News Release

• Strong Net Revenue Growth of 14 Percent
• Operating Profit Increased 12 Percent and Net Income Grew 9 Percent
• EPS Increased to $1.05; Excluding Mark-to-Market Gains, EPS Was up 11 Percent to $1.03
• PepsiCo Confirms Full-Year Earnings Per Share Guidance of at Least $3.72, excluding Mark-to-Market Gains/Losses
• Company Raises Intended 2008 Share Repurchases by at Least $1 Billion

PURCHASE, N.Y., July 23 /PRNewswire-FirstCall/ -- PepsiCo, Inc. (NYSE: PEP) today reported strong second-quarter operating results, with 14 percent net revenue and 12 percent operating profit growth. The Company delivered earnings per share of $1.05. Excluding current and prior year mark-to-market gains on commodity positions included in corporate unallocated expenses, earnings per share would have totaled $1.03, up 11 percent.

       Summary of PepsiCo Second-Quarter and Year-to-Date 2008 Results

                                            Quarter Alone       Year-to-Date
                                             % Growth             % Growth
          Volume (Servings)                       5                  4.5
          Revenue                                14                   14
          Division Operating Profit               7                    8
          Operating Profit                       12                   11
          Net Income                              9                    7
          Earnings Per Share (EPS)               13                   10
          EPS ex-Mark-to-Market                  11                   10

PepsiCo Chairman and Chief Executive Officer, Indra Nooyi said, "The strength and breadth of our global portfolio and geographic footprint delivered another quarter of solid results. PepsiCo continued to drive growth across its worldwide snacks and beverage businesses primarily through strong product innovation, well-executed pricing actions and focus on expense control and productivity." Nooyi continued, "We are proud of our first-half performance and confident that we are well-positioned to deliver on our outlook amidst a challenging macroeconomic environment."

              Summary of Division Reported Q2 and YTD 2008 Results
                             Q2 % Growth            Year-to-Date % Growth
                                           Div.                         Div.
                                       Operating                    Operating
                       Volume  Revenue    Profit  Volume   Revenue     Profit
    PAF                     2       16        13       3        15        10
        FLNA                2        8         8       2         8         6
        QFNA                2        4         4       1         6       5.5
        LAF                 4       41        38     5.5        39        33

    PAB                    -1        1        -7      -1         3        -1
    PI                  10/13*      25        18   10/13*       25        20
        UKEU             8/20*      24        19    8/22*       24        19
        MEAA            13/10*      25        16   14/10*       27        22

    Total PepsiCo        4/5*       14         7    4/4*        14         8

     *snacks/beverages

The results at PepsiCo Americas Foods (PAF) reflected solid top- and bottom-line performance across all segments of the business in spite of difficult macroeconomic conditions and rapidly escalating commodity costs.

Frito-Lay North America (FLNA). Our strong brands enabled 2 percent volume growth even as high-single-digit net price increases were realized from weight-outs and visual pricing to offset commodity inflation. FLNA revenue growth of 8 percent was broad based, and operating profit grew 8 percent, driven by net revenue growth and productivity, partially offset by higher costs for cooking oil, energy and fuel.

Volume growth was driven by double-digit growth in trademark Cheetos, Ruffles, Quaker Chewy Granola and SunChips. Innovation was the key for both Cheetos (e.g. Cracker Trax) and SunChips, which introduced new flavors and was supported by the 'Made From the Sun' marketing campaign. Weight-outs and a promotional shift to help manage potato supply constraints led to a high-single-digit volume decrease in trademark Lay's; but revenues were up high-single-digits. While pricing actions also contributed to a mid-single-digit volume decrease in trademark Doritos, revenues were up low-single digits. Single serve packages continued to provide volume growth.

At Quaker Foods North America (QFNA), volume grew 2 percent, reflecting an increase in Quaker Oatmeal, grits and Rice-A-Roni. Revenue and operating profit grew 4 percent.

At the end of the second quarter, flooding in Cedar Rapids, Iowa, shut down our major Quaker manufacturing facility. The Company expects to be back to full production levels by mid-August, but we are experiencing supply disruptions, and many Quaker products have been on allocation. We expect insurance to cover asset damage and business interruption exposures in the second half of the year.

