1. Brianne Powers February 21, 2003

2. Financial Snapshot of PepsiCo SMIP’s Current Position Company Overview Recent News Stock Performance Financial Statements Ratio Comparison Valuation CAPM RiskGrades Analysis Analyst Opinions Conclusions Presentation Overview

3. Financial Snapshot Ticker:PEP (NYSE) Sector:Consumer Staples/Non-Cyclical Industry:Beverages (Non-Alcoholic) Market Cap.:$68.8 Billion 52 Week High:$53.50 52 Week Low:$34.00 Last Traded:$40.20 (as of 2/18/03)

4. SMIP’s Current Position 35 Shares of PEP Purchased on December 2, 2002 Cost Basis: $1,470 Current Market Value:$1,407

5. Company Overview PepsiCo, Inc. is a leading manufacturer, marketer, and seller of snack foods, soft drinks and concentrates, and branded juices. During the summer of 2001, the Company acquired the Quaker Oats Company in an effort to grow and mature into the world’s premier convenient food and beverage provider. Operates two business segments: Worldwide Snacks & Worldwide Beverages

6. Recent News PepsiCo will no longer provide quarterly, annual guidance PepsiCo net rises 21% on price increases Riese Restaurants switches to Pepsi Scuffle with rapper Ludacris over contract War Over Obesity

7. Stock Performance (3-year)

8. Stock Performance (1-year)

9. Competitors

10. PEP vs. Competitors

11. Financial Statements

12. Ratio Comparison

13. EVA and MVA

14. Basic Stock Valuation

15. Free Cash Flow Model

16. Intrinsic Value Constant Growth Model$33.20 Variable Growth Model$25.49 Dividend and Earnings Model$38.82 Price/Earnings Model$37.55 Free Cash Flows$56.44 Valuepro.net$33.66 Intrinsic Value$37.53

17. Capital Asset Pricing Model K = Rf + (Rm * Beta) Rf = 4.75 Rm = 5.5 Beta =.73 SO, K = 8.77% This calculation shows that an 8.77% Return on Investment should be expected from an investment in PepsiCo, Inc.

18. RiskGrades Analysis Less Risky than 71% of the market Current RiskGrade: 147

19. Analyst Opinions

20. Conclusions Bad Press-Potential for Future Lawsuits PEP does not fit with SMIP’s new Investment Theory Less than Par Stock Performance (vs. Competitors) Trading at Intrinsic Value

21. Recommendation SELL 35 shares of PepsiCo, Inc.