Pepsi Prospectus - Ipo

The prospectus is being displayed in the website to make the prospectus accessible to more
investors. The Philippine Stock Exchange (PSE) assumes no responsibility for the correctness of
any of the statements made or the opinions or reports expressed in the prospectus. Furthermore, the
PSE makes no representation as to the completeness of the prospectus and disclaims any liability
whatsoever for any loss arising from or in reliance in whole or in part on the contents of the
prospectus.
The offering information on this Web site is intended to be available only to Philippine and
non-Philippine citizens residing in the Philippines or corporations or judicial entities organized and
existing under Philippine law, and is not intended for distribution in the United States or to U.S.
persons (as such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended
(the "U.S. Securities Act")). The information contained in this Web site may not be published or
distributed, directly or indirectly, into the United States and this information (including the
preliminary and final Prospectus) and does not constitute an offer of Offer Shares for sale in the
United States or to, or for the account or benefit of, U.S. persons. The Offer Shares described in the
Prospectus have not been, and will not be, registered under U.S. Securities Act or with any
securities regulatory authority of any state or other jurisdiction in the United States and may not be
offered or sold, directly or indirectly, into the United States or to, or for the account or benefit of,
U.S. persons unless the Offer Shares are so registered or an exemption from the registration
requirements is available. There will be no public offer of the Offer Shares mentioned herein in the
United States.
THIS PROSPECTUS IS TO BE USED EXCLUSIVELY FOR THE DOMESTIC OFFER AND IS
NOT INTENDED TO BE VIEWED BY NON-PHILIPPINE RESIDENTS.
Prospectus
January 19, 2008
Pepsi-Cola Products Philippines, Inc.

(incorporated with limited liability in the Republic of the Philippines)
Primary and Secondary Offer of 1,142,348,680 Common Shares

Offer Price of =
P3.50 per Offer Share
to be listed and traded on the First Board of the Philippine Stock Exchange, Inc.
Sole Global Coordinator, Bookrunner and International Underwriter
UBS Investment Bank

Joint Domestic Lead Underwriters
ATR KimEng Capital Partners, Inc.
BDO Capital & Investment Corporation
Domestic Participating Underwriters

ING Bank N.V., Manila Branch
AB Capital and Investment Corporation
RCBC Capital Corporation
Multinational Investment Bancorporation
Unicapital, Inc.
PEPSI-COLA PRODUCTS PHILIPPINES, INC.

KM. 29 NATIONAL ROAD, TUNASAN
MUNTINLUPA CITY
PHILIPPINES 1773
TELEPHONE NUMBER: (632) 850 7901
This Prospectus relates to the offer and sale of 1,142,348,680 common shares (the Firm Offer, and such shares,
the Firm Shares), par value of P
=0.15 per share (the Shares), of Pepsi-Cola Products Philippines, Inc., a
corporation organized under Philippine law. The Firm Shares will comprise (i) 380,782,893 new Shares to be
issued and offered by us by way of a primary offer (the Primary Offer, and such Shares, the Primary Offer
Shares) as further described below and (ii) 761,565,787 existing Shares offered by Guoco Assets (Philippines),
Inc. and The Nassim Fund (the Selling Shareholders) pursuant to a secondary offer (the Secondary Offer),
and such Shares, the Secondary Offer Shares). The Nassim Fund has granted UBS AG, acting through its
business group, UBS Investment Bank, in its role as stabilizing agent (the Stabilizing Agent), an option
exercisable in whole or in part from and including the date of listing and when trading of the Firm Shares
commences (the Listing Date) on the Philippine Stock Exchange (the PSE) and ending on the date 30 days
from the date of this Prospectus, to purchase up to an additional 171,352,302 Shares at the Offer Price (the
Optional Shares, and together with the Firm Shares, the Offer Shares), on the same terms and conditions
as the Firm Shares as set forth in this Prospectus, solely to cover over-allotments, if any (the Over-Allotment
Option). The offer of the Offer Shares, including the Optional Shares, is referred to as the Offer. The Optional
Shares will be sold as part of the International Offer (as defined below). See Plan of Distribution.
The Offer Shares shall be offered at a price of P
=3.50 per Offer Share (the Offer Price). The determination of
the Offer Price is further discussed on page 31 of this Prospectus. An estimated total of 3,693,772,279 Shares will
be outstanding after the Offer. The total proceeds to be raised by us and the Selling Shareholders from the sale
of Firm Shares will be P
=3,998,220,380. We will not receive any proceeds from Shares sold on the exercise of the
Over-Allotment Option.
Our estimated net proceeds from the Primary Offer, after deducting estimated underwriting discounts,
commissions and estimated offering expenses payable by us, will be approximately P
=1,196 million. For a more
detailed discussion on the proceeds from the Firm Offer and our proposed use of proceeds, please see Use of
Proceeds on page 27 of this Prospectus.
Each holder of Shares will be entitled to such dividends as may be declared by our Board of Directors (the
Board), provided that any stock dividends declaration requires the approval of shareholders holding at least
two-thirds of our total outstanding capital stock. The Corporation Code of the Philippines, Batas Pambansa Blg.
68 (the Philippine Corporation Code) has defined outstanding capital stock as the total shares of stock
issued, whether paid in full or not, except for treasury shares. Dividends may be declared only from our
unrestricted retained earnings. See Dividends and Dividend Policy on page 29 of this Prospectus.
342,704,000 of the Offer Shares (the Domestic Offer Shares) are being offered and sold by us and Guoco
Assets (Philippines), Inc. at the Offer Price in the Philippines (the Domestic Offer). 228,361,000 of the
Domestic Offer Shares are being offered to all of the trading participants of the PSE (the PSE Brokers) and up
to 114,343,000 of Domestic Offer Shares are being offered to local small investors (Local Small Investors) in
the Philippines. ATR KimEng Capital Partners, Inc. (ATR KimEng) and BDO Capital & Investment
Corporation (BDO Capital and together with ATR KimEng, the Joint Domestic Lead Underwriters) will act
as the Joint Domestic Lead Underwriters of the Domestic Offer. Details regarding the commission to be received
by the Joint Domestic Lead Underwriters can be found under Plan of Distribution on page 132 of this
Prospectus. Prior to the closing of the Domestic Offer, any allocation of Domestic Offer Shares not taken up by
the PSE Brokers and Local Small Investors shall be distributed by the Domestic Underwriters to their respective
clients or the general public. Domestic Offer Shares not taken up by the PSE Brokers, the Local Small Investors
and the Joint Domestic Lead Underwriters clients or the general public shall be purchased by the Joint Domestic
Lead Underwriters.
799,644,680 of the Offer Shares (the International Offer Shares) are being offered and sold outside the
Philippines and the United States by UBS AG, acting though its business group, UBS Investment Bank (UBS AG
or the International Underwriter) to non-U.S. persons in reliance on Regulation S (Regulation S) under the
United States Securities Act of 1933, as amended (the U.S. Securities Act) and within the United States by the
International Underwriter to qualified institutional buyers (QIBs) in reliance on Rule 144A (Rule 144A)
under the U.S. Securities Act (the International Offer). The Optional Shares will be sold as part of the
International Offer.
All of the Shares issued and to be issued pursuant to the Offer have, or will have, identical rights and privileges.
The Shares may be owned by any person or entity regardless of citizenship or nationality, subject to the
nationality limits under Philippine law. See Terms and Conditions of the Domestic Offer and Philippine
Foreign Exchange and Foreign Ownership Controls.
The allocation of the Offer Shares between the Domestic Offer and the International Offer is subject to
adjustment. In the event of an under-application in the International Offer and a corresponding over-application
in the Domestic Offer, Offer Shares in the International Offer may be reallocated to the Domestic Offer (in an
amount to be agreed by the Company, the Joint Domestic Lead Underwriters and the International Underwriter).
If there is an under-application in the Domestic Offer and if there is a corresponding over-application in the
International Offer, Offer Shares in the Domestic Offer may be reallocated to the International Offer (in an
amount to be agreed by the Company, the Joint Domestic Lead Underwriters and the International Underwriter).
The reallocation shall not apply in the event of over-application in both the Domestic Offer and the International
Offer.
Certain points characterizing the risks of participating in the offer are set forth in the section entitled Risk
Factors beginning on page 16. This includes a discussion of certain factors to be considered in connection with
an investment in the Offer Shares.
An application for listing of the Shares was approved on October 10, 2007 by the board of directors of the PSE,
subject to the fulfillment of certain listing conditions. The PSE assumes no responsibility for the correctness of
any statements made or opinions expressed in this Prospectus. The PSE makes no representation as to its
completeness and expressly disclaims any liability whatsoever for any loss arising from reliance on the entire or
any part of this Prospectus. Such approval for listing is permissive only and does not constitute a
recommendation or endorsement of the Shares by the PSE or the Securities and Exchange Commission of the
Philippines (the Philippine SEC).
Prior to the Offer, there has been no public market for the Shares. Accordingly, there has been no market price
for the Shares derived from day-to-day trading.
Application has been made to the Philippine SEC to register the Offer Shares under the provisions of the
Securities Regulation Code of the Philippines (Republic Act No. 8799) (the SRC).
ALL REGISTRATION REQUIREMENTS HAVE BEEN MET AND ALL INFORMATION CONTAINED
HEREIN IS TRUE AND CORRECT.
The Offer Shares are offered subject to receipt and acceptance of any order by us and the Selling Shareholders
and subject to their respective right to reject any order in whole or in part. It is expected that the Offer Shares
will be delivered in book-entry form against payment to the Philippine Depository and Trust Corporation (the
PDTC) on or about February 1, 2008.
(original signed)
Micky M. S. Yong
Chief Executive Officer
ii
This Prospectus includes forward-looking statements. We have based these forward-looking statements largely
on our current expectations and projections about future events and financial trends affecting our business.
Words including, but not limited to, believes, may, will, estimates, continues, anticipates,
intends, expects and similar words are intended to identify forward-looking statements. In light of these
risks and uncertainties associated with forward-looking statements, investors should be aware that the
forward-looking events and circumstances discussed in this Prospectus might not occur. Our actual results could
differ substantially from those anticipated in our forward-looking statements.
No representation or warranty, express or implied, is made by the International Underwriter or the Joint
Domestic Lead Underwriters as to the accuracy or completeness of the information herein and nothing contained
in this Prospectus is, or shall be relied upon as, a promise or representation by the International Underwriter or
the Joint Domestic Lead Underwriters. Any reproduction or distribution of this Prospectus, in whole or in part,
and any disclosure of its contents or use of any information herein for any purpose other than considering an
investment in the Offer Shares is prohibited. Each offeree of the Offer Shares, by accepting delivery of this
Prospectus, agrees to the foregoing.
No person has been or is authorized to give any information or to make any representation concerning us or our
affiliates, the Selling Shareholders or the Offer Shares, which is not contained in this Prospectus and any
information or representation not so contained herein must not be relied upon as having been authorized by us,
the Selling Shareholders, the International Underwriter or the Joint Domestic Lead Underwriters. Neither the
delivery of this Prospectus nor any offer, sale or delivery made in connection with the Offer shall at any time or
in any circumstances imply that the information contained herein is correct as at any time subsequent to its date
or constitute a representation that there has been no change or development reasonably likely to involve a
material adverse change in our affairs since the date hereof.
Market data and certain industry forecasts used throughout this Prospectus were obtained from internal surveys,
market research, publicly available information and industry publications. Certain information with respect to
market share is based in part on data reported by AC Neilsen through its Retail Index Service for the period to
September 2007. AC Neilsen holds the copyright for such data. Industry publications generally state that the
information contained therein has been obtained from sources believed to be reliable, but that the accuracy and
completeness of such information is not guaranteed. Similarly, internal surveys, industry forecasts and market
research, while believed to be reliable, have not been independently verified, and neither us, the Selling
Shareholders nor the Underwriters make any representation as to the accuracy of such information.
In connection with the Offer, the Stabilizing Agent may effect price stabilization transactions for a period
beginning on or after the Listing Date but extending no later than 30 days from the date of this Prospectus. The
Stabilizing Agent may purchase Shares in the open market only if the market price of the Shares is below the Offer
Price. This may have the effect of preventing a decline in the market price of the Shares and may also cause the
price of the Shares to be higher than the price that otherwise would exist in the open market in the absence of
these transactions. If the Stabilizing Agent commences any of these transactions, it may discontinue them at any
time. The Stabilizing Agent is required to disclose to the Philippine SEC any of the foregoing price stabilization
transactions.
CONVENTIONS APPLYING TO THIS PROSPECTUS
In this Prospectus, the terms we, our, us, the Company and PCPPI refer to Pepsi-Cola Products
Philippines, Inc.
In this Prospectus, unless otherwise specified or the context otherwise requires, all references to the Philippines
are references to the Republic of the Philippines. All references to the Government herein are references to the
Government of the Republic of the Philippines. All references to the BSP are references to Bangko Sentral ng
Pilipinas, the central bank of the Philippines. All references to United States or U.S. herein are to the United
States of America. All references to peso and P
= herein are to the lawful currency of the Philippines and all
references to U.S. dollar or U.S.$ herein are to the lawful currency of the United States.
For convenience, certain peso amounts have been translated into U.S. dollar amounts, based on the exchange rate
on September 28, 2007 of P
=45.063 = U.S.$1.00, being the weighted average rate for that date for the purchase
of U.S. dollars with pesos under the Philippine Dealing System (the PDS) and published in the Reference
iii
Exchange Rate Bulletin by the BSP (the BSP Rate). Such translations should not be construed as
representations that the peso or U.S. dollar amounts referred to could have been, or could be, converted into
pesos or U.S. dollars, as the case may be, at that or any other rate or at all. For further information regarding
rates of exchange between the peso and the U.S. dollar, see Exchange Rates. Figures in this Prospectus have
been subject to rounding adjustments. Accordingly, figures shown for the same item of information may vary and
figures which are totals may not be an arithmetic aggregate of their components. On January 18, 2008, the BSP
Rate was P
=40.959 = U.S.$1.00.
PRESENTATION OF FINANCIAL INFORMATION
Unless otherwise stated, all financial information relating to us and our subsidiaries contained herein is stated in
accordance with Philippine Financial Reporting Standards (PFRS).
In this Prospectus, references to fiscal 2005, fiscal 2006 and fiscal 2007 refer to the fiscal years ended June
30, 2005, June 30, 2006 and June 30, 2007, respectively. Manabat Sanagustin & Co. (MS & Co.), a member
practice of KPMG, has audited and rendered an unqualified audit report on our consolidated financial statements
for fiscal 2005 and fiscal 2006 and our financial statements for fiscal 2007. MS & Co. has also audited and
rendered an unqualified audit report on our interim financial statements for the three-month periods ended
September 30, 2006 and 2007.
Unless otherwise indicated, the description of our business activities in this Prospectus is presented on a
consolidated basis. For further information on our corporate structure, see Business Overview.
In this Prospectus, references to EBITDA are to net income after adding income tax expense, depreciation and
amortization and interest expense, references to EBITDA Margin are to EBITDA divided by net sales and
references to EBIT represent net income after adding income tax expense and interest expense. EBITDA,
EBITDA Margin and EBIT are not measures of performance under PFRS, and investors should not consider
EBITDA, EBITDA Margin or EBIT in isolation or as alternatives to net income as an indicator of our operating
performance or to cash flow from operating, investing and financing activities as a measure of liquidity, or any
other measures of performance under PFRS. Because there are various EBITDA, EBITDA Margin and EBIT
calculation methods, our presentation of these measures may not be comparable to similarly titled measures used
by other companies.
iv
TABLE OF CONTENTS
Page
Page
Glossary of Terms . . . . . . . . . . . . . . . . . . .
Regulation . . . . . . . . . . . . . . . . . . . . . . . .
84
Summary . . . . . . . . . . . . . . . . . . . . . . . . .
Board of Directors and Senior Management .
89
Summary of the Offer . . . . . . . . . . . . . . . .
Related Party Transactions . . . . . . . . . . . . .
96
Summary Financial Information . . . . . . . . .
13
Risk Factors . . . . . . . . . . . . . . . . . . . . . . .
16
Use of Proceeds . . . . . . . . . . . . . . . . . . . . .
27
Dividends and Dividend Policy . . . . . . . . . .
29
Exchange Rates . . . . . . . . . . . . . . . . . . . . .
30
Determination of Offer Price . . . . . . . . . . .
31
Capitalization . . . . . . . . . . . . . . . . . . . . . .
32
Dilution . . . . . . . . . . . . . . . . . . . . . . . . . .
33
Selected Financial Information . . . . . . . . . .
34
Principal and Selling Shareholders . . . . . . . . 101

Description of Share Capital . . . . . . . . . . . . 104
Description of Properties . . . . . . . . . . . . . . 113
Material Contracts . . . . . . . . . . . . . . . . . . 115
The Philippine Stock Market . . . . . . . . . . . 122
Philippine Foreign Exchange and Foreign
Ownership Controls . . . . . . . . . . . . . . . . 126
Philippine Taxation . . . . . . . . . . . . . . . . . . 128
Plan of Distribution . . . . . . . . . . . . . . . . . . 132
Managements Discussion and Analysis of

Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . .
37
Independent Public Accountants . . . . . . . . . 136
Business . . . . . . . . . . . . . . . . . . . . . . . . . .
57
Industry . . . . . . . . . . . . . . . . . . . . . . . . . .
71
Financial Statements and Independent

