human Resources Officer

The undersigned agrees to and accepts the terms and provisions of the foregoing Agreement:

/s/ Massimo d’Amore 2/7/12

NAME DATE

The undersigned hereby re-executes this Agreement, as of the Effective Date, for purposes of the release set forth in Section 8:

NAME DATE

EX-99.1

EXHIBIT 99.1

Purchase, New York     Telephone: 914-253-2000     www.pepsico.com

Contacts:	Investor	Media
	Jamie Caulfield	Jeff Dahncke
	Senior Vice President, Investor Relations	Senior Director, Media Bureau
	914-253-3035	914-253-3941
	jamie.caulfield@pepsico.com	jeff.dahncke@pepsico.com

PepsiCo Reports Fourth Quarter and Full Year 2011 Results

• Worldwide snacks volume¹ grew 8 percent in the quarter and the full year

• Worldwide beverage volume¹ grew 3 percent in the quarter and 5 percent for the full year

• Reported net revenue increased 11 percent in the quarter to $20.2 billion. Full-year reported net revenue increased 15 percent to $66.5 billion

• Reported net income increased 4 percent in the quarter and 2 percent for the full-year; core² net income increased 8 percent in the quarter and 5 percent for the full-year

• Reported EPS increased 5 percent to $0.89 in the quarter and 3 percent to $4.03 for the full-year. Core EPS grew 9 percent to $1.15 in the quarter and full-year core EPS grew 7 percent to $4.40

PURCHASE, N.Y. – February 9, 2012 – PepsiCo, Inc. (NYSE: PEP) today reported growth in volume, net revenue, operating profit and earnings per share for the fourth quarter and the full-year 2011. The results reflect top-line gains across its worldwide snacks and beverage businesses, the acquisition of Wimm-Bill-Dann (WBD), gains from sales of certain businesses and the favorable impact of an extra reporting week offset by high commodity costs.

“In 2011, we delivered solid top- and bottom-line growth,” said PepsiCo Chairman and CEO Indra Nooyi. “We continued to stimulate strong consumer demand for our products, and our successful pricing and productivity programs partially offset the impacts of inflation. Importantly, in a year characterized by a challenging macroeconomic environment and political turbulence, we took advantage of gains from strategic adjustments to our portfolio to reinvest in key capabilities and markets.”

“At the same time, we improved our long-term competitiveness in key emerging and developing markets through:

• Our acquisition of Wimm-Bill-Dann, which further strengthened our position in Russia,

• Pursuing new franchise models for our beverage operations in Mexico and China as we look to create more-advantaged businesses in these important markets, and

• Our acquisition of Mabel which extended our macrosnack position in Brazil

“PepsiCo has great brands and strong brand-building capabilities, innovative products and tremendous global reach, advantages we will continue to build upon. These strengths, coupled with strategic initiatives we separately announced today, will improve our ability to drive growth and generate shareholder value in the years ahead.”

¹ All 2011 volume growth measures reflect an adjustment to the base year (2010) for divestitures that occurred in 2011 and exclude the impact of an extra reporting week in 2011.

² Please refer to the Glossary for the definition of core. Core results are non-GAAP financial measures that exclude certain items. Please refer to “Reconciliation of GAAP and Non-GAAP information” in the attached exhibits for a description of these items.

In the quarter, an extra reporting week increased reported net revenue by 3 percentage points and reported total operating profit by 5 percentage points. On a full-year basis, the extra reporting week added 1 percentage point to both reported net revenue and reported total operating profit. Unless otherwise noted, the following discussion excludes the impact of the extra reporting week.

Full-year worldwide snacks volume increased 2.5 percent on an organic basis, reflecting broad-based gains in the snacks portfolio. Full-year worldwide beverage volume increased 1 percent on an organic basis. Full-year volume performance was led by growth in emerging markets, where volume increased 8 percent in snacks and 3 percent in beverages on an organic basis. Full-year net revenue increased 14 percent, driven by the benefits of volume growth, effective net pricing, favorable foreign exchange and the impact of the acquisitions of our North American anchor bottlers and WBD.

Reported full-year operating profit increased 16 percent including the extra reporting week and core operating profit for the year increased 6 percent. Full-year division core operating profit increased 7 percent, reflecting effective net pricing, synergies from the bottler acquisition and the impact of the WBD acquisition, partially offset by higher commodity costs.

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Summary Fourth Quarter 2011 Performance (Percent Growth)
									Corea
	Volumeb								Constant Currencya
	(ex. extra wk)			Revenue		Operating Profit			Revenue			Operating Profit			Revenue			Operating Profit
PAF		1			10		5			7			11			5			9
FLNA		1			13		10			6			10			6			10
LAF		6			7		(8	)		12			12			7			4
QFNA		(9	)		4		9			(2	)		11			(2	)		11
PAB		(1.5	)		0		1			(4	)		(6	)		(4	)		(7	)
Europe		36/22	c		32		0			34			38			31			36
AMEA		15/3	c		16		209			17			232			16			227
Total Divisions		8/3	c		11		7			9			12			8			10
Total PepsiCo							1	d											11

Summary Full Year 2011 Performance (Percent Growth)

									Corea
	Volumeb								Constant Currencya
	(ex. extra wk)			Revenue		Operating Profit			Revenue			Operating Profit			Revenue			Operating Profit
PAF		1			7		7			5			8			6			8
FLNA		1			6		7			3.5			7			4			7
LAF		5			13		7			11			11			13			12
QFNA		(6	)		0		8			(2	)		8			(2	)		8
PAB		1			10		18			8			(4	)		8			(4	)
Europe		35/21	c		41		15			38			14			41			18
AMEA		15/5	c		17		25			16			24			17			27
Total Divisions		8/5	c		15		13			13			6			14			7
Total PepsiCo							16	d											6

^a  The above core results and core constant currency results are non-GAAP financial measures that exclude certain items affecting comparability. For more information about our core results and core constant currency results, see “Reconciliation of GAAP and Non-GAAP Information” in the attached exhibits. Please refer to the Glossary for definitions of “Constant Currency” and “Core”.

^b  Volume growth measures reflect an adjustment to the base year (2010) for divestitures that occurred in 2011, as applicable.

^c  Snacks/Beverage.

^d  The reported operating profit growth was impacted by certain items excluded from our core results in both 2011 and 2010. See “Reconciliation of GAAP and Non-GAAP Information” in the attached exhibits for more information about these items. Please refer to the Glossary for the definition of “Core”.

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All comparisons are on a core year-over-year basis and exclude the extra reporting week in 2011 unless otherwise noted.

Division Operating Summaries

PepsiCo Americas Foods (PAF)

Frito-Lay North America (FLNA)

FLNA net revenue grew 6 percent in the quarter, reflecting volume growth of 1 percent, effective net pricing, product innovation and marketplace execution. Each of the division’s six largest brands – Lay’s, Doritos, Cheetos, Ruffles, Tostitos and Fritos – posted strong revenue growth. Net revenue growth and cost control more than offset the impact of high commodity cost inflation, resulting in 10 percent operating profit growth.

For the full-year, FLNA net revenue grew 4 percent, reflecting volume growth of 1 percent and effective net pricing. Operating profit grew 7 percent for the full year on the revenue gains and strong cost control, and despite high levels of commodity cost inflation.

Latin America Foods (LAF)

Net revenue growth of 7 percent in the quarter was driven by positive price realization across LAF and reflected volume growth of 6 percent in the quarter with solid gains in the division’s largest markets, Mexico and Brazil, and strong growth in some key markets across Central and South America. Profit growth was muted due to high commodity inflation and the adverse impact of foreign exchange. A gain from the sale of a fish business in Brazil contributed 12 percentage points of operating profit growth and reduced net revenue growth by 2 percentage points in the quarter.

For the full-year, volume growth of 5 percent and strong price realization led to double-digit net revenue and operating profit growth, although operating profit growth was adversely impacted by high commodity cost inflation. The gain from the sale of the fish business in Brazil contributed 5 percentage points of profit growth for the year and reduced net revenue growth by 1 percentage point.

Quaker Foods North America (QFNA)

QFNA net revenue declined 2 percent in the quarter. Operating profit grew 11 percent in the quarter driven by gains from the disposal of certain assets coupled with solid cost controls and productivity initiatives offsetting high commodity cost inflation and volume declines. Gains from a divestiture and an asset sale contributed 14 percentage points of profit growth in the quarter.

For the full-year, QFNA delivered 8 percent operating profit growth, reflecting the asset sale gains which contributed 4 percentage points of growth and an inventory accounting change in the first quarter which contributed 2 percentage points. Efforts throughout the year on cost controls and pricing actions fully offset weak consumer demand and commodity cost inflation.

PepsiCo Americas Beverages (PAB)

Net revenue in the quarter was reduced by 4 percentage points by the refranchising of the division’s beverage business in Mexico. On a full-year basis, net revenue grew 8 percent, reflecting effective net pricing and the impact of the bottler acquisition. The refranchising of Mexico reduced full-year net revenue by more than 1 percentage point. PAB volume declined 1.5 percent in the quarter but was up 1 percent for the full-year, with growth in non-carbonated beverages offset by declines in carbonated soft drinks (CSDs).

In North America, net revenue declined 1 percent for the quarter and increased 9 percent for the full-year. Volume declined 4 percent for the quarter and, on an organic basis, declined 1 percent for the year, in part reflecting the impact on consumer demand of pricing actions taken to offset commodity cost inflation. For the year, non-carbonated beverage volume in North America grew low-single-digits with Gatorade growth of high-single-digits behind product innovation and the

4

benefit of implementing direct-store-delivery to small format stores. The company’s successful Trop 50 product continued to perform well in its second year since introduction, increasing volume over 35 percent, and trademark Lipton increased volume 6 percent. CSD volume in North America declined mid-single-digits on an organic basis for the year.

Latin America Beverages delivered solid volume growth in the quarter and for the year driven primarily by strength in Mexico and Central America.

Operating profit declined in the quarter and for the year primarily as a result of increased commodity costs which offset the benefits of net pricing, productivity, synergies from the anchor bottler acquisitions and a gain associated with the refranchising of the division’s Mexico bottling operations, which contributed 5 percentage points of operating profit growth in the quarter.

