Conference
Call Transcript
PEP
- PepsiCo Reaches Merger Agreements with Pepsi Bottling Group and PepsiAmericas
Conference Call
Event
Date/Time: Aug 04, 2009 / 01:30PM GMT
CORPORATE
PARTICIPANTS
Lynn
Tyson
PepsiCo
- SVP, IR
Indra
Nooyi
PepsiCo
- Chairman & CEO
Eric
Foss
Pepsi
Bottling Group - Chairman & CEO
Bob
Pohlad
Pepsi
Americas - Chairman & CEO
Richard
Goodman
PepsiCo
- CFO
CONFERENCE
CALL PARTICIPANTS
Kaumil
Gajrawala
UBS
- Analyst
Carlos
Laboy
Credit
Suisse - Analyst
John
Faucher
JPMorgan
Chase - Analyst
Bill
Pecoriello
Consumer
Edge Research - Analyst
PRESENTATION
Good
morning and welcome to PepsiCo's conference call. Your lines have been placed on
listen-only until the question-and-answer session. (Operator Instructions).
Today's call is being recorded and will be archived for 14 days. It is now my
pleasure to introduce Ms. Lynn Tyson, Senior Vice President of Investor
Relations. Ms. Tyson, you may begin.
Lynn Tyson -
PepsiCo - SVP, IR
Thank
you, operator. With me today from PepsiCo are Chairman and CEO, Indra Nooyi and
CFO, Richard Goodman. Also joining us are Eric Foss, Chairman and CEO of the
Pepsi Bottling Group and Bob Pohlad, Chairman and CEO of Pepsi
Americas.
We will
start the call off with some prepared comments from Indra, Eric and Bob and then
Richard will talk about the financial impact of the transaction. Then we will
move to Q&A and end with closing comments from Indra.
I
encourage you to review the deck we have posted on our website,
PepsiCo.com/investors, which augments our comments today. During today's call,
unless otherwise noted, all references to EPS growth, net revenue growth and
division operating profit growth are on a core constant currency basis. And I
encourage you to read our Q2 release for more detail.
Before we
begin, please take note of our cautionary statement. This conference call
includes forward-looking statements based on currently available information,
operating plans and projections about future events and trends. Our actual
results could differ materially from those predicted in such forward-looking
statements, but we undertake no obligation to update any such statements whether
as a result of new information, future events or otherwise. Please see our
filings with the Securities and Exchange Commission, including our annual report
on Form 10-K and subsequent reports on Form 10-Q and 8-K.
And
finally, you should refer to the Investors section of PepsiCo's website under
Financial News to find disclosures and reconciliations of non-GAAP financial
measures that may be used by management when discussing PepsiCo's financial
results. And with that, I will turn the call over to Indra.
Indra Nooyi -
PepsiCo - Chairman & CEO
Thanks,
Lynn. Since we've released earnings last month, I have had an opportunity to
speak with many of you. And I know you are as pleased as I am to see that we
have entered into a definitive merger agreement with both PBG and PAS. Before I
hand it over to Richard to go through the particulars of the agreements and
financial implications, I wanted to take a moment to address two questions many
of you have raised in the meetings we held with you over the past two
weeks.
First,
you asked if the strategic rationale behind this bottling consolidation still
holds. Second, you wanted to know what the system benefits were. In response to
the first question, to us, the strategic rationale behind this consolidation has
been significantly reinforced as we have continued to watch the evolution of the
North American beverage business over the past few months.
As I said
to you in April, we believe in the North American beverage business, but we also
know it is fundamentally different in every way from the category we saw in 1999
when we spun off the bottlers and that evolution will continue in the future.
The operating model that exists right now makes it very difficult for any
participant in the LRB business to deliver sustainable top-line growth in
profitability over the long term because the profit pool for any system is not
growing enough in total to reinvest in the business and feed the appetites of
multiple growth companies.
The steps
we are taking to consolidate our anchor bottlers back into PepsiCo will allow us
to vertically integrate our business, reduce costs and focus our system
resources on driving growth and innovation, enabling us to provide better value
and service to our consumers and customers globally while delivering value to
our shareholders.
In short,
we believe we are taking a very important step to strategically reshape the
North American beverage business, which then leads to the second question we
have been asked by investors, whether we expect to get the same system benefits
we shared with you in April. The answer to this is also yes. And after spending
time with Eric and Bob, I am even more convinced of the near and long-term
benefits. And that is why we have increased our synergy levels from $200 million
to $300 million by 2012.