Auditors Reports . . . . . . . . . . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . . . . . . . . 135
F-1
Glossary of Terms
In this Prospectus, unless the context otherwise requires, the following terms shall have the meanings set out
below.
Application ........................................
An application to subscribe for Offer Shares pursuant to the Firm Offer
ATR KimEng .....................................
Banking Day ......................................
A day other than a Saturday or Sunday on which banks are open for
business in Metro Manila
BDO Capital ......................................
BIR .....................................................
Bureau of Internal Revenue
Board .................................................
Our Board of Directors
BSP .....................................................
Bangko Sentral ng Pilipinas, the central bank of the Philippines
BSP Rate ............................................
The weighted average rate for a specific date for the purchase of U.S.
dollars with pesos
Company or PCPPI ...........................
Crossing Date ....................................
The date when the sale of the Secondary Offer Shares by the Selling
Shareholders to investors shall be crossed through the facilities of the
PSE
Domestic Offer ..................................
342,704,000 Offer Shares to be offered by us and Guoco Assets

(Philippines), Inc. to the public in the Philippines
Domestic Offer Period .......................
From 9:00 a.m., Manila time, on January 21, 2008 to 11:00 a.m.,
Manila time, on January 28, 2008, or such other period as may be
agreed between us and the Joint Domestic Lead Underwriters, subject
to approval by the Philippine SEC and the PSE
Domestic Offer Shares .......................
The Offer Shares that are being offered by us and Guoco Assets
(Philippines), Inc. in the Philippines relating to the Domestic Offer
Domestic Participating Underwriters
ING Bank N.V., Manila Branch, AB Capital and Investment

Corporation, RCBC Capital Corporation, Multinational Investment
Bancorporation and Unicapital, Inc.
Domestic Receiving Agent .................
Stock Transfer Service, Inc.
Domestic Receiving Bank ...................
Citibank N.A.
Domestic Selling Agent ......................
Trading Participants of the PSE
Domestic Underwriters ......................
The Joint Domestic Lead Underwriters and the Domestic Participating

Underwriters
Domestic Underwriting Agreement ...
Agreement to be dated on or about January 21, 2008 among us, Guoco

Assets (Philippines), Inc. and the Domestic Underwriters
Eight-ounce case equivalents ..............
A standardized measure of beverage volume, being the volume

contained in a case of 24 eight-ounce bottles (approximately 5.7 liters)
Firm Offer .........................................
The offer and sale of 1,142,348,680 Shares by us and the Selling

Shareholders
Firm Shares ........................................
The Shares relating to the Firm Offer
First Board .........................................
The First Board of the Philippine Stock Exchange
First Closing Date ..............................
Date of delivery of the Firm Shares, which is expected to occur in

Manila on or about February 1, 2008, or such other date as the
Underwriters and we shall agree in writing
FRSC .................................................
The Philippine Financial Reporting Standards Council

1
Glossary of Terms
GDP ....................................................
The Gross Domestic Product of the Philippines, which is a measure of

economic activity compiled by the Philippines National Statistical
Coordination Board
Government .......................................
The Government of the Republic of the Philippines
Guoco Group ....................................
Guoco Group Limited and its subsidiaries, including our shareholders

Guoco Assets (Philippines), Inc. and Hong Way Holdings, Inc.
International Offer .............................
799,644,680 Offer Shares that are being offered by us and the Selling
Shareholders and sold outside the Philippines and the United States to:
(i) non-U.S. persons in reliance on Regulation S under the U.S.
Securities Act; and (ii) in the United States to QIBs in reliance on Rule
144A under the U.S. Securities Act. For the avoidance of doubt, the
Optional Shares will be offered as part of the International Offer
International Offer Shares .................
The Shares that are being offered by us and the Selling Shareholders
relating to the International Offer
International Underwriter ..................
UBS AG, acting through its business group, UBS Investment Bank
International Underwriting
Agreement ..........................................
Underwriting agreement to be dated on or about January 19, 2008

between us, Guoco Securities (Bermuda) Limited, the Selling
Shareholders and the International Underwriter
Joint Domestic Lead Underwriters ....
ATR KimEng Capital Partners, Inc. and BDO Capital & Investment
Corporation
Listing Date .......................................
The date of listing and when the trading of our Firm Shares commences
Local Small Investors .........................
Subscribers or purchasers of the Domestic Offer Shares who are willing

to subscribe or purchase 1,000 Offer Shares under the Local Small
Investors Program
Manual ..............................................
Our Manual on Corporate Governance adopted by our Board of

Directors on June 21, 2007 and filed with the Philippine SEC on
December 10, 2007
Nadeco Realty ...................................
Nadeco Realty Corporation
Offer ..................................................
The offer of the Offer Shares, including the Optional Shares, pursuant
to the Domestic Offer and the International Offer
Offer Shares .......................................
The Firm Shares and the Optional Shares
Optional Shares .................................
The Shares relating to the Over-Allotment Option
Over-Allotment Option .....................
An option granted by The Nassim Fund to the Stabilizing Agent,

exercisable within 30 days from the date of this Prospectus, to purchase
additional Shares comprising up to 15% of the Firm Shares to cover
over-allotments, if any
PAS ....................................................
Philippine Accounting Standards
PCD ....................................................
Philippine Central Depository
PDS ....................................................
Philippine Dealing System
PDTC .................................................
Philippine Depository and Trust Corp., the central securities depositary

of, among others, securities listed and traded on the PSE
PepsiCo ..............................................
PepsiCo, Inc., including its subsidiaries Quaker Global Investments

B.V. and PepsiCo Far East Trade Development Inc.
pesos or P
= ...........................................
The lawful currency of the Philippines
PET .....................................................
Polyethylene terephthalate, a type of plastic
PFRS ..................................................
Philippine Financial Reporting Standards
Glossary of Terms
Philippine Constitution or
Constitution .......................................
The Constitution of the Republic of the Philippines
Philippine Corporation Code ............
Batas Pambansa Blg. 68, otherwise known as The Corporation Code

of the Philippines
Philippine GAAS ................................
Generally accepted auditing standards in the Philippines
Philippine National ............................
As defined under Republic Act No. 7042, as amended, otherwise

known as the Foreign Investments Act of the Philippines, means a
citizen of the Philippines, or a domestic partnership or association
wholly owned by citizens of the Philippines, or a corporation organized
under the laws of the Philippines of which at least 60% of the capital
stock outstanding and entitled to vote is owned and held by citizens of
the Philippines, or a corporation organized abroad and registered to do
business in the Philippines under the Philippine Corporation Code, of
which 100% of the capital stock outstanding and entitled to vote is
wholly owned by citizens of the Philippines or a trustee of funds for
pension or other employee retirement or separation benefits, where the
trustee is a Philippine National and at least 60% of the funds will
accrue to the benefit of Philippine Nationals
Philippine SEC ...................................
The Securities and Exchange Commission of the Philippines
Philippines...........................................
Republic of the Philippines
PSE .....................................................
The Philippine Stock Exchange, Inc.
PSE Brokers .......................................
The trading participants of the PSE in the Philippines
QIBs ....................................................
Qualified institutional buyers within the meaning of Rule 144A
Regulation S........................................
Regulation S under the U.S. Securities Act
RGBs...................................................
Returnable glass bottles
Rule 144A...........................................
Rule 144A under the U.S. Securities Act
S&P ...................................................
Standard & Poors Ratings Services, a division of the McGraw-Hill

Companies, Inc.
SARS ..................................................
Severe Acute Respiratory Syndrome
Secondary Offer..................................
761,565,787 existing Shares offered by the Selling Shareholders
Selling Shareholders ............................
Guoco Assets (Philippines), Inc. and The Nassim Fund
Shares..................................................
Our shares of common stock, par value =

P0.15 per share
SRC ....................................................
Republic Act No. 8799, otherwise known as The Securities

Regulation Code of the Philippines, as amended from time to time,
and including the rules and regulations issued thereunder
Stabilizing Agent ................................
Stock Transfer Agent .........................
Stock Transfer Service, Inc.
Subsidiary ..........................................
A company in which we own, directly or indirectly, at least a majority

of the outstanding capital stock
Trading Participants ..........................
Member brokers of the PSE
Underwriters ......................................
The Domestic Underwriters and the International Underwriter
United States or U.S. .........................
The United States of America
U.S.$ or U.S. dollar ............................
The lawful currency of the United States of America
U.S. Securities Act...............................
The United States Securities Act of 1933, as amended
VAT.....................................................
Value-added tax
Summary
This summary highlights information contained elsewhere in this Prospectus. This summary is qualified in its
entirety by more detailed information and financial statements, including notes thereto, appearing elsewhere in
this Prospectus. For a discussion of certain matters that should be considered in evaluating an investment in the
Offer Shares, see Risk Factors. Investors are advised to read this entire Prospectus carefully, including our
financial statements and related notes contained herein.
OVERVIEW
We are the licensed bottler of PepsiCo beverages in the Philippines. We manufacture a range of carbonated and
non-carbonated beverages and distribute them to retail outlets throughout the Philippines. Our portfolio of
products includes cola and flavored carbonated beverages, including low-calorie derivatives, as well as juices,
iced teas, sports drinks and energy drinks. Our brands include well-known beverage brands such as Pepsi, Diet
Pepsi, Pepsi Max, 7Up, Diet 7Up, Mountain Dew, Gatorade, Lipton Iced Tea, Tropicana, Propel and Sting. In
fiscal 2007, we sold 120.4 million eight-ounce case equivalents of carbonated beverages and 12.1 million
eight-ounce case equivalents of non-carbonated beverages.
We manufacture and package our products at 11 production plants throughout the Philippines, and distribute
them through 101 warehouses and 99 sales offices (generally co-located), together with an extensive third party
distribution network, to approximately 275,000 outlets, including supermarkets, restaurants, bars, and small
grocery stores. Most of our carbonated beverages and some of our non-carbonated beverages are sold in
returnable glass bottles, or RGBs, which are returned to the retailer upon consumption of the beverage for
repayment of a deposit and subsequently collected, washed and reused.
Pepsi-Cola has been continuously manufactured in the Philippines since 1946, when the business that we now
operate was first established. We were incorporated on March 8, 1989 when the business was acquired by
interests associated with the Lorenzo family. Affiliates of the Guoco Group acquired the company in 1997 and
sold a minority stake to PepsiCo, Inc. in 1998. The Guoco Group currently holds 40.3%. PepsiCo holds 32.9%.
Our other minority shareholders include The Nassim Fund, which holds 21.6%, and Orion Land, Inc., which
holds 4.5%. Other small shareholders, including certain executives and employees, own the remaining 0.7%. For
information regarding our expected shareholder structure following completion of this offering, see Principal
and Selling Shareholders. We have not, in the past three years, been a party to any material reclassification,
merger, consolidation or purchase or sale of a significant amount of assets.
COMPETITIVE STRENGTHS
We believe that our competitive strengths include:
Strong relationship with PepsiCo in addition to licensing us to produce PepsiCo products, PepsiCo
provides us with marketing support and contributes the benefit of its global experience and expertise in
production and distribution. PepsiCo has an active product development program. We are able to access
PepsiCos new products for the Philippines market, so that we do not need to make large product
development expenditures. We, PepsiCo and certain PepsiCo affiliates have entered into a new 10-year
Exclusive Bottling Appointment, dated as of April 11, 2007. A particular benefit of the agreement is that
it provides for fixed pricing (as a percentage of the sales price of the finished product) for beverage
concentrates, locking in a major component of our cost of goods sold at what we believe is a favorable rate.
Note, however, that PepsiCo could terminate the agreement early if we commit certain breaches. See
Relationship with PepsiCo and Risk Factors Because we produce our products under licenses from
PepsiCo and depend upon PepsiCo to provide us with concentrates, marketing support and access to new
products, changes in our relationship with PepsiCo could adversely affect our business and financial
results.
The brands we license from PepsiCo include some of the worlds best-known brands, including Pepsi, Pepsi
Max, Pepsi Light, Mountain Dew, 7Up, Diet 7Up and Gatorade. We license Liptons Iced Tea from a
PepsiCo/Unilever joint venture. There is a high degree of awareness of global brands in the Philippines, due
in part to the prevalence of the English language, the consumption of Western, and particularly U.S., media
and entertainment and the large numbers of Philippine citizens who work overseas or have relatives who
do so. Pepsi has been continuously marketed in the Philippines for the last 61 years. We believe that our
high brand recognition enables us to sell more products with a lower marketing cost than a competitor with
lesser-known brands. PepsiCo named us its 2006 Pepsi Bottler of the Year Asia.
Strong portfolio of non-carbonated beverage products we entered the non-carbonated beverage

market in 2004, and since then, we have introduced five new brands in the Philippines, including
Tropicana, Gatorade, and Lipton Iced Tea, and launched over 80 new products (including new flavors,
packages and sizes) in new categories including juices, iced teas, sports drinks, energy drinks and vitamin
waters. We believe that our ability to execute new brand and product launches, particularly in the
fast-growing non-carbonated beverage space, will be a key to our future success.
Established manufacturing and distribution platform a majority of the carbonated beverages

consumed in the Philippines are sold in RGBs, which results in more affordable products for consumers.
Selling RGBs requires significant capital investment in a float of RGBs and plastic shells and a capitaland labor-intensive distribution network that is able both to deliver products to the many small outlets
through which beverages are sold and collect empty RGBs for reuse. The RGB model also requires that
bottling plants are located nearby the markets they serve. Currently, we believe that only we and one other
competitor have an established platform for manufacturing and distributing beverages in RGBs throughout
the Philippines. We believe we have exhibited a proven ability to manage large-scale operations, quality
control mechanisms and supply chain relationships across our 11 locations throughout the country, and
that the cost and complexity involved in establishing such a platform represent significant barriers to entry
for potential competitors.
Experienced management team our senior management team has an average of over 18 years
experience in the beverages industry. Our CEO was previously a senior executive with the Guoco Group
and our CFO has been seconded to us by PepsiCo. We believe that the ability to draw from the deep
management pool that these major shareholders possess represents a significant additional competitive
advantage. Over recent years, our management has taken an active stance to build a strong organization
based on the solid foundation of our companys values. The Management Development Program and other
leadership training courses within Pepsi University allow for the development of future leaders within and
reinforce our succession planning program.
Stable financial base in recent years, we have consistently generated positive operational cash flow, and
as of September 30, 2007, had only P
=532.8 million of outstanding debt. As of September 30, 2007, our debt
to equity ratio was 15.4%. We believe that our stable cash flow and low debt give us a solid platform for
future growth, as well as the flexibility to weather future economic downturns.
STRATEGY
We have two principal strategic goals: to extract greater profitability out of our existing brands and production
assets by increasing our market share; and to diversify our product portfolio, in particular by capitalizing on the
growing demand for beverages associated with health and wellness by rolling out new products targeting these
categories.
The key elements of our strategy include:
Increase market share in carbonated beverages we aim to increase our share of the market for
carbonated beverages by increasing the reach of our distribution network. This will include a significant
investment in the infrastructure necessary to increase the number of outlets in which our products are sold,
including increasing our investment in RGBs, plastic cases and in-store refrigeration equipment. We believe
this is integral to increasing our market share in carbonated beverages and to expanding our
non-carbonated beverage business. Within the carbonated beverage category, we aim to defend our volume
and market share for regular cola while aggressively growing Mountain Dew, 7Up and non-sugar colas.
Increasing production capacity we intend to increase our production capacity by overcoming

approaching capacity constraints in our production of carbonated beverages and expanding our the
capacity to produce non-carbonated beverages, which we currently produce only at our Muntinlupa plant
5
in Metro Manila, at other plants. We intend to achieve both objectives by installing combi lines, capable
of producing both carbonated and non-carbonated beverages in both RGB and PET bottles, in at least four
of our plants outside Metro Manila by 2009. We believe that expanding production capacity at our other
plants will enable us to lower our freight and distribution costs. Using combi lines enables us to deploy
production capacity efficiently in response to changing demand.
Expanding our non-carbonated beverage portfolio as a response to increasing health awareness in

the Philippines, we have expanded our range of non-carbonated beverage products. We intend to further
diversify this range by continuing to add new products from the PepsiCo development pipeline and believe
that further growth is possible in the hydration sector with our sports and vitamin water beverage products.
In addition, we aim to capitalize on the strength of our Gatorade, Tropicana, Lipton and Propel brands and
to drive sales and profit by expanding these products into more affordable packaging formats. Ultimately,
our aim is to obtain and hold the number one or two market share ranking in each of our major
non-carbonated beverage product categories.
COMPANY INFORMATION
We are a Philippine corporation with our registered office and principal executive offices located at Km. 29,
National Road, Tunasan, Muntinlupa City, 1773 Philippines. Our telephone number is +63-2-850-7901.
INFORMATION RELATING TO THE SHARES
Authorized number of Shares .................................................................................................... 5,000,000,000
Shares outstanding before the Offer .......................................................................................... 3,312,989,386
Shares outstanding after the Offer .............................................................................................. 3,693,772,279
P12,928,202,977
Market Capitalization at the Offer Price of P
=3.50 Per Offer Share(1) .......................................=
Note:
(1)
Computed at the Offer Price of =
P3.50 per Offer Share multiplied by the equivalent number of Shares outstanding after the Offer. The
PSE computes market capitalization based on the number of listed shares multiplied by the market price.
Summary of the Offer