Europe

Europe net revenue increased 31 percent, primarily reflecting the benefit of the WBD acquisition as well as effective net pricing. Volume increased double-digits in both snacks and beverages for the fourth quarter and full-year, including the impact of the WBD acquisition. In the fourth quarter, snacks volume increased 2 percent on an organic basis, led by high-single-digit growth in South Africa and Turkey. Beverage volume declined 1 percent on an organic basis.

Fourth quarter operating profit growth of 36 percent benefited from the impact of the WBD acquisition and effective net pricing, offset somewhat by high levels of commodity and other cost inflation.

Full-year net revenue increased 41 percent, 12 percent excluding the impact of the WBD acquisition. Full-year operating profit increased 18 percent.

Asia, Middle East & Africa (AMEA)

Fourth quarter net revenue increased 16 percent, driven by effective net pricing and the volume growth. Fourth quarter snacks volume increased 15 percent and beverage volume grew 3 percent, led by strong performance in key emerging markets.

In the fourth quarter, snacks volume grew double digits in China, India and the Middle East. Beverage volume growth was driven by double-digit gains in India, Saudi Arabia and Vietnam. China beverage volume growth was impacted by the introduction of a consumer-preferred 500ml PET value package in the third quarter, which drove strong unit growth and a double-digit net revenue increase but adversely impacted reported volume growth.

Fourth quarter operating profit growth of 227 percent almost entirely reflected the gain associated with the sale of the division’s minority investment in its franchise bottler in Thailand. The impact on profitability of the volume growth and effective net pricing was offset by higher commodity costs, the impact of civil unrest in certain countries in the Middle East, and by increased marketing support in key countries.

On a full year basis, snacks volume grew 15 percent and beverage volume grew 5 percent. Full-year net revenue increased 17 percent and operating profit grew 27 percent.

Restructuring

PepsiCo separately announced today that on February 8, 2012, it committed to a multi-year productivity program. As a result, the Company incurred pre-tax non-core restructuring charges of $383 million in the fourth quarter of 2011 and it anticipates additional charges of approximately $425 million in 2012 and another $100 million from 2013 through 2015. These charges resulted in cash expenditures of $30 million in the fourth quarter of 2011, and the Company anticipates approximately $550 million of related cash expenditures during 2012, with the balance of approximately $175 million of related cash expenditures in 2013 through 2015.

5

Tax Rate

PepsiCo’s reported tax rate was 29.9 percent in the fourth quarter, and its core tax rate was 28.4%. The core tax rate in the fourth quarter was 1.5 percentage points higher versus prior year primarily due to tax expenses related to certain asset dispositions.

For the full year 2011, the reported tax rate was 26.8 percent and the core tax rate was 26.5 percent.

Cash Flow

Full-year cash flow from operating activities was $8.9 billion. Management operating cash flow, which is net of capital expenditures, was $5.7 billion and included: $283 million of merger and integration payments associated with the bottler and WBD acquisitions and $108 million of capital spending related to the bottler integrations; and other items as set out in the attached financial schedules. Management operating cash flow excluding these items was $6.1 billion. The company returned $5.6 billion of cash to shareholders in 2011 through share repurchases of $2.5 billion and dividends of $3.2 billion.

2012 Outlook

PepsiCo announced today its outlook for 2012 and beyond in a separate press release. Please see release titled “PepsiCo Announces Strategic Investment to Drive Growth” for information on the company’s outlook.

Investor Meeting

At 8 a.m. (Eastern Time) today, the company will host a meeting with investors to discuss fourth-quarter and full-year 2011 results and its outlook for 2012 and beyond. The meeting, including a slide presentation, will be webcast live on the company’s website at www.pepsico.com/investors.

About PepsiCo

In its global portfolio of food and beverage brands, PepsiCo has 22 different brands that generate more than $1 billion each in annual retail sales. Our main businesses also make hundreds of other enjoyable foods and beverages that are respected household names throughout the world. With net revenues of over $65 billion, PepsiCo’s people are united by our unique commitment to sustainable growth by investing in a healthier future for people and our planet, which we believe also means a more successful future for PepsiCo. We call this commitment Performance with Purpose: PepsiCo’s promise to provide a wide range of foods and beverages for local tastes; to find innovative ways to minimize our impact on the environment, including by conserving energy and water usage, and reducing packaging volume; to provide a great workplace for our associates; and to respect, support, and invest in the local communities where we operate. For more information, please visit www.pepsico.com.

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Cautionary Statement

Statements in this communication that are “forward-looking statements,” are based on currently available information, operating plans and projections about future events and trends. Terminology such as “believe,” “expect,” “intend,” “estimate,” “project,” “anticipate,” “will” or similar statements or variations of such terms are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in demand for PepsiCo’s products, as a result of changes in consumer preferences and tastes or otherwise; PepsiCo’s ability to compete effectively; unfavorable economic conditions in the countries in which PepsiCo operates; damage to PepsiCo’s reputation; PepsiCo’s ability to grow its business in developing and emerging markets or unstable political conditions, civil unrest or other developments and risks in the countries where PepsiCo operates; trade consolidation or the loss of any key customer; changes in the legal and regulatory environment; PepsiCo’s ability to build and sustain proper information technology infrastructure, successfully implement its ongoing business transformation initiative or outsource certain functions effectively; fluctuations in foreign exchange rates; increased costs, disruption of supply or shortages of raw materials and other supplies; disruption of PepsiCo’s supply chain; climate change, or legal, regulatory or market measures to address climate change; PepsiCo’s ability to hire or retain key employees or a highly skilled and diverse workforce; failure to successfully renew collective bargaining agreements or strikes or work stoppages; failure to successfully complete or integrate acquisitions and joint ventures into PepsiCo’s existing operations; failure to successfully implement PepsiCo’s global operating model; failure to realize anticipated benefits from our productivity plan; any downgrade of our credit ratings; and any infringement of or challenge to PepsiCo’s intellectual property rights.

For additional information on these and other factors that could cause PepsiCo’s actual results to materially differ from those set forth herein, please see PepsiCo’s filings with the SEC, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. PepsiCo undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Miscellaneous Disclosures

In discussing financial results and guidance, the company may refer to certain non-GAAP measures. Reconciliations of any such non-GAAP measures to the most directly comparable financial measures in accordance with GAAP can be found in the attached exhibits, as well as on the company’s website at www.pepsico.com in the “Investors” section under “Investor Presentations.” Our non-GAAP measures exclude from reported results those items that management believes are not indicative of our ongoing performance and how management evaluates our operating results and trends.

Glossary

Beverage volume: Volume shipped to retailers and independent distributors from both PepsiCo and our bottlers.

Core: Core results are non-GAAP financial measures which exclude certain items from our historical results. In 2011, core results exclude the commodity mark-to-market net impact included in corporate unallocated expenses, restructuring charges, an extra week of results, as well as merger and integration costs and certain inventory fair value adjustments in connection with our acquisitions of The Pepsi Bottling Group, Inc. (PBG), PepsiAmericas, Inc. (PAS) and WBD. In 2010, core results exclude the commodity mark-to-market net impact included in corporate unallocated expenses, a one-time net charge related to the change to hyperinflationary accounting and currency devaluation in Venezuela, a contribution to The PepsiCo Foundation, Inc., an asset write-off charge for SAP software and interest expense incurred in connection with our cash tender offer to repurchase debt. Additionally, with respect to our acquisitions of PBG and PAS, 2010 core

7

results also exclude our gain on previously held equity interests, merger and integration costs, as well as our share of PBG’s and PAS’s respective merger and integration costs, and certain inventory fair value adjustments. For more details and reconciliations of our 2011 and 2010 core and core constant currency results, see “Reconciliation of GAAP and Non-GAAP Information” in the exhibits attached hereto.

Constant currency: Financial results assuming constant foreign currency exchange rates used for translation based on the rates in effect for the comparable prior-year period. In order to compute our constant currency results, we multiply or divide, as appropriate, our current year U.S. dollar results by the current year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior year average foreign exchange rates.

Division operating profit: The aggregation of the operating profit for each of our reportable segments, which excludes the impact of corporate unallocated expenses.

Effective net pricing: The combined impact of mix and price.

Management operating cash flow: Net cash provided by operating activities less capital spending plus sales of property, plant and equipment. This non-GAAP financial measure is our primary measure used to monitor cash flow performance. See the attached exhibits for a reconciliation of this measure to the most directly comparable financial measure in accordance with GAAP (operating cash flow).

Management operating cash flow, excluding certain items: Management operating cash flow, excluding: (1) a discretionary pension contribution, (2) restructuring payments, (3) merger and integration payments in connection with the PBG, PAS and WBD acquisitions, (4) capital investments related to the bottling integration, and (5) the tax impacts associated with each of these items, as applicable. See the attached exhibits for a reconciliation of this non-GAAP financial measure to the most directly comparable financial measure in accordance with GAAP (operating cash flow).

Mark-to-market gain or loss or net impact: Change in market value for commodity contracts that we purchase to mitigate the volatility in costs of energy and raw materials that we consume. The market value is determined based on average prices on national exchanges and recently reported transactions in the marketplace.

Net pricing: The combined impact of list price changes, weight changes per package, discounts and allowances.

Net capital spending: Capital spending less cash proceeds from sales of property, plant and equipment.

Organic: A measure that excludes the impact of acquisitions.

Pricing: The impact of list price changes and weight changes per package.

Transaction foreign exchange: The foreign exchange impact on our financial results of transactions, such as purchases of imported raw materials, commodities, or services, occurring in currencies other than the local, functional currency.