In April,
we cited several key benefits from this transaction. First, we said the
consolidation of 80% of our total beverage volume in North America will allow
for improved speed of decision-making across the Company and the elimination of
friction points resulting from competing manufacturing and distribution systems.
With the retail environment getting increasingly concentrated and difficult,
this will give us a strategic advantage.
Second,
this power of one. We can take this to a completely new level by offering more
compelling, bundled offers across our beverage and food portfolio. We can also
serve our fountain and food service customers better as we will be positioned to
provide them with enhanced customer service across both our beverages and snacks
on a national basis.
Third,
over time, this transaction allows us to consolidate the manufacturing network
of hot-fill and cold-fill assets, which will provide cost benefits for the
entire system, allowing us to step up our investment in growth and
innovation.
Fourth,
the beverage business of today and looking ahead will be very different in one
major way, which has significant consequences for brand, innovation, go to
market and retail [theater]. We believe that we are likely to see even more
product diversification as health and wellness offerings become a larger part of
the beverage portfolio.
The only
way we can successfully launch these products and make them compelling for
consumers to buy them is if we can get them on the retail shelf cost-effectively
and incubate them so they can establish a franchise with consumers. The [DOC]
system that exists in beverages today is inadequate to accomplish this because
new products, which don't have the heft or velocity of legacy products, get
prematurely minimized sometimes.
Similarly,
the beverage distribution system of today does not allow flexible sorting of
products to tailor distribution by channel. This transaction allows us to
flexibly deploy multiple go-to-market systems. It also allows us to get new
health and wellness products onto retail shelves and really incubate them to
give them a chance to succeed.
And
finally, we can eliminate redundant costs between the various systems, including
headquarters and back-office.
Taken
together, we are very excited about the potential new structural architecture of
the North American business and the flexibility it will give us. We also now
believe we can capture about $300 million in pretax synergies on an annual basis
as we reduce costs and leverage scale efficiencies.
Just a
bit on synergies. We have had a lot of discussion about these numbers, so let me
clarify a few things. The $300 million is something we believe we can achieve in
the next three years as we reestablish the base of the new merged system and
reignite healthy growth.
At
PepsiCo, we have a very well-developed forced merger integration approach and we
are all ready to swing into action. The benefits I cited provide us with a truly
differentiated competitive advantage that transcends just a synergy number. Our
system will be in a much better position to lead in customer service, innovation
and expanding product distribution, helping PepsiCo redefine the shape of the
beverage market in the future.
We
anticipate closing after the required regulatory approval. We will leverage the
collective strength and knowledge of all three organizations through an
integration task force and overall program management approach. The vast
majority of associates across the blue system will stay focused on managing
day-to-day operations and customer service.
I would
like to thank Eric Foss and Bob Pohlad for their leadership and partnership
during our negotiation. Our strategic intent is to drive towards a new model
grounded in speed, simplicity and flexibility and move swiftly forward in
integrating the blue system into one company.
Before we
turn it over to Richard, I would like to ask Eric and Bob to make a few
comments. Eric?
Eric Foss -
Pepsi Bottling Group - Chairman & CEO
Thank
you, Indra. It's great to be here today and on behalf of the Pepsi Bottling
Group, I will add that we are extremely pleased about this morning's
announcement. We have had a very productive 10-year relationship with PepsiCo
and we are excited to be entering into a new phase of that relationship together
with Pepsi Americas to create something really special for all of our
stakeholders.
As Indra
mentioned, the strategic rationale for this deal is enormous, including
flexibility and speed to market, streamlining the supply chain and reinvesting
to accelerate growth. In addition, the PBG employees should benefit from greater
career opportunities. We also believe our shareholders will benefit from the
structure of this transaction, which delivers the best of both worlds -- 50% in
cash at a substantial premium, as well as 50% in PepsiCo stock, enabling them to
participate in the significant upside we see in the combination.
When I
was named CEO of PBG, I mentioned at the time how fortunate I was to lead an
organization that had the top three elements of any CEO's corporate wish list --
first, strong brands; second, a productive and efficient go-to-market system and
finally, talented, motivated people. These assets were paramount to our success
then and they are just as valuable and applicable to the new beverage company
being formed today.
I would
like to thank the men and women of PBG for the tremendous value that they have
built at PBG over the last 10 years and for the leadership and commitment they
continue to demonstrate everyday in every way. Together, we have helped grow our
customers' businesses. We have created a great place to work and build a career
and we have delivered earnings growth and shareholder value.
