We have built a track record of consistent growth. At the end of 2004, we were crystal clear about our priorities: reestablish volume growth, moderately increase pricing, invest strategically, and continue to generate strong cash flow. In 2005, we did just that.

• We delivered volume growth of 6.5 percent, driven by the successful integration of Central Investment Corporation (CIC) and good volume contribution from our international operations.
• We delivered increased net selling price of 3.9 percent, which lead to net sales of more than $3.7 billion.
• We delivered adjusted return on invested capital* of 7.7 percent, an increase of 40 basis points.
• We delivered strong adjusted operating cash flow* of over $240 million.
• And finally, we delivered this cash to you, our shareholders, through increased dividends and share repurchases.

With top line growth as a clear focus, PepsiAmericas delivered. We realigned our selling initiatives behind non-carbonated beverages and saw this dynamic and growing category increase 16 percent from last year. We leveraged our scale to introduce new categories to our customers, increasing the non-carbonated category mix to 14 percent of our portfolio, up from 12 percent in 2004.

With so much focus on the growing non-carbonated segment of the liquid refreshment beverage category, it's possible to forget that carbonated soft drinks still account for 86 percent of our portfolio. PepsiAmericas has built dominant brands, with either the No. 1 or No. 2 share position with Pepsi, Mountain Dew, Aquafina, Tropicana and our energy line-up. And we intend to keep it that way.

And while the U.S. represents 85 percent of our revenue, we know that our future growth will come increasingly from international markets.

We expanded in 2005, effectively integrating our new CIC territories. CIC has proven to be a prudent acquisition, contributing meaningful top line growth and operating profit to PepsiAmericas in its first year.

We broadened our international portfolio. In early 2005, we began distributing Frito Lay snacks in Hungary, learning from the prior year rollout in the Czech Republic. In June, we signed an agreement with the Romanian Pepsi bottler to acquire nearly half of their stock with an option to become a bigger shareholder in the future. In the following month, our Polish team completed a deal to become the sole distributor for Beck's beer in Poland.

While these deals may seem small on their own, they reflect an evolution within PepsiAmericas that more fully utilizes our assets and capability for greater growth.

The entire organization did a tremendous job of managing costs in 2005. Faced with higher raw material and transportation costs, we found new and creative ways to reduce the number of miles driven, increase drop sizes, and optimize our supply chain.

Internationally, we continued to take costs out of the system by consolidating production facilities in Central Europe and blowing our own bottles in Puerto Rico to streamline the production process.

As an organization we are flexible and nimble. We have demonstrated our ability to adjust and respond to a changing marketplace, higher raw material and fuel costs, as well as Mother Nature.

These strategies paid off for PepsiAmericas. Operating income rose 15.8 percent versus the prior year to $393.4 million. For the year, net income was $194.7 million, or diluted earnings per share (EPS) of $1.42. EPS was up almost 11 percent from 2004.

Looking ahead, we're confident in our ability to continue to deliver value. We know that continuing to increase shareholder value is dependent upon stronger revenue growth from an improved balance between volume growth and pricing strength. It rests on our ability to maintain the long-standing strength and dominance of our Pepsi and Mountain Dew trademarks, and translate that dominance to the breadth of our portfolio and those products that are increasingly the choice of our consumers. Focusing on cost control and leveraging our assets to maintain our strong cash flow and continuing the steady improvement in our return on invested capital are ongoing and important objectives.

Strategically, we will look further strengthen our position within the Pepsi system and our industry as we continue to source longer-term growth. We will continue to meet the expectations of our customers by evolving our go-to-market system, while concurrently anticipating and satisfying the tastes of our consumers through an even more robust portfolio of products. Our growth plans are consistent with the lifestyle, refreshment and wellness focus to which the Pepsi system is committed.

It is my belief that PepsiAmericas is a special organization. We have great products and a strong partnership with PepsiCo, one of the world's leading consumer product companies. However, what makes PepsiAmericas truly special is the quality of our people. Their support and participation in a culture built on responsibility and doing things the right way is the foundation of our success.

We are committed to executing our plans in 2006 and the strategy necessary to exceed the expectations of the people we work for, you, our shareholders. You have my commitment that we will continue to deliver... every day.