# # #

8

PepsiCo, Inc. and Subsidiaries

Summary of PepsiCo 2011 Results

(unaudited)

	Quarter Ended 12/31/11			Year Ended 12/31/11
	Reported Growth (%)	Core* Growth (%)	Core Constant Currency* Growth (%)	Reported Growth (%)	Core* Growth (%)	Core Constant Currency* Growth (%)
Volume (Servings)	7	4		6	5
Net Revenue	11	8	9	15	14	13
Division Operating Profit	7	10	12	13	7	6
Total Operating Profit	1	11		16	6
Net Income Attributable to PepsiCo	4	8	9	2	5	4
Earnings per Share (EPS)	5	9	11	3	7	5

* Core results and core constant currency results are financial measures that are not in accordance with Generally Accepted Accounting Principles (GAAP) and, in 2011, exclude the commodity mark-to-market net impact included in corporate unallocated expenses, restructuring charges, an additional week of results (53^rd week), as well as merger and integration costs and certain inventory fair value adjustments in connection with our acquisitions of The Pepsi Bottling Group, Inc. (PBG), PepsiAmericas, Inc. (PAS) and Wimm-Bill-Dann Foods OJSC (WBD). Core results also exclude, in 2010, the commodity mark-to-market net impact included in corporate unallocated expenses, a one-time net charge related to the change to hyperinflationary accounting and currency devaluation in Venezuela, a contribution to The PepsiCo Foundation, Inc., an asset write-off charge for SAP software and interest expense incurred in connection with our cash tender offer to repurchase debt. Additionally, with respect to our acquisitions of PBG and PAS, 2010 core results also exclude our gain on previously held equity interests, merger and integration costs, as well as our share of PBG’s and PAS’s respective merger and integration costs, and certain inventory fair value adjustments. Core growth, on a constant currency basis, assumes constant foreign currency exchange rates used for translation based on the rates in effect for the comparable period during 2010. In order to compute our constant currency results, we multiply or divide, as appropriate, our current year U.S. dollar results by the current year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior year average foreign exchange rates. See schedules A-7 through A-19 for a discussion of these items and reconciliations to the most directly comparable financial measures in accordance with GAAP.

A-1

PepsiCo, Inc. and Subsidiaries

Condensed Consolidated Statement of Income

(in millions, except per share amounts, and unaudited, except year-ended 12/25/10 amounts)

	Quarter Ended									Year Ended
	12/31/11			12/25/10			Change			12/31/11			12/25/10			Change
Net Revenue	$	20,158		$	18,155			11	%	$	66,504		$	57,838			15	%
Cost of sales		9,731			8,359			16	%		31,593			26,575			19	%
Selling, general and administrative expenses		8,150			7,526			8	%		25,145			22,814			10	%
Amortization of intangible assets		30			39			(21	)%		133			117			14	%
Operating Profit		2,247			2,231			1	%		9,633			8,332			16	%
Bottling equity income		—			7			n/m			—			735			n/m
Interest expense		(272	)		(408	)		(33	)%		(856	)		(903	)		(5	)%
Interest income and other		24			42			(44	)%		57			68			(16	)%
Income before income taxes		1,999			1,872			7	%		8,834			8,232			7	%
Provision for income taxes		597			511			17	%		2,372			1,894			25	%
Net income		1,402			1,361			3	%		6,462			6,338			2	%
Less: Net income attributable to noncontrolling interests		(13	)		(4	)		283	%		19			18			4	%
Net Income Attributable to PepsiCo	$	1,415		$	1,365			4	%	$	6,443		$	6,320			2	%
Diluted
Net Income Attributable to PepsiCo per Common Share	$	0.89		$	0.85			5	%	$	4.03		$	3.91			3	%
Average Shares Outstanding		1,584			1,607						1,597			1,614
Cash dividends declared per common share	$	0.515		$	0.48					$	2.025		$	1.89

n/m = not meaningful

A-2

PepsiCo, Inc. and Subsidiaries

Supplemental Financial Information

(in millions and unaudited, except year-ended 12/25/10 amounts)

	Quarter Ended									Year Ended
	12/31/11			12/25/10			Change			12/31/11			12/25/10			Change
Net Revenue
Frito-Lay North America	$	4,155		$	3,667			13	%	$	13,322		$	12,573			6	%
Quaker Foods North America		819			790			4	%		2,656			2,656			—
Latin America Foods		2,399			2,252			7	%		7,156			6,315			13	%
PepsiCo Americas Foods		7,373			6,709			10	%		23,134			21,544			7	%
PepsiCo Americas Beverages		6,311			6,296			—			22,418			20,401			10	%
Europe		4,231			3,212			32	%		13,560			9,602			41	%
Asia, Middle East & Africa		2,243			1,938			16	%		7,392			6,291			17	%
Total Net Revenue	$	20,158		$	18,155			11	%	$	66,504		$	57,838			15	%
Operating Profit
Frito-Lay North America	$	1,076		$	982			10	%	$	3,621		$	3,376			7	%
Quaker Foods North America		239			220			9	%		797			741			8	%
Latin America Foods		358			388			(8	)%		1,078			1,004			7	%
PepsiCo Americas Foods		1,673			1,590			5	%		5,496			5,121			7	%
PepsiCo Americas Beverages		740			734			1	%		3,273			2,776			18	%
Europe		226			228			—			1,210			1,054			15	%
Asia, Middle East & Africa		157			51			209	%		887			708			25	%
Division Operating Profit		2,796			2,603			7	%		10,866			9,659			13	%
Corporate Unallocated 53rd Week		(18	)		—			n/m			(18	)		—			n/m
Net Impact of Mark-to-Market on Commodity Hedges		(71	)		33			n/m			(102	)		91			n/m
Merger and Integration Charges		(14	)		(63	)		(78	)%		(78	)		(191	)		(59	)%
Restructuring Charges		(74	)		—			n/m			(74	)		—			n/m
Venezuela Currency Devaluation		—			—			—			—			(129	)		n/m
Asset Write-Off		—			—			—			—			(145	)		n/m
Foundation Contribution		—			—			—			—			(100	)		n/m
Other		(372	)		(342	)		9	%		(961	)		(853	)		13	%
		(549	)		(372	)		48	%		(1,233	)		(1,327	)		(7	)%
Total Operating Profit	$	2,247		$	2,231			1	%	$	9,633		$	8,332			16	%

n/m = not meaningful

A-3

PepsiCo, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(in millions)

		$00,0000			$00,0000
	Year Ended
	12/31/11			12/25/10
	(unaudited)
Operating Activities
Net income	$	6,462		$	6,338
Depreciation and amortization		2,737			2,327
Stock-based compensation expense		326			299
Restructuring and impairment charges		383			—
Cash payments for restructuring charges		(31	)		(31	)
Merger and integration costs		329			808
Cash payments for merger and integration costs		(377	)		(385	)
Gain on previously held equity interests in PBG and PAS		—			(958	)
Asset write-off		—			145
Non-cash foreign exchange loss related to Venezuela devaluation		—			120
Excess tax benefits from share-based payment arrangements		(70	)		(107	)
Pension and retiree medical plan contributions		(349	)		(1,734	)
Pension and retiree medical plan expenses		571			453
Bottling equity income, net of dividends		—			42
Deferred income taxes and other tax charges and credits		495			500
Change in accounts and notes receivable		(666	)		(268	)
Change in inventories		(331	)		276
Change in prepaid expenses and other current assets		(27	)		144
Change in accounts payable and other current liabilities		520			488
Change in income taxes payable		(340	)		123
Other, net		(688	)		(132	)
Net Cash Provided by Operating Activities		8,944			8,448
Investing Activities
Capital spending		(3,339	)		(3,253	)
Sales of property, plant and equipment		84			81
Acquisitions of PBG and PAS, net of cash and cash equivalents acquired		—			(2,833	)
Acquisition of manufacturing and distribution rights from Dr Pepper Snapple Group, Inc. (DPSG)		—			(900	)
Acquisition of WBD, net of cash and cash equivalents acquired		(2,428	)		—
Investment in WBD		(164	)		(463	)
Other acquisitions and investments in noncontrolled affiliates		(601	)		(83	)
Divestitures		780			12
Short-term investments, net		66			(212	)
Other investing, net		(16	)		(17	)
Net Cash Used for Investing Activities		(5,618	)		(7,668	)
Financing Activities
Proceeds from issuances of long-term debt		3,000			6,451
Payments of long-term debt		(1,596	)		(59	)
Debt repurchase		(771	)		(500	)
Short-term borrowings, net		303			2,482
Cash dividends paid		(3,157	)		(2,978	)
Share repurchases – common		(2,489	)		(4,978	)
Share repurchases – preferred		(7	)		(5	)
Proceeds from exercises of stock options		945			1,038
Excess tax benefits from share-based payment arrangements		70			107
Acquisition of noncontrolling interests		(1,406	)		(159	)
Other financing		(27	)		(13	)
Net Cash (Used for)/Provided by Financing Activities		(5,135	)		1,386
Effect of exchange rate changes on cash and cash equivalents		(67	)		(166	)
Net (Decrease)/Increase in Cash and Cash Equivalents		(1,876	)		2,000
Cash and Cash Equivalents – Beginning of Year		5,943			3,943
Cash and Cash Equivalents – End of Period	$	4,067		$	5,943
Non-cash activity:
Issuance of common stock and equity awards in connection with our acquisitions of PBG and PAS, as reflected in investing and financing activities		—		$	4,451

A-4

PepsiCo, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet

(in millions, except per share amounts)

	12/31/11			12/25/10
	(unaudited)
Assets
Current Assets
Cash and cash equivalents	$	4,067		$	5,943
Short-term investments		358			426
Accounts and notes receivable, net		6,912			6,323
Inventories
Raw materials		1,883			1,654
Work-in-process		207			128
Finished goods		1,737			1,590
		3,827			3,372
Prepaid expenses and other current assets		2,277			1,505
Total Current Assets		17,441			17,569
Property, plant and equipment, net		19,698			19,058
Amortizable intangible assets, net		1,888			2,025
Goodwill		16,800			14,661
Other nonamortizable intangible assets		14,557			11,783
Nonamortizable Intangible Assets		31,357			26,444
Investments in noncontrolled affiliates		1,477			1,368
Other assets		1,021			1,689
Total Assets	$	72,882		$	68,153
Liabilities and Equity
Current Liabilities
Short-term obligations	$	6,205		$	4,898
Accounts payable and other current liabilities		11,757			10,923
Income taxes payable		192			71
Total Current Liabilities		18,154			15,892
Long-term debt obligations		20,568			19,999
Other liabilities		8,266			6,729
Deferred income taxes		4,995			4,057
Total Liabilities		51,983			46,677
Commitments and Contingencies
Preferred stock, no par value		41			41
Repurchased preferred stock		(157	)		(150	)
PepsiCo Common Shareholders’ Equity
Common stock, par value 12/3¢ per share (authorized 3,600 shares, issued 1,865 shares)		31			31
Capital in excess of par value		4,461			4,527
Retained earnings		40,316			37,090
Accumulated other comprehensive loss		(6,229	)		(3,630	)
Repurchased common stock, at cost (301 and 284 shares, respectively)		(17,875	)		(16,745	)
Total PepsiCo Common Shareholders’ Equity		20,704			21,273
Noncontrolling interests		311			312
Total Equity		20,899			21,476
Total Liabilities and Equity	$	72,882		$	68,153