Issuer...................................................
Pepsi-Cola Products Philippines, Inc., a corporation organized under

the laws of the Philippines.
Selling Shareholders ............................
Guoco Assets (Philippines), Inc. and The Nassim Fund.
The Offer ............................................
Offer of Firm Shares, consisting of 380,782,893 new Shares to be

issued and offered by us, and 761,565,787 existing Shares to be offered
by the Selling Shareholders and an offer of up to 171,352,302 Optional
Shares pursuant to the Over-Allotment Option (as described below).
799,644,680 of the Firm Shares are being offered and sold outside the
Philippines and the United States to non-U.S. persons in reliance on
Regulation S under the U.S. Securities Act and within the United States
to QIBs in reliance on Rule 144A as part of the International Offer.
342,704,000 of the Firm Shares are being offered and sold to all of the
PSE Brokers and Local Small Investors as part of the Domestic Offer in
the Philippines. 228,361,000 of the Domestic Shares are being offered
and sold to PSE Brokers and 114,343,000 of the Domestic Offer Shares
are being sold to Local Small Investors. ATR KimEng and BDO Capital
will act as the Joint Domestic Lead Underwriters. Domestic Offer
Shares not taken up by the PSE Brokers and Local Small Investors will
be purchased by the Domestic Underwriters and sold to their respective
clients or the general public prior to the close of the Domestic Offer.
The Optional Shares will form part of the International Offer.
Offer Price ..........................................
=
P3.50 per Offer Share.
Over-Allotment Option.......................
The Nassim Fund has granted the Stabilizing Agent an option,

exercisable in whole or in part to purchase up to 171,352,302 Optional
Shares at the Offer Price, on the same terms and conditions as the Firm
Shares as set forth in this Prospectus, solely to cover over-allotments, if
any. The Over-Allotment Option is exercisable from and including the
Listing Date and ending on the date 30 days from the date of this
Prospectus. See Plan of Distribution The Over-Allotment Option.
Domestic Offer Period ........................
The Domestic Offer Period shall commence at 9:00 a.m., Manila time,
on January 21, 2008 and end at 11:00 a.m. (Manila time) on January
28, 2008. We and the Joint Domestic Lead Underwriters reserve the
right to extend or terminate the Domestic Offer Period with the
approval of the Philippine SEC and the PSE.
Applications must be received by the Domestic Receiving Agent not
later than 11:00 a.m. (Manila time) on January 25, 2008, with respect
to Applications to be submitted through the PSE Brokers and by Local
Small Investors, and not later than 1:00 p.m. (Manila time) on January
28, 2008 with respect to the Domestic Offer Shares to be applied for by
other domestic investors. Applications received thereafter or without
the required documents will be rejected. Applications shall be
considered irrevocable upon submission to the Domestic Selling Agent
or Domestic Underwriter, and shall be subject to the terms and
conditions of the offer as stated in this Prospectus and in the
Application. The actual purchase of the Domestic Offer Shares shall
become effective only upon the actual listing or crossing of the
Domestic Offer Shares on the PSE and upon the obligations of the
Domestic Underwriters under the Domestic Underwriting Agreement
becoming unconditional and not being suspended, terminated or
cancelled on or before the Listing Date or Crossing Date in accordance
with the provisions of such agreement.
Eligible Investors.................................
The Shares offered in the Domestic Offer may be purchased by any

natural person of legal age residing in the Philippines regardless of
nationality, or any corporation, association, partnership, trust account,
fund or entity residing in and organized under the laws of the
Philippines and/or licensed to do business in the Philippines, regardless
of nationality, subject to our right to reject an Application or reduce the
number of our Firm Shares applied for subscription or purchase if the
same will cause us to be in breach of the Philippine ownership
requirement under relevant Philippine laws.
Subscription to, and purchase of, the Firm Shares in certain
jurisdictions may be restricted by law. Foreign investors interested in
subscribing or purchasing the Firm Shares should inform themselves of
the applicable legal requirements under the laws and regulations of the
countries of their nationality, residence or domicile, and as to any
relevant tax or foreign exchange control laws and regulations affecting
them personally. Foreign investors, both corporate and individual,
warrant that their purchase of the Firm Shares will not violate the laws
of their jurisdiction and that they are allowed to acquire, purchase and
hold the Firm Shares.
Restrictions on Ownership .................
The Philippine Constitution and related statutes set forth restrictions

on foreign ownership of companies engaged in certain activities.
In connection with the ownership of private land, Section 7 of Article
XII of the Constitution, in relation to Section 3 of Article XII of the
Constitution and Chapter 5 of Commonwealth Act No. 141, states that
no private land shall be transferred or conveyed except to citizens of the
Philippines or to corporations or associations organized under the laws
of the Philippines at least 60% of whose capital is owned by such
citizens.
While we do not own land, we do have an equity interest in an affiliate
that directly owns land. See Business Properties. In the event,
however, that we decide to hold private land, we must comply with
Philippine law requirements that would constitute us as a Philippine
National and allow us to directly own private lands in the Philippines.
During that period, foreign ownership in us would be limited to a
maximum of 40% of our issued and outstanding capital stock entitled
to vote. Accordingly, we would not be permitted to allow the issuance
or the transfer of Shares to persons other than Philippine Nationals and
would not be able to record transfers in our books if such issuance or
transfer would result in our ceasing to be a Philippine National for
purposes of complying with the restrictions on foreign ownership
discussed above.
In addition, so long as the Exclusive Bottling Appointment granted by
PepsiCo and certain PepsiCo affiliates authorizing us to produce
PepsiCo beverages, or its replacement agreement is in effect, our articles
of incorporation and by-laws generally prohibit acquisitions of our
Shares that result in:
a change of control;
a manufacturer, bottler, seller or distributor of competing

beverages acquiring 10% or more of our Shares; or
20% or more of our Shares being acquired by any person other

than our current shareholders.
For more information relating to restrictions on the ownership of our

Shares, see the sections entitled Description of Share Capital, Risk
Factors and Philippine Foreign Exchange and Foreign Ownership
Controls.
Transfer Restrictions ...........................
The Offer Shares are initially being offered and sold within the United
States to QIBs in reliance on Rule 144A and outside the United States
to non-U.S. persons in reliance on Regulation S. The Offer Shares have
not been and will not be registered under the U.S. Securities Act and,
subject to certain exceptions, may not be offered or sold within the
United States or to, or for the benefit of, U.S. persons. See Plan of
Distribution The International Offer.
Dividends ...........................................
Any dividends we pay will be at the discretion of the Board after taking
into account our operations, earnings, financial condition, cash
requirements, investment opportunities, the availability of credit, and
other factors as the Board may consider relevant. In addition, our
payment of dividends will be subject to the provisions and procedures
of our articles of incorporation and by-laws. Subject to the foregoing,
our present policy is to pay up to 50% of our annual net income in
dividends. However, this policy may be subject to future revision.
Lock-up .............................................
We, Quaker Global Investments B.V., Hong Way Holdings, Inc., Orion
Land Inc. and the Selling Shareholders have each agreed with the
International Underwriter that, other than in connection with the
Over-Allotment Option and certain other exceptions, for a period of
180 days after the First Closing Date, neither us nor any person acting
on our behalf will, without the prior written consent of the
International Underwriter issue, offer, sell, contract to sell, pledge or
otherwise dispose of (or publicly announce any such issuance, offer,
sale or disposal of) any Shares or securities convertible or exchangeable
into or exercisable for Shares or warrants or other rights to purchase
Shares or any security or financial product whose value is determined
directly or indirectly by reference to the price of the underlying
securities, including equity swaps, forward sales and options. For more
information, see Plan of Distribution.
Use of Proceeds...................................
See Use of Proceeds for details of how the total net proceeds from the
Primary Offer will be applied.
Minimum Subscription .......................
Each Application must be for a minimum of 1,000 Firm Shares, and

thereafter, in multiples of 1,000 Firm Shares. Applications for multiples
of any other number of Shares may be rejected or adjusted to conform
to the required multiple, at our discretion.
Reallocation .......................................
The allocation of the Offer Shares between the Domestic Offer and the
International Offer is subject to adjustment. In the event of an
under-application in the International Offer and a corresponding
over-application in the Domestic Offer, Offer Shares in the
International Offer may be reallocated to the Domestic Offer (in an
amount to be agreed by the Company, the Joint Domestic Lead
Underwriters and the International Underwriter). If there is an
under-application in the Domestic Offer and if there is a corresponding
over-application in the International Offer, Offer Shares in the
Domestic Offer may be reallocated to the International Offer (in an
amount to be agreed by the Company, the Joint Domestic Lead
Underwriters and the International Underwriter). The reallocation
shall not apply in the event of over-application in both the Domestic
Offer and the International Offer.
Procedure for Application...................
Application forms to purchase Offer Shares in the Domestic Offer may

be obtained from any Domestic Underwriter or Domestic Selling Agent
listed in this Prospectus. All Applications shall be evidenced by the
application to purchase form, duly executed in each case by an
authorized signatory of the applicant and accompanied by one
completed signature card which, for corporate and institutional
applicants, should be authenticated by the corporate secretary, and the
corresponding payment for the Firm Shares covered by the Application
and all other required documents. The duly executed Application and
required documents should be submitted during the Domestic Offer
Period to the same office where it was obtained.
If the applicant is a corporation partnership or trust account, the
Application must be accompanied by the following documents:
A certified true copy of the applicants latest articles of

incorporation and by-laws and other constitutive documents
(each as amended to date) duly certified by its corporate
secretary;
A certified true copy of the applicants Philippine SEC certificate

of registration duly certified by its corporate secretary; and
A duly notarized corporate secretarys certificate setting forth the

resolution of the applicants board of directors or equivalent body
authorizing the purchase of the Firm Shares indicated in the
Application, identifying the designated signatories authorized for
the purpose, including his or her specimen signature, and
certifying to the percentage of the applicants capital or capital
stock held by Philippine Nationals.
Foreign corporate and institutional applicants who qualify as Eligible

Investors, in addition to the documents listed above, are required to
submit in quadruplicate, a representation and warranty stating that
their purchase of the Firm Shares to which their Application relates will
not violate the laws of their jurisdictions of incorporation or
organization, and that they are allowed, under such laws, to acquire,
purchase and hold the Firm Shares.
Payment Terms ...................................
The Firm Shares in the Domestic Offer must be paid for in full upon
submission of the Application. Payment must be made by a check
drawn against a bank in Manila to the order of Pepsi-Cola Products
Philippines, Inc. The check must be dated as of the date of submission
of the Application and crossed for deposit.
Acceptance/Rejection of Applications.
The actual number of Firm Shares that an applicant will be allowed to

purchase in the Domestic Offer is subject to the confirmation of the
Domestic Underwriter. Applications shall be subject to our final
approval. We reserve the right to accept or reject, in whole or in part,
any Application due to any grounds specified in the Domestic
Underwriting Agreement entered into by us, Guoco Assets
(Philippines), Inc. and the Joint Domestic Lead Underwriters.
Applications where checks are dishonored upon first presentation and
Applications which do not comply with the terms of the Domestic
Offer shall be rejected. Moreover, any payment received pursuant to
the Application does not mean our approval or acceptance of the
Application.
10
An Application, when accepted, shall constitute an agreement between

the applicant and us for the purchase of the Firm Shares at the time, in
the manner and subject to terms and conditions set forth in the
Application and those described in this Prospectus. Notwithstanding
the acceptance of any Application by the Joint Domestic Lead
Underwriters or their respective duly authorized representatives, acting
for or on behalf of us, the actual purchase by the applicant of the Firm
Shares will become effective only upon listing or crossing of the Firm
Shares on the PSE and upon the obligations of the Domestic
Underwriters under the Domestic Underwriting Agreement becoming
unconditional and not being suspended, terminated or cancelled, on or
before the Listing Date or Crossing Date, in accordance with the
provisions of such agreements. If such conditions have not been
fulfilled on or before the periods provided above, all application
payments will be returned to the applicants without interest and, in the
meantime, the said application payments will be held in a separate
bank account with the Domestic Receiving Bank.
Refunds...............................................
In the event that the number of Firm Shares to be received by an

applicant, as confirmed by the Domestic Underwriters, is less than the
number covered by its Application, or if an Application is rejected by
us, then the Joint Domestic Lead Underwriters shall refund, without
interest, within five banking days from the end of the Domestic Offer
Period, all, or a portion, of the payment corresponding to the number
of Firm Shares wholly or partially rejected. All refunds shall be made
through the Domestic Underwriters or Domestic Selling Agent with
whom the applicant has filed the Application, at the applicants risk.
Issuance and Transfer Taxes ..............
All standard taxes applicable to the issuance and transfer of the Offer
Shares by us and the Selling Shareholders, respectively, pursuant to the
Offer shall be for the account of us and the Selling Shareholders,
respectively.
Registration and Lodgment

of Shares with the PDTC....................
Registration of Foreign Investments ...
Restriction on Issuance
and Disposal of Shares .......................
Offer Shares purchased by applicants will be lodged with the PDTC.

The applicant must provide the information required for the PDTC
lodgment of the Offer Shares. The Offer Shares will be lodged with the
PDTC at least two trading days prior to Listing Date.
The BSP requires that investments in shares of stock funded by an
inward remittance of foreign currency be registered with the BSP if the
foreign exchange needed to service capital repatriation or dividend
remittance will be sourced from the Philippine banking system. The
registration with the BSP of all foreign investments in the Firm Shares
and the Optional Shares (if any) shall be the responsibility of the
foreign investor. See Philippine Foreign Investment, Foreign
Ownership and Exchange Controls.
Existing shareholders who own an equivalent of at least 10.0% of our
issued and outstanding Shares after the Offer are required under the
revised listing rules of the PSE applicable to companies applying for
listing on the PSE First Board, not to sell, assign or otherwise dispose of
their Shares for a minimum period of 180 days after the Listing Date.
Quaker Global Investments B.V. and Hong Way Holdings, Inc. are
covered by this lock-up requirement. This lock-up does not apply to the
Optional Shares.
11
Except for the issuance of Offer Shares pursuant to the Offer or Shares
for distribution by way of stock dividends and certain option grants
and issuances under employee incentive schemes, the PSE will require
us, as a condition to the listing of the Shares, not to issue new shares in
capital or grant any rights to or issue any securities convertible into or
exchangeable for, or otherwise carrying rights to acquire or subscribe
to, any shares in its capital or enter into any arrangement or agreement
whereby any new shares or any such securities may be issued for a
period of 180 days after the Listing Date. These restrictions are in
addition to the contractual lock-up described above.
Listing and Trading ............................
Our application for the listing of the Shares was approved by the PSE
on October 10, 2007. All of the Shares in issue or to be issued,
including the Offer Shares, are expected to be listed on the PSE on
February 1, 2008. Trading is expected to commence on the same date.
Tax Considerations .............................
See Taxation for further information on the tax consequences of the

purchase, ownership and disposition of the Offer Shares.
Expected Timetable.............................
The timetable of the Offer is expected to be as follows:

(dates provided below are dates in the Philippines)
Pricing and allocation of the
International Offer Shares...............................
January 19, 2008
PSE Brokers Commitment Period ..................
January 21-23, 2008
Joint Domestic Lead Underwriters

Offer Period ....................................................
January 21-28, 2008
Domestic Offer Settlement Date .....................
February 1, 2008
International Offer Settlement Date................
February 1, 2008
Listing Date and commencement of

trading on the PSE ..........................................
February 1, 2008
The dates included above are subject to market and other conditions
and may be changed.
Risk Factors ........................................
12
Prospective investors should carefully consider the risks connected with

an investment in the Offer Shares, certain of which are discussed in the
section of this Prospectus titled Risk Factors.
Summary Financial Information

The following tables present summary financial information for us and should be read in conjunction with the
auditors reports and with our financial statements and notes thereto contained in this Prospectus and the section
entitled Managements Discussion and Analysis of Financial Condition and Results of Operations. The
summary financial information presented below as of and for the years ended June 30, 2005 and 2006 was
derived from the consolidated financial statements of PCPPI, prepared in accordance with PFRS and audited by
MS & Co. The summary financial information as of and for the year ended June 30, 2007 was derived from the
financial statements of PCPPI, audited by MS & Co. and prepared in accordance with PFRS. The summary
financial information as of September 30, 2007 and for the three month periods ended September 30, 2006 and
2007 was derived from the financial statements of PCPPI, prepared in accordance with PFRS and audited by MS
& Co. The information below is not necessarily indicative of the results of future operations. Furthermore, the
translation of peso amounts to U.S. dollars is provided for convenience only. For additional information
regarding financial information presented in this Prospectus, see Presentation of Financial Information.
For the three months ended
For the years ended June 30,
2005
P
=
September 30,
2006
2007
2007(1)
2006
2007
2007(1)
P
=
P
=
U.S.$
P
=
P
=
U.S.$
(in millions, except per Share figures and where indicated)
Revenues
Net sales ...................................
Cost of goods sold....................
8,932.5
5,622.7
10,992.8
7,252.8
12,916.2
8,760.0
286.6
194.4
2,753.0
1,933.0
3,198.9
2,193.9
71.0
48.7
Gross Profit...............................
3,309.8
3,740.0
4,156.2
92.2
820.0
1,005.0
22.3
Operating Expenses
Selling and distribution.............
General and administrative.......
Marketing expenses ..................
1,224.9
507.5
524.2
1,434.7
536.3
424.1
1,594.3
598.5
468.3
35.3
13.3
10.4
374.6
141.5
134.5
446.7
191.1
176.6
9.9
4.2
3.9
2,256.6
2,395.1
2,661.1
59.0
650.6
814.4
18.0
Income From Operations..........

