pbg presentation at cagny 2009

Al DrewesSVP & CFO

Eric FossChairman & CEO

Cautionary StatementCautionary Statement

Statements made in this presentation that relate to future performance or financial results of PBG are forward-looking statements, which involve uncertainties that could cause actual performance or results to materially differ. We undertake no obligation to update any of these statements. Listeners are cautioned not to place undue reliance on these forward-looking statements. These statements should be taken in conjunction with the additional information about risk and uncertainties set forth in PBG’s annual report on Form 10-K for the year ended December 29, 2007.

We have disclosed certain non-GAAP measures within this presentation. Our 2009 financial outlook also contains non-GAAP measures. “Non-GAAP” measures include those designated as “Comparable” as well as Operating Free Cash Flow (OFCF). Please see reconciliations to their respective measures prescribed by accounting principles generally accepted in the U.S. included on our website at www.pbg.com under Investor Relations.

Statements made in this presentation that relate to future performance or financial results of PBG are forward-looking statements, which involve uncertainties that could cause actual performance or results to materially differ. We undertake no obligation to update any of these statements. Listeners are cautioned not to place undue reliance on these forward-looking statements. These statements should be taken in conjunction with the additional information about risk and uncertainties set forth in PBG’s annual report on Form 10-K for the year ended December 29, 2007.

We have disclosed certain non-GAAP measures within this presentation. Our 2009 financial outlook also contains non-GAAP measures. “Non-GAAP” measures include those designated as “Comparable” as well as Operating Free Cash Flow (OFCF). Please see reconciliations to their respective measures prescribed by accounting principles generally accepted in the U.S. included on our website at www.pbg.com under Investor Relations.

REFRESHREFRESH RETHINKRETHINK REDEFINEREDEFINE

SNAPSHOTOF PBGSNAPSHOTOF PBG

THE EVOLVINGLANDSCAPETHE EVOLVINGLANDSCAPE

STRATEGICPRIORITIESTO DRIVESHAREHOLDER

VALUE

STRATEGICPRIORITIESTO DRIVESHAREHOLDER

VALUE 2009PRIORITIES &FINANCIALOUTLOOK

2009PRIORITIES &FINANCIALOUTLOOK

AGENDAAGENDA

3.5 MILLIONPOINTS OFINTERRUPTION

3.5 MILLIONPOINTS OFINTERRUPTION

85 BILLIONSERVINGSSOLD ANNUALLY

85 BILLIONSERVINGSSOLD ANNUALLY

1.5 MILLIONDELIVERIESPER WEEK

1.5 MILLIONDELIVERIESPER WEEK

67,000EMPLOYEES67,000EMPLOYEES

2 MILLIONPIECES OFCOLD DRINKEQUIPMENT

2 MILLIONPIECES OFCOLD DRINKEQUIPMENT

Snapshot of PBGSnapshot of PBG

Successful Portfolio Repositioning… With Clear OpportunitiesSuccessful Portfolio Repositioning… With Clear Opportunities

GeographiesGeographies

U.S.U.S. InternationalInternational

2012F2012F

4040

6060

20082008

3030

7070

20022002

1010

9090

Operating Profit ShiftsOperating Profit Shifts

CSDsCSDs Non-CarbsNon-Carbs

2012F2012F

>35>35

<65<65

20082008

2727

7373

20022002

1515

8585

U.S. Category ShiftsU.S. Category Shifts

BrandsBrands

Operating profit is on a comparable basisOperating profit is on a comparable basis

Snapshot of PBGSnapshot of PBG

Great Portfolio of Brands… Strong #1 or #2Great Portfolio of Brands… Strong #1 or #2

ColasColas

Non-CarbsNon-Carbs

WaterWater

Invigoration & EnergyInvigoration & Energy

FlavorsFlavors

• Financial Literacy

• Metric Based Granular Focus

• Tools, Training & Technology

• Financial Literacy

• Metric Based Granular Focus

• Tools, Training & Technology

Snapshot of PBGSnapshot of PBG

Capable, Motivated, Experienced WorkforceCapable, Motivated, Experienced Workforce

• Results Oriented

• Continuity of Management

• Appreciation & Recognition

• Results Oriented

• Continuity of Management

• Appreciation & Recognition

CapabilityCapability CultureCulture

Snapshot of PBGSnapshot of PBG

1999 2009 & Beyond

“We Sell Soda.”“We Sell Soda.”