A-5

PepsiCo, Inc. and Subsidiaries

Supplemental Share and Stock-Based Compensation Data

(in millions, except dollar amounts, and unaudited)

	Quarter Ended						Year Ended
	12/31/11			12/25/10			12/31/11			12/25/10
Beginning Net Shares Outstanding		1,568			1,583			1,582			1,565
Shares Issued in Connection with our Acquisitions of PBG and PAS		—			—			—			67
Options Exercised/Restricted Stock Units Converted		5			8			22			26
Shares Repurchased		(8	)		(9	)		(39	)		(76	)
Ending Net Shares Outstanding		1,565			1,582			1,565			1,582
Weighted Average Basic		1,564			1,582			1,576			1,590
Dilutive securities:
Options		12			18			14			18
Restricted Stock Units		7			6			6			5
ESOP Convertible Preferred Stock/Other		1			1			1			1
Weighted Average Diluted		1,584			1,607			1,597			1,614
Average Share Price for the period	$	62.92		$	65.56		$	65.25		$	64.35
Growth Versus Prior Year		(4	)%		8	%		1	%		16	%
Options Outstanding		91			106			97			112
Options in the Money		55			84			72			88
Dilutive Shares from Options		12			18			14			18
Dilutive Shares from Options as a % of Options in the Money		22	%		21	%		20	%		21	%
Average Exercise Price of Options in the Money	$	48.93		$	50.36		$	51.36		$	49.14
Restricted Stock Units Outstanding		12			11			13			9
Dilutive Shares from Restricted Stock Units		7			6			6			5
Average Intrinsic Value of Restricted Stock Units Outstanding*	$	62.96		$	63.27		$	62.93		$	62.50

* Weighted -average intrinsic value at grant date.

A-6

Reconciliation of GAAP and Non-GAAP Information

(unaudited)

Net revenue excluding the impact of WBD, division operating profit, core results and core constant currency results are non-GAAP financial measures as they exclude certain items noted below. However, we believe investors should consider these measures as they are more indicative of our ongoing performance and with how management evaluates our operational results and trends.

53rd week impact

In 2011, we had an additional week of results (53rd week). Our fiscal year ends on the last Saturday of each December, resulting in an additional week of results every five or six years. The 53rd week increased net revenue by $623 million and operating profit by $109 million in the quarter and year ended December 31, 2011.

Commodity mark-to-market net impact

In the quarter and year ended December 31, 2011, we recognized $71 million and $102 million, respectively, of mark-to-market net losses on commodity hedges in corporate unallocated expenses. In the quarter and year ended December 25, 2010, we recognized $33 million and $91 million, respectively, of mark-to-market net gains on commodity hedges in corporate unallocated expenses. We centrally manage commodity derivatives on behalf of our divisions. Certain of these commodity derivatives do not qualify for hedge accounting treatment and are marked to market with the resulting gains and losses recognized in corporate unallocated expenses. These gains and losses are subsequently reflected in division results when the divisions take delivery of the underlying commodity.

Merger and integration charges

In the quarter ended December 31, 2011, we incurred merger and integration charges of $155 million related to our acquisitions of PBG, PAS and WBD, including $35 million recorded in the PAB segment, $106 million recorded in the Europe segment and $14 million recorded in corporate unallocated expenses. In the year ended December 31, 2011, we incurred merger and integration charges of $329 million related to our acquisitions of PBG, PAS and WBD, including $112 million recorded in the PAB segment, $123 million recorded in the Europe segment, $78 million recorded in corporate unallocated expenses and $16 million recorded in interest expense. These charges also include closing costs and advisory fees related to our acquisition of WBD. In the quarter ended December 25, 2010, we incurred merger and integration charges of $263 million related to our acquisitions of PBG and PAS, as well as advisory fees in connection with our acquisition of WBD, including $133 million recorded in the PAB segment, $67 million recorded in the Europe segment and $63 million recorded in corporate unallocated expenses. In the year ended December 25, 2010, we incurred merger and integration charges of $799 million related to our acquisitions of PBG and PAS, as well as advisory fees in connection with our acquisition of WBD, including $467 million recorded in the PAB segment, $111 million recorded in the Europe segment, $191 million recorded in corporate unallocated expenses and $30 million recorded in interest expense. These charges also include closing costs, one-time financing costs and advisory fees related to our acquisitions of PBG and PAS. In addition, in the year ended December 25, 2010, we recorded $9 million of merger-related charges, representing our share of the respective merger costs of PBG and PAS, in bottling equity income.

Restructuring charges

In the quarter and year ended December 31, 2011, we incurred charges of $383 million in conjunction with our multi-year productivity plan (Productivity Plan), including $76 million recorded in the FLNA segment, $18 million recorded in the QFNA segment, $48 million recorded in the LAF segment, $81 million recorded in the PAB segment, $77 million recorded in the Europe segment, $9 million recorded in the AMEA segment and $74 million recorded in corporate unallocated expenses. The Productivity Plan includes actions in all segments of our business that we believe will strengthen our complementary food, snack and beverage businesses through a new integrated operating model designed to streamline our organization, accelerate information sharing, facilitate timely decision-making and drive operational productivity.

Gain on previously held equity interests in PBG and PAS

In the first quarter of 2010, in connection with our acquisitions of PBG and PAS, we recorded a gain on our previously held equity interests of $958 million, comprising $735 million which is non-taxable and recorded in bottling equity income and $223 million related to the reversal of deferred tax liabilities associated with these previously held equity interests.

Inventory fair value adjustments

In the quarter ended December 31, 2011, we recorded $5 million of incremental costs in cost of sales related to hedging contracts included in PBG’s and PAS’s balance sheets at the acquisition date. In the year ended December 31, 2011, we recorded $46 million of incremental costs in cost of sales related to fair value adjustments to the acquired inventory included in WBD’s balance sheet at the acquisition date and hedging contracts included in PBG’s and PAS’s balance sheets at the acquisition date. In the quarter ended December 25, 2010, in the PAB segment, we recorded $24 million of incremental costs, substantially all in costs of sales, related to hedging contracts included in PBG’s and PAS’s balance

A-7

Reconciliation of GAAP and Non-GAAP Information (cont.)

(unaudited)

sheets at the acquisition date. In the year ended December 25, 2010, we recorded $398 million of incremental costs, substantially all in cost of sales, related to fair value adjustments to the acquired inventory and other related hedging contracts included in PBG’s and PAS’s balance sheets at the acquisition date, including $358 million recorded in the PAB segment and $40 million recorded in the Europe segment.

Venezuela currency devaluation

As of the beginning of our 2010 fiscal year, we recorded a one-time $120 million net charge related to our change to hyperinflationary accounting for our Venezuelan businesses and the related devaluation of the bolivar fuerte (bolivar). $129 million of this net charge was recorded in corporate unallocated expenses, with the balance (income of $9 million) recorded in our PAB segment.

Asset write-off

In the first quarter of 2010, we recorded a $145 million charge related to a change in scope of one release in our ongoing migration to SAP software. This change was driven, in part, by a review of our North America systems strategy following our acquisitions of PBG and PAS. This change does not impact our overall commitment to continue our implementation of SAP across our global operations over the next few years.

Foundation contribution

In the first quarter of 2010, we made a $100 million contribution to The PepsiCo Foundation, Inc. (Foundation), in order to fund charitable and social programs over the next several years. This contribution was recorded in corporate unallocated expenses.

Interest expense incurred in connection with debt repurchase

In the quarter and year ended December 25, 2010, we paid $672 million in a cash tender offer to repurchase $500 million (aggregate principal amount) of our 7.90% senior unsecured notes maturing in 2018. As a result of this debt repurchase, we recorded a $178 million charge to interest expense, primarily representing the premium paid in the tender offer.

Management operating cash flow

Additionally, management operating cash flow is the primary measure management uses to monitor cash flow performance. This is not a measure defined by GAAP. Since net capital spending is essential to our product innovation initiatives and maintaining our operational capabilities, we believe that it is a recurring and necessary use of cash. As such, we believe investors should also consider net capital spending when evaluating our cash from operating activities.

A-8

Reconciliation of GAAP and Non-GAAP Information (cont.)

($ in millions, unaudited)

Operating Profit Growth Reconciliation

	Quarter Ended			Year Ended
	12/31/11			12/31/11
Division Operating Profit Growth		7	%		13	%
Impact of Corporate Unallocated		(7	)		3
Reported Total Operating Profit Growth		1	%*		16	%

* Does not sum due to rounding.

Operating Profit Growth Reconciliation

	Quarter Ended
	12/31/11			12/25/10			Growth
Reported Total Operating Profit Growth	$	2,247		$	2,231			1	%
53rd Week		(109	)		—
Mark-to-Market Net Losses/(Gains)		71			(33	)
Merger and Integration Charges		155			263
Restructuring Charges		383			—
Inventory Fair Value Adjustments		5			24
Core Total Operating Profit Growth	$	2,752		$	2,485			11	%

	Year Ended
	12/31/11			12/25/10			Growth
Reported Total Operating Profit Growth	$	9,633		$	8,332			16	%
53rd Week		(109	)		—
Mark-to-Market Net Losses/(Gains)		102			(91	)
Merger and Integration Charges		313			769
Restructuring Charges		383			—
Venezuela Currency Devaluation		—			120
Asset Write-Off		—			145
Foundation Contribution		—			100
Inventory Fair Value Adjustments		46			398
Core Total Operating Profit Growth	$	10,368		$	9,773			6	%

Net Income Attributable to PepsiCo Reconciliation

	Quarter Ended
	12/31/11			12/25/10			Growth
Reported Net Income Attributable to PepsiCo	$	1,415		$	1,365			4	%
53rd Week		(64	)		—
Mark-to-Market Net Losses/(Gains)		51			(22	)
Merger and Integration Charges		124			217
Restructuring Charges		286			—
Inventory Fair Value Adjustments		3			14
Debt Repurchase		—			114
Core Net Income Attributable to PepsiCo	$	1,815		$	1,688			8	%

	Year Ended
	12/31/11			12/25/10			Growth
Reported Net Income Attributable to PepsiCo	$	6,443		$	6,320			2	%
53rd Week		(64	)		—
Mark-to-Market Net Losses/(Gains)		71			(58	)
Merger and Integration Charges		271			648
Restructuring Charges		286			—
Gain on Previously Held Equity Interests		—			(958	)
Inventory Fair Value Adjustments		28			333
Venezuela Currency Devaluation		—			120
Asset Write-Off		—			92
Foundation Contribution		—			64
Debt Repurchase		—			114
Core Net Income Attributable to PepsiCo	$	7,035		$	6,675			5	%

A-9

Reconciliation of GAAP and Non-GAAP Information (cont.)

