Pepsi Bottling Group (PBG)

Full-Year 2009 Financial Highlights

• On a currency neutral basis, revenue increased one percent in 2009. The Company’s revenue performance reflects solid execution of our revenue and margin management strategy in a challenging macroeconomic environment. Reported revenue decreased four percent.

• Net revenue per case improved four percent on a currency neutral basis in 2009. This includes currency neutral net revenue per case growth of three percent in the U.S. and Canada, seven percent in Europe and six percent in Mexico. On a reported basis, net revenue per case declined one percent, with two percent growth in the U.S. and Canada segment and double-digit declines in Europe and Mexico.
• Total worldwide physical case volume declined three percent for the full year, consistent with the Company’s expectations. Volume declined two percent in the U.S. and Canada segment, four percent in Mexico and eight percent in Europe, where the macroeconomic challenges were more acute.
• Worldwide operating income was flat on a comparable currency neutral basis, which includes a 10 percentage point negative impact from transactional foreign currency headwinds and a three percentage point positive impact from acquisitions. Comparable currency neutral operating income declined two percent in the U.S. and Canada segment, while Europe grew two percent and Mexico was up double-digits.
  
  Reported worldwide operating income grew 61 percent, with a two percent decline in the U.S. and Canada segment offset by growth in Europe and Mexico.
• The Company achieved approximately $350 million in cost savings and productivity improvements, exceeding expectations. This reflects successful initiatives to optimize manufacturing costs, transform warehouse operations, and maximize go-to-market effectiveness. PBG’s comparable currency neutral SD&A expenses improved two percent, or seven percent on a reported basis.
• COGS per case increased six percent on a comparable, currency neutral basis for the year, which includes 1.5 points of transactional foreign exchange impact. Reported COGS per case increased one percent.
• PBG benefited from a lower comparable effective tax rate of 18.1 percent in 2009, versus a tax rate of 29.7 percent in the prior year. The lower effective tax rate was driven by a favorable earnings mix, lower interest charges on tax reserves due to settlements, and tax planning initiatives. The tax rate also benefited from the reversal of valuation allowances on certain international deferred tax assets, the majority of which were not included in our previous guidance. The Company’s reported effective tax rate for 2009 was 5.7 percent, reflecting the above plus a net positive benefit from tax audit settlements that were partially offset by a tax law change in Mexico. This compares to a 33.4 percent reported effective tax rate in 2008.
• Operating free cash flow for 2009 was $578 million, excluding advisory fees related to the pending PepsiCo transaction, which reflects the Company’s disciplined approach to capital spending and working capital management as well as its lower cash tax rate. The operating free cash flow number includes $229 million in pension funding and $62 million in one-time pre-tax restructuring charges.