ServiceExcellence

ServiceExcellence

OperationalExcellenceOperationalExcellence

Revenue / Margin Management Excellence

Revenue / Margin Management Excellence

Executional ExcellenceExecutional Excellence

SellingExcellence

SellingExcellence

Best-In-Class ExecutionBest-In-Class Execution

$526$504

2005 2008

Snapshot of PBGSnapshot of PBG

Proven Financial Track RecordProven Financial Track Record

$11.7$13.8

2005 2008

CAGR+6%

$1.2$1.0

2005 2008

CAGR+6%

Topline Growth(in billions)

Topline Growth(in billions)

Operating Profit(in billions)

Operating Profit(in billions)

EPS Growth(in dollars)

EPS Growth(in dollars)

Cash Flow(in millions)Cash Flow(in millions)

$1.68

$2.27

2005 2008

CAGR+11%

Total Payout +110%

All figures are on a comparable basisAll figures are on a comparable basis

The Evolving Landscape… Consumer The Evolving Landscape… Consumer

RelevanceRelevance

• Purchasing Broader Repertoire of Products• Adopting New and Unique Brands & Flavors• Purchasing Broader Repertoire of Products• Adopting New and Unique Brands & Flavors

Health & WellnessHealth & Wellness

• Shopping Across Channels in Search of Value• Seeking Key Price Points• Shopping Across Channels in Search of Value• Seeking Key Price Points

• Craving Humanity, Optimism & Energy• Embracing Modern, Simple & Iconic Designs• Craving Humanity, Optimism & Energy• Embracing Modern, Simple & Iconic Designs

VarietyVariety

• Searching for Better for You and Functional Products• Continuing to Focus on Better Tasting Hydration• Searching for Better for You and Functional Products• Continuing to Focus on Better Tasting Hydration

ValueValue

Evolving Landscape… Channel & Customer Evolving Landscape… Channel & Customer

Continued Channel MigrationContinued Channel Migration

Value Rules the DayValue Rules the Day

Escalating Labor CostsEscalating Labor Costs

Big Getting BiggerBig Getting Bigger

Evolving Landscape… Category Evolving Landscape… Category

• Top Retail Sales Category• Annual Growth of 4%• Innovation Fueling Growth

• Top Retail Sales Category• Annual Growth of 4%• Innovation Fueling Growth

• 110 Million Households Buying• Top Destination Category• Highest Grocery Purchase Frequency

• 110 Million Households Buying• Top Destination Category• Highest Grocery Purchase Frequency

US Retail LRB SalesUS Retail LRB Sales

20052005

$98B$98B

$110B$110B

20082008 LRBLRB

4%4%

Top 10Top 10

4%4%

HouseholdPenetrationHouseholdPenetration

LRBLRB Top 10Top 10

98%98%

73%73%

PurchaseFrequencyPurchase

Frequency

LRBLRB Top 10Top 10

6363

1414

Big, Growing and Powerful CategoryBig, Growing and Powerful Category

Retail Sales Growth

Retail Sales Growth

Reposition and Strengthen Global

Brand Portfolio

Reposition and Strengthen Global

Brand Portfolio

TransformPerformance ThroughOperating Excellence

TransformPerformance ThroughOperating Excellence

Capitalize on Geographic Growth

Opportunities

Capitalize on Geographic Growth

Opportunities

Strategic Priorities to Drive Shareholder ValueStrategic Priorities to Drive Shareholder Value

REFRESHREFRESH RETHINKRETHINK REDEFINEREDEFINE

Reposition and Strengthen Global Brand PortfolioReposition and Strengthen Global Brand Portfolio