($ in millions, except per share amounts, unaudited)

Diluted EPS Reconciliation

	Quarter Ended
	12/31/11			12/25/10			Growth
Reported Diluted EPS	$	0.89		$	0.85			5	%
53rd Week		(0.04	)		—
Mark-to-Market Net Losses/(Gains)		0.03			(0.01	)
Merger and Integration Charges		0.08			0.13
Restructuring Charges		0.18			—
Inventory Fair Value Adjustments		—			0.01
Debt Repurchase		—			0.07
Core Diluted EPS	$	1.15	*	$	1.05			9	%

* Does not sum due to rounding.

Diluted EPS Reconciliation

	Year Ended
	12/31/11			12/25/10			Growth
Reported Diluted EPS	$	4.03		$	3.91			3	%
53rd Week		(0.04	)		—
Mark-to-Market Net Losses/(Gains)		0.04			(0.04	)
Gain on Previously Held Equity Interests		—			(0.60	)
Merger and Integration Charges		0.17			0.40
Restructuring Charges		0.18			—
Inventory Fair Value Adjustments		0.02			0.21
Venezuela Currency Devaluation		—			0.07
Asset Write-Off		—			0.06
Foundation Contribution		—			0.04
Debt Repurchase		—			0.07
Core Diluted EPS	$	4.40		$	4.13	*		7	%

* Does not sum due to rounding.

Net Cash Provided by Operating Activities Reconciliation

	Year Ended
	12/31/11
Net Cash Provided by Operating Activities	$	8,944
Capital Spending		(3,339	)
Sales of Property, Plant and Equipment		84
Management Operating Cash Flow		5,689
Discretionary Pension Contributions (after-tax)		44
Payments Related to Restructuring Charges (after-tax)		21
Merger and Integration Payments (after-tax)		283
Capital Investments Related to the PBG/PAS Integration		108
Management Operating Cash Flow Excluding above Items	$	6,145

Growth in Europe Net Revenue Reconciliation

	Year Ended
	12/31/11
Growth in Europe Net Revenue		41	%
Impact of WBD		(29	)
Growth in Europe Net Revenue Excluding WBD		12	%

A-10

Reconciliation of GAAP and Non-GAAP Information (cont.)

($ in millions, unaudited)

Effective Tax Rate Reconciliation

	Quarter Ended
	12/31/11
	Pre-Tax Income			Income Taxes			Effective Tax Rate
Reported Effective Tax Rate	$	1,999		$	597			29.9	%
53rd Week		(94	)		(30	)
Mark-to-Market Net Losses		71			20
Merger and Integration Charges		155			31
Inventory Fair Value Adjustments		5			2
Restructuring Charges		383			97
Core Effective Tax Rate	$	2,519		$	717			28.4	%

	Year Ended
	12/31/11
	Pre-Tax Income			Income Taxes			Effective Tax Rate
Reported Effective Tax Rate	$	8,834		$	2,372			26.8	%
53rd Week		(94	)		(30	)
Mark-to-Market Net Losses		102			31
Merger and Integration Charges		329			58
Inventory Fair Value Adjustments		46			12
Restructuring Charges		383			97
Core Effective Tax Rate	$	9,600		$	2,540			26.5	%

North America Beverages Net Revenue Reconciliation

	Quarter Ended			Year Ended
	12/31/11			12/31/11
Growth in North America Beverages Reported Net Revenue		5	%		11	%
53rd Week		(5	)		(2	)
Growth in North America Beverages Core Net Revenue		(1	)%*		9	%

* Does not sum due to rounding.

A-11

PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information (cont.)

Certain Line Items

Quarter and Year Ended December 31, 2011

(in millions, except per share amounts, and unaudited)

	GAAP Measure			Non-Core Adjustments															Non-GAAP Measure
	Reported			Inventory fair  value adjustments			Merger  and integration charges			Restructuring charges			Commodity mark-to- market net losses			53rd week			Core*
	Quarter Ended 12/31/11																		Quarter Ended 12/31/11
Net revenue	$	20,158		$	—		$	—		$	—		$	—		$	(623	)	$	19,535
Cost of sales	$	9,731		$	(5	)	$	—		$	—		$	—		$	(265	)	$	9,461
Selling, general and administrative expenses	$	8,150		$	—		$	(155	)	$	(383	)	$	(71	)	$	(248	)	$	7,293
Amortization of intangible assets	$	30		$	—		$	—		$	—		$	—		$	(1	)	$	29
Operating profit	$	2,247		$	5		$	155		$	383		$	71		$	(109	)	$	2,752
Interest expense	$	(272	)	$	—		$	—		$	—		$	—		$	16		$	(256	)
Interest income and other	$	24		$	—		$	—		$	—		$	—		$	(1	)	$	23
Provision for income taxes	$	597		$	2		$	31		$	97		$	20		$	(30	)	$	717
Net income attributable to PepsiCo	$	1,415		$	3		$	124		$	286		$	51		$	(64	)	$	1,815
Net income attributable to PepsiCo per common share—diluted	$	0.89		$	—		$	0.08		$	0.18		$	0.03		$	(0.04	)	$	1.15	**

	GAAP Measure			Non-Core Adjustments															Non-GAAP Measure
	Reported			Inventory fair  value adjustments			Merger  and integration charges			Restructuring charges			Commodity mark-to- market net losses			53rd week			Core*
	Year Ended 12/31/11																		Year Ended 12/31/11
Net revenue	$	66,504		$	—		$	—		$	—		$	—		$	(623	)	$	65,881
Cost of sales	$	31,593		$	(46	)	$	—		$	—		$	—		$	(265	)	$	31,282
Selling, general and administrative expenses	$	25,145		$	—		$	(313	)	$	(383	)	$	(102	)	$	(248	)	$	24,099
Amortization of intangible assets	$	133		$	—		$	—		$	—		$	—		$	(1	)	$	132
Operating profit	$	9,633		$	46		$	313		$	383		$	102		$	(109	)	$	10,368
Interest expense	$	(856	)	$	—		$	16		$	—		$	—		$	16		$	(824	)
Interest income and other	$	57		$	—		$	—		$	—		$	—		$	(1	)	$	56
Provision for income taxes	$	2,372		$	12		$	58		$	97		$	31		$	(30	)	$	2,540
Noncontrolling interests	$	19		$	6		$	—		$	—		$	—		$	—		$	25
Net income attributable to PepsiCo	$	6,443		$	28		$	271		$	286		$	71		$	(64	)	$	7,035
Net income attributable to PepsiCo per common share—diluted	$	4.03		$	0.02		$	0.17		$	0.18		$	0.04		$	(0.04	)	$	4.40

* Core results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments. See schedules A-7 and A-8 for a discussion of each of these non-core adjustments.

** Does not sum due to rounding.

A-12

PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information (cont.)

Certain Line Items

Quarter and Year Ended December 25, 2010

(in millions, except per share amounts, and unaudited)

	GAAP Measure			Non-Core Adjustments																							Non-GAAP Measure
	Reported			Gain on previously held equity interests in PBG and PAS			Inventory fair  value adjustments			Merger and integration charges			Asset write-off			Foundation contribution			Venezuela currency devaluation			Debt repurchase		Commodity mark-to- market net gains			Core*
	Quarter Ended 12/25/10																										Quarter Ended 12/25/10
Cost of sales	$	8,359		$	—		$	(24	)	$	—		$	—		$	—		$	—		$	—	$	—		$	8,335
Selling, general and administrative expenses	$	7,526		$	—		$	—		$	(263	)	$	—		$	—		$	—		$	—	$	33		$	7,296
Operating profit	$	2,231		$	—		$	24		$	263		$	—		$	—		$	—		$	—	$	(33	)	$	2,485
Interest expense	$	(408	)	$	—		$	—		$	—		$	—		$	—		$	—		$	178	$	—		$	(230	)
Provision for income taxes	$	511		$	—		$	10		$	46		$	—		$	—		$	—		$	64	$	(11	)	$	620
Net income attributable to PepsiCo	$	1,365		$	—		$	14		$	217		$	—		$	—		$	—		$	114	$	(22	)	$	1,688
Net income attributable to PepsiCo per common share—diluted	$	0.85		$	—		$	0.01		$	0.13		$	—		$	—		$	—		$	0.07	$	(0.01	)	$	1.05
	GAAP Measure			Non-Core Adjustments																							Non-GAAP Measure
	Reported			Gain on previously held  equity interests in PBG and PAS			Inventory fair  value adjustments			Merger and integration charges			Asset write-off			Foundation contribution			Venezuela currency devaluation			Debt repurchase		Commodity mark-to- market net gains			Core*
	Year Ended 12/25/10																										Year Ended 12/25/10
Cost of sales	$	26,575		$	—		$	(395	)	$	—		$	—		$	—		$	—		$	—	$	—		$	26,180
Selling, general and administrative expenses	$	22,814		$	—		$	(3	)	$	(769	)	$	(145	)	$	(100	)	$	(120	)	$	—	$	91		$	21,768
Operating profit	$	8,332		$	—		$	398		$	769		$	145		$	100		$	120		$	—	$	(91	)	$	9,773
Bottling equity income	$	735		$	(735	)	$	—		$	9		$	—		$	—		$	—		$	—	$	—		$	9
Interest expense	$	(903	)	$	—		$	—		$	30		$	—		$	—		$	—		$	178	$	—		$	(695	)
Provision for income taxes	$	1,894		$	223		$	65		$	160		$	53		$	36		$	—		$	64	$	(33	)	$	2,462
Net income attributable to PepsiCo	$	6,320		$	(958	)	$	333		$	648		$	92		$	64		$	120		$	114	$	(58	)	$	6,675
Net income attributable to PepsiCo per common share—diluted	$	3.91		$	(0.60	)	$	0.21		$	0.40		$	0.06		$	0.04		$	0.07		$	0.07	$	(0.04	)	$	4.13	**

* Core results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments. See schedules A-7 and A-8 for a discussion of each of these non-core adjustments.