In
closing, this transaction positions the Pepsi system to continue to win in the
marketplace and that is the goal Indra, Bob and I all share. Thank you.
Bob?
Bob Pohlad -
Pepsi Americas - Chairman & CEO
Thanks,
Eric and good morning, everyone. Today's announcement is an important day for
Pepsi Americas and for all our shareholders. From the beginning of this process,
we have believed in the strategic rationale and the timing of an integrated
Pepsi system. This is not change for change sake; this is change with purpose.
The timing is right and the potential is real and significant to tailor all
parts of our business to the needs of our customers and the tastes of our
consumers.
Over the
past nine years since the formation of Pepsi Americas, we have built a company
that has achieved much success. Today's events are a clear reflection of what we
have accomplished in our market, in our ability to identify new growth
opportunities and importantly, our ability to realize the potential of both of
those. Everything we have achieved is the result of the talent, dedication and
commitment of the over 20,000 people that are Pepsi Americas. Each one has made
an important contribution and each has my respect and thanks.
Finally,
we look forward to continuing our strong partnership with PepsiCo that begins
with Indra Nooyi for whom I have great respect and it extends into the close
working relationships we have with the entire PepsiCo organization both here in
North America and in Pepsi International. Thank you. Richard?
Richard Goodman -
PepsiCo - CFO
Thanks,
Bob. As you saw in the press release, we will be paying about $7.8 billion in a
combination of stock and cash for the shares of PBG and PAS that we don't
currently own. As Indra indicated, we believe we can capture annual pretax
synergies of $300 million, largely due to, one, G&A cost savings related to
overlapping functions at the corporate and operating levels globally; two, the
reduction of manufacturing and warehouse logistics and other supply chain costs;
three, the rationalization of selling and other go-to-market functions; and
four, benefit from enhanced distribution of our products.
This is
about $100 million more than we had anticipated in April with the difference
mostly driven by additional savings opportunities identified in our discussions
with PBG and PAS. We expect to realize more than half of these synergies in the
first 18 months and the full benefits by year three. We also expect to incur
one-time costs of about $300 million to achieve these synergies. We expect that
this transaction will result in EPS accretion of about $0.15 by year three when
the cost savings will be fully realized. There will be modest accretion in
2010.
Let me
turn to our cash flow and balance sheet. As most of you are aware, the rating
agencies already evaluate us on the collective debt of the system. As a result
of this transaction, we will be taking down about $4 billion of additional debt.
However, we remain committed to returning free cash flow to shareholders in the
form of dividends and share repurchases and we believe our financial flexibility
will allow us to continue to opportunistically pursue tuck-in acquisitions
globally as we have done over the past several years.
I also
want to note that to the extent our share repurchases continue to be delayed in
2009 because of the transaction, we would look to repurchase additional shares
over the following 12 to 18 months. This transaction will reduce our ROIC from
the mid-20s to the high teens. However, over time as we grow revenue and
operating income, we expect this metric to improve.
The
transaction is not subject to financing contingencies. Of course, it requires
approval of PBG and PAS shareholders. We will close it as expeditiously as
possible, recognizing that the transaction will undergo the customary regulatory
approval process. As such, we anticipate the transaction will be completed by
the end of this year or early next year. Until we actually close the
transaction, we will not be in a position to give you additional information on
the financial implications beyond what we have just shared with you. With that,
let me turn it over to the operator for Q&A.
QUESTION
AND ANSWER
(Operator
Instructions). Kaumil Gajrawala, UBS.
Kaumil Gajrawala -
UBS - Analyst
Hey,
guys. Good morning, everybody. As it relates to the $300 million, is that
entirely coming from cost savings or is there some revenue synergies baked into
that number?
Indra Nooyi -
PepsiCo - Chairman & CEO
Richard?
Richard Goodman -
PepsiCo - CFO
It is
primarily -- the majority of it is cost savings, but it also includes the profit
implications of expanded revenue that we hope to capture over the next several
years.
Indra Nooyi -
PepsiCo - Chairman & CEO
But I
would say 80% of it is cost savings.
Kaumil Gajrawala -
UBS - Analyst
On the
cost side. So as you go through the process of achieving these synergies, any
additional synergies that you find along the way, is that slated to be
reinvested in top line or is that something you would then come back to us and
potentially talk about for falling to the bottom line?