ENTERWHITESPACE

ENTERWHITESPACE

INVEST INCOREBRANDS

INVEST INCOREBRANDS

FILL PORTFOLIOGAPS: GOAL#1 OR #2POSITION

FILL PORTFOLIOGAPS: GOAL#1 OR #2POSITION

PURSUESCALEOPPORTUNITIES

PURSUESCALEOPPORTUNITIES

REFRESHREFRESH

Transformational Re-Launch of PepsiTransformational

Re-Launch of Pepsi

REFRESHREFRESH

Invest in Core BrandsInvest in Core BrandsREFRESHREFRESH

Aligns Portfolio Across U.S. and Canada

Strengthens Flavor CSD Brand Line-Up

Significant Volume Potential

Aligns Portfolio Across U.S. and Canada

Strengthens Flavor CSD Brand Line-Up

Significant Volume Potential

REFRESHREFRESH

REFRESHREFRESH

Expand Energy PortfolioExpand Energy Portfolio

Expands PBG’s Portfolio into White Space

Leading Brand in High Growth Segment

Strong Platform for Health & Wellness

Muscle MilkREFRESHREFRESH

Largest Juice Producer; #1 Share Position

Growth Category within LRB

Juice Drinks Introduction in 2009

Scale Business with Attractive Margins

75/25 Joint Venture with PepsiCo

Integration Opportunities and Synergies

Largest Juice Producer; #1 Share Position

Growth Category within LRB

Juice Drinks Introduction in 2009

Scale Business with Attractive Margins

75/25 Joint Venture with PepsiCo

Integration Opportunities and Synergies

Lebedyansky AcquisitionLebedyansky AcquisitionREFRESHREFRESH

Re-Conceptualize ConsumerValue Architecture

Re-Conceptualize ConsumerValue Architecture

Step Change inCost Structure and Productivity

Step Change inCost Structure and Productivity

Transform Performance Through Operating ExcellenceTransform Performance Through Operating ExcellenceRETHINKRETHINK

Re-Conceptualize Consumer Value ArchitectureRe-Conceptualize Consumer Value Architecture

• Pulse Value at Key Price Points• Big Brands & Big Packs, In & Out• Pulse Value at Key Price Points• Big Brands & Big Packs, In & Out

• Deep Insights & Experience• Understand Private Label Limitations• Deep Insights & Experience• Understand Private Label Limitations

• Well-Defined Value Architecture• Best-in-Class Planning Tools• Well-Defined Value Architecture• Best-in-Class Planning Tools

• Long-Range Value Migration Planning• Delivers Value Volume & Margin Runway• Long-Range Value Migration Planning• Delivers Value Volume & Margin Runway

Innovation & Limited Time Offer PackagesInnovation & Limited Time Offer Packages

Price Gap ManagementPrice Gap Management

Weeks in ValueWeeks in Value

Price / Package ArchitecturePrice / Package Architecture

Transform Performance Through Operating ExcellenceTransform Performance Through Operating ExcellenceRETHINKRETHINK

Step Change in Cost Structure and ProductivityStep Change in Cost Structure and Productivity

2009 Cost Savings of $250 Million2009 Cost Savings of $250 Million

Transform Warehouse Capabilities

Transform Warehouse Capabilities

Maximize Go-To-Market Effectiveness

Maximize Go-To-Market Effectiveness

Optimize Manufacturing

Cost

Optimize Manufacturing

Cost

Transform Performance Through Operating ExcellenceTransform Performance Through Operating ExcellenceRETHINKRETHINK

REDEFINEREDEFINE

OVER 100INDEPENDENT BOTTLERSOVER 100INDEPENDENT BOTTLERS

GeographiesGeographiesNew/Emerging SegmentsNew/Emerging SegmentsOrganic GrowthOrganic Growth

Capitalize on Geographic Growth Opportunities Capitalize on Geographic Growth Opportunities

DomesticDomestic

Other AnchorsOther

Anchors

IndependentBottlers

IndependentBottlers

• Enhanced Speed to Market

• Cost Rationalization

• Financially Accretive

• Enhanced Speed to Market

• Cost Rationalization

• Financially Accretive

• PepsiCo Partnership

• Distribution Agreements

• Learning Labs

• PepsiCo Partnership

• Distribution Agreements

• Learning Labs

• Consumer Value

• Executional Excellence

• Leverage Innovation

• Consumer Value

• Executional Excellence

• Leverage Innovation

$1 BILLIONIN RETAIL SALES $1 BILLIONIN RETAIL SALES

3 TO 5% RETAILCATEGORY GROWTH3 TO 5% RETAILCATEGORY GROWTH

• Low LRB Per Capita Consumption

• Strong Brand Portfolio

• Power of One with Frito

• Capability as a Competitive Advantage

• Low LRB Per Capita Consumption

• Strong Brand Portfolio

• Power of One with Frito

• Capability as a Competitive Advantage

RussiaRussia MexicoMexico

• Large Population Base

• Capitalize on Channel Shifts

• Strengthened Management Team

• Restructuring Plans Being Executed

• Large Population Base

• Capitalize on Channel Shifts

• Strengthened Management Team

• Restructuring Plans Being Executed

International Markets… Positive Long-Term PotentialInternational Markets… Positive Long-Term Potential

Capitalize on Geographic Growth Opportunities Capitalize on Geographic Growth Opportunities REDEFINEREDEFINE