** Does not sum due to rounding.

A-13

PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information (cont.)

Operating Profit by Division

Quarter and Year Ended December 31, 2011

(in millions and unaudited)

	GAAP Measure			Non-Core Adjustments											Non-GAAP Measure
	Reported			Inventory fair value adjustments		Merger and integration charges		Restructuring charges		Commodity mark-to- market net losses		53rd week			Core*
	Quarter Ended 12/31/11														Quarter Ended 12/31/11
Operating Profit
Frito-Lay North America	$	1,076		$	—	$	—	$	76	$	—	$	(72	)	$	1,080
Quaker Foods North America		239			—		—		18		—		(12	)		245
Latin America Foods		358			—		—		48		—		—			406
PepsiCo Americas Foods		1,673			—		—		142		—		(84	)		1,731
PepsiCo Americas Beverages		740			5		35		81		—		(35	)		826
Europe		226			—		106		77		—		(8	)		401
Asia, Middle East & Africa		157			—		—		9		—		—			166
Division Operating Profit		2,796			5		141		309		—		(127	)		3,124
Corporate Unallocated		(549	)		—		14		74		71		18			(372	)
Total Operating Profit	$	2,247		$	5	$	155	$	383	$	71	$	(109	)	$	2,752

	GAAP Measure			Non-Core Adjustments											Non-GAAP Measure
	Reported			Inventory fair  value adjustments		Merger and integration charges		Restructuring charges		Commodity mark-to- market net losses		53rd week			Core*
	Year Ended 12/31/11														Year Ended 12/31/11
Operating Profit
Frito-Lay North America	$	3,621		$	—	$	—	$	76	$	—	$	(72	)	$	3,625
Quaker Foods North America		797			—		—		18		—		(12	)		803
Latin America Foods		1,078			—		—		48		—		—			1,126
PepsiCo Americas Foods		5,496			—		—		142		—		(84	)		5,554
PepsiCo Americas Beverages		3,273			21		112		81		—		(35	)		3,452
Europe		1,210			25		123		77		—		(8	)		1,427
Asia, Middle East & Africa		887			—		—		9		—		—			896
Division Operating Profit		10,866			46		235		309		—		(127	)		11,329
Corporate Unallocated		(1,233	)		—		78		74		102		18			(961	)
Total Operating Profit	$	9,633		$	46	$	313	$	383	$	102	$	(109	)	$	10,368

* Core results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments. See schedules A-7 through A-8 for a discussion of each of these non-core adjustments.

A-14

PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information (cont.)

Operating Profit by Division

Quarter and Year Ended December 25, 2010

(in millions and unaudited)

	GAAP Measure			Non-Core Adjustments													Non-GAAP Measure
	Reported			Inventory fair  value adjustments		Merger and integration charges		Asset write-off		Foundation contribution		Venezuela currency devaluation		Commodity mark-to- market net gains			Core*
	Quarter Ended 12/25/10																Quarter Ended 12/25/10
Operating Profit
Frito-Lay North America	$	982		$	—	$	—	$	—	$	—	$	—	$	—		$	982
Quaker Foods North America		220			—		—		—		—		—		—			220
Latin America Foods		388			—		—		—		—		—		—			388
PepsiCo Americas Foods		1,590			—		—		—		—		—		—			1,590
PepsiCo Americas Beverages		734			24		133		—		—		—		—			891
Europe		228			—		67		—		—		—		—			295
Asia, Middle East & Africa		51			—		—		—		—		—		—			51
Division Operating Profit		2,603			24		200		—		—		—		—			2,827
Corporate Unallocated		(372	)		—		63		—		—		—		(33	)		(342	)
Total Operating Profit	$	2,231		$	24	$	263	$	—	$	—	$	—	$	(33	)	$	2,485

	GAAP Measure			Non-Core Adjustments														Non-GAAP Measure
	Reported			Inventory fair  value adjustments		Merger and integration charges		Asset write-off		Foundation contribution		Venezuela currency devaluation			Commodity mark-to- market net gains			Core*
	Year Ended 12/25/10																	Year Ended 12/25/10
Operating Profit
Frito-Lay North America	$	3,376		$	—	$	—	$	—	$	—	$	—		$	—		$	3,376
Quaker Foods North America		741			—		—		—		—		—			—			741
Latin America Foods		1,004			—		—		—		—		—			—			1,004
PepsiCo Americas Foods		5,121			—		—		—		—		—			—			5,121
PepsiCo Americas Beverages		2,776			358		467		—		—		(9	)		—			3,592
Europe		1,054			40		111		—		—		—			—			1,205
Asia, Middle East & Africa		708			—		—		—		—		—			—			708
Division Operating Profit		9,659			398		578		—		—		(9)			—			10,626
Corporate Unallocated		(1,327	)		—		191		145		100		129			(91	)		(853	)
Total Operating Profit	$	8,332		$	398	$	769	$	145	$	100	$	120		$	(91	)	$	9,773

* Core results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments. See schedules A-7 through A-8 for a discussion of each of these non-core adjustments.

A-15

PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information (cont.)

Core Growth and Core Constant Currency Growth*

(unaudited)

	Quarter Ended
	12/31/11
	Net Revenue			Operating Profit
Frito-Lay North America
Reported Growth		13	%		10	%
Merger and Integration Charges		—			—
Restructuring Charges		—			8
53rd Week		(7	)		(7	)
Core Growth		6			10
Impact of Foreign Currency Translation		—			—
Core Constant Currency Growth		6	%		10	%
Quaker Foods North America
Reported Growth		4	%		9	%
Merger and Integration Charges		—			—
Restructuring Charges		—			8
53rd Week		(5	)		(6	)
Core Growth		(2	)		11
Impact of Foreign Currency Translation		—			—
Core Constant Currency Growth		(2	)%		11	%
Latin America Foods
Reported Growth		7	%		(8	)%
Merger and Integration Charges		—			—
Restructuring Charges		—			12
53rd Week		—			—
Core Growth		7			4
Impact of Foreign Currency Translation		6			7
Core Constant Currency Growth		12	%		12	%
PepsiCo Americas Foods
Reported Growth		10	%		5	%
Merger and Integration Charges		—			—
Restructuring Charges		—			9
53rd Week		(4.5	)		(5	)
Core Growth		5			9
Impact of Foreign Currency Translation		2			2
Core Constant Currency Growth		7	%		11	%
PepsiCo Americas Beverages
Reported Growth		—%			1	%
Merger and Integration Charges		—			(13	)
Inventory Fair Value Adjustments		—			(3	)
Restructuring Charges		—			11
53rd Week		(5	)		(5	)
Core Growth		(4	)		(7	)
Impact of Foreign Currency Translation		—			1
Core Constant Currency Growth		(4	)%		(6	)%

* Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments. See schedules A-7 and A-8 for a discussion of each of these non-core adjustments.

Note – certain amounts above may not sum due to rounding.

A-16

PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information (cont.)

Core Growth and Core Constant Currency Growth*

(unaudited)

	Quarter Ended
	12/31/11
	Net Revenue			Operating Profit
Europe
Reported Growth		32	%		—	%
Merger and Integration Charges		—			13
Restructuring Charges		—			26
53rd Week		(1	)		(3	)
Core Growth		31			36
Impact of Foreign Currency Translation		3			2
Core Constant Currency Growth		34	%		38	%
Asia, Middle East & Africa
Reported Growth		16	%		209	%
Merger and Integration Charges		—			—
Restructuring Charges		—			19
53rd Week		—			—
Core Growth		16			227
Impact of Foreign Currency Translation		1			5
Core Constant Currency Growth		17	%		232	%
Total Divisions
Reported Growth		11	%		7	%
Merger and Integration Charges		—			(2	)
Inventory Fair Value Adjustments		—			(1	)
Restructuring Charges		—			12
53rd Week		(3	)		(5	)
Core Growth		8			10
Impact of Foreign Currency Translation		1.5			1.5
Core Constant Currency Growth		9	%		12	%

* Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments. See schedules A-7 and A-8 for a discussion of each of these non-core adjustments.

Note – certain amounts above may not sum due to rounding.

A-17

PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information (cont.)

Core Growth and Core Constant Currency Growth*

(unaudited)

	Year Ended
	12/31/11
	Net Revenue			Operating Profit
Frito-Lay North America
Reported Growth		6	%		7	%
Merger and Integration Charges		—			—
Restructuring Charges		—			2
53rd Week		(2	)		(2	)
Core Growth		4			7
Impact of Foreign Currency Translation		—			—
Core Constant Currency Growth		3.5	%		7	%
Quaker Foods North America
Reported Growth		—	%		8	%
Merger and Integration Charges		—			—
Restructuring Charges		—			2
53rd Week		(2	)		(2	)
Core Growth		(2	)		8
Impact of Foreign Currency Translation		(1	)		(0.5	)
Core Constant Currency Growth		(2	)%		8	%
Latin America Foods
Reported Growth		13	%		7	%
Merger and Integration Charges		—			—
Restructuring Charges		—			5
53rd Week		—			—
Core Growth		13			12
Impact of Foreign Currency Translation		(2	)		(1	)
Core Constant Currency Growth		11	%		11	%
PepsiCo Americas Foods
Reported Growth		7	%		7	%
Merger and Integration Charges		—			—
Restructuring Charges		—			3
53rd Week		(1	)		(2	)
Core Growth		6			8
Impact of Foreign Currency Translation		(1	)		(0.5	)
Core Constant Currency Growth		5	%		8	%
PepsiCo Americas Beverages
Reported Growth		10	%		18	%
Merger and Integration Charges		—			(13	)
Inventory Fair Value Adjustments		—			(12	)
Restructuring Charges		—			3
53rd Week		(1	)		(1	)
Core Growth		8			(4	)
Impact of Foreign Currency Translation		(1	)		(0.5	)
Core Constant Currency Growth		8	%		(4	)%

* Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments. See schedules A-7 and A-8 for a discussion of each of these non-core adjustments.

