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This excerpt taken from the PBG 8-K filed Sep 16, 2009. OUR
BUSINESS
The Pepsi Bottling Group, Inc. is the world’s largest
manufacturer, seller and distributor of Pepsi-Cola beverages.
When used in these Consolidated Financial Statements,
“PBG,” “we,” “our,” “us”
and the “Company” each refers to The Pepsi Bottling
Group, Inc. and, where appropriate, to Bottling Group, LLC
(“Bottling LLC”), our principal operating subsidiary.
We have the exclusive right to manufacture, sell and distribute
Pepsi-Cola beverages in all or a portion of the U.S., Mexico,
Canada, Spain, Russia, Greece and Turkey. PBG manages and
reports operating results through three reportable segments:
U.S. & Canada, Europe (which includes Spain, Russia,
Greece and Turkey) and Mexico. As shown in the graph below, the
U.S. & Canada segment is the dominant driver of our
results, generating 68 percent of our volume and
75 percent of our net revenues.
The majority of our volume is derived from brands licensed from
PepsiCo, Inc. (“PepsiCo”) or PepsiCo joint ventures.
These brands are some of the most recognized in the world and
consist of carbonated soft drinks (“CSDs”) and
non-carbonated beverages. Our CSDs include brands such as
Pepsi-Cola, Diet Pepsi, Diet Pepsi Max, Mountain Dew and Sierra
Mist. Our non-carbonated beverages portfolio includes brands
with Starbucks Frapuccino in the ready-to-drink coffee category;
Mountain Dew Amp and SoBe Adrenaline Rush in the energy drink
category; SoBe and Tropicana in the juice and juice drinks
category; Aquafina in the water category; and Lipton Iced Tea in
the tea category. We continue to strengthen our powerful
portfolio highlighted by our focus on the hydration category
with SoBe Life Water, Propel fitness water and G2 in the
U.S. In some of our territories we have the right to
manufacture, sell and distribute soft drink products of
companies other than PepsiCo, including Dr Pepper, Crush and
Squirt. We also have the right in some of our territories to
manufacture, sell and distribute beverages under brands that we
own, including Electropura,
e-pura and
Garci Crespo. See Part I, Item 1 of this report for a
listing of our principal products by segment.
We sell our products through cold-drink and take-home channels.
Our cold-drink channel consists of chilled products sold in the
retail and foodservice channels. We earn the highest profit
margins on a per-case basis in the cold-drink channel. Our
take-home channel consists of unchilled products that are sold
in the retail, mass merchandiser and club store channels for
at-home consumption.
Our products are brought to market primarily through direct
store delivery (“DSD”) or third-party distribution,
including foodservice and vending distribution networks. The
hallmarks of the Company’s DSD system are customer service,
speed to market, flexibility and reach. These are all critical
factors in bringing new products to market, adding accounts to
our existing base and meeting increasingly diverse volume
demands.
Our customers range from large format accounts, including large
chain foodstores, supercenters, mass merchandisers, chain drug
stores, club stores and military bases, to small independently
owned shops and foodservice businesses. Changing consumer
shopping trends and “on-the-go” lifestyles are
shifting more of our volume to fast-growing channels such as
supercenters, club and dollar stores. Retail consolidation
continues to increase the strategic significance of our
large-volume customers. In 2008, sales to our top five retail
customers represented approximately 19 percent of our net
revenues.
PBG’s focus is on superior sales execution, customer
service, merchandising and operating excellence. Our goal is to
help our customers grow their beverage business by making our
portfolio of brands readily available to consumers at every
shopping occasion, using proven methods to grow not only PepsiCo
brand sales, but the overall beverage category. Our objective is
to ensure we have the right product in the right package to
satisfy the ever changing needs of today’s consumers.