Indra Nooyi -
PepsiCo - Chairman & CEO
Let's
cross that bridge when we get there, Kaumil.
Kaumil Gajrawala -
UBS - Analyst
Okay. And
then the last thing, as it relates to your long-term algorithm, how does this
change it? Obviously the weightings now are different as it relates to the size
of your business that is in the US and that is beverages. So can you talk to us
about what the algorithm looks like now as it relates to top line, the leverage
and then what we should expect, excluding the cost synergies, over the long term
on earnings growth?
Richard Goodman -
PepsiCo - CFO
I think
that at -- I mean, at this point, we have long-term goals that are in place that
we feel that we can realize. Obviously, in the current economy, it is really
very difficult to sort of predict exactly what 2010 is going to look like. It
really depends upon what the economy is going to be. But clearly, we believe
that this is an extremely attractive acquisition and will help enormously in
solidifying our North American beverage business.
Kaumil Gajrawala -
UBS - Analyst
Okay. So
then maybe it is something you would come back to us with when you
--?
Richard Goodman -
PepsiCo - CFO
Yes, we
will certainly do that later in the year.
Kaumil Gajrawala -
UBS - Analyst
All
right. Thank you.
Carlos
Laboy, Credit Suisse.
Carlos Laboy -
Credit Suisse - Analyst
Good
morning, everyone. Congratulations.
Indra Nooyi -
PepsiCo - Chairman & CEO
Thank
you.
Carlos Laboy -
Credit Suisse - Analyst
Beyond
the synergies and the transition, what kind of a long-term growth rate do you
think this new model can yield and can you maybe compare that against what the
alternative might've been?
Indra Nooyi -
PepsiCo - Chairman & CEO
Carlos, I
will tell you, this is a brief call where we are just updating you on the
transaction. As Richard mentioned, later on in the year, we will come back and
talk to you much more expansively about what the consequences are of the
transaction, the implications of the strategic reshaping and what the future for
PepsiCo overall in North America in particular looks like. So hold that question
and ask it at that meeting.
Carlos Laboy -
Credit Suisse - Analyst
Okay. Is
there anything you can tell us on the DPS brands?
Indra Nooyi -
PepsiCo - Chairman & CEO
On the
what?
Carlos Laboy -
Credit Suisse - Analyst
On Dr.
Pepper?
Indra Nooyi -
PepsiCo - Chairman & CEO
No, there
is nothing. I mean --.
Richard Goodman -
PepsiCo - CFO
Dr.
Pepper is in our system now. It was in our system before the bottlers spin-off
and we have very good relationships with Dr. Pepper and we have done a very good
job with the Dr. Pepper products.
Carlos Laboy -
Credit Suisse - Analyst
Thank
you.
John Faucher -
JPMorgan Chase - Analyst
Yes, good
morning. As far as the timing of the synergy goes, if I remember correctly, when
you initially announced the offer, it was $200 million in 18 months. And I guess
if we look at it now, if you are saying half the cost saves will show up in the
first 18 months now, it seems as though you're actually taking the synergy
target down by $50 million if I'm reading this correctly. So can you walk me
through maybe what I am missing from a timing standpoint
here?
Richard Goodman -
PepsiCo - CFO
I don't
think -- I mean I think at the end of the day, we thought it would take us about
three years in order to be able to get the full synergies. And as we reviewed
both with Bob and Eric the nature of the synergies themselves, I think we are in
pretty good agreement that that is what we can get, recognizing that we had
sometimes thought that we could maybe close at a different point earlier. But at
this point, we will do all of the things that we can. We clearly have every
interest in getting the synergies as quickly as possible. But I think that
realistically speaking, there are a number of things that we need to do in order
to be able to make this happen and we want to make sure that we do it in an
entirely planned-for way.
Indra Nooyi -
PepsiCo - Chairman & CEO
John, let
me just say something. Even the original announcement, it was always three
years. We did not have an 18 month number at all. $200 million fully realized
for the end of year three is what we said even then.
John Faucher -
JPMorgan Chase - Analyst
Okay. So
the accretion then was -- if I remember correctly, there was something about 18
months. Was that the accretion then was flowing through in 18
months?
Indra Nooyi -
PepsiCo - Chairman & CEO
No. I
mean just as Richard mentioned, this deal is modestly accretive in 2010. By year
three, it is about $0.15 and then it ramps up in 2011. So at this point, we have
taken it up by $100 million in synergies. We are still staying with the three
years. So this is a nice bump to what we said in April.