AgendaAgenda

PBG’S APPROACHTO CREATINGSHAREHOLDERVALUEPBG’S APPROACHTO CREATINGSHAREHOLDERVALUE

MANAGINGIN THE CURRENTENVIRONMENT

MANAGINGIN THE CURRENTENVIRONMENT

2009FINANCIALOUTLOOK2009FINANCIALOUTLOOK

PBG’s Approach to Creating Shareholder ValuePBG’s Approach to Creating Shareholder Value

• Sustainable Topline and Bottomline Growth

• Focused Cash Flow Priorities

– Investments Increase ROIC – WACC Spread

– Grow Operating Free Cash Flow

– Effectively Return Cash to Shareholders

• Sustainable Topline and Bottomline Growth

• Focused Cash Flow Priorities

– Investments Increase ROIC – WACC Spread

– Grow Operating Free Cash Flow

– Effectively Return Cash to Shareholders

PBG’s Approach to Creating Shareholder ValuePBG’s Approach to Creating Shareholder Value

Revenue(in billions)Revenue(in billions)

Operating Profit(in billions)

Operating Profit(in billions)

EPS(in dollars)

EPS(in dollars)

Sustainable Topline and Bottomline GrowthSustainable Topline and Bottomline Growth

$1.41$1.41

$2.20$2.20$2.27$2.27

20032003 20072007 20082008

$10.3$10.3

$13.6$13.6$13.8$13.8

20032003 20072007 20082008

~$1.1~$1.1~$1.2~$1.2

$.9$.9

20032003 20072007 20082008

CAGR+7%

+2%

CAGR+5%

+2%

CAGR+12%

+3%

Operating profit and EPS are on a comparable basisOperating profit and EPS are on a comparable basis

PBG’s Approach to Creating Shareholder ValuePBG’s Approach to Creating Shareholder Value

1999-20021999-2002 2003-20082003-2008

Reinvest in the BusinessReinvest in the Business $2.3 Billion$2.3 Billion $4.4 Billion$4.4 Billion

AcquisitionsAcquisitions $1.3 Billion$1.3 Billion $1.1 Billion$1.1 Billion

Share Buybacks & DividendsShare Buybacks & Dividends $700 Million$700 Million $3.5 Billion$3.5 Billion

Focused Cash Flow PrioritiesFocused Cash Flow Priorities

PBG’s Approach to Creating Shareholder ValuePBG’s Approach to Creating Shareholder Value

ROICROIC

Focused Cash Flow PrioritiesFocused Cash Flow Priorities

OFCFOFCF

7.0%7.0%7.8%7.8%

20032003 20082008

$440$440$526$526

20032003 20082008

CAGR+4%

WACCWACC

Non-GAAPNon-GAAP

Managing in the Current EnvironmentManaging in the Current Environment

EnvironmentEnvironment PrioritiesPriorities

• Global GDP Pressure = LRB Category Pressure

• Double-Digit Foreign Currency Devaluation

• Tight Credit Markets

• Commodity Costs Improving

• Global GDP Pressure = LRB Category Pressure

• Double-Digit Foreign Currency Devaluation

• Tight Credit Markets

• Commodity Costs Improving

• Ensure Strong Liquidity

• Enhance Risk Management Capability

• Accelerate Productivity

• Strengthen Cash Flow and Working Capital

• Ensure Strong Liquidity

• Enhance Risk Management Capability

• Accelerate Productivity

• Strengthen Cash Flow and Working Capital

Goal:Solid Near-Term Results… an Even Stronger PBG Post-Recession

Goal:Solid Near-Term Results… an Even Stronger PBG Post-Recession

Managing in the Current EnvironmentManaging in the Current Environment

• Reaffirmed A/A2 Credit Rating

• Guarantee Liquidity

– $1.1B Committed Bank Lines Through 2012

– $1.3B 5 Year Offering in Oct. 2008

– $750 10 Year Offering in Jan. 2009

• Reaffirmed A/A2 Credit Rating

• Guarantee Liquidity

– $1.1B Committed Bank Lines Through 2012

– $1.3B 5 Year Offering in Oct. 2008

– $750 10 Year Offering in Jan. 2009

Bond Maturity Ladder(in billions)

Bond Maturity Ladder(in billions)

’09 -’11’09 -’11

LiquidityLiquidity

$1.0$1.0

$0.4$0.4

$1.3$1.3

$0.8$0.8

$1.0$1.0

$0.75$0.75

$0.25$0.25

$0$0

’12’12 ’13’13 ’14’14 ’15’15 ’16’16 ’19’19 ’29’29

Managing in the Current EnvironmentManaging in the Current Environment

Working CapitalWorking Capital • Rigorous Cash Conversion Cycle Management• Global Receivable & Inventory Controls• Rigorous Cash Conversion Cycle Management• Global Receivable & Inventory Controls