We measure our sales in terms of physical cases sold to our
customers. Each package, as sold to our customers, regardless of
configuration or number of units within a package, represents
one physical case. Our net price and gross margin on a per-case
basis are impacted by how much we charge for the product, the
mix of brands and packages we sell, and the channels through
which the product is sold. For example, we realize a higher net
revenue and gross margin per case on a 20-ounce chilled bottle
sold in a convenience store than on a 2-liter unchilled bottle
sold in a grocery store.
Our financial success is dependent on a number of factors,
including: our strong partnership with PepsiCo, the customer
relationships we cultivate, the pricing we achieve in the
marketplace, our market execution, our ability to meet changing
consumer preferences and the efficiencies we achieve in
manufacturing and distributing our products. Key indicators of
our financial success are: the number of physical cases we sell,
the net price and gross margin we achieve on a per-case basis,
our overall cost productivity which reflects how well we manage
our raw material, manufacturing, distribution and other overhead
costs, and cash and capital management.
The discussion and analysis throughout Management’s
Financial Review should be read in conjunction with the
Consolidated Financial Statements and the related accompanying
notes. The preparation of our Consolidated Financial Statements
in conformity with accounting principles generally accepted in
the United States of America (“U.S. GAAP”)
requires us to make estimates and assumptions that affect the
reported amounts in our Consolidated Financial Statements and
the related accompanying notes, including various claims and
contingencies related to lawsuits, taxes, environmental and
other matters arising from the normal course of business. We
apply our best judgment, our knowledge of existing facts and
circumstances and actions that we may undertake in the future,
in determining the estimates that affect our Consolidated
Financial Statements.
3
Table of Contents
We evaluate our estimates on an on-going basis using our
historical experience as well as other factors we believe
appropriate under the circumstances, such as current economic
conditions, and adjust or revise our estimates as circumstances
change. As future events and their effect cannot be determined
with precision, actual results may differ from these estimates.
This excerpt taken from the PBG 8-K filed Aug 4, 2009. Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Applicable Law to close.
“ These excerpts taken from the PBG 10-K filed Feb 20, 2009. OUR
BUSINESS
The Pepsi Bottling Group, Inc. is the world’s largest
manufacturer, seller and distributor of Pepsi-Cola beverages.
When used in these Consolidated Financial Statements,
“PBG,” “we,” “our,” “us”
and the “Company” each refers to The Pepsi Bottling
Group, Inc. and, where appropriate, to Bottling Group, LLC
(“Bottling LLC”), our principal operating subsidiary.
We have the exclusive right to manufacture, sell and distribute
Pepsi-Cola beverages in all or a portion of the U.S., Mexico,
Canada, Spain, Russia, Greece and Turkey. PBG manages and
reports operating results through three reportable segments:
U.S. & Canada, Europe (which includes Spain, Russia,
Greece and Turkey) and Mexico. As shown in the graph below, the
U.S. & Canada segment is the dominant driver of our
results, generating 68 percent of our volume and
75 percent of our net revenues.
The majority of our volume is derived from brands licensed from
PepsiCo, Inc. (“PepsiCo”) or PepsiCo joint ventures.
These brands are some of the most recognized in the world and
consist of carbonated soft drinks (“CSDs”) and
non-carbonated beverages. Our CSDs include brands such as
Pepsi-Cola, Diet Pepsi, Diet Pepsi Max, Mountain Dew and Sierra
Mist. Our non-carbonated beverages portfolio includes brands
with Starbucks Frapuccino in the ready-to-drink coffee category;
Mountain Dew Amp and SoBe Adrenaline Rush in the energy drink
category; SoBe and Tropicana in the juice and juice drinks
category; Aquafina in the water category; and Lipton Iced Tea in
the tea category. We continue to strengthen our powerful
portfolio highlighted by our focus on the hydration category
with SoBe Life Water, Propel fitness water and G2 in the
U.S. In some of our territories we have the right to
manufacture, sell and distribute soft drink products of
companies other than PepsiCo, including Dr Pepper, Crush and
Squirt. We also have the right in some of our territories to
manufacture, sell and distribute beverages under brands that we
own, including Electropura,
e-pura and
Garci Crespo. See Part I, Item 1 of this report for a
listing of our principal products by segment.