John Faucher -
JPMorgan Chase - Analyst
Okay.
Thank you. And then one sort of housekeeping question. Do you know when you are
going to file for regulatory approval?
Indra Nooyi -
PepsiCo - Chairman & CEO
It is too
early to talk about that, John. We just got the deal signed. So let's come back
and talk to you about all this over the next few days.
John Faucher -
JPMorgan Chase - Analyst
Okay.
Thank you.
Indra Nooyi -
PepsiCo - Chairman & CEO
Thanks,
John. I guess we are going to take one last question.
Bill
Pecoriello, Consumer Edge Research.
Bill Pecoriello -
Consumer Edge Research - Analyst
Congratulations
to everybody.
Indra Nooyi -
PepsiCo - Chairman & CEO
Thanks,
Bill.
Bill Pecoriello -
Consumer Edge Research - Analyst
The
question on the 20% of the unconsolidated volume in the US, do you see any
issues in terms of cooperation in the route-to-market changes? Do you see more
consolidation of that network over time? And just as a second question, in terms
of the management structure and running the combined operations, is it too early
to talk about that? Thanks.
Indra Nooyi -
PepsiCo - Chairman & CEO
Let's
skip to the second question. I think, again, it is too early to talk about all
the management changes or whatever we need to do. Let's hold that
question.
On the
first question, as I said on the call the last time, we have a great
relationship with both the Pepsi-Cola Bottling Association and the Independent
Bottlers Association. So all of our independent bottlers and PepsiCo, we have
had a great relationship over the past few years. And I expect that relationship
has been, in fact, solidified and taken to a new level going forward. So we
don't see any problem and in the past few months, the conversations we have had
with representatives of either association does not seem to indicate that there
is going to be any problem at all.
Bill Pecoriello -
Consumer Edge Research - Analyst
Thank
you.
Indra Nooyi -
PepsiCo - Chairman & CEO
Okay. So
let me just bring this call to a close. And before we close, let me reiterate
that we believe the LRB category is at a point in its evolution where both steps
are required to help shape the future and insure profitable long-term growth. We
truly believe that one vertically integrated system can effectively drive cost
synergies, invest in marketing and product innovation, successfully incubate new
health and wellness offerings and optimize manufacturing and distribution
systems. And all of this, I think, makes us far more nimble in the marketplace,
allowing us to better capitalize on future growth
opportunities.
But to be
honest, this transaction goes beyond beverages to our entire North American
business. Over the past four months, we have spent some time thinking through
the many ways we can take our North American business to a whole new level by
leveraging our incredible reservoir of knowledge of consumer eating and drinking
habits, DOC systems, high velocity product merchandising, impulse product
marketing and flexible deployment of go-to-market systems.
Our
long-term goal is to be viewed by our North American customers and consumers as
the leading food and beverage company in terms of product offerings, service
levels and overall performance. While it would be premature to talk about all of
these details today, the ideas that are emerging, some of the concepts already
being tested at Frito-Lay North America, some of the thoughts coming from our
anchor bottling partners, all give me reason to feel very optimistic about the
layers of long-term advantage we are building into our North American business.
It bodes well for shoppers, retailers, our shareholders, but most importantly
for our associates, which brings me to our people.
I believe
PepsiCo and the combined bottling companies have the best leaders in the global
food and beverage industry. A group of people with tremendous experience and a
group whose talents we refresh when needed to insure diversity of thought. It is
through the leadership of this group of people that we will be able to
seamlessly integrate these three companies into one and win in the marketplace.
It is their can-do spirit, coupled with their must-do sense of responsibility,
that makes PepsiCo sustain great performance over many years. I feel privileged
to lead such an incredible group of associates. Thank you all for your time and
we look forward to a continuing dialogue with you.
This
concludes today's PepsiCo conference call. You may now
disconnect.
