Created 4/29/10

1. PepsiCo (PEP) Brad Schwer

2. Recommendation: Buy Estimated Value: $71.06-$79.04 Current Stock Price: $66.29 Sector: Consumer StaplesIndustry: Soft Drinks

3. Company Information Fiscal year ends 12/31 Non-alcoholic Carbonated and non-carbonated beverages Various foods and snacks Headquarters in Purchase, NY Beverage concentrates, fountain syrups, and finished goods

4. Familiar Products Pepsi/Diet Pepsi Mountain Dew Aquafina (bottled water) 7UP SoBeLifewater Tropicana Lays, Doritos, Ruffles Quaker oatmeal/Rice-A-Roni

5. Direct Competitors

6. Business Units 1. PepsiCo Americas Foods* 2. PepsiCo Americas Beverages* 3. PepsiCo International * Includes Latin American business

7. PepsiCo 2009 Source: Edward Jones

10. Value Line Projections 17% Yr to Yr Gain Baseline Projections 28% Yr to Yr Gain

11. SWOT Analysis

12. SWOT Analysis

13. P/E Valuation Average Forward P/E for S&P 500: 14.5

14. P/E Valuation 5-year average P/E: 18 Forward P/E: 16 Averaged P/E multiple: 17x Estimated projection: 17*$4.18 $71.06 per share

15. DCF Data Input

16. Valuation DCF intrinsic value: $79.24 P/E valuation: $71.06 Valuation range $71.06-$79.24 Current Stock Price $66.29 (Undervalued)

17. Recommendation: Buy Estimated Value: $71.06-$79.24 Current Price: $66.29

18. Questions from the Board of Directors?

19. PepsiCo vs. Coca-Cola

21. Coca-Cola

22. Generated 74% of net operating revenue from outside U.S.

23. Uses 72 functional currencies

24. Currency impact on net revenue

25. 2009: -11%

26. Uses derivatives to hedge

27. Forward contracts

28. Purchase currency options

29. Generated 48% of net operating revenue from outside U.S.

30. Currency impact on net revenue

31. 2009: -5%

32. Uses derivatives to hedge

33. Forward contracts