Note – certain amounts above may not sum due to rounding.

A-18

PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information (cont.)

Core Growth and Core Constant Currency Growth*

(unaudited)

	Year Ended
	12/31/11
	Net Revenue			Operating Profit
Europe
Reported Growth		41	%		15	%
Merger and Integration Charges		—			1
Inventory Fair Value Adjustments		—			(1	)
Restructuring Charges		—			4
53rd Week		—			(1	)
Core Growth		41			18
Impact of Foreign Currency Translation		(3	)		(4	)
Core Constant Currency Growth		38	%		14	%
Asia, Middle East & Africa
Reported Growth		17	%		25	%
Merger and Integration Charges		—			—
Restructuring Charges		—			1
53rd Week		—			—
Core Growth		17			27
Impact of Foreign Currency Translation		(2	)		(2.5	)
Core Constant Currency Growth		16	%		24	%
Total Divisions
Reported Growth		15	%		13	%
Merger and Integration Charges		—			(4	)
Inventory Fair Value Adjustments		—			(4	)
Restructuring Charges		—			3
53rd Week		(1	)		(1	)
Core Growth		14			7
Impact of Foreign Currency Translation		(1	)		(1	)
Core Constant Currency Growth		13	%		6	%

* Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments. See schedules A-7 and A-8 for a discussion of each of these non-core adjustments.

Note – certain amounts above may not sum due to rounding.

A-19

EX-99.2

EXHIBIT 99.2

Purchase, New York     Telephone: 914-253-2000    www.pepsico.com

Contacts: Investor Jamie Caulfield Senior Vice President, Investor Relations 914-253-3035 jamie.caulfield@pepsico.com Media Jeff Dahncke Senior Director, Media Bureau 914-253-3941 jeff.dahncke@pepsico.com

PepsiCo Announces Strategic Investments to Drive Growth

• Plans to increase advertising and marketing support behind its global brands by $500-$600 million in 2012, with particular focus on North America; going forward, it expects to maintain or increase that rate of support as a percentage of revenues

• Multi-year productivity program expected to generate $1.5 billion of incremental cost savings by 2014 through optimization of operating practices and organization structure, including a reduction in force of about 8,700 employees, about 3 percent of global workforce

• Company targets high-single-digit core constant currency* EPS growth for 2013 and beyond after a transition year in 2012, in which it expects core constant currency EPS to decrease by 5%

• Announces plan to increase returns to shareholders in the form of higher dividends and share repurchases in 2012

NEW YORK, Feb. 9 /PRNewswire-FirstCall/ — PepsiCo (NYSE: PEP) announced today a series of strategic investment and productivity initiatives to deliver top-tier, sustainable long-term growth for its shareholders. These decisions are based on a comprehensive review by the Company’s management of its portfolio, brands, costs, organization and capital structure. As a result of its review, the Company reaffirmed its commitment to an integrated food and beverage portfolio through a one-company platform.

“In a volatile global environment over the past five years, PepsiCo has delivered double-digit compound annual growth in core net revenue, 8% compound annual growth in core EPS, and returned about $30 billion to shareholders in the form of dividends and share repurchases,” said PepsiCo Chairman and CEO Indra Nooyi. “Our goal is to continue on that earnings trajectory over the next 5 to 10 years, fully recognizing that we need to make changes in how we operate to address the challenges we identified in the review process. 2012 will be a transition year, in which we will be taking the appropriate steps to build a stronger, more successful company going forward.”

* Please refer to the Glossary for definitions of core and constant currency. Core results and constant currency results are non-GAAP financial measures that exclude certain items. Please refer to “Reconciliation of GAAP and non-GAAP information” in the attached exhibits for a description of these items.

James Schiro, PepsiCo’s presiding director, said: “The Board of Directors has been engaged throughout the review process. We are fully aligned with and supportive of management with respect to both the strategic direction of the Company and also the initiatives being announced today.”

Senior executives will share details of the Company’s strategies at an investor meeting at 8 a.m. (EST) today. The meeting, including a slide presentation, will be webcast live on the Company’s website at www.pepsico.com/investors.

Key Initiatives

The Company reaffirmed the underlying strength of its integrated food and beverage portfolio – and concluded that PepsiCo offers the most compelling value to shareholders as one company.

Beginning in 2012, PepsiCo is undertaking a number of key actions to further strengthen the Company and enhance shareholder value. The Company said it plans to:

• Significantly increase investments in its iconic brands and in bringing innovation to market. Advertising and marketing spending will increase by $500-$600 million in 2012, the majority in North America. Going forward, it expects to maintain or increase that rate of support as a percentage of revenues. To drive efficiencies, it will reduce the number of agency partners and also take steps to leverage the global scale of its top brand platforms. The brand investments are expected to drive topline growth and enable greater price realization;

• Implement a three-year productivity program that is expected to generate over $500 million in incremental cost savings in 2012, further incremental reductions in the cost base of about $500 million in 2013, and an additional $500 million in 2014. The productivity savings will span every aspect of the business: leveraging new technologies and processes across operations, go-to-market and information systems; heightened focus on best practice sharing across the globe; consolidating manufacturing, warehouse and sales facilities; and implementing simplified organization structures, with wider spans of control and fewer layers of management. This effort includes headcount reductions of about 8,700 employees across 30 countries, about 3% of the Company’s global workforce. The productivity programs will enhance the Company’s cost-competitiveness as well as provide a source of funding for future brand-building and innovation initiatives.

• Improve its net return on invested capital by at least 50 basis points annually beginning in 2013 through increased focus on capital spending and working capital management. As an example, in 2012 we will be reducing capital expenditures by 10% versus 2011. The emphasis is on systematically improving the efficiency of the existing asset base; and

• Enhance returns to shareholders in 2012 through both a 4% increase in its annual dividend beginning with the June 2012 dividend payment, and also the execution of a share repurchase program this year of at least $3 billion.

2

2012: A Transition Year, with Accelerated Productivity, Stepped-Up Brand Investment, and High Commodity Costs

“As we implement our strategic priorities in 2012, we’ve had to make some tough decisions,” said Chief Financial Officer Hugh Johnston. “As a result, 2012 will be a year of transition, one in which we will make the right investments to position PepsiCo properly to achieve long-term high-single-digit core constant currency EPS growth.”

For 2012, the Company is targeting mid-single-digit core constant currency net revenue growth, in-line with its long-term target. It expects a decline in core constant currency EPS of approximately 5 percent from its fiscal 2011 core EPS of $4.40, reflecting a combination of strategic and macroeconomic factors, primarily:

• Marketplace Investments: In 2012, the Company will step-up its strategic brand investments by $500-$600 million, particularly in North American beverages and food – the benefits from which will be increasingly seen in the second half of 2012 and into 2013. Further, the Company anticipates a larger increase in consumer-facing spending through marketing efficiency initiatives. Additionally, incremental investments in routes and display racks will total about $100 million in 2012.

• Commodities: The Company anticipates a second consecutive year of global commodity cost inflation that is well above historic levels. In a different economic climate the Company would likely offset these additional costs through increased pricing. However, it does not anticipate that it can pass through all of the higher commodity costs to its consumers in 2012 given the continuing challenges that consumers are facing, particularly in the developed economies.

• Pension/Interest/Taxes: Additionally, the Company expects higher pension costs as a result of a lower discount rate, higher net interest expense as it increases indebtedness and also terms-out debt in a low interest rate environment, and a core tax rate of approximately 27%, about 50 basis points higher than in 2011.

• Productivity: Partially offsetting these additional costs, major productivity initiatives are expected to result in about a $500 million incremental reduction in operating expenses in 2012.

Based on the current forex market consensus, foreign exchange translation would have a three percentage point unfavorable impact on the Company’s full-year core EPS growth in 2012.

The following table presents the key elements explaining the difference between the Company’s long-term core constant currency EPS growth target and its 2012 core constant currency EPS growth target:

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Long-Term Core EPS Growth Target (CC) HSD	~8%
Increased Marketplace Investments	(8)
Excess Commodity Inflation	(9)
Higher Pension Costs	(1)
Higher Interest and Taxes	(2)
Incremental Productivity	+7
2012 Core EPS Growth Target (CC)	~(5)%

On a reported basis, the Company’s results will reflect charges from its three-year productivity program, primarily severance costs associated with workforce reductions. In the fourth quarter of 2011, the Company incurred pre-tax non-core restructuring charges of $383 million, and it anticipates additional charges of approximately $425 million in 2012 and another $100 million from 2013 through 2015.

The Company is targeting about $8 billion in cash flow from operating activities and more than $6 billion in management operating cash flow (excluding certain items) in 2012, which will include the favorable impacts of a 10% reduction in capital expenditures and incremental working capital efficiency. The Company also expects to make a pre-tax discretionary pension and retiree medical contribution of $1 billion in 2012.

Dividend Increase/Higher Share Repurchases

Reflecting the Company’s commitment to return capital to shareholders and confidence in its long-term growth targets, PepsiCo today announced that it will raise the annualized common stock dividend, effective with the dividend payable in June 2012, by 4 percent to $2.15 per share, the 40^th consecutive year of dividend growth. The Company anticipates increasing share repurchases in 2012 by at least $3 billion, which will be financed by operating cash flow and additional debt.

Long-Term Financial Targets

PepsiCo provided its long-term target of mid-single-digit constant currency net revenue growth. It also announced that it is targeting long-term core constant currency operating profit growth of 6-7%, and long-term high-single-digit core constant currency EPS growth after a transition year in 2012, driven by positive returns from executing its strategic initiatives.

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About PepsiCo

In its global portfolio of food and beverage brands, PepsiCo has 22 different brands that generate more than $1 billion each in annual retail sales. Our main businesses also make hundreds of other enjoyable foods and beverages that are respected household names throughout the world. With net revenues of over $65 billion, PepsiCo’s people are united by our unique commitment to sustainable growth by investing in a healthier future for people and our planet, which we believe also means a more successful future for PepsiCo. We call this commitment Performance with Purpose: PepsiCo’s promise to provide a wide range of foods and beverages for local tastes; to find innovative ways to minimize our impact on the environment, including by conserving energy and water usage, and reducing packaging volume; to provide a great workplace for our associates; and to respect, support, and invest in the local communities where we operate. For more information, please visit www.pepsico.com.