Net Finance and Other Income
(Expense) ..............................
1,053.2
1,344.9
1,495.1
33.2
169.4
190.6
4.3
24.5
0.5
4.5
0.1
Income Before Tax ...................
906.3
1,289.6
1,519.6
33.7
161.6
195.1
4.4
Income Tax Expense ...............
139.0
420.9
518.2
11.5
55.9
48.6
1.1
Net Income ..............................
767.3
868.7
1,001.4
22.2
105.7
146.5
3.3
Earnings Per Share

Basic..........................................
0.23
0.26
0.30
0.007
0.03
0.04
0.00
(146.9)
(55.3)
(7.8)
Note:
(1)
For the readers convenience, amounts in pesos were converted to U.S. dollars using the BSP Rate of =
P45.063 to U.S.$1.00 as of
September 28, 2007.
13
As at June 30,
2005
2006
As at September 30,
2007
(1)
2007
2007
P
=
P
=
P
=
U.S.$
P
=
2007(1)
U.S.$
ASSETS
Current Assets
Cash and cash equivalents.............................
Receivables net .........................................
Inventories net ..........................................
Due from a related party(2) ...........................
Prepaid expenses and other current assets ....
333.1
647.3
401.7
54.4
477.8
658.7
512.5
31.8
632.3
828.3
600.9
133.3
61.0
14.0
18.4
13.3
3.0
1.4
245.3
771.7
667.3
134.9
63.4
5.5
17.1
14.8
3.0
1.4
Total Current Assets ................................
1,436.5
1,680.8
2,255.8
50.1
1,882.6
41.8
Noncurrent Assets
Bottles and cases net.................................
Investments in associates ...............................
Property, plant and equipment net ...........
Deferred income tax ......................................
Other assets ...................................................
1,091.8
2,417.6
196.3
38.0
1,324.1
2,440.2
195.5
75.7
1,687.6
505.5
2,158.1
40.4
137.9
37.4
11.2
47.9
0.9
3.1
1,679.9
506.4
2,368.5
173.2
37.3
11.2
52.6
3.8
Total Noncurrent Assets ..........................
3,743.7
4,035.5
4,529.5
100.5
4,728.0
104.9
5,180.2
5,716.3
6,785.3
150.6
6,610.6
146.7
LIABILITIES AND EQUITY

Liabilities
Current Liabilities
Notes payable................................................
Accounts and acceptances payable and
accrued expenses .......................................
Income tax payable .......................................
Dividends payable .........................................
Due to a related party ...................................
Current portion of long-term debt ................
328.4
48.6
48.6
1.1
428.6
9.5
1,821.0
92.2
154.6
1,962.0
183.7
99.4
116.7
2,201.2
271.1
400.0
53.4
241.7
48.8
6.0
8.9
1.2
5.4
2,065.7
203.5
52.2
83.3
45.8
4.5
1.2
1.8
Total Current Liabilities ...........................
2,396.2
2,410.4
3,216.0
71.4
2,833.3
62.8
255.8
333.3
41.7
0.9
20.8
0.5
159.5
125.2
131.6
117.7
203.9
4.5
210.9
75.4
4.7
1.7
Total Noncurrent Liabilities .....................
540.5
582.6
245.6
5.4
307.1
6.9
Total Liabilities ........................................
2,936.7
2,993.0
3,461.6
76.8
3,140.4
69.7
Noncurrent Liabilities
Long-term debt net of current portion.....
Accrued retirement cost net of current
portion.......................................................
Deferred tax liability .....................................
Equity
Capital stock..................................................
Additional paid-in capital..............................
Effect of dilution of ownership
in an investment ........................................
Revaluation increment on land .....................
Retained earnings ..........................................
496.9
59.5
496.9
59.5
496.9
59.5
11.0
1.3
496.9
59.5
11.0
1.3
266.0
1,421.1
274.6
1,892.3
(1.0)
2,768.3
61.5
(1.0)
2,914.8
64.7
Total Equity .............................................
2,243.5
2,723.3
3,323.7
73.8
3,470.2
77.0
5,180.2
5,716.3
6,785.3
150.6
6,610.6
146.7
Notes:
(1)
P45.063 to U.S.$1.00 as of
September 28, 2007.
(2)
Classified as a current asset in our interim balance sheet as at September 30, 2007 with comparative balance as at June 30, 2007 as
shown on page F-42.
14

September 30,

2005
P
=
Key performance indicators

and ratios
Gross sales ................................
Net sales ...................................
EBIT(2) .....................................
EBIT margin(3) ..........................
EBITDA(4) ................................
EBITDA margin(5) ...................
Gross margin(6) ........................
Return on equity(7) ...................
Return on assets(8) ....................
Capital expenditures(9)..............
Net income ...............................
Net cash provided by (used in)
operating activities................
investing activities.................
financing activities ................
Debt-to-equity ratio(10) ............
2007
2007(1)
P
=
P
=
U.S.$
P
=
P
=
U.S.$
2006
2007
2007(1)
2006
10,581.1
8,932.5
990.5
11.1%
1,637.1
18.3%
37.1%
34.2%
14.8%
1,060.2
767.3
12,803.4
10,992.8
1,369.6
12.5%
2,073.0
18.9%
34.0%
31.9%
15.2%
938.9
868.7
15,062.2
12,916.2
1,572.1
12.2%
2,385.6
18.5%
32.2%
30.1%
14.8%
1,616.8
1,001.4
334.2
286.6
34.9
52.9
35.9
22.2
3,209.7
2,753.0
175.5
6.3%
369.5
13.4%
29.8%
355.2
105.7
3,767.7
3,198.9
201.3
6.3%
422.7
13.2%
31.4%
427.7
146.5
83.6
71.0
4.5
9.4
9.5
3.3
1,611.3
1,679.0
2,121.3
47.1
284.7
274.1
6.1
(1,082.0)
(996.1)
(1,700.8)
(37.7)
(364.0)
(462.0)
(10.3)
(519.0)
32.9%
(538.3)
18.3%
(266.0)
10.0%
(5.9)
0.6
21.2%
(199.2)
15.4%
(4.4)
Notes:
(1)
P45.063 to U.S.$1.00 as of
September 28, 2007.
(2)
EBIT represents net income after adding income tax expense and interest expense. EBIT is not a measure of performance under PFRS
and investors should not consider EBIT in isolation or as an alternative to operating income or net income as an indicator of our
operating performance or to cash flow from operating, investing and financing activities as a measure of liquidity, or any other
measures of performance under PFRS. Because there are various EBIT calculation methods, our presentation of EBIT may not be
comparable to similarly titled measures used by other companies.
(3)
Represents EBIT divided by net sales.
(4)
EBITDA represents net income after adding income tax expense, depreciation and amortization and interest expense. EBITDA is not
a measure of performance under PFRS and investors should not consider EBITDA in isolation or as an alternative to operating income
or net income as an indicator of our operating performance or to cash flow from operating, investing and financing activities as a
measure of liquidity, or any other measures of performance under PFRS. Because there are various EBITDA calculation methods, our
presentation of EBITDA may not be comparable to similarly titled measures used by other companies.
(5)
Represents EBITDA divided by net sales.
(6)
Represents gross profit (computed as net sales less cost of goods sold) as a percentage of net sales.
(7)
Represents net income divided by total stockholders equity.
(8)
Represents net income divided by total assets.
(9)
Capital expenditure includes net additions to bottles and cases and property, plant and equipment.
(10) Debt-to-equity ratio is computed as total funded and interest bearing debt divided by total stockholders equity.
15
Risk Factors
An investment in the Shares involves a number of risks. The price of securities can and does fluctuate, and any
individual security may experience upward or downward movements and may even become valueless. There is
an inherent risk that losses may be incurred rather than profit made as a result of buying and selling securities.
Past performance is not a guide to future performance and there may be a large difference between the buying
price and the selling price of these securities. Investors deal with a range of investments, each of which may carry
a different level of risk. Investors should carefully consider all the information contained in this Prospectus,
including the risk factors described below, before deciding to invest in the Shares. The occurrence of any of the
following events, or other events not currently anticipated, could have a material adverse effect on our business,
financial condition and results of operations and cause the market price of the Shares to decline. All or part of
an investment in the Shares could be lost.
The means by which we plan to address the risk factors discussed herein are principally presented in the sections
of this Prospectus entitled Business Competitive Strengths on pages 57 to 58, Business Strategy on
pages 58 to 59 and Managements Discussion and Analysis of Financial Condition and Results of Operations
on pages 37 to 56. This section entitled Risk Factors does not purport to disclose all of the risks and other
significant aspects of investing in these securities. Investors should undertake independent research and study the
trading of securities before commencing any investment or trading activity. Investors should seek professional
advice regarding any aspect of the securities such as the nature of risks involved in the investment in or trading
of securities, and specifically those of high risk securities. Investors may request publicly available information
on the Shares and us from the Philippine SEC.
RISKS RELATED TO OUR BUSINESS
Because we produce our products under licenses from PepsiCo and depend upon PepsiCo to provide us
with concentrates, marketing support and access to new products, changes in our relationship with
PepsiCo could adversely affect our business and financial results.
Our relationship with PepsiCo and the rights we have under our Exclusive Bottling Appointment from PepsiCo
and certain of its affiliates are fundamental to our business. Under these appointments, we are licensed to produce
and sell PepsiCo products in the Philippines, and PepsiCo has agreed to provide us with marketing support and
other services that assist in the production and sale of PepsiCo products. PepsiCo has the right to terminate our
Exclusive Bottling Appointment if:
we fail to perform or comply with the terms or conditions of the appointment, provided that PepsiCo must
give us written notice of the failure and 30 days to rectify the failure;
certain specified competitors, or any manufacturer or distributor anywhere in the world of any product
which competes with the beverages licensed to us acquires 10% or more of our Shares;
any person (other than the existing shareholders) acquires 20% or more of our Shares;
we discontinue bottling the beverages for a period of 30 consecutive days;
certain events occur related to our insolvency or bankruptcy;
our management or control of our business changes by virtue of any law, decree, order, rule, regulation,
ordinance or any other similar cause; or
any of our Exclusive Bottling Appointments (other than our Lipton Exclusive Bottling Appointment) is
terminated.
In addition, if, in the reasonable opinion of PepsiCo, we should at any time fail to vigorously market the sale of
the beverages in, or secure full coverage for, any part of the Philippines, PepsiCo may, after notifying us of the
failure and allowing us three months to correct the failure, remove that area from our appointment.
For more details regarding our Exclusive Bottling Appointments, see Business Relationship with PepsiCo
and Related Party Transactions Transactions with PepsiCo and Material Contracts.
16
Risk Factors
If our Exclusive Bottling Appointments with PepsiCo and certain of its affiliates are suspended, terminated or not
renewed for any reason, it would have a material adverse effect on our business and financial results.
We may not be successful in executing our growth strategy, part of which depends on successfully
developing a new range of non-carbonated beverages to capitalize on current consumer trends
towards health and wellness beverages.
In recent years, the market for carbonated beverages in the Philippines has grown considerably slower than the
economy as a whole, due to the maturity of the market and an increasing consumer preference for beverages
associated with health and wellness, in particular non-carbonated beverages such as juices, iced teas, sports
drinks and water. We began manufacturing and selling non-carbonated beverages in 2004, and since that time,
our annual sales of non-carbonated beverages have grown to approximately 12 million eight-ounce case
equivalents, while during the same period, our sales of carbonated beverages have grown approximately 15.4%
from approximately 104 million eight-ounce case equivalents to approximately 120 million eight-ounce case
equivalents.
A key part of our strategy is to continue to grow our sales of non-carbonated beverages. Our existing
non-carbonated beverage products have short sales histories in the Philippines, and we cannot assure you that we
will be successful in continuing to grow our sales of these products. In addition, our strategy depends on our
ability to successfully launch new non-carbonated beverages. When we launch new products, there is a risk that
they will not be successful for a variety of reasons, including failing to appeal to consumer tastes, unsuccessful
marketing and competitor actions. In addition, because we rely mainly on PepsiCo to develop or acquire rights
to the products that we sell, if PepsiCo fails to develop or acquire innovative products that respond to changing
consumer demands and are suitable for the Philippines market, or if we do not choose appropriate products from
PepsiCos range and package and market them effectively, we may not be successful in launching new products
and growing our business.
If our new products are not successful, we may be unable to grow our business as we expect, or at all, and we
may not recover the investments we make in developing and launching those products, which may have a
material adverse effect on our financial results.
We may not be able to compete successfully within the highly competitive carbonated and
non-carbonated beverage markets.
The carbonated and non-carbonated beverage markets are both highly competitive. We compete with The
Coca-Cola Company, which owns 100% of the local Coca-Cola bottler in the Philippines. The Coca-Cola
Company has a significantly larger share of the market for carbonated beverages in the Philippines than we do.
We also compete with several large Philippines-based corporations, including San Miguel Corporation, Universal
Robina Corporation and Zesto Corporation. Our competitors brands include some of the most
widely-recognized brands in the world. Branding and marketing are extremely important in the beverages
market, and if our competitors are more successful in marketing their products and building and promoting their
brands than we are, we could fail to grow, or even lose market share, which could have a material adverse effect
on our business and financial results.
Competing effectively will require continuous efforts in sales and marketing of our existing products,
development of new products and efficient operations. We cannot predict the pricing or promotional actions of
our competitors or their effect on our ability to market and sell our products. We cannot assure investors that
our sales volume or market shares would not be adversely affected by negative consumer reaction to our
relatively higher prices as a result of any price reduction or promotional sales undertaken by our competitors,
that we will not be forced to reduce our prices to meet our competition, or that we will otherwise be able to
compete effectively.
Some of our smaller competitors have lower cost bases than we do and price their products lower than ours. If
we were forced to compete with these companies on price in order to retain market share it would significantly
reduce our margins and profitability. Historically, our carbonated beverage products have tended to be priced
slightly below the comparable products of The Coca-Cola Company. If The Coca-Cola Company were to reduce
its prices for those products, we may be forced to reduce our prices as well, which could have a material adverse
effect on our margins and profitability.
17
Risk Factors
Our business requires a significant supply of raw materials and energy, the limited availability or
increased costs of which could adversely affect our business and financial results.
The production and distribution of our beverage products is highly dependent on an adequate supply of certain
raw materials. Apart from the beverage concentrates that we purchase from PepsiCo, our largest raw materials
expenditure has been and is expected to continue to be for sugar, which comprised approximately 26% of our
cost of goods sold in fiscal 2006 and fiscal 2007. We purchase sugar from a small number of suppliers in the
Philippines, generally under short-term contracts of less than one year. The sugar industry in the Philippines is
protected by a system of import quotas and tariffs, and, as a result, sugar prices may from time to time exceed
prices available on the international markets. Our ability to achieve certainty with respect to sugar prices is
limited by the unwillingness of Philippines sugar producers to enter into long-term sales contracts and the absence
of a liquid market for financial instruments to hedge the Philippines sugar price.
We also purchase materials such as glass and plastic bottles, aluminum cans, plastic cases and carbon dioxide
from a variety of local and regional producers and purchase diesel fuel for our trucks. The cost and supply of
these specific materials could be adversely affected by price changes, strikes, weather conditions, governmental
controls or other factors. Because we may only use suppliers that meet PepsiCos global standards, we may not
be able to select the lowest-cost suppliers, or stimulate price tension between competing suppliers. We cannot
assure you that the price we pay for our raw materials will be stable or the most competitive in the future. Price
changes to our raw materials may result in unexpected increases in production, packaging and distribution costs,
and we may be unable to increase the prices of our products to offset these increased costs and therefore may
suffer a reduction to our profit margins. We also do not currently hedge against changes in raw material prices.
Interruption to or a shortage in the supply of the raw materials and/or other supplies used by us could prevent
us from operating our manufacturing facilities at full capacity, and if the shortage is severe, could lead to the
suspension of our production all together.
If we are unable to maintain brand image and product quality, or if we encounter other product issues
such as product recalls, our business may suffer.
Maintaining our brand image and reputation for product quality is critical to our success. If we fail to maintain
high quality standards for our products, or if we fail to maintain high ethical, social and environmental standards
for all of our operations and activities, our reputation could be jeopardized. In addition, we may be liable if the
consumption of any of our products causes injury or illness, and we may be required to recall products if they
become contaminated or damaged or are mislabeled. The reputation of our products is also dependent on the
worldwide reputation of PepsiCo products, which may be adversely affected by quality issues or contamination,
or the actions of PepsiCo or other Pepsi bottlers in other countries, all of which are beyond our control. A
significant product liability or other product-related legal judgment against us or another Pepsi bottler or a
widespread recall of our or their products could have a material adverse effect on our reputation, business and
financial results. In addition, if PepsiCo determines that our products do not meet its standards, it can require us
to suspend production at the plant or plants responsible until appropriate remedial action is complete.
We are dependent on the continuing operation of our bottling plants, in particular our Muntinlupa
plant.
We manufacture substantially all of the products we sell at our 11 bottling plants throughout the Philippines.
These plants are subject to the normal risks of industrial production, including equipment breakdowns, labor
stoppages, natural disasters, directives from government agencies and power interruptions. In the past, we have
experienced a number of power outages, including as a result of inadequate power generation and transmission
infrastructure in the Philippines and natural disasters such as typhoons, which are common in the Philippines.
While all of our plants have some back-up power generation capacity, it is only sufficient to maintain limited
operations. As a result, any extended power supply interruption will result in reduced production at the affected
plant. Any interruption to production at any of these plants could materially reduce our production, sales revenue
and profit.
We are particularly dependent on our Muntinlupa plant, which is our largest plant, accounting for approximately
47.7%, 50.7% and 50.5% of our net sales in fiscal 2006, fiscal 2007 and the three month period ended
September 30, 2007, respectively. We manufacture all of our non-carbonated beverage products at Muntinlupa,
as well as producing carbonated beverages for the Metro Manila market, which is our largest market. Any
18
Risk Factors
significant interruption in production at Muntinlupa could result in an interruption to our sales of

non-carbonated beverages throughout the Philippines and in our sales of carbonated beverages in Metro Manila,
which could have a material adverse effect on our business, results of operations, financial condition and
prospects, and particularly the growth of our non-carbonated beverages business.
We may have potential conflicts of interest with PepsiCo, which could result in PepsiCos objectives
being favored over our objectives.
Our past and ongoing relationship with PepsiCo could give rise to conflicts of interests. In addition to the
commercial relationship described above, PepsiCo is one of our substantial shareholders and four members of
our Board of Directors are senior executives of PepsiCo. See Our major shareholders could affect matters
concerning us.
These conflicts could arise over matters such as:
divergences between our strategic priorities and those of PepsiCo, including PepsiCos preference for us to
pursue products that require us to purchase concentrates from PepsiCo;
the level of PepsiCos marketing contributions and the type of marketing activities we pursue as part of our
joint marketing program;
balancing the objectives of increasing sales volume of PepsiCo beverages and maintaining or increasing our
profitability;
the nature, quality and pricing of services or products provided to us by PepsiCo; or
any proposal for us to acquire or divest territories, plants or products.
Our major shareholders could affect matters concerning us.

