PepsiCo Inc, 2017 Annual Report

1 FUNFORYOUBETTERFORYOUGOODFORYOU // 2017 Annual Report / PERFORMANCE WITH PURPOSE>>>>> PepsiCo 2017 Annual Report Our selection of low- and zero-calorie beverages and more-nutritious foods continued to grow, including Aqua Minerale Water+Juice, new flavors of KeVita Master Brew Kombucha, Quaker 3 Minutos and Off the Eaten Path. Frito-Lay s expanded Simply line offers great-tasting snacks with no artificial flavors or while TransformingIn 2017, PepsiCo continued to deliver strong performance and shareholder returns, powered by our portfolio of Fun for You, Better for You and Good for You products.* 1. Full-year reported net revenue increased Full-year reported EPS declined 23%.

2 Full-year reported EPS results include a $ billion provisional net tax expense ($ per share) associated with the enactment of the Tax Cuts and Jobs Act. Full-year cash ow from operating activities was $10 billion. Over the past ve years, reported net revenue declined at a 1% compound Annual growth rate and reported EPS declined an average of 2%. Organic, core and constant currency results, free cash ow, excluding certain items, as well as ROIC and core net ROIC, are non-GA AP nancial measures. Please refer to Reconciliation of GA AP and Non-GA AP Information beginning on page 147 of this Annual Report for de nitions and more information about these results, including a reconciliation to the most directly comparable nancial measure in accordance with GA AP.

3 $ cash flow, excluding certain revenue growth1 The joint launch of MTN DEW ICE and Doritos Blaze harnessed the power of PepsiCo s complementary food and beverage net return on invested capital (ROIC)1~$1B Annual savings enabled by productivity agenda9%core constant currency EPS growth1 $ returned to shareholders through dividends and share repurchasesThe joint launch of MTN DEW ICE The joint launch of MTN DEW ICE and Doritos Blaze harnessed and Doritos Blaze harnessed The joint launch of MTN DEW ICE The joint launch of MTN DEW ICE and Doritos Blaze harnessed and Doritos Blaze harnessed The joint launch of MTN DEW ICE The joint launch of MTN DEW ICE and Doritos Blaze harnessed and Doritos Blaze harnessed PepsiCo s distinctive black can Pepsi, with maximum cola taste and zero sugar.

4 Expanded to 35+ new markets around the world in s distinctive PepsiCo s distinctive Our selection of low- and Our selection of low- and zero-calorie beverages and more-zero-calorie beverages and more-Frito-Lay s expanded Simply line Frito-Lay s expanded Simply line offers great-tasting offers great-tasting *As we evolve our portfolio and expand our offerings, we are continually updating our defi nitions of our Good for You, Better for You and Fun for You categories, and what products fi t within each category. Below are 2017 defi nitions: GOOD FOR YOU options help consumers meet recommended daily intakes of whole grains, vegetables, fruits, dairy, nuts and seeds with low to no amounts of par ticular nutrients, such as added sugars, salt or saturated FOR YOU options can help consumers limit particular nutrients, such as added sugars, salt or saturated fat, when incorporated into a well-balanced diet.

5 These options include beverages with fewer or no calories. In this category, we also include products specifi cally formulated to provide a functional benefi t, such as addressing the performance needs of FOR YOU options are treats for consumers to enjoy to Shareholders 01 Financial Highlights 10 PepsiCo Board of Directors 11 PepsiCo Leadership 12 PepsiCo Form 10-K 13 Reconciliation of GAAP and Non-GAAP Information 147 Forward- Looking Statements 150 Common Stock and Shareholder Information 151 Corporate Information 152 Indra K. NooyiPepsiCo Chairman of the Board of Directors and Chief Executive Offi cerDear Fellow Shareholders,2017 PepsiCo Annual Report | 1Ta b l e o f ContentsMore than half a century ago, standing before an assembly of civic leaders and citizens in Frankfurt, Germany, President John F.

6 Kennedy a man who, for so many, embodied the dawning of a new era articulated his philosophy on progress: For time and the world do not stand still, he said. Change is the law of life. And those who look only to the past or the present are certain to miss the future. Two years later, in 1965, Frito-Lay and Pepsi-Cola merged to form PepsiCo . And ever since, we have done our best to live up to those words, to the idea of always looking to the future. Throughout our history, we have continually scanned the horizon, strived to identify new and emerging trends, and focused on making the necessary investments and adjustments to navigate them is why, decade after decade, we have consistently delivered top-tier returns, outperformed the competition and built a portfolio of iconic brands, while also attracting and developing some of the best and brightest leaders in our Fellow Shareholders,2017 PepsiCo Annual Report | 1 Our commitment to excellence and innovation served us well once again in 2017, unlocking another year of strong operating performance1.

7 We delivered organic revenue growth of We expanded core operating margins by 45 basis points. We grew core constant currency EPS by 9%, exceeding the 8% goal we set at the beginning of 2017. We generated free cash fl ow, excluding certain items, of $ billion, which exceeded our goal of approximately $7 billion we set at the beginning of 2017. Core net ROIC expanded by 140 basis points and now stands at We met our goal of returning $ billion in cash to shareholders through dividends and share repurchases 2017 results build on a strong fi ve-year track record: Organic revenue grew at a 4% compound rate.

8 Core operating margin expanded by 220 basis points. Core constant currency EPS growth averaged more than 9% annually. Core net ROIC expanded more than 750 basis points. Our annualized dividend per share increased by 50%. We returned $38 billion to shareholders through dividends and share repurchases are impressive results, particularly in light of all the global megatrends impacting our business, including macroeconomic and political volatility; the continued rebalancing of the economic world; shifting consumer preferences and increasing demand for more nutritious foods and beverages; the disruption of retail; and the emergence of niche brands capturing growth in many of the other powerful megatrends impacting our business, of course, is the relentless pace of digital innovation.

9 Internet-enabled services, automation across the value chain, the rise of Big Data, and pervasive social media driven consumption are fundamentally transforming how all of us live, work, communicate, shop and do have written about some of these megatrends in past letters to shareholders, but what sets this moment apart is not just the perpetuation of these trends, but also their acceleration and the amplifi cation of their impact on our business and all recent study of how companies perform when confronted by industry-wide disruption found that only one-third successfully navigate change and emerge on the other am absolutely confi dent PepsiCo will be one of those companies, emerging from this period stronger than before because we have anticipated many of these trends and changes, and invested behind ongoing transformation of our portfolio with more delicious, nutritious choices is helping ensure the health of our business.

10 The power of our retail and foodservice partnerships off ers an unmatched advantage in the marketplace. We are diff erentiating ourselves with world-class design and capturing growth in eCommerce. Digitalization is empowering us to be more responsive to the needs of customers and consumers, and helping drive greater agility and effi ciency, leading to greater productivity. We are minimizing our impact on the planet while reducing costs. And upskilling our associates is helping ensure we have the workforce of the future, while uplifting our communities is helping ensure we are a good neighbor in the markets we s take these, one at a time.