At Latin America Foods (LAF) organic revenue and profit increased 10 percent and 21 percent, respectively, despite higher commodity costs. Revenue growth was driven by broad based pricing actions at our key businesses of Sabritas and Gamesa. At Sabritas unit volumes grew mid-single digits; kilo volume declined by low-single digits as expected, largely due to weight-outs. Also consistent with expectations, Gamesa experienced double-digit net revenue growth due to favorable pricing actions; its volume was essentially flat in the quarter lapping double-digit growth in the prior year. In total, LAF volume grew 4 percent, benefiting from the Lucky brands acquisition in Brazil in the fourth quarter of 2007.

PepsiCo Americas Beverages (PAB). In North America, the economic slowdown continues to pressure the liquid refreshment beverage category with a decline across convenience channels and a reduction in the growth of unflavored water. In this environment, PAB volume decreased 1 percent during the quarter, driven by a 3 percent decline in North America that was partially offset by a mid- single-digit volume increase in Latin America. As a result, net revenue grew 1 percent and operating profit declined 7 percent.

The North American carbonated soft drink (CSD) portfolio gained market share in measured channels. While showing sequential improvement, CSD volume declined 2 percent due to category softness. Trademarks Mountain Dew and Sierra Mist both grew low-single digits, partially offsetting a mid-single digit decline in trademark Pepsi. Non-carbonated beverages (NCB) volume declined 4 percent primarily due to a double-digit decline in unflavored water. Volume growth in the Company's North American energy drinks portfolio -- led by triple-digit volume growth for Amp Energy and more than 50 percent volume growth for SoBe Life Water -- was partially offset by mid-single-digit declines in juice. Gatorade volume was up slightly for the quarter.

The Company's Latin America Beverage business (LAB) continues to produce strong top- and bottom-line growth. LAB's broad-based volume growth was driven by mid-single-digit growth in the CSD portfolio and double-digit growth in NCBs.

PepsiCo International (PI) continued to deliver strong performance while lapping over 20 percent revenue growth and over 30 percent profit growth from prior year. PI captured broad-based volume gains in snacks and beverages even as the Company continued to implement pricing actions across its markets.

In the UK/Europe (UKEU) segment, broad-based snack volume growth of 8 percent was driven by double-digit growth in Russia and high-single-digit growth in Poland. Additionally, Walkers in the United Kingdom grew at a mid-single-digit rate. The acquisition of the Penelopa nuts and seeds business in Bulgaria increased total snack volume by 1 point. UKEU beverage volume grew 20 percent, primarily reflecting the Sandora acquisition and the expansion of the Pepsi Lipton International joint venture, which together contributed 17 percentage points to volume growth. UKEU net revenue increased 24 percent, reflecting volume growth and effective net pricing in major markets; foreign exchange contributed 11 percentage points and acquisitions 4 percentage points of growth. Operating profit grew 19 percent driven by net revenue growth and partially offset by increased commodity costs; foreign exchange added 9 percentage points and acquisitions 4 percentage points to growth.

Middle East/Africa/Asia (MEAA) segment snack volume grew 13 percent, led by double-digit growth across the Middle East, India, South Africa and China. In beverages, 10 percent volume growth in the MEAA segment reflected broad-based gains led primarily by double-digit growth in the Middle East, China and India. CSD volume grew at a high-single-digit rate and NCBs grew at a double-digit rate. Net revenue for snacks and beverages increased 25 percent, reflecting volume growth and effective net pricing; foreign exchange contributed 6 percentage points to net revenue growth. Operating profit grew 16 percent as a result of revenue growth, partially offset by higher commodity costs; foreign exchange contributed 4 percentage points to growth.

Commodity mark-to-market valuation gains contributed to EPS growth.

For the quarter, corporate unallocated expenses decreased $71 million compared to last year, primarily due to increased mark-to-market gains on commodity hedges ($61 million this quarter compared with $13 million in the second quarter last year). Excluding this net $48 million mark-to-market valuation change, corporate unallocated costs would have decreased $23 million compared to last year, driven by lower employee-related costs, which were partially offset by continued investment in our business transformation initiative and higher investments in research and development. Net interest expense increased $21 million. For the quarter, the reported tax rate was 26.7 percent versus 26.5 percent in the previous year.