Following the Offering, PepsiCo will beneficially own approximately 29.5% of our outstanding Shares, while the
Guoco Group will beneficially own approximately 30.1%. As a result of these shareholdings, each of PepsiCo
and the Guoco Group will be able to significantly affect the outcome of our shareholder votes, including the
election of directors, thereby affecting matters concerning us. The interest of these shareholders may not
necessarily be aligned with those of independent shareholders, and this concentration of ownership may also have
the effect of delaying, deferring or preventing a change in control of us. PepsiCo and the Guoco Group are parties
to a Cooperation Agreement, under which they have agreed to, among other things:
support each others candidates for election to our Board of Directors;
implement an agreed upon governance structure, including ensuring that their representatives serve on each
board committee; and
entitle each other to appoint certain key executives and support each others appointees to such positions.
The parties have also agreed among themselves to certain rights in the event of a transfer by one of them. See
Related Party Transactions Transactions with Guoco and PepsiCo Cooperation Agreement.
Our success depends on key members of our board and management, the loss of whom could disrupt
our business operations.
Our directors and members of our senior management have been an integral part of our success, and the
experience, knowledge, business relationships and expertise that would be lost should any of these people depart
could be difficult to replace and may result in a decrease in our operating efficiency and financial performance.
If we are not successful in retaining, or attracting and retaining executive talent to replace departing executives,
our business and results of operations may be adversely affected.
19
Risk Factors
Our operations are cash intensive, and our business could be adversely affected if we fail to maintain
sufficient levels of working capital.
We expend a significant amount of cash in our operations, principally to fund our raw material procurement. In
fiscal 2006, fiscal 2007 and the three month period ended September 30, 2007, cash sales represented
approximately 57%, 53% and 46% of our net sales, respectively. Our credit terms for most customers are 30
days, although we offer some of our larger customers 60 or 75 days. Our obligations to PepsiCo, which
principally relate to concentrate purchases, are on seven days credit. We generally fund most of our working
capital requirements out of cash flow generated from our operations. If we fail to generate sufficient cash from
our sales, or if we suffer decreasing sales to customers as a result of ceasing to offer credit terms, or if PepsiCo
ceases to offer credit terms, or we experience difficulties in collecting our accounts receivables, we may not have
sufficient cash flow to fund our operating costs and we may have to incur debt to fund our operations (which
debt facilities may not be available on reasonable terms or at all). In such event, our business could be adversely
affected. See Managements Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources.
Changes in technology may affect our competitive position in the future.
Beverage production equipment, processes and logistical systems are important technologies in our business. We
expect these technologies to play an increasingly important role in the processing and delivery of our products
to customers in a cost-effective manner. Our ability to compete effectively in the future will, in part, be driven by
our ability to efficiently maintain and update our technology platforms. Failure to maintain appropriate
standards of technology or the failure of technology to perform its intended purpose may adversely affect our
future operating and financial performance.
Our results of operations may fluctuate due to seasonality.
Our sales are subject to seasonality. For example, our sales are generally higher in the hot, dry months from
March through June and lower during the wetter monsoon months of July through October. In addition, the
Philippines is at risk of typhoons during the monsoon period. Typhoons usually result in substantially reduced
sales in the affected area, and have, in the past, interrupted production at our plants in affected areas. While these
factors lead to a natural seasonality in our sales, unseasonable weather could also significantly affect sales and
profitability compared to previous comparable periods. We also tend to experience a period of higher sales
around the Christmas/New Year holiday period in late December through early January. Consequently, our
operating results may fluctuate. In addition, the seasonality of our results may be affected by unforeseen
circumstances, such as production interruptions. Due to these fluctuations, comparisons of sales and operating
results between periods within a single year, or between different periods in different financial years, are not
necessarily meaningful and should not be relied on as indicators of our performance.
Continued compliance with, and any changes in, safety, health and environmental laws and regulations
may adversely affect our results of operations and financial condition.
The operation of our existing and future beverage manufacturing facilities is subject to a broad range of safety,
health and environmental laws and regulations. These laws and regulations impose controls on food hygiene
standards, air and water discharges, on the storage, handling, discharge and disposal of fuel, employee exposure
to hazardous substances and other aspects of the operations of these facilities and businesses. We have incurred,
and expect to continue to incur, operating costs to comply with such laws and regulations. In addition, we have
made and expect to continue to make capital expenditures on an ongoing basis to comply with safety, health and
environmental laws and regulations. If we were to discharge hazardous substances or other pollutants into the
air, soil or water, we could be liable to third parties, the Government or to the local government units with
jurisdiction over the areas where our facilities are located. We may be required to incur costs to remedy the
damage caused by such discharges or pay fines or other penalties for non-compliance.
Safety, health and environmental laws and regulations in the Philippines have been increasing in stringency and
it is possible that these laws and regulations will become significantly more stringent in the future. The adoption
of new safety, health and environmental laws and regulations, new interpretations of existing laws, increased
governmental enforcement of environmental laws or other developments in the future may require additional
capital expenditures or the incurrence of additional operating expenses in order to comply with such laws and
to maintain current operations. Furthermore, if the measures implemented by us to comply with these new laws
and regulations are not deemed sufficient by the Government, compliance costs may significantly exceed current
20
Risk Factors
estimates. If we fail to meet safety, health and environmental requirements, we may be subject to administrative,
civil and criminal proceedings initiated by the Government, as well as civil proceedings by environmental groups
and other individuals, which could result in substantial fines and penalties against us, as well as orders that could
limit or halt our operations.
There can be no assurance that we will not become involved in future litigation or other proceedings or be held
responsible in any such future litigation or proceedings relating to safety, health and environmental matters in the
future, the costs of which could be material. Clean-up and remediation costs of the sites in which our facilities
are located and related litigation could materially and adversely affect our cash flow, results of operations and
financial condition.
Our business depends on the reliable movement of raw materials between our plants and finished
products to retailers. Any delays in delivery or poor handling by distributors and third-party transport
operators may affect our sales and damage our reputation.
Our business requires significant movement of materials and finished products by ground and ferry
transportation throughout the Philippines. We take delivery of many of our raw materials requirements at our
Muntinlupa plant and distribute them from there to our other plants. Much of the transportation and delivery
are undertaken by third party contractors, which operate beyond our direct control. Interruptions in the
transportation of raw materials or delivery of finished products, and poor handling of materials or products in
transit could interrupt our business, cause us losses, damage our reputation, and materially adversely affect our
cash flow, results of operations and financial condition.
We lease most of our manufacturing and business premises from a single landlord, which may take
actions that harm our business.
Most of our business premises, including all of our manufacturing plants other than Muntinlupa, are located on
land owned by Nadeco Realty, which is 40% owned by PCPPI. Under our leases, Nadeco Realty has various
customary rights as landlord, including the right to terminate the leases if we commit a substantial breach. If
Nadeco Realty were to take actions that are adverse to us, such as alleging a substantial breach of one or more
of the leases, or purporting to terminate such lease or leases, our business could be materially adversely affected.
If Nadeco Realty were to become bankrupt, ownership of the properties may pass to other third parties, whose
actions may materially and adversely affect our business.
Changes in economic conditions in the Philippines may affect our financial performance.
Substantially, all of our revenues are generated in the Philippines. Our financial performance could be affected
by changes in economic conditions in the Philippines. Such changes may include, but are not limited to, the
following: changes in economic growth, unemployment levels or consumer confidence, the occurrence of any of
which could lead to a general fall in the demand for our non-beverage products; changes in underlying cost
structures for labor, ingredients, packaging materials and service charges; changes in interest rates, which may
impact our profitability; or national or international political and economic instability or the instability of
national or international financial markets as a result of terrorist acts or war, which could reduce sales or limit
access to base ingredients or packaging sourced from international suppliers.
RISKS RELATED TO THE PHILIPPINES
A slowdown in the Philippines economic growth could adversely affect us.
Historically, results of operations have been influenced, and will continue to be influenced, to a significant degree
by the general state of the Philippine economy. As a result, our income and results of operations depend, to a
significant extent, on the performance of the Philippine economy. In the past, the Philippines has experienced
periods of slow or negative growth, high inflation, significant devaluation of the peso and the imposition of
exchange controls.
From mid-1997 to 1999, the economic crisis in Asia adversely affected the Philippine economy, causing a
significant depreciation of the peso, increases in interest rates, increased volatility and the downgrading of the
Philippine local currency rating and the ratings outlook for the Philippine banking sector. These factors had a
material adverse impact on the ability of many Philippine companies to meet their debt-servicing obligations.
While the Philippine economy has generally registered positive economic growth in the period since 1999, it
continues to face a significant budget deficit, limited foreign currency reserves, a volatile peso exchange rate and
a relatively weak banking sector. High oil and consumer prices and weak external trade contributed to a
21
Risk Factors
slowdown in gross domestic product growth in 2005. In 2005, gross domestic product growth decelerated to
5.1%, compared to growth of 6.0% in 2004, and gross national product growth decelerated to 5.7% in 2005
from 6.2% in 2004. Prospects for future growth therefore remain uncertain and the Government may be required
to increase borrowings in order to meet its operational needs. Any deterioration in the Philippine economy may
adversely affect consumer sentiment and lead to a reduction in demand for our products. There can be no
assurance that current or future Governments will adopt economic policies conducive to sustaining economic
growth.
In addition, the strength of the Philippine economy is influenced and affected by global factors, including the
performance of other world and regional economies and the global economy, in general. Any change in the health
and performance of other national economics, in particular, that of the United States and/or the global economy,
could adversely affect the Philippine economy and our business.
Any political instability in the Philippines may adversely affect us.
The Philippines has from time to time experienced political, social and military instability. Political instability in
the Philippines occurred in the late 1980s when Presidents Ferdinand Marcos and Corazon Aquino held office.
In 2000, the then-former President of the Philippines, Joseph Estrada, was subject to allegations of corruption,
culminating in impeachment proceedings, mass public protests in Manila, withdrawal of support by the military
and his removal from office. The then-Vice President, Gloria Macapagal-Arroyo, was sworn in as President on
January 20, 2001. On July 27, 2003, a group of 70 officers and over 200 soldiers from the Philippine Army, Navy
and Air Force attempted a coup detat against the Macapagal-Arroyo administration which ended after 20 hours
of negotiation between the group and the Government. Certain individuals identified with the administration of
former President Estrada have been implicated as supporters of the failed coup detat. This instability could
materially affect the countrys economic growth. For example, while in 1999 and 2000, a number of the
Philippines economic indicators showed some improvements, the pace of economic growth slowed again in 2001
after the impeachment of then-President Joseph Estrada. Former President Estrada was convicted by a special
tribunal on charges of plunder on September 12, 2007. On October 25, 2007, he was unconditionally pardoned
by President Arroyo. Since 2001, when current President Gloria Arroyo came to power, the economy has been
negatively affected from time to time by political scandals, an attempted coup detat and the uncertainty
generated by the May 2004 presidential election.
In May 2004, the Philippines held presidential elections as well as elections for the Senate and House of
Representatives. President Arroyo was elected to a six-year term. However, certain opposition candidates,
including defeated presidential candidate Fernando Poe, Jr., questioned the election results, alleging fraud and
disenfranchisement of voters.
Allegations of fraud committed during the May 2004 election had intensified since early June 2005 in light of
revelations that President Arroyo had spoken with an official from the independent Commission on Elections
during the counting of votes. President Arroyo has admitted to speaking with an election official, but insists that
she did not participate in fraud or induce the Commission on Elections to tamper with the election. On July 7,
2005, President Arroyo called upon her entire cabinet to submit courtesy resignations in order to rebuild a new
administration that could more efficiently implement economic reforms. The next day, ten of President Arroyos
senior governmental officials submitted their resignations and urged President Arroyo to resign as well. On July
25, 2005, impeachment complaints against President Arroyo were referred to the House of Representatives
Committee on Justice and subsequently dismissed on August 31, 2005. Several cases were filed with the Supreme
Court questioning the constitutionality of the decision but none have been successful. On October 5, 2007, a new
impeachment complaint was filed against President Arroyo following bribery allegations involving government
officials allegedly involved in the approval of a government contract with a Chinese telecommunications
company. There have been media reports that opposition parties, including former members of the military,
continue to call for President Arroyos resignation.
There have been media reports of military plots to remove President Arroyo from office. On February 24, 2006,
President Arroyo issued Proclamation 1017, which declared a state of national emergency in response to reports
of an alleged attempted coup detat. In connection with the proclamation, a number of opposition members were
arrested or threatened with arrest. On March 3, 2006, President Arroyo lifted the state of national emergency,
22
Risk Factors
and the Supreme Court ruled that certain acts committed by law enforcement officials in furtherance of
Proclamation 1017 were unconstitutional. On November 29, 2007, Philippine Senator Trillanes, who is facing
charges for the July 2003 coup de tat, walked out of his court hearing and seized a hotel in Makati to demand
President Arroyo to step down. He and his companions surrendered after a six-hour standoff.
Political instability in the Philippines could negatively affect the general economic conditions and operating
environment in the Philippines, which could have a material impact on our business, financial condition and
results of operation. Further, in 2010 the Philippines will hold its next presidential elections and with President
Arroyo no longer eligible for re-election, a new president will be elected and a change in administration could
cause potential instability. Furthermore, there is no assurance that the next president of the Philippines will
continue to implement the economic policies favored by President Arroyos administration. No assurance can be
given that the political environment in the Philippines will stabilize and any political instability in the future may
have an adverse effect on our business, results of operations and financial condition.
The low credit ratings of the Philippines may adversely affect our business.
On July 11, 2005, Standard & Poors Ratings Services (S&P), downgraded its long-term foreign and local
currency sovereign credit ratings outlooks for the Philippines from stable to negative while affirming the
existing ratings of BB- and BB+, respectively. S&P cited its concern stemming from the ongoing political crisis
in the country sparked by allegations of electoral impropriety by the president, and punctuated by the Supreme
Courts freezing of an expanded sales tax, and the departure of President Arroyos economic team as the reasons
for this downgrade. On July 11, 2005, Fitch Ratings downgraded its long-term foreign and local currency ratings
outlooks for the Philippines from stable to negative while retaining the ratings of BB and BB+, respectively,
and on July 13, 2005, Moodys Investors Services, Inc. (Moodys) downgraded its long-term foreign and local
currency ratings outlooks for the Republic from stable to negative while retaining the ratings at B1, both
citing similar reasons as S&P. On February 9, 2006, S&P upgraded its long-term foreign and local currency
sovereign credit ratings outlooks for the Philippines from negative to stable while affirming the existing
ratings of BB- and BB+, respectively. S&P noted that the stable outlook reflects revised expectations concerning
the prospects of policy continuity and adherence to fiscal consolidation, which foreshadows improved chances
for overall deficit reduction and stabilization of the countrys debt dynamics.
On February 13, 2006, Fitch Ratings upgraded its long-term foreign and local currency ratings outlooks for the
Philippines from negative to stable while affirming the existing ratings of BB and BB+, respectively, citing
similar reasons. On November 2, 2006, Moodys upgraded its long-term foreign and local currency outlooks
from negative to stable. The low sovereign ratings of the Government directly adversely affect companies
resident in the Philippines as international credit rating agencies issue credit ratings by reference to that of the
sovereign. No assurance can be given that Moodys, S&P or any other international credit rating agency will not
in the future downgrade the credit ratings of the Government and, therefore, Philippine companies, including us.
Any such downgrade could have an adverse impact on the liquidity in the Philippine financial markets, the ability
of the Government and Philippine companies, including us, to raise additional financing and the interest rates and
other commercial terms at which such additional financing is available.
The recent outbreak, and any future outbreaks, of avian influenza or other contagious diseases may
adversely affect the Philippine economy and our business.
Since late 2003, a number of countries in Asia, including the Philippines, as well as countries in other parts of
the world, have had confirmed cases of the highly pathogenic H5N1 strain of avian influenza virus in birds. These
cases severely affected the poultry and related industries and resulted in the death or culling of large stocks of
poultry. In addition, certain countries in Southeast Asia have reported cases of bird to human transmission of
avian influenza resulting in numerous human deaths. Investigations are continuing on possible cases of human
to human transmission in Thailand, Vietnam and Indonesia. The World Health Organization and other agencies
continue to issue warnings on a potential avian influenza pandemic if there is sustained human to human
transmission. In 2003, the Republic of China, the Peoples Republic of China, Singapore and other countries
experienced an outbreak of SARS, which adversely affected the economies of many countries in Asia, including
the Philippines. The avian influenza and SARS outbreaks have adversely affected, and any future outbreaks of
avian influenza, SARS or other contagious diseases could adversely affect, the Philippine economy and economic
activity in the region. Any present or future outbreak of avian influenza, SARS or other contagious diseases could
have a material adverse effect on our business.
23
Risk Factors
Acts of terrorism in the Philippines could destabilize the country and could have a material adverse
effect on our financial condition, results of operations and cash flows.
The Philippines has been subject to a number of terrorist attacks since 2000. The Philippine army has been in
conflict with the Abu Sayyaf organization which has been identified as being responsible for kidnapping and
terrorist activities in the Philippines. Recently, there has been a series of bombings in the Philippines, mainly in
cities in the southern part of the country. Although no one has claimed responsibility for these attacks, it is
believed that the attacks are the work of various separatist groups, possibly including the Abu Sayyaf
organization, which has ties to the al-Qaeda terrorist network. On November 13, 2007, an explosion at the
Philippine House of Representatives in a suspected assassination resulted in the death of a Congressman from
Basilan, the southern Philippine island used by the Abu Sayaff as a base to launch kidnapping and bombing raids.
An increase in the frequency, severity or geographic reach of terrorist acts could destabilize the Philippines,
increase internal divisions within the Government as it evaluates responses to that instability and unrest and
adversely affect the countrys economy. Our production and distribution facilities, particularly those located on
Mindanao island, may be targets of terrorist activities, as well as events occurring in response to or in connection
with them, that could result in full or partial disruption of our ability to manufacture and/or distribute our
products. There can be no assurance that the Philippines will not be subject to further acts of terrorism in the
future, and violent acts arising from, and leading to, instability and unrest may have a material adverse effect on
us and our financial condition, results of operations and prospects.
The Philippine Constitution and related statutes set forth restrictions on foreign ownership of
companies that own land.
While we do not currently own land, we may do so in the future. If we do decide to purchase and own land,
foreign ownership in the Company will be limited to a maximum of 40.0% of the Companys issued and
outstanding capital stock. Under such circumstances, we would not be permitted to allow the issuance or the
transfer of Shares to persons other than Philippine Nationals if such issuance or transfer would result in the
Company ceasing to be a Philippine National for purposes of complying with the restrictions on land ownership
discussed above. These restrictions may adversely affect the liquidity and market price of the Shares to the extent
international investors are restricted from purchasing Shares in normal secondary transactions.
RISKS RELATED TO THE OFFER
The market price of securities can and does fluctuate. The Shares have not been publicly traded and the
relative volatility and illiquidity of the Philippine securities market may substantially limit investors
ability to sell the Offer Shares at a suitable price or at a time they desire.
The market price of securities can and does fluctuate, and it is impossible to predict whether the price of the Offer
Shares will rise or fall. An individual security may experience upward or downward movements, and may even
lose all its value. There is an inherent risk that losses may be incurred rather than profit made as a result of buying
and selling securities. There may be a substantial difference between the buying price and the selling price of such
securities. Trading prices of the Offer Shares will be influenced by, among other things, our financial position,
results of operations, and political, economic and other factors.
Prior to the Offer, there has been no public market for the Shares in the Philippines. The Philippine securities
market is substantially smaller, less liquid, and more volatile than major securities markets in the United States
and other jurisdictions, and is not as highly regulated or supervised as some of these other markets. The Offer
Price will be determined by us and the Selling Shareholders in consultation with the Joint Domestic Lead
Underwriters and the International Underwriter and could differ significantly from the price at which the Shares
will trade subsequent to completion of the Offer. There can be no assurance that even after the Shares have been
approved for listing on the PSE, an active trading market for the Shares will develop or be sustained after the
Offer, or that the Offer Price will correspond to the price at which the Shares will trade in the Philippine public
market subsequent to the Offer. There is no assurance that investors may sell Offer Shares at prices or at times
deemed appropriate.
There may be a delay or failure in trading of the Shares.
There is approximately a 14-day gap between the date on which the Offer Price is determined and the date on
which trading of the Shares is expected to commence on the PSE. During this period, a delay in or termination
of the trading of the Shares on the PSE may result from the occurrence of any one or more events, including the
Domestic Underwriters and/or International Underwriter exercising their respective rights pursuant to the
24
Risk Factors
Domestic Underwriting Agreement and/or the International Underwriting Agreement as the case may be, to
discharge themselves from their obligations thereunder. In the event the commencement of trading on the PSE
does not occur, the Offer may be terminated and investors may not be allocated the Offer Shares for which they
initially subscribed.
Future sales of Shares in the public market could adversely affect the prevailing market price of the
Shares and shareholders may experience dilution in their holdings.
In order to finance the expansion of our business and operations, our Board will consider the funding options
available to them at the time, which may include the issuance of new Shares. If additional funds are raised
through the issuance of new equity or equity-linked securities by us other than on a pro rata basis to existing
shareholders, the percentage ownership of the shareholders may be reduced, shareholders may experience
subsequent dilution and/or such securities may have rights, preferences and privileges senior to those of the
Shares.
Further, the market price of the Shares could decline as a result of future sales of substantial amounts of the Shares
in the public market or the issuance of new Shares, or the perception that such sales, transfers or issuances may
occur. This could also materially and adversely affect the prevailing market price of the Shares or our ability to
raise capital in the future at a time and at a price we deem appropriate.
We, Quaker Global Investments B.V., Hong Way Holdings, Inc., Orion Land Inc. and the Selling Shareholders
have each agreed with the International Underwriter that, for a period of 180 days after the First Closing Date,
neither we nor any person acting on our behalf will issue, offer, sell, contract to sell, pledge or otherwise dispose
of (or publicly announce any such issuance, offer, sale or disposal of) any Shares or securities convertible or
exchangeable into or exercisable for Shares or warrants or other rights to purchase Shares or any security or
financial product whose value is determined directly or indirectly by reference to the price of the underlying
securities, including equity swaps, forwards, sales and options without, in each case, the prior written consent of
the International Underwriter.
Except for such restrictions, there is no restriction on our ability to issue Shares or the ability of the Selling
Shareholders to dispose of, encumber or pledge their Shares, and there can be no assurance that we will not issue
Shares or that such shareholders will not dispose of, encumber or pledge their Shares.
Future changes in the value of the peso against the U.S. dollar or other currencies will affect the foreign
currency equivalent of the value of the Shares and any dividends.
Fluctuations in the exchange rate between the peso and other currencies will affect the foreign currency
equivalent of the peso price of the Shares on the PSE. Such fluctuations will also affect the amount in foreign
currency received upon conversion of cash dividends or other distributions paid in pesos by us on, and the peso
proceeds received from any sales of, the Shares.
Developments in other countries may adversely affect the Philippine economy and, therefore, the
market price of the Shares.
In the past, the Philippine economy and the securities of Philippine companies have been influenced, to varying
degrees, by economic and market conditions in other emerging market countries, especially other countries in
Southeast Asia, as well as investors responses to those conditions.
Although economic conditions are different in each country, investors reactions to adverse developments in one
country may affect the market price of securities of companies in other countries, including the Philippines. For
example, the 1997 Asian economic crisis triggered market volatility in other emerging market countries
securities markets, including the Philippines. In addition, currency control measures imposed by the Bank of
Thailand in mid-December 2006 restricting foreign-capital inflows into the Thai bond and other debt instrument
markets also triggered volatility in the Thai stock market and certain other securities markets. While we believe
that the measures taken by the Bank of Thailand did not affect the Philippine stock market, there can be no
assurance that other central banks will not impose similarly restrictive measures or that these will not adversely
affect the Philippine stock market in the future. Accordingly, adverse developments in other emerging market
countries could lead to a reduction in the demand for, and market price of, the Offer Shares.
25
Risk Factors
The ongoing military actions in response to the September 11, 2001 terrorist attacks on the United States and the
current hostilities in Iraq may have negative and unpredictable effects on the international, U.S. or Philippine
economies or financial markets. We cannot predict what future effects these events may have on investors
perceptions of risk regarding investments in equity securities of companies in emerging markets or equity
securities generally.
LITIGATION
Please refer to page 69 for a discussion of certain legal proceedings to which we are a party and certain legal
proceedings involving the sale of certain PCPPI shares.
26
Use of Proceeds
We estimate that our net proceeds from the Primary Offer will be approximately P
=1,196 million (U.S.$29.2
million, which is translated based on the BSP Rate as of January 18, 2008 of P
=40.959 = U.S.$1.00) after
deducting the applicable underwriting discounts and commissions and expenses for the Offer payable by us. We
will not receive any proceeds from the Sale of Offer Shares by the Selling Shareholders.
We intend to use the net proceeds from the Primary Offer to finance, in part, our planned capital expenditures
for fiscal 2008 and fiscal 2009. The following table sets forth our current expectation of the projects for which
we will use the net proceeds and the approximate amount of the net proceeds that we will apply to each project.
Budgeted
amount
Proposed Use
(P
=, millions)
Add non-carbonated beverage production facilities at several of our plants ...................................................

