This is a summary of the fourth quarter fiscal 2006 earnings call conducted by Pepsi Bottling Group (PBG: chart) on January 30, 2007

Management:

- President and CEO: Eric Foss
- CFO: Al Drewes
- VP of IR and PR: Mary Winn Settino
- President of North American Operations: Rob King

Key Investor Issues:

- Net income increased 84% from a year ago to $133 million or 55 cents a share.
- Revenue grew 2.8% to $3.8 billion from $3.7 billion in the prior year on increases in volume.
- The firm repurchased 18 million shares of its common stock.

Full-Year 2006 Highlights:

- Worldwide physical case volume grew 3% in 2006 on a constant territory basis.
- Reported net revenue per case increased 4% from a year ago on a worldwide basis.
- PBG delivered a strong operating free cash flow performance, generating $522 million in 2006.
- The firm invested approximately $732 million in capital expenditures..

Fourth Quarter Highlights:

Worldwide revenue grew 2.8% to $3.8 billion from $3.7 billion in the prior year on increases in volume fueled by strong brand performance across non-carbonated beverages and our ability to capture the growth in emerging channels.

Pepsi Bottling Group was able to drive this growth through to the bottom line delivering a 6% jump in operating profits.

The company reported net income of $133 million or 55 cents a share, including a $13 million expense or 5 cents EPS due to the impact of FAS 123(r) and a $55 million gain or 22 cents EPS primarily from the reversal of tax reserves. This compared with net income of $74 million, or 30 cents a share in the prior year, including a net 4 cents EPS reduction which reflected the impact of PBG''s spending initiatives, partially offset by the proceeds from the high fructose corn syrup litigation settlement.

Operating free cash flow was $522 million and the firm repurchased nearly 18 million shares in the payment of dividends.

In the US, volume was up 2% on a constant territory basis and this was lapping 4% growth from the prior year.

- The total water business grew 15% in the quarter and 22% for the year.
- The firm posted a 3% net revenue increase in the US in both quarters and for the full-year.
- In Canada, net revenue per case grew 5% for the quarter and 3% for the full-year in local currency.

In Mexico, profits were up more than 10% on a reported basis.

- CSD volume was down 2%, bottled water grew 2%, and the non-carbs portfolio increased more than 35%.
- The European business turned in another solid performance with profits up strong double-digit for the full year.
- In the US and in Canada Pepsi Bottling Group has an exciting innovation calendar that includes new products to new packages across the consumer needs base of refreshment, invigoration, wellness, and hydration.
- Pepsi Bottling Group reported a non-cash tax benefit of approximately $55 million from the reversal of income tax reserves.

Fiscal 2007 Outlook

Globalized volume is expected to grow 1% to 2% for the year with the US volume flat to up 1%.

- The net revenue per case is projected to improve 3% to 4% and the US business will likely deliver a 4% plus increase.
- Carbs per case will be up about 6% for the year.
- SG&A is expected to rise 4% to 5% for the year.

Operating profits will grow 3% to 4% in 2007, and EPS should be in the range of $1.92 to $2.