Counter PartyCounter Party• Minimum Criteria for Financial Institutions & Global Suppliers• Quarterly Review of Exposure• Rigorous Assessment of Suppliers

• Minimum Criteria for Financial Institutions & Global Suppliers• Quarterly Review of Exposure• Rigorous Assessment of Suppliers

HedgingHedging• Smooth Volatility and Manage Risks• Hedges Matched to Future Needs… No Speculation• Rolling Average Hedge Positions & Centralized Control

• Smooth Volatility and Manage Risks• Hedges Matched to Future Needs… No Speculation• Rolling Average Hedge Positions & Centralized Control

• Balanced Maturity ladder• Committed Bank Lines in Place… $1.1 Billion Through 2012• Balanced Maturity ladder• Committed Bank Lines in Place… $1.1 Billion Through 2012Liquidity / RefinancingLiquidity / Refinancing

Risk ManagementRisk Management

Managing in the Current EnvironmentManaging in the Current Environment

• Real-Time Decision Making

• Multiple Scenario Plans

• Heightened Focus on Productivity

• New Working Capital / Capital Spending Approach

• Local Currency Profit Targets

• Real-Time Decision Making

• Multiple Scenario Plans

• Heightened Focus on Productivity

• New Working Capital / Capital Spending Approach

• Local Currency Profit Targets

New Approach to PlanningNew Approach to Planning

Balancing the Near-Term Pressureswith the Long-Term Attractiveness of PBG

Balancing the Near-Term Pressureswith the Long-Term Attractiveness of PBG

Managing in the Current EnvironmentManaging in the Current Environment

• Structured to Succeed

• Self Manufacturing andLight Weighting

• Transform Warehouse Operations

• Optimize Route-To-Market

• Structured to Succeed

• Self Manufacturing andLight Weighting

• Transform Warehouse Operations

• Optimize Route-To-Market

Productivity Savings(in millions)

Productivity Savings(in millions)

Productivity InitiativesProductivity Initiatives

$100$100

$170$170

$250$250

20072007 20082008 2009F2009F

Managing in the Current EnvironmentManaging in the Current Environment

• Accounts Receivable and Credit Monitoring Enhanced

• Cash Conversion Scorecards and Targets by Country

• US Best Practices to International Markets

• Accounts Receivable and Credit Monitoring Enhanced

• Cash Conversion Scorecards and Targets by Country

• US Best Practices to International Markets

Working CapitalWorking CapitalCapital Spending(in millions)

Capital Spending(in millions)

Capex as % of RevenuesCapex as % of Revenues

$869$869

$693$693$550 - $600 $550 - $600

6.4%6.4% 5.0%5.0% 4.0%4.0%

20072007 20082008 2009F2009F

2009 Guidance2009 Guidance

Top-Line GrowthTop-Line Growth

Operating Profit Growth*Operating Profit Growth*

Earnings Per Share*Earnings Per Share*

Operating Free Cash FlowOperating Free Cash Flow

*Comparable*Comparable

Down Low to Mid-Single Digits

Down Low to Mid-Single Digits

$2.15 to $2.25$2.15 to $2.25

~ $450 Million~ $450 Million

U.S. DollarU.S. Dollar

Down Low to Mid-Single Digits

Down Low to Mid-Single Digits+ Low-Single Digits+ Low-Single Digits

+ Low-Single Digits+ Low-Single Digits

~ $(0.18)ForEx Impact

~ $(0.18)ForEx Impact

Currency NeutralCurrency Neutral

Financial Outlook SummaryFinancial Outlook Summary

Strong Track Record of Results

Clear Priorities for 2009

Financial Flexibility due to Strong Balance Sheet

Bright Future as Macros Rebound

Strong Track Record of Results

Clear Priorities for 2009

Financial Flexibility due to Strong Balance Sheet

Bright Future as Macros Rebound

STRENGTHENING

BRANDPORTFOLIO

STRENGTHENING

BRANDPORTFOLIO

BEST-IN-CLASS OPERATINGCAPABILITYBEST-IN-CLASS OPERATINGCAPABILITY

STRATEGICREPOSITIONINGOF GEOGRAPHIC PORTFOLIO

STRATEGICREPOSITIONINGOF GEOGRAPHIC PORTFOLIO

SummarySummary