Expand carbonated beverage production at plants currently running near capacity .......................................
Add PET production capacity at several of our plants ...................................................................................
628
284
284
Total ............................................................................................................................................................
1,196
The foregoing represents our current plans, and are based on our current estimates of the capital cost of those
plans. Our plans may change, based on factors including changing market conditions, or new information
regarding the cost or feasibility of our plans. Our cost estimates may also change as we develop our plans, and
actual costs may be different to our budgeted costs, including due to changes in the cost of machinery and
equipment. In addition, a substantial portion of the costs of these projects will be denominated in U.S. dollars,
so a substantial fall in the value of the Philippine peso would increase the peso cost of our plans. For these
reasons, we may find it necessary or advisable to reallocate the net proceeds within the categories described
above, or to alter our plans, including by abandoning projects described above and/or pursuing different projects.
If our proceeds from the offering are lower than we expect, we would have to incur debt to finance the shortfall,
or delay or abandon one or more of the components of our plans.
We intend to pay the costs and expenses of the Offer other than the underwriting commissions, discounts, taxes
and other expenses applicable to the Offer Shares being sold by the Selling Shareholders. We estimate that our
total expenses for the Offer will be approximately P
=137 million, consisting of:
Underwriting and selling fees for the Offer Shares .......................................................................................
Taxes to be paid by us ..................................................................................................................................
Philippine SEC filing and legal research fee ..................................................................................................
PSE listing and processing fee .......................................................................................................................
Estimated professional fees ...........................................................................................................................
Estimated other expenses ..............................................................................................................................
P
=39,982,204
=
P285,587
=
P2,661,647
=
P16,856,000
=
P66,478,500
=
P10,239,750
Total ...........................................................................................................................................................
=136,503,688
P
27
Use of Proceeds
We estimate the net proceeds to be received by the Selling Shareholders from the Offer will be approximately
P
=2,562 million after deducting the applicable underwriting discounts and commissions and expenses for the
Offer payable by the Selling Shareholders. The costs and expenses to be incurred by the Selling Shareholders
(assuming no exercise of the Over-Allotment Option) will be approximately P
=104 million, consisting of:
Underwriting and selling fees for the Offer Shares being sold by the Selling Shareholders ............................
Stock transaction tax to be paid by the Selling Shareholders .........................................................................
PSE Brokers commission and block sale costs ...............................................................................................
Estimated professional fees ..............................................................................................................................
Estimated other expenses .................................................................................................................................
=
P79,964,408
=
P13,327,401
=
P4,006,395
=
P5,672,822
=
P675,823
Total ............................................................................................................................................................ P
=103,646,849
28
Dividends and Dividend Policy

Our Board is authorized to declare dividends. A cash dividend declaration does not require any further approval
from our shareholders. A stock dividend declaration requires the further approval of shareholders representing
not less than two-thirds of our outstanding capital stock. Dividends may be declared only from unrestricted
retained earnings.
In relation to foreign shareholders, dividends payable may not be remitted using foreign exchange sourced from
the Philippine banking system unless the investment was first registered with the BSP.
We are allowed under Philippine laws to declare property and stock dividends, subject to certain requirements.
See Description of the Share Capital Shareholders Meetings Dividends.
Record Date
Pursuant to existing Philippine SEC rules, cash dividends declared by us must have a record date not less than
10 days nor more than 30 days from the date the cash dividends are declared.
With respect to stock dividends, the record date is to be not less than 10 days nor more than 30 days from the
date of shareholder approval, provided however, that the set record date is not to be less than ten trading days
from receipt by the PSE of the notice of declaration of stock dividend. If no record date is set, under Philippine
SEC rules the record date will be deemed fixed at 15 days from the date of the stock dividend declaration. In the
event that a stock dividend is declared in connection with an increase in authorized capital stock, the
corresponding record date is to be fixed by the Philippine SEC.
Dividends
We declare dividends to shareholders of record, which are paid from our unrestricted retained earnings. Any
future dividends we pay will be at the discretion of the Board after taking into account our operations, earnings,
financial condition, cash requirements, investment opportunities, the availability of credit, and other factors as
the Board may consider relevant. In addition, our payment of dividends will be subject to the provisions and
procedures of our articles of incorporation and by-laws. Subject to the foregoing, our present policy is to pay up
to 50% of our annual net income in dividends. However, this policy may be subject to future revision.
During the 2005, 2006 and 2007 fiscal years, we declared and paid the dividends set forth in the following table.
The U.S. dollar equivalents shown are based on the BSP rate of P
=45.063 = U.S.$1.00 as of September 28, 2007.
We have not declared a dividend during the 2008 fiscal year.
Dividend per Share(1)
P
=
U.S. dollars
Declaration date
February 16, 2005 ................................................................

August 9, 2005 ......................................................................
October 21, 2005 ..................................................................
April 17, 2006 .......................................................................
June 22, 2006 ........................................................................
June 21, 2007 ........................................................................
Total
P
=
U.S. dollars
99,367
99,367
99,367
99,367
99,367
400,000
2,205.1
2,205.1
2,205.1
2,205.1
2,205.1
8,876.5
(thousands)
0.03
0.03
0.03
0.03
0.03
0.12
0.0006657
0.0006657
0.0006657
0.0006657
0.0006657
0.0026629
Note:
(1)
At each dividend declaration date, 3,312,989,386 Shares were issued and outstanding.
29
Exchange Rates
Fluctuations in the exchange rates between the peso and the U.S. dollar and other foreign currencies will affect
the equivalent in U.S. dollars or other foreign currencies of the peso price of the Shares on the PSE, of dividends
distributed in pesos by us, if any, and of the peso proceeds received by investors on a sale of the Shares on the
PSE, if any. Fluctuations in such exchange rates will also affect the peso value of our assets and liabilities which
are denominated in currencies other than pesos.
The PDS, a computer network supervised by the BSP, through which the members of the Bankers Association of
the Philippines effect spot and forward currency exchange transactions, was introduced in 1992. The PDS was
adopted by the BSP as a means to monitor foreign exchange rates. The BSP Rate is the weighted average rate for
the purchase of U.S. dollars with pesos under the PDS and published in the BSPs Reference Exchange Rate
Bulletin. On September 28, 2007, the BSP Rate was P
=45.063 = U.S.$1.00. On January 18, 2008, the BSP Rate
was P
=40.959 = U.S.$1.00.
The following table sets forth certain information concerning the BSP Rate between the peso and the U.S. dollar
for the periods and dates indicated, expressed in pesos per U.S.$1.00:
Peso/U.S. dollar exchange rate
Year
2003 ......................................................................................
2004 ......................................................................................
2005 ......................................................................................
2006 ......................................................................................
2007
January ..............................................................................
February ............................................................................
March ................................................................................
April ..................................................................................
May ...................................................................................
June ...................................................................................
July ....................................................................................
August ...............................................................................
September ..........................................................................
October .............................................................................
November .........................................................................
December ..........................................................................
Period end
Average(1)
High
Low
55.569
56.267
53.067
49.132
54.203
56.040
55.085
51.345
55.767
56.443
56.355
55.587
52.021
55.142
52.995
49.132
49.027
48.287
48.262
47.510
46.269
46.329
45.611
46.695
45.063
43.947
42.798
41.401
48.914
48.381
48.517
47.822
46.814
46.160
45.625
46.074
46.132
44.380
43.218
41.743
49.156
48.902
48.864
48.294
47.673
45.718
46.246
46.904
46.940
45.041
43.761
42.759
48.706
48.054
48.077
47.449
45.922
46.594
44.788
45.165
45.063
43.947
42.798
41.142
Note:
(1)
The average of the monthly average BSP Rates during the relevant period comprises the average of the monthly average rates for the
months of January 2007 through December 2007 and the average of the daily rates for the relevant period.
Source: Reference Exchange Rate Bulletin, Treasury Department of the BSP
30
Determination of Offer Price

The Offer Price has been set at P
=3.50. The Offer Price was determined through a book-building process and
discussions between us, the Selling Shareholders, the International Underwriter and the Joint Domestic Lead
Underwriters. Since the Shares have not been listed on any stock exchange, there has been no market price for
the Shares derived from day-to-day trading.
The factors considered in determining the Offer Price were, among others, our ability to generate earnings and
cash flow, our short and long-term prospects and the market price of comparable local and regional listed
companies. The Offer Price may not have any correlation to the actual book value of the Offer Shares.
31
Capitalization
The following table sets forth our short-term and long-term debt, stockholders equity and capitalization as of
September 30, 2007 and as adjusted to reflect the issuance and sale of the Offer Shares (assuming the
Over-Allotment Option is not exercised), after deducting underwriting discounts, commissions and estimated
offering expenses payable by us.
The table should be read in conjunction with our financial statements, including the notes thereto, included in
this Prospectus beginning on page F-2, and also Managements Discussion and Analysis of Financial Condition
and Results of Operations Liquidity and Capital Resources. Other than as described below, there has been
no material change in our capitalization since September 30, 2007.
As of September 30, 2007
Actual
P
=
As Adjusted
U.S.$
(1)
P
=
U.S.$ (1)
(in millions)
Total short-term and long-term debt(2) .................................