We sell our products through cold-drink and take-home channels.
Our cold-drink channel consists of chilled products sold in the
retail and foodservice channels. We earn the highest profit
margins on a per-case basis in the cold-drink channel. Our
take-home channel consists of unchilled products that are sold
in the retail, mass merchandiser and club store channels for
at-home consumption.
Our products are brought to market primarily through direct
store delivery (“DSD”) or third-party distribution,
including foodservice and vending distribution networks. The
hallmarks of the Company’s DSD system are customer service,
speed to market, flexibility and reach. These are all critical
factors in bringing new products to market, adding accounts to
our existing base and meeting increasingly diverse volume
demands.
Our customers range from large format accounts, including large
chain foodstores, supercenters, mass merchandisers, chain drug
stores, club stores and military bases, to small independently
owned shops and foodservice businesses. Changing consumer
shopping trends and “on-the-go” lifestyles are
shifting more of our volume to fast-growing channels such as
supercenters, club and dollar stores. Retail consolidation
continues to increase the strategic significance of our
large-volume customers. In 2008, sales to our top five retail
customers represented approximately 19 percent of our net
revenues.
PBG’s focus is on superior sales execution, customer
service, merchandising and operating excellence. Our goal is to
help our customers grow their beverage business by making our
portfolio of brands readily available to consumers at every
shopping occasion, using proven methods to grow not only PepsiCo
brand sales, but the overall beverage category. Our objective is
to ensure we have the right product in the right package to
satisfy the ever changing needs of today’s consumers.
We measure our sales in terms of physical cases sold to our
customers. Each package, as sold to our customers, regardless of
configuration or number of units within a package, represents
one physical case. Our net price and gross margin on a per-case
basis are impacted by how much we charge for the product, the
mix of brands and packages we sell, and the channels through
which the product is sold. For example, we realize a higher net
revenue and gross margin per case on a 20-ounce chilled bottle
sold in a convenience store than on a 2-liter unchilled bottle
sold in a grocery store.
Our financial success is dependent on a number of factors,
including: our strong partnership with PepsiCo, the customer
relationships we cultivate, the pricing we achieve in the
marketplace, our market execution, our ability to meet changing
consumer preferences and the efficiencies we achieve in
manufacturing and distributing our products. Key indicators of
our financial success are: the number of physical cases we sell,
the net price and gross margin we achieve on a per-case basis,
our overall cost productivity which reflects how well we manage
our raw material, manufacturing, distribution and other overhead
costs, and cash and capital management.
The discussion and analysis throughout Management’s
Financial Review should be read in conjunction with the
Consolidated Financial Statements and the related accompanying
notes. The preparation of our Consolidated Financial Statements
in conformity with accounting principles generally accepted in
the United States of America (“U.S. GAAP”)
requires us to make estimates and assumptions that affect the
reported amounts in our Consolidated Financial Statements and
the related accompanying notes, including various claims and
contingencies related to lawsuits, taxes, environmental and
other matters arising from the normal course of business. We
apply our best judgment, our knowledge of existing facts and
circumstances and actions that we may undertake in the future,
in determining the estimates that affect our Consolidated
Financial Statements.
16
Table of Contents
We evaluate our estimates on an on-going basis using our
historical experience as well as other factors we believe
appropriate under the circumstances, such as current economic
conditions, and adjust or revise our estimates as circumstances
change. As future events and their effect cannot be determined
with precision, actual results may differ from these estimates.