For the Company in total, foreign exchange contributed 4 percentage points to revenue growth and 3 percentage points to operating profit growth. Acquisitions accounted for 3 percentage points to revenue growth and 1 percentage point to operating profit growth.

2008 GUIDANCE

The Company expects full-year 2008 performance of three to five percent volume growth, low-double-digit net revenue growth (including acquisitions and foreign exchange) and EPS of at least $3.72 excluding the impact of any mark- to-market gains/losses. The Company is not able to provide guidance on the 2008 projected EPS growth including the impact of the mark-to-market gains or losses on commodity hedges due to the unpredictability of future changes in commodity prices.

Cash provided by operating activities is expected to be approximately $7.6 billion and capital spending about $2.7 billion. In 2008, the Company intends to repurchase at least $5.3 billion of its shares, subject to market conditions. This represents an increase of at least $1 billion from its previously announced intention to spend $4.3 billion in share repurchases in 2008. As of the end of the second quarter, the Company spent $2.9 billion repurchasing its shares in 2008.

About PepsiCo

PepsiCo is one of the world's largest food and beverage companies, with 2007 annual revenues of more than $39 billion. The Company employs approximately 185,000 people worldwide, and its products are sold in approximately 200 countries. Its principal businesses include: Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. The PepsiCo portfolio includes 18 brands that generate $1 billion or more each in annual retail sales. PepsiCo's commitment to sustainable growth, defined as Performance with Purpose, is focused on generating healthy financial returns while giving back to communities the Company serves. This includes meeting consumer needs for a spectrum of convenient foods and beverages, reducing the Company's impact on the environment through water, energy and packaging initiatives, and supporting its employees through a diverse and inclusive culture that recruits and retains world-class talent. PepsiCo is listed on the Dow Jones Sustainability North America Index and the Dow Jones Sustainability World Index. For more information, please visit www.pepsico.com.

Cautionary Statement

This release contains statements concerning PepsiCo's expectations for future performance, including our 2008 guidance. These "forward-looking statements" are based on currently available information, operating plans and projections about future events and trends. They 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 our products, as a result of shifts in consumer preferences or otherwise; our ability to maintain our reputation; our ability to build and sustain our information technology infrastructure, successfully implement our business process transformation initiative or outsource certain functions effectively; fluctuations in the cost and availability of raw materials; our ability to compete effectively; disruption of our supply chain; trade consolidation, the loss of any key customer, or failure to maintain good relationships with our bottling partners; changes in the legal or regulatory environment; our ability to hire or retain key employees; unfavorable economic, environmental or political conditions in the countries where we operate; and market risks arising from changes in commodity prices, foreign exchange rates and interest rates. For additional information on these and other factors that could cause our actual results to materially differ from those set forth herein, please see our filings with the Securities and Exchange Commission, including our 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

Conference Call. At 11 a.m. (Eastern Time) today, the Company will host a conference call with investors to discuss second-quarter 2008 results and the outlook for the full-year 2008. For details, visit the Company's website at www.pepsico.com, under "Financial Press Releases" in the "Investors" section.

Reconciliation. 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 under "PepsiCo Financial Press Releases" on the Company's website in the "Investors" section at www.pepsico.com.

Bottler Volume. Volume for products sold by PepsiCo's bottlers is reported by PepsiCo on a monthly basis, with the second quarter comprising April and May for North America, and March, April and May for our bottlers outside of North America.

Bottler Case Sales (BCS). BCS represents physical beverage volume shipped to retailers and independent distributors from both PepsiCo and our bottlers.

Concentrate Shipment Equivalents (CSE). CSE represents PepsiCo's physical beverage volume shipments to bottlers, retailers and independent distributors.

"Effective net pricing" refers to the combined impact of mix and price. "Net pricing" refers to the combined impact of list price changes, discounts and allowances. "Pricing" refers to the impact of list price changes.

Mark-to-market gain or loss. The change in market value for financial instruments, such as 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.

Organic revenue and/or profit growth. Growth excluding the impact of foreign exchange and acquisition/divestiture activity.

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