Stockholders equity:
Common stock: =
P0.15 par value per Share;
5,000,000,000 Shares authorized;
3,312,989,386 Shares issued and fully paid up ................
Additional paid-in capital, net ..............................................
Retained earnings ..................................................................
Total stockholders equity .....................................................
532.8
3,470.2
11.8
77.0
532.8
4,666.4
11.8
103.6
496.9
58.5
2,914.8
3,470.2
11.0
1.3
64.7
77.0
554.0
1,197.6
2,914.8
4,666.4
12.3
26.6
64.7
103.6
Total capitalization ............................................................
4,003.0
88.8
5,199.2
115.4
Notes:
(1)
The translations from pesos to U.S. dollars have been made on the basis of the BSP Rate as of September 28, 2007 of =
P45.063 =
U.S.$1.00. See Exchange Rates.
(2)
At January 15, 2008, our short-term and long-term indebtedness was =
P947 million. There has not been any material change in our
contingent liabilities since September 30, 2007.
32
Dilution
As of September 30, 2007, our net book value was approximately P
=3,470.2 million, or P
=1.047 per Share. Net
book value per Share represents assets minus total liabilities divided by the total number of Shares outstanding.
Without taking into account any other changes in such net tangible book value after September 30, 2007, other
than to give effect to the sale of the Offer Shares (assuming the Over-Allotment Option is not exercised) after
deduction of the underwriting discounts and commissions and estimated offering expenses of this offering
payable by us, our adjusted net book value as of September 30, 2007 would increase to P
=4,666.4 million, or
P
=1.263 per Share. This represents an immediate increase in net book value of P
=0.216 per Share to existing
shareholders, and an immediate dilution of P
=2.237 per Offer Share to purchasers of Offer Shares at the Offer
Price.
The following table illustrates dilution on a per Share basis based on the Offer Price of P
=3.50 per Offer Share,
assuming the Over-Allotment Option is not exercised:
Offer Price per Offer Share...............................................................................................................................
Net book value per Share as of September 30, 2007 .......................................................................................
Increase per Share attributable to the Offer Shares ..........................................................................................
Pro forma net book value per Share after the Offer ........................................................................................
Dilution to purchasers of Offer Shares .............................................................................................................
=
P3.50
P1.047
=
=
P0.216
P
=1.263
=
P2.237
The following table sets forth the shareholdings and percentage of Shares outstanding of existing and new
shareholders of the Company immediately after completion of the Offer, assuming no exercise of the
Over-Allotment Option:
Shares
Number
Percent
Existing shareholders ............................................................................................................... 2,551,423,599

New investors........................................................................................................................... 1,142,348,680
69%
31%
Total ......................................................................................................................................... 3,693,772,279
100%
See also Risk Factors Risks Relating to the Offer Future sales of Shares in the public market could
adversely affect the prevailing market price of the Shares and shareholders may experience dilution in their
holdings.
33
Selected Financial Information

The following tables present summary financial information for us and should be read in conjunction with
the auditors reports and with our financial statements and notes thereto contained in this Prospectus and the
section entitled Managements Discussion and Analysis of Financial Condition and Results of Operations.
The summary financial information presented below as of and for the years ended June 30, 2005 and June
30, 2006 was derived from the consolidated financial statements of PCPPI, and prepared in accordance with
PFRS and audited by MS & Co. The summary financial information as of and for the year ended June 30,
2007 was derived from the financial statements of PCPPI, audited by MS & Co. and prepared in accordance
with PFRS. The summary financial information as of September 30, 2007 and for the three month periods
ended September 30, 2006 and 2007 was derived from the financial statements of PCPPI, prepared in
accordance with PFRS and audited by MS & Co. The information below is not necessarily indicative of the
results of future operations. Furthermore, the translation of peso amounts to U.S. dollars is provided for
convenience only. For additional information regarding financial information presented in this Prospectus, see
Presentation of Financial and Other Information.
2005
P
=
2006
2007
P
=
P
=
September 30,
(1)
2006
2007
2007(1)
U.S.$
P
=
P
=
U.S.$
2007
Revenues
Net sales .........................................
Cost of goods sold..........................
8,932.5
5,622.7
10,992.8
7,252.8
12,916.2
8,760.0
286.6
194.4
2,753.0
1,933.0
3,198.9
2,193.9
71.0
48.7
Gross Profit ....................................
3,309.8
3,740.0
4,156.2
92.2
820.0
1,005.0
22.3
Operating Expenses
Selling and distribution...................
General and administrative ............
Marketing expenses ........................
1,224.9
507.5
524.2
1,434.7
536.3
424.1
1,594.3
598.5
468.3
35.3
13.3
10.4
374.6
141.5
134.5
446.7
191.1
176.6
9.9
4.2
3.9
2,256.6
2,395.1
2,661.1
59.0
650.6
814.4
18.0
Income From Operations ...............

Net Finance and Other Income
(Expense) ....................................
1,053.2
1,344.9
1,495.1
33.2
169.4
190.6
4.3
24.5
0.5
4.5
0.1
Income Before Tax .........................
906.3
1,289.6
1,519.6
33.7
161.6
195.1
4.4
Income Tax Expense .....................
139.0
420.9
518.2
11.5
55.9
48.6
1.1
Net Income ....................................
767.3
868.7
1,001.4
22.2
105.7
146.5
3.3
Earnings Per Share

Basic................................................
0.23
0.26
0.30
0.007
0.03
0.04
0.00
(146.9)
(55.3)
(7.8)
Note:
(1)
P45.063 to U.S.$1.00 as of
September 28, 2007.
34
As at June 30,
2005
2006
As at September 30,
2007
(1)
2007
2007
P
=
P
=
P
=
U.S.$
P
=
2007(1)
U.S.$
ASSETS
Current Assets
Cash and cash equivalents..................................
Receivables net ..............................................
Inventories net ...............................................
Due from a related party(2) ................................
Prepaid expenses and other current assets .........
333.1
647.3
401.7
54.4
477.8
658.7
512.5
31.8
632.3
828.3
600.9
133.3
61.0
14.0
18.4
13.3
3.0
1.4
245.3
771.7
667.3
134.9
63.4
5.5
17.1
14.8
3.0
1.4
Total Current Assets .....................................
1,436.5
1,680.8
2,255.8
50.1
1,882.6
41.8
Noncurrent Assets
Bottles and cases net......................................
Investments in associates ....................................
Property, plant and equipment net ................
Deferred income tax ...........................................
Other assets ........................................................
1,091.8
2,417.6
196.3
38.0
1,324.1
2,440.2
195.5
75.7
1,687.6
505.5
2,158.1
40.4
137.9
37.4
11.2
47.9
0.9
3.1
1,679.9
506.4
2,368.5
173.2
37.3
11.2
52.6
3.8
Total Noncurrent Assets ...............................
3,743.7
4,035.5
4,529.5
100.5
4,728.0
104.9
5,180.2
5,716.3
6,785.3
150.6
6,610.6
146.7

Liabilities
Current Liabilities
Notes payable.....................................................
Accounts and acceptances payable and
accrued expenses ............................................
Income tax payable ............................................
Dividends payable ..............................................
Due to a related party ........................................
Current portion of long-term debt .....................
328.4
48.6
48.6
1.1
428.6
9.5
1,821.0
92.2
154.6
1,962.0
183.7
99.4
116.7
2,201.2
271.1
400.0
53.4
241.7
48.8
6.0
8.9
1.2
5.4
2,065.7
203.5
52.2
83.3
45.8
4.5
1.2
1.8
Total Current Liabilities ................................
2,396.2
2,410.4
3,216.0
71.4
2,833.3
62.8
255.8
333.3
41.7
0.9
20.8
0.5
159.5
125.2
131.6
117.7
203.9
4.5
210.9
75.4
4.7
1.7
Total Noncurrent Liabilities ..........................
540.5
582.6
245.6
5.4
307.1
6.9
Total Liabilities .............................................
2,936.7
2,993.0
3,461.6
76.8
3,140.4
69.7
496.9
59.5
496.9
59.5
496.9
59.5
11.0
1.3
496.9
59.5
11.0
1.3
266.0
1,421.1
274.6
1,892.3
(1.0)
2,768.3
61.5
(1.0)
2,914.8
64.7
Long-term debt net of current portion..........
Accrued retirement cost net of current
portion............................................................
Deferred tax liability ..........................................
Equity
Capital stock.......................................................
Additional paid-in capital...................................
Effect of dilution of ownership
in an investment .............................................
Revaluation increment on land ..........................
Retained earnings ...............................................
Total Equity ..................................................
2,243.5
2,723.3
3,323.7
73.8
3,470.2
77.0
5,180.2
5,716.3
6,785.3
150.6
6,610.6
146.7
Notes:
(1)
P45.063 to U.S.$1.00 as of
September 28, 2007.
(2)
Classified as a current asset in our interim balance sheet as at September 30, 2007 with comparative balance as at June 30, 2007 as
shown on page F-42.
35

2005
P
=
2006
2007
P
=
P
=
September 30,
(1)
2006
2007
2007(1)
U.S.$
P
=
P
=
U.S.$
2007
Key performance indicators

and ratios
Gross sales ......................................
Net sales .........................................
EBIT(2) ...........................................
EBIT margin(3) ................................
EBITDA(4) .....................................
EBITDA margin(5) .........................
Gross margin(6) .............................
Return on equity(7) .........................
Return on assets(8) ..........................
Capital expenditures(9) ...................
Net income .....................................
operating activities......................
investing activities.......................
financing activities ......................
Debt-to-equity ratio (10) ................
10,581.1
8,932.5
990.5
11.1%
1,637.1
18.3%
37.1%
34.2%
14.8%
1,060.2
767.3
12,803.4
10,992.8
1,369.6
12.5%
2,073.0
18.9%
34.0%
31.9%
15.2%
938.9
868.7
15,062.2
12,916.2
1,572.1
12.2%
2,385.6
18.5%
32.2%
30.1%
14.8%
1,616.8
1,001.4
334.2
286.6
34.9
52.9
35.9
22.2
3,209.7
2,753.0
175.5
6.3%
369.5
13.4%
29.8%
355.2
105.7
3,767.7
3,198.9
201.3
6.3%
422.7
13.2%
31.4%
427.7
146.5
83.6
71.0
4.5
9.4
9.5
3.3
1,611.3
1,679.0
2,121.3
47.1
284.7
274.1
6.1
(1,082.0)
(996.1)
(1,700.8)
(37.7)
(364.0)
(462.0)
(10.3)
(519.0)
32.9%
(538.3)
18.3%
(266.0)
10.0%
(5.9)
0.6
21.2%
(199.2)
15.4%
(4.4)
Notes:
(1)
P45.063 to U.S.$1.00 as of
September 28, 2007.
(2)
EBIT represents net income after adding income tax expense and interest expense. EBIT is not a measure of performance under PFRS
and investors should not consider EBIT in isolation or as an alternative to operating income or net income as an indicator of our
operating performance or to cash flow from operating, investing and financing activities as a measure of liquidity, or any other
measures of performance under PFRS. Because there are various EBIT calculation methods, our presentation of EBIT may not be
comparable to similarly titled measures used by other companies.
(3)
Represents EBIT divided by net sales.
(4)
EBITDA represents net income after adding income tax expense, depreciation and amortization and interest expense. EBITDA is not
a measure of performance under PFRS and investors should not consider EBITDA in isolation or as an alternative to operating income
or net income as an indicator of our operating performance or to cash flow from operating, investing and financing activities as a
measure of liquidity, or any other measures of performance under PFRS. Because there are various EBITDA calculation methods, our
presentation of EBITDA may not be comparable to similarly titled measures used by other companies.
(5)
Represents EBITDA divided by net sales.
(6)
Represents gross profit (computed as net sales less cost of goods sold) as a percentage of net sales.
(7)
Represents net income divided by total stockholders equity.
(8)
Represents net income divided by total assets.
(9)
Capital expenditure includes net additions to bottles and cases and property, plant and equipment.
(10) Debt-to-equity ratio is computed as total funded and interest bearing debt divided by total stockholders equity.
36
Managements Discussion and Analysis of Financial Condition

and Results of Operations
The following is a discussion and analysis of our financial condition and results of operations and certain trends,
risks and uncertainties that may affect our business. The critical accounting policies section discloses certain
accounting policies and management judgments that are material to our results of operations and financial
condition for the periods presented in this report. The discussion and analysis of our results of operations is
presented in three comparative sections: the year ended June 30, 2006 compared with the year ended June 30,
2005, the year ended June 30, 2007 compared with the year ended June 30, 2006 and the three month period
ended September 30, 2007 compared with the three month period ended September 30, 2006. Disclosure relating
to liquidity and financial condition and the trends, risks and uncertainties that have had or that are expected to
affect revenues and income complete the managements discussion and analysis.
Prospective investors should read this discussion and analysis of our financial condition and results of operations
in conjunction with the financial statements and the notes thereto set forth elsewhere in this Prospectus.
Our financial statements for the fiscal years ended June 30, 2005 and June 30, 2006 consolidated the results of
Nadeco Realty, which was a subsidiary. As a result of a reorganization of Nadeco Realty that became effective
on February 1, 2007, Nadeco Realty is no longer consolidated in our financial statements, and our interests in
Nadeco Realty and its parent, Nadeco Holding Corporation, are treated as investments in associates.
Accordingly, for the fiscal year ended June 30, 2007 and the three month period ended September 30, 2007, we
present financial statements of PCPPI as a stand-alone entity. The effects of the reorganization of Nadeco Realty
are described in Note 7 to the financial statements for the years ended June 30, 2007 and 2006 and Note 8 to
the financial statements for the three month periods ended September 30, 2007 and 2006, in each case included
in this Prospectus.
This discussion contains forward-looking statements and reflects our current views with respect to future events
and financial performance. Actual results may differ materially from those anticipated in these forward-looking
statements as a result of certain factors such as those set forth in the section entitled Risk Factors and elsewhere
in this Prospectus.
OVERVIEW
Pepsi, Pepsi Light, Pepsi Max, 7Up, Diet 7Up, Mountain Dew, Gatorade, Lipton Iced Tea, Tropicana, Propel and
Sting. We derive substantially all of our revenue from sales of our beverage products to retailers and to
wholesalers. Our customers include supermarket and restaurant chains, wholesalers and individual outlets such
as supermarkets, restaurants, convenience stalls and the small neighborhood grocery stores and restaurants
known as sari-sari stores and carinderias, respectively.
Historically, the bulk of our sales revenue has come from sales of carbonated beverages in returnable glass bottles,
or RGBs, which we collect after use and reuse multiple times. Using RGBs enables us to offer products at lower
retail prices than other forms of packaging, thereby making our products accessible to a wider section of the
Philippine population. However, the RGB model requires us to maintain a float of glass bottles and plastic
shells for transporting them, and to manufacture our products in geographical proximity to the markets in which
we sell them. We also sell carbonated beverages in aluminum cans and polyethylene terephthalate (PET)
bottles, which are more suitable for supermarket sales and for sale in places not serviced by our RGB distribution
network.
In recent years, there has been steady growth in the Philippines market for non-carbonated beverages, which has
been influenced by a trend towards products associated with health and wellness, while the total market for
carbonated beverages has remained relatively flat.
37
Managements Discussion and Analysis of Financial Condition and Results of Operations
The following table shows the net sales, gross sales and gross profit we derived from sales of carbonated
beverages and non-carbonated beverages, respectively, for the 2005, 2006 and 2007 fiscal years and the three
month periods ended September 30, 2006 and 2007.
Three month period ended
Fiscal year ended June 30,
2005
2006
September 30,
2007
2006
2007
(P
=, millions)
Carbonated beverages:
Gross sales.................................................
Net sales ....................................................
Gross profit ...............................................
Non-carbonated beverages:
Gross sales.................................................
Net sales ....................................................
Gross profit ...............................................
Total:
Gross sales.................................................
Net sales ....................................................
Gross profit ...............................................
Net income ................................................
9,895.1
8,287.0
3,058.7
10,950.2
9,262.4
3,190.2
12,736.4
10,774.6
3,507.4
2,700.0
2,284.0
689.7
3,079.0
2,573.8
800.5
686.0
645.5
251.1
1,853.2
1,730.4
549.8
2,325.8
2,141.6
648.8
509.7
469.0
130.3
688.7
625.1
204.5
10,581.1
8,932.5
3,309.8
767.3
12,803.4
10,992.8
3,740.0
868.7
15,062.2
12,916.2
4,156.2
1,001.4
3,209.7
2,753.0
820.0
105.7
3,767.7
3,198.9
1,005.0
146.5
FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our results of operations are affected by a variety of factors. Set out below is a discussion of the most significant
factors that have affected our results in the past, and which we expect to affect our results in the future. Factors
other than those discussed below could also have a significant impact on our results of operation and financial
condition in the future. See Risk Factors.
Pricing and volume
Since fiscal 2002, our sales volume has increased steadily on an annual basis. The volume increases in carbonated
beverages are the result of improved marketing and distribution efforts, which have increased our share of an
overall market that has remained relatively flat, due to its maturity and the increasing appeal to consumers of
beverages associated with health and wellness. We began manufacturing and selling non-carbonated beverages
in fiscal 2004, and in fiscal 2007, these products constituted approximately 9.2% of our sales volume and 15.4%
of our gross sales. Our volumes are also affected by the overall performance of the Philippine economy. During
the years ended June 30, 2005, 2006 and 2007, the Philippines GDP grew by 5.4%, 5.5% and 5.7%,
respectively. However, the last decade has also included years of negative and slow economic growth. See Risk
Factors Changes in economic conditions in the Philippines may affect our financial performance and Risk
Factors A slowdown in the Philippines economic growth could adversely affect us.
The following table shows the sales volumes of our carbonated and non-carbonated beverages in fiscal 2005,
fiscal 2006 and fiscal 2007 and the three month periods ended September 30, 2006 and 2007.
September 30,

2005
2006
2007
2006
2007
(millions of 8-ounce case equivalents)
Carbonated beverages ...................................