OUR BUSINESS The Pepsi Bottling Group, Inc. is the world’s largest manufacturer, seller and distributor of Pepsi-Cola beverages. When used in these Consolidated Financial Statements, “PBG,” “we,” “our,” “us” and the “Company” each refers to The Pepsi Bottling Group, Inc. and, where appropriate, to Bottling Group, LLC (“Bottling LLC”), our principal operating subsidiary. We have the exclusive right to manufacture, sell and distribute Pepsi-Cola beverages in all or a portion of the U.S., Mexico, Canada, Spain, Russia, Greece and Turkey. PBG manages and reports operating results through three reportable segments: U.S. & Canada, Europe (which includes Spain, Russia, Greece and Turkey) and Mexico. As shown in the graph below, the U.S. & Canada segment is the dominant driver of our results, generating 68 percent of our volume and 75 percent of our net revenues.
The majority of our volume is derived from brands licensed from PepsiCo, Inc. (“PepsiCo”) or PepsiCo joint ventures. These brands are some of the most recognized in the world and consist of carbonated soft drinks (“CSDs”) and non-carbonated beverages. Our CSDs include brands such as Pepsi-Cola, Diet Pepsi, Diet Pepsi Max, Mountain Dew and Sierra Mist. Our non-carbonated beverages portfolio includes brands with Starbucks Frapuccino in the ready-to-drink coffee category; Mountain Dew Amp and SoBe Adrenaline Rush in the energy drink category; SoBe and Tropicana in the juice and juice drinks category; Aquafina in the water category; and Lipton Iced Tea in the tea category. We continue to strengthen our powerful portfolio highlighted by our focus on the hydration category with SoBe Life Water, Propel fitness water and G2 in the U.S. In some of our territories we have the right to manufacture, sell and distribute soft drink products of companies other than PepsiCo, including Dr Pepper, Crush and Squirt. We also have the right in some of our territories to manufacture, sell and distribute beverages under brands that we own, including Electropura, e-pura and Garci Crespo. See Part I, Item 1 of this report for a listing of our principal products by segment. We sell our products through cold-drink and take-home channels. Our cold-drink channel consists of chilled products sold in the retail and foodservice channels. We earn the highest profit margins on a per-case basis in the cold-drink channel. Our take-home channel consists of unchilled products that are sold in the retail, mass merchandiser and club store channels for at-home consumption. Our products are brought to market primarily through direct store delivery (“DSD”) or third-party distribution, including foodservice and vending distribution networks. The hallmarks of the Company’s DSD system are customer service, speed to market, flexibility and reach. These are all critical factors in bringing new products to market, adding accounts to our existing base and meeting increasingly diverse volume demands. Our customers range from large format accounts, including large chain foodstores, supercenters, mass merchandisers, chain drug stores, club stores and military bases, to small independently owned shops and foodservice businesses. Changing consumer shopping trends and “on-the-go” lifestyles are shifting more of our volume to fast-growing channels such as supercenters, club and dollar stores. Retail consolidation continues to increase the strategic significance of our large-volume customers. In 2008, sales to our top five retail customers represented approximately 19 percent of our net revenues. PBG’s focus is on superior sales execution, customer service, merchandising and operating excellence. Our goal is to help our customers grow their beverage business by making our portfolio of brands readily available to consumers at every shopping occasion, using proven methods to grow not only PepsiCo brand sales, but the overall beverage category. Our objective is to ensure we have the right product in the right package to satisfy the ever changing needs of today’s consumers. We measure our sales in terms of physical cases sold to our customers. Each package, as sold to our customers, regardless of configuration or number of units within a package, represents one physical case. Our net price and gross margin on a per-case basis are impacted by how much we charge for the product, the mix of brands and packages we sell, and the channels through which the product is sold. For example, we realize a higher net revenue and gross margin per case on a 20-ounce chilled bottle sold in a convenience store than on a 2-liter unchilled bottle sold in a grocery store. Our financial success is dependent on a number of factors, including: our strong partnership with PepsiCo, the customer relationships we cultivate, the pricing we achieve in the marketplace, our market execution, our ability to meet changing consumer preferences and the efficiencies we achieve in manufacturing and distributing our products. Key indicators of our financial success are: the number of physical cases we sell, the net price and gross margin we achieve on a per-case basis, our overall cost productivity which reflects how well we manage our raw material, manufacturing, distribution and other overhead costs, and cash and capital management. The discussion and analysis throughout Management’s Financial Review should be read in conjunction with the Consolidated Financial Statements and the related accompanying notes. The preparation of our Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires us to make estimates and assumptions that affect the reported amounts in our Consolidated Financial Statements and the related accompanying notes, including various claims and contingencies related to lawsuits, taxes, environmental and other matters arising from the normal course of business. We apply our best judgment, our knowledge of existing facts and circumstances and actions that we may undertake in the future, in determining the estimates that affect our Consolidated Financial Statements. 16 Table of ContentsWe evaluate our estimates on an on-going basis using our historical experience as well as other factors we believe appropriate under the circumstances, such as current economic conditions, and adjust or revise our estimates as circumstances change. As future events and their effect cannot be determined with precision, actual results may differ from these estimates. These excerpts taken from the PBG 10-K filed Feb 27, 2008. OUR
BUSINESS
The Pepsi Bottling Group, Inc. is the world’s largest
manufacturer, seller and distributor of Pepsi-Cola beverages.
