This summary is based on the fourth quarter fiscal 2007 earnings call conducted by PepsiCo Inc. (PEP: chart) on February 7, 20087.

Management:

- Chairman and CEO: Indra Nooyi
- Vice Chairman and CEO of PepsiCo International: Mike White
- CFO: Richard Goodman
- CEO of PepsiCo America''s Food: John Compton
- CEO of PepsiCo America''s Beverages: Massimo d’Amore
- VP, IR: Jane Nielsen

Key Investors Issues

- Net revenues rose 17% to $12.3 billion from $11 billion in 2006.
- Net income was down 31% to $1.3 billion or 77 cents a share.
- A total of $1.3 billion was spend in M&A transactions.

Full Year Highlights:

- Revenues increased 12% to $39.5 billion, though income marginally grew to $5.7 billion or $3.41 a share.
- Cash provided by operating activities grew 14% to $6.9 billion and capital spending was $2.4 billion.
- The firm returned $6.5 billion to shareholders, up 34% from 2006, $2.2 billion in the form of dividends and $4.3 billion in share repurchases.

Fourth Quarter Highlights

Net revenues increased 16.8% to $12.3 billion from $10.6 billion in the prior year as categories continued to demonstrate vibrancy and resiliency around the globe.

- Net income dropped 30.9% to $1.3 billion or 77 cents a share from $1.8 billion or $1.09 a share on higher expenses.
- Corporate unallocated expenses increased $26 million based on previously announced research and development spending.
- Net interest expense increased $24 million, reflecting higher net debt balances and lower gains on investments used to hedge deferred compensation expenses.
- In the US, both savory snacks and liquid refreshment beverages posted category growth with relatively stable trends throughout the year.
- The firm offset inflation with pricing and productivity while maintaining volume momentum and the team''s leveraged strong developing market macroeconomics.

The benefits of both the geographic and product diversity in the portfolio is evident in the consistency of the overall algorithms this past year.

- The firm closed on the acquisition of Lucky snacks in Brazil, and also advanced penetration in adjacent categories with the announced acquisition of Penelopa, Bulgaria''s leading nuts and seeds business and Frito-Lays joint venture with Sabra in fresh dips and spreads.
- A total of $1.3 billion was spend in M&A transactions and every transaction will enhance future growth and create value for shareholders.
- In order to reign in commodity cost inflation, the firm is accelerating effort to cross the entire business system through product formulations, ingredients sourcing trade efficiencies, manufacturing, go-to-market and G&A.
- In addition, it will be looking to effective pricing both through innovative new products as well through judicious combination of mix management, product and absolute pricing.

PepsiCo International

- Snacks volumes were very strong, up 9% and the firm gained one full share point of market share in the top 27 markets.
- Beverage volume was also strong, up 8%, while emerging and developing markets had robust double-digit growth.
- Innovation continued to be a key driver of growth behind new snack forms and flavors, expansion of Pepsi Max and 7-Up H2O into new geographies, as well as strong growth from Lipton and Tropicana in particular.

In each of the markets, the firm continually work to maintain the local cost structure with targeted initiatives to drive productivity across the entire supply chain.

- The firm continued the IT transformation journey with successful and self-funded SAP Go-Live in Mexico, in China and Holland, and is enhancing the global communications backbone for PI as well.
- The firm acquired the leading salty snacks company in New Zealand, Bluebird and in partnership with PepsiAmericas, the anchor bottler, acquired the Sandora juice business in the Ukraine, the leading juice business in that country.
- It also expanded partnerships with Unilever and Starbucks and increased equity positions in both the Northern Latin America Snacks business as well as several of the beverage operations in China.

Core operating profits were up 12% in spite of significant benefits we saw from foreign exchange in the quarter.

- The firm took advantage of its foreign currency upsides and strong overall performance to consciously invest back in the businesses, both to enhance competitive position as well as to set us up for good growth in 2008.
- The majority of those investments were targeted to emerging markets, as well as, to implement the SAP platform internationally.
- Volume trends remain very solid, with snacks volume up 8% and beverage volume up 9%.

Core brands like Lay''s and Doritos continued their strong growth and the firm is encouraged by the improved top and bottom line trends at Walkers whereas Sabritas performance was very solid and consistent with prior quarters.

- The firm managed significant commodity cost headwinds through net effective pricing. - There are tremendous opportunities for growth for the new PI, that is the UK, Europe, Asia, Middle East, Africa and the firm is well position to capture those opportunities in some of the fastest growing economies of the world.
- In the Beverage business, the firm is executing price pack management to offer entry point packages, promotional value and channel specific offerings.