Cautionary Statement

Statements in this communication that are “forward-looking statements,” including PepsiCo’s 2012 guidance and long-term growth targets, are based on currently available information, operating plans and projections about future events and trends. Terminology such as “believe,” “expect,” “intend,” “estimate,” “project,” “anticipate,” “will” or similar statements or variations of such terms are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in demand for PepsiCo’s products, as a result of changes in consumer preferences and tastes or otherwise; PepsiCo’s ability to compete effectively; unfavorable economic conditions in the countries in which PepsiCo operates; damage to PepsiCo’s reputation; PepsiCo’s ability to grow its business in developing and emerging markets or unstable political conditions, civil unrest or other developments and risks in the countries where PepsiCo operates; trade consolidation or the loss of any key customer; changes in the legal and regulatory environment; PepsiCo’s ability to build and sustain proper information technology infrastructure, successfully implement its ongoing business transformation initiative or outsource certain functions effectively; fluctuations in foreign exchange rates; increased costs, disruption of supply or shortages of raw materials and other supplies; disruption of PepsiCo’s supply chain; climate change, or legal, regulatory or market measures to address climate change; PepsiCo’s ability to hire or retain key employees or a highly skilled and diverse workforce; failure to successfully renew collective bargaining agreements or strikes or work stoppages; failure to successfully complete or integrate acquisitions and joint ventures into PepsiCo’s existing operations; failure to successfully implement PepsiCo’s global operating model; failure to realize anticipated benefits from our productivity plan; any downgrade of our credit ratings; and any infringement of or challenge to PepsiCo’s intellectual property rights.

For additional information on these and other factors that could cause PepsiCo’s actual results to materially differ from those set forth herein, please see PepsiCo’s filings with the SEC, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. PepsiCo undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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Miscellaneous Disclosures

In discussing financial results and guidance, the Company may refer to certain non-GAAP measures. Reconciliations of any such non-GAAP measures to the most directly comparable financial measures in accordance with GAAP can be found in the attached exhibits, as well as on the Company’s website at www.pepsico.com in the “Investors” section under “Investor Presentations.” Our non-GAAP measures exclude from reported results those items that management believes are not indicative of our ongoing performance and how management evaluates our operating results and trends.

Glossary

Core: Core results are non-GAAP financial measures which exclude certain items from our historical results. In 2006, core results exclude certain tax adjustments and restructuring and impairment charges. In 2011, core results exclude the commodity mark-to-market net impact included in corporate unallocated expenses, restructuring charges, an extra week of results, as well as merger and integration costs and certain inventory fair value adjustments in connection with our acquisitions of The Pepsi Bottling Group, Inc. (PBG), PepsiAmericas, Inc. (PAS) and WBD. With respect to our 2012 and longer-term guidance, our core results exclude the commodity mark-to-market net impact included in corporate unallocated expenses, merger and integration charges, restructuring and impairment charges, and the impact of certain hedging contracts in connection with our acquisitions of PBG and PAS. For more details and reconciliations of our 2011 core results and 2012 and beyond core and core constant currency guidance, see “Reconciliation of GAAP and Non-GAAP Information” in the exhibits attached hereto.

Constant currency: Financial results assuming constant foreign currency exchange rates used for translation based on the rates in effect for the comparable prior-year period. In order to compute our constant currency results, we multiply or divide, as appropriate, our current year U.S. dollar results by the current year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior year average foreign exchange rates.

Management operating cash flow: Net cash provided by operating activities less capital spending plus sales of property, plant and equipment. This non-GAAP financial measure is our primary measure used to monitor cash flow performance. See the attached exhibits for a reconciliation of this measure to the most directly comparable financial measure in accordance with GAAP (operating cash flow).

Management operating cash flow, excluding certain items: Management operating cash flow, excluding: (1) discretionary pension and retiree medical contributions, (2) restructuring payments, (3) merger and integration payments in connection with our PBG, PAS and WBD acquisitions, (4) capital investments related to the bottling integration, and (5) the tax impacts associated with each of these items, as applicable. See the attached exhibits for a reconciliation of this non-GAAP financial measure to the most directly comparable financial measure in accordance with GAAP (operating cash flow).

# # #

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Reconciliation of GAAP and Non-GAAP Information

(unaudited)

Diluted EPS Reconciliation (5-Year CAGR)

	Year Ended 12/30/06			Year Ended 12/31/11			CAGR
Reported Diluted EPS	$	3.34		$	4.03			4	%
53rd Week		—			(0.04	)
Mark-to-Market Net Losses		0.01			0.04
Merger and Integration Charges		—			0.17
Restructuring and Impairment Charges		0.03			0.18
Inventory Fair Value Adjustments		—			0.02
Tax Benefits		(0.37	)		—
Core Diluted EPS	$	3.01		$	4.40			8	%

Net Cash Provided by Operating Activities Reconciliation (in billions)

		$,00,00
	2012 Guidance
Net Cash Provided by Operating Activities	~$	7.8
Net Capital Spending		~(2.9	)
Management Operating Cash Flow		~4.9
Payments Related to Restructuring Charges (after-tax)		~0.5
Discretionary Pension and Retiree Medical Contributions (after-tax)		~0.7
Capital Investments Related to the PBG/PAS Integration		~0.1
Management Operating Cash Flow Excluding above Items	~$	6.1	*

* Does not sum due to rounding.

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Reconciliation of GAAP and Non-GAAP Information (cont.)

(unaudited)

Core results and core constant currency results are non-GAAP financial measures as they exclude certain items noted below. However, we believe investors should consider these measures as they are more indicative of our ongoing performance and with how management evaluates our operational results and trends.

53rd week impact

In 2011, we had an additional week of results (53rd week). Our fiscal year ends on the last Saturday of each December, resulting in an additional week of results every five or six years. The 53rd week increased net revenue by $623 million and operating profit by $109 million in the year ended December 31, 2011.

Commodity mark-to-market net impact

In the year ended December 31, 2011, we recognized $102 million of mark-to-market net losses on commodity hedges in corporate unallocated expenses. In the year ended December 30, 2006, we recognized $18 million of mark-to-market net losses on commodity hedges in corporate unallocated expenses. We centrally manage commodity derivatives on behalf of our divisions. Certain of these commodity derivatives do not qualify for hedge accounting treatment and are marked to market with the resulting gains and losses recognized in corporate unallocated expenses. These gains and losses are subsequently reflected in division results when the divisions take delivery of the underlying commodity.

Merger and integration charges

In the year ended December 31, 2011, we incurred merger and integration charges of $329 million related to our acquisitions of PBG, PAS and WBD, including $112 million recorded in the PAB segment, $123 million recorded in the Europe segment, $78 million recorded in corporate unallocated expenses and $16 million recorded in interest expense. These charges also include closing costs and advisory fees related to our acquisition of WBD.

Restructuring charges

In the year ended December 31, 2011, we incurred charges of $383 million in conjunction with our multi-year productivity plan (Productivity Plan), including $76 million recorded in the FLNA segment, $18 million recorded in the QFNA segment, $48 million recorded in the LAF segment, $81 million recorded in the PAB segment, $77 million recorded in the Europe segment, $9 million recorded in the AMEA segment and $74 million recorded in corporate unallocated expenses. The Productivity Plan includes actions in all segments of our business that we believe will strengthen our complementary food, snack and beverage businesses through a new integrated operating model designed to streamline our organization, accelerate information sharing, facilitate timely decision-making and drive operational productivity. In the year ended December 30, 2006, we recorded restructuring and impairment charges of $67 million in conjunction with consolidating the manufacturing network at Frito-Lay.

Inventory fair value adjustments

In the year ended December 31, 2011, we recorded $46 million of incremental costs in cost of sales related to fair value adjustments to the acquired inventory included in WBD’s balance sheet at the acquisition date and hedging contracts included in PBG’s and PAS’s balance sheets at the acquisition date.

Tax adjustments

In the year ended December 30, 2006, we recorded non-cash tax benefits of $602 million, substantially all of which related to the Internal Revenue Service’s (IRS’s) examination of our consolidated income tax returns for the years 1998 through 2002. In 2006, PBG also recorded non-cash tax benefits in connection with the IRS’s examination of certain of their consolidated income tax returns. We recorded our share of $18 million of these tax benefits in bottling equity income.

Management operating cash flow

Additionally, management operating cash flow is the primary measure management uses to monitor cash flow performance. This is not a measure defined by GAAP. Since net capital spending is essential to our product innovation initiatives and maintaining our operational capabilities, we believe that it is a recurring and necessary use of cash. As such, we believe investors should also consider net capital spending when evaluating our cash from operating activities.

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Reconciliation of GAAP and Non-GAAP Information

(unaudited)

2012 and beyond guidance

Our 2012 core tax rate guidance, our 2012 core constant currency EPS guidance and our long-term core constant currency operating profit and EPS growth targets exclude the commodity mark-to-market net impact included in corporate unallocated expenses, merger and integration charges, and restructuring and impairment charges. In addition, our 2012 core constant currency net revenue and EPS guidance and our long-term constant currency net revenue and core constant currency operating profit and EPS growth targets exclude the impact of foreign exchange. We are not able to reconcile our full-year projected 2012 core tax rate to our full-year projected 2012 reported tax rate or our full-year projected 2012 core constant currency EPS growth or our long-term core constant currency operating profit and EPS growth targets to our full-year projected 2012 and long-term reported results because we are unable to predict the 2012 and long-term impact of foreign exchange or the mark-to-market net gains or losses on commodity hedges due to the unpredictability of future changes in foreign exchange rates and commodity prices. In addition, we are unable to reconcile our full-year projected 2012 core constant currency net revenue growth and long-term core constant currency net revenue growth target to our full-year projected 2012 and long-term reported net revenue growth because we are unable to predict the 2012 and long-term impact of foreign exchange due to the unpredictability of future changes in foreign exchange rates. Therefore, we are unable to provide a reconciliation of these measures.

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