When used in these Consolidated Financial Statements,
“PBG,” “we,” “our,” “us”
and the “Company” each refers to The Pepsi Bottling
Group, Inc. and, where appropriate, to Bottling Group, LLC
(“Bottling LLC”), our principal operating subsidiary.
We have the exclusive right to manufacture, sell and distribute
Pepsi-Cola beverages in all or a portion of the U.S., Mexico,
Canada, Spain, Russia, Greece and Turkey. PBG manages and
reports operating results through three reportable segments:
U.S. & Canada, Europe (which includes Spain, Russia,
Greece and Turkey) and Mexico. As shown in the graph below, the
U.S. & Canada segment is the dominant driver of our
results, generating 68% of our volume, 76% of our net revenues
and 83% of our operating income.
The majority of our volume is derived from brands licensed from
PepsiCo, Inc. (“PepsiCo”) or PepsiCo joint ventures.
In some of our territories we have the right to manufacture,
sell and distribute soft drink products of companies other than
PepsiCo, including Dr Pepper and Squirt. We also have the
right in some of our territories to manufacture, sell and
distribute beverages under trademarks that we own. The fastest
growing category of our business is
non-carbonated
beverages. Leading this category is bottled water where we have
Aquafina, the number one brand in the U.S., Aqua Minerale, the
number one brand in Russia, and Electropura, the number one
water in Mexico. Adding to our strength in this category is
Lipton Iced Tea the number one ready-to-drink tea in the U.S.,
Canada, Russia, Turkey and Greece. Our non-carbonated beverages
portfolio also includes strong brands with Starbucks Frapuccino
in the
ready-to-drink
coffee category, Mountain Dew Amp and SoBe Adrenaline Rush in
the energy drink category and SoBe and Tropicana in the juice
and juice drinks category. We continue to add to our powerful
portfolio highlighted by our focus on Hydration with SoBe Life
Water, Propel fitness water and G2 in the U.S. See
Part I, Item 1 of this report for a listing of our
principal products by segment.
We sell our products through either a cold-drink or take-home
channel. Our cold-drink channel consists of chilled products
sold in the retail and foodservice channels. We earn the highest
profit margins on a per-case basis in the cold-drink channel.
Our
take-home
channel consists of unchilled products that are sold in the
retail, mass merchandiser and club store channels for at-home
consumption.
Our products are brought to market primarily through direct
store delivery (“DSD”) or third-party distribution,
including foodservice and vending distribution networks. The
hallmarks of PBG’s DSD system are speed to market,
flexibility and reach, all critical factors in bringing new
products to market, adding accounts to our existing base and
meeting increasing volume demands.