Cautionary
Statement
This communication does
not constitute an offer to sell or the solicitation of an offer to buy any
securities or a solicitation of any vote or approval. PepsiCo, Inc. (“PepsiCo”)
and The Pepsi Bottling Group, Inc. (“PBG”)
plan to file with the Securities and Exchange Commission (“SEC”)
a registration statement on Form S-4 containing a proxy statement/prospectus and
other documents with respect to the proposed acquisition of PBG and a definitive
proxy statement/prospectus will be mailed to shareholders of PBG. PepsiCo and
PepsiAmericas, Inc. (“PAS”)
plan to file with the SEC a registration statement on Form S-4 containing a
proxy statement/prospectus and other documents with respect to the proposed
acquisition of PAS and a definitive proxy statement/prospectus will be mailed to
shareholders of PAS. INVESTORS
AND SECURITY HOLDERS OF PBG AND PAS ARE URGED TO READ THE APPLICABLE PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE FILED WITH THE SEC
CAREFULLY
IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
Investors
and security holders will be able to obtain free copies of the registration
statements and the proxy statements/prospectuses (when available) and other
documents filed with the SEC by PepsiCo, PBG or PAS through the website
maintained by the SEC at http://www.sec.gov. Copies of the documents filed with
the SEC by PepsiCo will be available free of charge on PepsiCo’s internet
website at www.pepsico.com
or by contacting PepsiCo’s Investor Relations Department at 914-253-3035. Copies
of the documents filed with the SEC by PBG will be available free of charge on
PBG’s internet website at www.pbg.com
or by contacting PBG’s Investor Relations Department at 914-767-7216. Copies of
the documents filed with the SEC by PAS will also be available free of charge on
PAS’s internet website at www.pepsiamericas.com
or by contacting PAS’s Investor Relations Department at
612-661-3883.
PBG and
its directors, executive officers and certain other employees may be deemed to
be participants in the solicitation of proxies in respect of the proposed
acquisitions of PBG. Information regarding PBG’s directors and executive
officers is available in its Annual Report on Form 10-K for the year ended
December 27, 2008, which was filed with the SEC on February 20, 2009,
and its proxy statement for its 2009 annual meeting of shareholders, which was
filed with the SEC on April 7, 2009. PAS and its directors, executive officers
and certain other employees may be deemed to be participants in the solicitation
of proxies in respect of the proposed acquisitions of PAS. Information regarding
PAS’s directors and executive officers is available in its Annual Report on Form
10-K for the year ended January 3, 2009, which was filed with the SEC on March
4, 2009, and its proxy statement for its 2009 annual meeting of shareholders,
which was filed with the SEC on March 18, 2009. Other information regarding the
participants in the proxy solicitations and a description of their direct and
indirect interests, by security holdings or otherwise, will be contained in the
proxy statements/prospectuses and other relevant materials to be filed with the
SEC when they become available.
Statements in this release
that are “forward-looking statements” are based on currently available
information, operating plans and projections about future events and trends.
They inherently involve risks and uncertainties that could cause actual results
to differ materially from those predicted in such forward-looking statements.
Such risks and uncertainties include, but are not limited to: PepsiCo’s ability
to consummate the acquisitions of PBG and PAS and to achieve the synergies and
value creation contemplated by the proposed acquisitions; PepsiCo’s ability to
promptly and effectively integrate the businesses of PBG, PAS and PepsiCo; the
timing to consummate the proposed acquisitions and any necessary actions to
obtain required regulatory approvals; the diversion of management time on
transaction-related issues; changes in demand for PepsiCo’s products, as a
result of shifts in consumer preferences or otherwise; increased costs,
disruption of supply or shortages of raw materials and other supplies;
unfavorable economic conditions
and increased volatility in foreign exchange rates; PepsiCo’s ability to build
and sustain proper information technology infrastructure, successfully implement
its ongoing business process transformation initiative or outsource certain
functions effectively; damage to PepsiCo’s reputation; trade consolidation, the
loss of any key customer, or failure to maintain good relationships with
PepsiCo’s bottling partners, including as a result of the proposed acquisitions;
PepsiCo’s ability to hire or retain key employees or a highly skilled and
diverse workforce; changes in the legal and regulatory environment; disruption
of PepsiCo’s supply chain; unstable political conditions, civil unrest or other
developments and risks in the countries where PepsiCo operates; and risks that
benefits from PepsiCo’s Productivity for Growth initiative may not be achieved,
may take longer to achieve than expected or may cost more than currently
anticipated.
For
additional information on these and other factors that could cause PepsiCo’s
actual results to materially differ from those set forth herein, please see
PepsiCo’s filings with the SEC, including its most recent annual report on Form
10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not
to place undue reliance on any such forward-looking statements, which speak only
as of the date they are made. All information in this communication is as of
August 4, 2009. PepsiCo undertakes no obligation to update any forward-looking
statements, whether as a result of new information, future events or
otherwise.
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