Our customers range from large format accounts, including large
chain foodstores, supercenters, mass merchandisers, chain drug
16
Table of Contents
stores, club stores and military bases to small independently
owned shops and foodservice businesses. Changing consumer
shopping trends and “on-the-go” lifestyles are
shifting more of our volume to fast-growing channels such as
supercenters, club and dollar stores and restaurants and other
fountain accounts. Retail consolidation continues to increase
the importance of our large-volume customers. In 2007, sales to
our top five retail customers represented approximately
19 percent of our net revenues.
Our goal is to help our customers grow their beverage business
by making our portfolio of brands readily available to consumers
at every shopping occasion, using proven methods to grow not
only PepsiCo brand sales, but the overall beverage category. Our
objective is to ensure we have the right product in the right
package to fill the needs of consumers.
Our sales force sells and delivers more than 200 million
eight-ounce servings worldwide of Pepsi-Cola brand beverages per
day. PBG’s focus is on superior sales execution, customer
service, merchandising and operating excellence.
We measure our sales in terms of physical cases sold to our
customers. Each package, as sold to our customers, regardless of
configuration or number of units within a package, represents
one physical case. Our net price and gross margin on a per-case
basis are impacted by how much we charge for the product, the
mix of brands and packages we sell, and the channels in which
the product is sold. For example, we realize a higher net
revenue and gross margin per case on a 20-ounce chilled bottle
sold in a convenience store than on a 2-liter unchilled bottle
sold in a grocery store.
Our financial success is dependent on a number of factors,
including: our strong partnership with PepsiCo, the customer
relationships we cultivate, the pricing we achieve in the
marketplace, our market execution, our ability to meet changing
consumer preferences and the efficiency we achieve in
manufacturing and distributing our products. Key indicators of
our financial success are: the number of physical cases we sell,
the net price and gross margin we achieve on a per-case basis,
and our overall cost productivity, which reflects how well we
manage our raw material, manufacturing, distribution and other
overhead costs.
The discussion and analysis throughout Management’s
Financial Review should be read in conjunction with the
Consolidated Financial Statements and the related accompanying
notes. Management’s Discussion and Analysis of Financial
Condition and Results of Operations reflects the classification
correction discussed in Note 1 in the Notes to Consolidated
Financial Statements. The preparation of our Consolidated
Financial Statements in conformity with accounting principles
generally accepted in the United States of America
(“U.S. GAAP”) requires us to make estimates and
assumptions that affect the reported amounts in our Consolidated
Financial Statements and the related accompanying notes,
including various claims and contingencies related to lawsuits,
taxes, environmental and other matters arising out of the normal
course of business. We use our best judgment, our knowledge of
existing facts and circumstances and actions that we may
undertake in the future, in determining the estimates that
affect our Consolidated Financial Statements.
OUR BUSINESS The Pepsi Bottling Group, Inc. is the world’s largest manufacturer, seller and distributor of Pepsi-Cola beverages. When used in these Consolidated Financial Statements, “PBG,” “we,” “our,” “us” and the “Company” each refers to The Pepsi Bottling Group, Inc. and, where appropriate, to Bottling Group, LLC (“Bottling LLC”), our principal operating subsidiary. We have the exclusive right to manufacture, sell and distribute Pepsi-Cola beverages in all or a portion of the U.S., Mexico, Canada, Spain, Russia, Greece and Turkey. PBG manages and reports operating results through three reportable segments: U.S. & Canada, Europe (which includes Spain, Russia, Greece and Turkey) and Mexico. As shown in the graph below, the U.S. & Canada segment is the dominant driver of our results, generating 68% of our volume, 76% of our net revenues and 83% of our operating income. The majority of our volume is derived from brands licensed from PepsiCo, Inc. (“PepsiCo”) or PepsiCo joint ventures. In some of our territories we have the right to manufacture, sell and distribute soft drink products of companies other than PepsiCo, including Dr Pepper and Squirt. We also have the right in some of our territories to manufacture, sell and distribute beverages under trademarks that we own. The fastest growing category of our business is non-carbonated beverages. Leading this category is bottled water where we have Aquafina, the number one brand in the U.S., Aqua Minerale, the number one brand in Russia, and Electropura, the number one water in Mexico. Adding to our strength in this category is Lipton Iced Tea the number one ready-to-drink tea in the U.S., Canada, Russia, Turkey and Greece. Our non-carbonated beverages portfolio also includes strong brands with Starbucks Frapuccino in the ready-to-drink coffee category, Mountain Dew Amp and SoBe Adrenaline Rush in the energy drink category and SoBe and Tropicana in the juice and juice drinks category. We continue to add to our powerful portfolio highlighted by our focus on Hydration with SoBe Life Water, Propel fitness water and G2 in the U.S. See Part I, Item 1 of this report for a listing of our principal products by segment. We sell our products through either a cold-drink or take-home channel. Our cold-drink channel consists of chilled products sold in the retail and foodservice channels. We earn the highest profit margins on a per-case basis in the cold-drink channel. Our take-home channel consists of unchilled products that are sold in the retail, mass merchandiser and club store channels for at-home consumption. Our products are brought to market primarily through direct store delivery (“DSD”) or third-party distribution, including foodservice and vending distribution networks. The hallmarks of PBG’s DSD system are speed to market, flexibility and reach, all critical factors in bringing new products to market, adding accounts to our existing base and meeting increasing volume demands. Our customers range from large format accounts, including large chain foodstores, supercenters, mass merchandisers, chain drug 16 Table of Contentsstores, club stores and military bases to small independently owned shops and foodservice businesses. Changing consumer shopping trends and “on-the-go” lifestyles are shifting more of our volume to fast-growing channels such as supercenters, club and dollar stores and restaurants and other fountain accounts. Retail consolidation continues to increase the importance of our large-volume customers. In 2007, sales to our top five retail customers represented approximately 19 percent of our net revenues. Our goal is to help our customers grow their beverage business by making our portfolio of brands readily available to consumers at every shopping occasion, using proven methods to grow not only PepsiCo brand sales, but the overall beverage category. Our objective is to ensure we have the right product in the right package to fill the needs of consumers. Our sales force sells and delivers more than 200 million eight-ounce servings worldwide of Pepsi-Cola brand beverages per day. PBG’s focus is on superior sales execution, customer service, merchandising and operating excellence. We measure our sales in terms of physical cases sold to our customers. Each package, as sold to our customers, regardless of configuration or number of units within a package, represents one physical case. Our net price and gross margin on a per-case basis are impacted by how much we charge for the product, the mix of brands and packages we sell, and the channels in which the product is sold. For example, we realize a higher net revenue and gross margin per case on a 20-ounce chilled bottle sold in a convenience store than on a 2-liter unchilled bottle sold in a grocery store. Our financial success is dependent on a number of factors, including: our strong partnership with PepsiCo, the customer relationships we cultivate, the pricing we achieve in the marketplace, our market execution, our ability to meet changing consumer preferences and the efficiency we achieve in manufacturing and distributing our products. Key indicators of our financial success are: the number of physical cases we sell, the net price and gross margin we achieve on a per-case basis, and our overall cost productivity, which reflects how well we manage our raw material, manufacturing, distribution and other overhead costs. The discussion and analysis throughout Management’s Financial Review should be read in conjunction with the Consolidated Financial Statements and the related accompanying notes. Management’s Discussion and Analysis of Financial Condition and Results of Operations reflects the classification correction discussed in Note 1 in the Notes to Consolidated Financial Statements. The preparation of our Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires us to make estimates and assumptions that affect the reported amounts in our Consolidated Financial Statements and the related accompanying notes, including various claims and contingencies related to lawsuits, taxes, environmental and other matters arising out of the normal course of business. We use our best judgment, our knowledge of existing facts and circumstances and actions that we may undertake in the future, in determining the estimates that affect our Consolidated Financial Statements. | EXCERPTS ON THIS PAGE:
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