Non-carbonated beverages ............................
Total ..........................................................
38
103.9
3.8
107.7
109.9
9.9
119.8
120.4
12.2
132.6
26.1
2.7
28.8
28.9
3.7
32.6
Our prices are affected by a variety of factors, in particular the cost of producing and distributing our beverages
and the availability and price of competitive beverages. Historically our carbonated beverages, including Pepsi,
have tended to be priced slightly below the comparable products of The Coca-Cola Company. The market for
non-carbonated beverages is more fragmented. Some of our products, such as iced teas, compete directly with
comparable products, which constrains our ability to set prices. In less competitive categories, we have greater
flexibility to adopt pricing strategies that we believe will maximize our profit. In newer product categories, there
is also usually greater scope to use new packaging and sizing to effect price changes.
Because increases in most of our raw material costs, such as sugar and packaging costs, affect the industry
generally, historically, over time, we have usually been able to pass on increased costs to customers. In addition,
we charge higher prices in some more remote regions, reflecting the higher transport costs involved in producing
and distributing products.
Packaging and Product mix
Our margins differ between beverage products and package types and sizes. Excluding packaging, production
costs are similar across our range of carbonated beverages, but vary between non-carbonated beverages.
Packaging costs vary, with RGBs being less expensive than PET, aluminum cans or non-returnable glass. The
incremental cost of producing larger-sized serves in the same package type is proportionately lower than the
increased volume, creating opportunities to achieve higher margins where customers perceive value in terms of
volume. The prices we are able to charge for our products are significantly affected by the competitive landscape,
in particular the price and availability of comparable products in comparable packages and sizes. As a result of
these factors, the margins we earn on our products can be substantially different, and the margins can change in
both absolute and relative terms from period to period. For example, in recent periods, our margins for
carbonated beverages in RGBs have been amongst our highest, reflecting the low production costs and relatively
stable competitive landscape, and higher for the one-liter take-home pack than for the single-serve 355ml pack.
As a result of the different margins between our products and packages, product and package mix from period
to period can have a significant effect on our operating profit. While we attempt to adjust our product and
package mix to maximize profitability, changes in consumer demand and the competitive landscape can have a
significant impact on our mix and therefore our profitability.
Raw materials prices
Over half of our total costs comprise purchases of raw materials. Our largest purchases are of sugar and beverage
concentrates, each of which constituted approximately 26% of our cost of goods sold in fiscal 2006 and fiscal
2007, respectively. Historically, sugar prices have fluctuated considerably. We purchase all our sugar
requirements domestically because of import restrictions imposed by the Philippines government. As a result of
the import restrictions, Philippines sugar prices have often exceeded the world market price. We do not undertake
any hedging with respect to our sugar purchasing requirements. See Market Risk Commodity prices. We
purchase all of our beverage concentrates from PepsiCo at prices that are fixed as a percentage of the wholesale
prices we charge for the finished products, subject to a price floor in U.S. dollars. Our purchases of beverage
concentrates from PepsiCo constitute the largest component of these purchases. See Business Related Party
Transactions Transactions with PepsiCo. However, if we launch new brands, we will have to negotiate new
arrangements with PepsiCo for the supply of the concentrate for that product.
We also have substantial costs for packaging, which constituted approximately 20% and 19% of our cost of
goods sold in fiscal 2006 and fiscal 2007, respectively. The major components of this expense were purchases of
PET preforms, which we convert into PET bottles at our plant, non-reusable glass bottles, aluminum cans and
closures. We also make regular purchases of RGBs to maintain our float at appropriate levels. However, we only
expense a small portion of the value of our RGB float per year, carrying the rest as an asset. See Critical
Accounting Policies Bottles and cases. We purchase each of these materials from a small number of suppliers,
including suppliers based in the Philippines and in other parts of Asia, usually under short term, fixed price
contracts. As a result, our costs are exposed to fluctuations in the market prices of these materials. Under our
Exclusive Bottling Appointments, our major suppliers must be approved in advance by PepsiCo, which may limit
our ability to exert competitive pressure on our suppliers. Because packaging costs vary between package types
(generally, RGB is the cheapest package and aluminum cans the most expensive) changes in our packaging mix
can affect our overall costs.
39
Distribution
Our sales volumes depend on the reach of our distribution network. An important aspect of our distribution
system is the infrastructure-intensive process of selling and delivering our RGB products to many thousands of
small retailers, including sari-sari stores and carinderias. See Business Distribution. According to AC
Nielsen, as of September 2007, our distribution network reached approximately 46% of the potential outlets for
our products in the Philippines on a volume-weighted basis. Our growth strategy for the carbonated beverages
category is to increase our overall market share by increasing the reach of our distribution network to cover a
larger proportion of potential outlets, although we estimate that the proportion of potential outlets that we could
service profitably is significantly less than the total number. However, while increasing the reach of our
distribution network would be expected to increase sales volume, our efforts to do so will require significant
investments in distribution infrastructure such as additional trucks, refrigeration equipment, warehouse space
and a larger float of glass bottles and plastic shells, as well as higher costs for additional sales and distribution
staff.
Although our direct purchases of fuel are relatively small as a proportion of our total costs, we are exposed to
fluctuations in the price of oil through our dependence on freight and delivery services, the prices we pay for
which reflect, over time, increases in the cost of fuel.
Seasonality
Sales of our products are affected by the weather, generally being higher in the hot, dry months from March
through June and lower during the wetter monsoon months of July through October. In addition, the Philippines
is at risk of typhoons during the monsoon period. Typhoons usually result in substantially reduced sales in the
affected area, and have, in the past, interrupted production at our plants in affected areas. While these factors
lead to a natural seasonality in our sales, unseasonable weather could also significantly affect sales and
profitability compared to previous comparable periods. We also tend to experience a period of higher sales
around the Christmas/New Year holiday period in late December. In the 2007 fiscal year, approximately 30% of
our sales took place during the fourth quarter, while 21% took place in the first quarter.
Currency fluctuations
All of our sales are denominated in Philippine pesos. Some of our significant costs, such as our purchases of
packaging materials are denominated in United States dollars. Some of our other costs, which we incur in
Philippine pesos, can also be affected by fluctuations in the exchange rate between the Philippine peso and United
States dollars. For example, fuel prices in the Philippines are based on the United States dollar price of oil. A
weaker Philippine peso may also place upward pressure on sugar prices if it makes it economic for domestic
producers to export their product at international market prices. In addition, our purchases of beverage
concentrate from PepsiCo are subject to a U.S. dollar-denominated floor price, which means that a substantial
drop in the value of the Philippine peso could result in higher concentrate prices as a proportion of revenues,
adversely affecting our margins. As a result, movements in the exchange rate between Philippine pesos and other
currencies, in particular United States dollars, can have a significant effect on our results of operations. See
Market Risk Currency Exchange Rates.
FACTORS AFFECTING COMPARABILITY
We changed our method of estimating uncollectible receivables with effect from the balance sheet as of June 30,
2007. For balance dates prior to June 30, 2007, management categorized any amount that remained unpaid more
than 60 days after its due date as uncollectible. Management now estimates the amount of receivables that it does
not expect to collect solely on the basis of its review of the age and status of the outstanding accounts, without
reference to an arbitrary cut-off. The change in method resulted in a P
=29 million writeback of amounts previously
estimated for as uncollectible receivables and a corresponding P
=29 million increase in income before income tax
and P
=19 million increase in net income as of June 30, 2007. We have not restated prior period comparatives on
the same basis.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Critical accounting policies are those that are both (i) relevant to the presentation of our financial condition and
results of operations and (ii) require managements most difficult, subjective or complex judgments, often as a
result of the need to make estimates about the effect of matters that are inherently uncertain. As the number of
variables and assumptions affecting the possible future resolution of the uncertainties increase, those judgments
40
become even more subjective and complex. In order to provide an understanding of how our management forms
its judgments about future events, including the variables and assumptions underlying its estimates, and the
sensitivity of those judgments to different circumstances, we have identified the critical accounting policies
discussed below. While we believe that all aspects of our financial statements should be studied and understood
in assessing our current and expected financial condition and results of operations, we believe that the following
critical accounting policies warrant particular attention. For more information, see Note 2 and Note 3 to our
financial statements included in this Prospectus.
Revenue recognition
We recognize revenue from the sales of our products when the significant risks and rewards of ownership have
been transferred to the buyer, which coincides with the delivery of the products to the customer, which may be
a retailer or a third party distributor. For the purposes of the net sales line on our income statement, we recognize
revenue net of certain incentives that we offer from time to time to our customers, such as discounts and
allowances that we may offer retailers, and the distribution margin we pay to third party distributors. We refer
to revenue prior to these deductions as gross sales.
Receivables
Approximately 57% of our sales in fiscal 2006 and 52% in fiscal 2007 were cash sales, and we expect the
proportion of credit sales to continue to grow as sales to supermarkets, chain stores, restaurant chains and third
party distributors increase as a percentage of total sales. Our credit terms for most customers are 30 days,
although we offer some of our larger customers 60 or 75 days. We provide separately for estimated losses for
uncollectible amounts. Management performs regular reviews of the age and status of outstanding accounts,
designed to identify accounts with objective evidence of impairment. The review is accomplished using a
combination of specific and collective assessment approaches, with the impairment losses being determined for
each risk group that management identifies. Management estimates this allowance first by identifying specifically
any accounts that it does not expect to collect, and then by categorizing any other amount that remains unpaid
more than 60 days after its due date as uncollectible. Were this method to result in an under-estimate of the
amount of uncollectible receivables, we would incur write-downs of our recorded receivables that could impact
profitability in the period they are incurred. At June 30, 2005, 2006 and 2007 and September 30, 2007, the
allowance for uncollectible receivables was P
=93 million, P
=105 million, P
=67 million and P
=83 million, respectively.
Bottles and cases
Our float of RGBs and plastic cases represents a significant capital asset in our business. The value at which
we carry this investment on our balance sheet under the line item Bottles and cases net consists of two
components:
an amount representing the deposit values of our RGBs and cases (that is, the price we pay our customers
to return them to us after use), less an allowance, which we expense during each accounting period as part
of our cost of goods sold, representing our estimate, based on sampling of the physical inventory, of the
proportion of outstanding RGBs and cases that will not be returned to us or will be unusable or obsolete;
and
an additional amount representing the excess of the acquisition costs of the bottles and cases over their
deposit values. We amortize this amount over the estimated useful lives of the RGBs and cases. We base our
estimates of useful lives principally on historical rates of breakage and loss. Currently, we estimate useful
lives of 5 years for RGBs and 7 years for cases.
If we were to reduce our estimates of the useful lives of our bottles and cases, it would increase our amortization
expenses and decrease our non-current assets.
Depreciation of Buildings, Plant and Equipment
Our bottling plants are located on leased land. See Business Properties. Under the terms of the leases, we
own the buildings and building improvements themselves, which appear as assets on our balance sheet.
We carry our buildings, plant and equipment at cost, which comprises its purchase price and any directly
attributable cost of bringing the asset to working condition and location for its intended use, less accumulated
41
depreciation, amortization and impairment losses, if any. When we incur subsequent costs in relation to the asset
that can be reliably measured and when it is probable that future economic benefits will flow to us as a result,
such costs are added to the carrying amount. These costs are distinguished from day-to-day running costs for the
asset, which we recognize as expenses in the period incurred.
We depreciate the value of plant and equipment on a straight-line basis over the estimated useful lives of the
assets. We amortize leasehold improvements over the shorter of their useful lives and the term of the lease.
We annually review the estimated useful lives of buildings, plant and equipment based on the period over which
we expect the assets to be available for use and we update our estimates if our expectations differ from previous
estimates due to physical wear and tear or technical or commercial obsolescence. The following table shows the
estimated useful lives of certain of our asset classes:
Asset
Estimated useful life
Buildings ...............................................................................................................................................
Bottling machinery ...............................................................................................................................
Trucks ...................................................................................................................................................
Coolers .................................................................................................................................................
20
10
5
5
years
years
years
years
If we were to reduce our estimates of the useful lives of our plant and equipment, it would increase our
depreciation and amortization expenses and decrease non-current assets.
We review the carrying values of our buildings, plant and equipment at each balance sheet date to determine
whether there is any indication of impairment. An asset is impaired if the carrying value exceeds the amount
recoverable with respect to the asset, which is the higher of its:
fair value less cost to sell, which is the amount we estimate that we would obtain in an arms length sale
less the estimated costs of undertaking the sale; or
value in use, which is a risk-adjusted estimate of the discounted future cash flows that the asset will
generate (or, if the asset does not generate cash flows independently of those from other assets, the cash
flows from the cash-generating unit).
Indications of impairment include:
significant underperformance relative to the expected historical or projected future operating results;
significant changes in the manner of use of the acquired assets or the strategy for the overall business; and
significant negative industry or economic trends.
As of June 30, 2005, 2006 and 2007 and September 30, 2007, the carrying amount of property, plant and
equipment amounted to approximately P
=2,418 million, P
=2,440 million, P
=2,158 million and P
=2,369 million,
respectively. Provision for probable losses for idle assets amounted to approximately P
=29 million in fiscal 2005,
P
=24 million in fiscal 2006 and P
=2 million in fiscal 2007. For the period ended June 30, 2005, 2006 and 2007 and
the three month period ended September 30, 2007, depreciation amounted to approximately P
=413 million, P
=443
million, P
=484 million and P
RESULTS OF OPERATIONS
The following discussion and analysis is based on the audited financial statements for the fiscal years ended June
30, 2005, 2006 and 2007 and the audited financial statements for the three month periods ended September 30,
2006 and 2007, prepared in conformity with PFRS and included herein, and should be read in conjunction with
those financial statements.
42
In discussing our results of operations, we focus on the following key measures and line items:
Gross sales Gross sales is our total sales revenue (excluding amounts we collect for VAT and remit to the
Philippines government).
Net sales Net sales is gross sales net of certain incentives that we offer to our customers, such as discounts and
allowances that we may offer retailers, and the distribution margin we pay to third party distributors. We analyze
our net sales in terms of sales volume and net price per case. To provide comparability across package sizes, we
convert our sales volumes into the equivalent volume in cases of 24 eight-ounce bottles. We calculate our net price
per case by dividing our net sales by the sales volume for the same period. Changes in net price per case include
both the impact of sales price changes and changes in product and package mix. To date, the net price per case
of our non-carbonated beverage products has been considerably higher than that of our carbonated beverage
products, reflecting the fact that our non-carbonated products are predominantly packaged in higher priced PET
and non-returnable glass bottles, the higher cost of producing these products and the more limited competition
in several non-carbonated categories.
Cost of goods sold Cost of goods sold is the direct costs of production, including:
raw material costs, which consist mainly of purchases of sugar, concentrate and packaging materials;
the delivery and freight costs incurred in transporting raw materials and finished products between our
plants. Because we currently manufacture all of our non-carbonated beverage products and all products
packed in cans and plastic bottles at our Muntinlupa plant and transport them to our other plants for
distribution, our distribution and freight costs in cost of goods sold have increased in recent periods as our
non-carbonated beverage production has increased
depreciation and amortization of our manufacturing plant and equipment and RGBs and shells;;
the salaries, wages and employee benefits we pay to our employees involved in production;
rental costs of equipment such as forklifts, and the costs of utilities at our production plants; and
the cost of repairing and maintaining our production equipment.
The following table shows the major components of our cost of goods sold for fiscal 2005, fiscal 2006, fiscal
2007 and the three month periods ended September 30, 2006 and 2007.
September 30,

2005
Materials and supplies......

Delivery and freight..........
Depreciation and
amortization .................
Salaries, wages and
employee benefits .........
Rental and utilities ...........
Repairs and maintenance .
Other ................................
Total .............................
2006
2007
2006
2007
(P
=,
millions)
(P
=,
millions)
(P
=,
millions)
(P
=,
millions)
(P
=,
millions)
4,232.1
337.5
75.3
6.0
5,565.4
450.2
76.7
6.2
6,679.8
646.3
76.3
7.4
1,463.3
127.6
75.7
6.6
1,639.6
165.6
74.7
7.6
444.8
7.9
485.4
6.7
561.1
6.4
134.2
6.9
153.0
7.0
265.6
174.9
110.0
57.8
5,622.7
4.7
3.1
2.0
1.0
100.0
232.1
218.8
137.9
163.0
7,252.8
3.2
3.0
1.9
2.3
100.0
235.4
248.3
149.4
239.7
8,760.0
2.7
2.8
1.7
2.7
100.0
53.1
60.2
41.8
52.8
1,933.0
2.7
3.1
2.2
2.8
100.0
63.7
69.4
47.1
55.5
2,193.9
2.9
3.2
2.1
2.6
100.0
43
We compare costs across our product range by measuring changes in costs per case, which includes the impact
of changes both in price and in product and package mix.
Selling and distribution expenses Selling and distribution expenses include the salaries and commissions of the
sales and distribution personnel that we employ directly (but not the costs of third party distribution, which are
deducted from gross sales to arrive at net sales, as indicated above). Selling and distribution expenses also include
transport costs, rent on our warehouses and sales offices and depreciation on our coolers and trucks.
The following table shows the major components of our selling and distribution expenses for fiscal 2005, fiscal
2006 and fiscal 2007 and the three month periods ended September 30, 2006 and 2007.
2005
2006
(P
=,
Distribution ......................
Salaries, wages and
employee benefits .........
Depreciation and
amortization .................
Delivery and freight..........
Other ................................
Total .............................
September 30,
2007
(P
=,
2006
(P
=,
2007
(P
=,
(P
=,
millions)
millions)
millions)
millions)
millions)
395.8
32.3
454.6
31.7
516.5
32.4
119.8
32.0
136.6
30.6
203.9
16.6
216.5
15.1
231.6
14.6
54.8
14.6
65.8
14.7
166.5
107.3
351.4
1,224.9
13.6
8.8
28.7
100.0
183.2
141.5
438.9
1,434.7
12.8
9.9
30.5
100.0
211.2
192.5
442.5
1,594.3
13.2
12.0
27.8
100.0
50.3
42.9
106.8
374.6
13.4
11.5
28.5
100.0
57.9
48.6
137.8
446.7
13.0
10.9
30.8
100.0
Marketing expenses Marketing expenses principally consist of the costs of our advertising and promotional
costs. Under our Exclusive Bottling Appointment with PepsiCo, we undertake a joint marketing program with
PepsiCo under which PepsiCo is obliged to contribute an equal amount of funding. In recent years, PepsiCo has
made additional unilateral contributions to the marketing program generally to support programs and product
launches to which we have contributed capital and other expenditures beyond our Performance Agreement
obligations, although there can be no assurance that this practice will continue. In general, PepsiCo pays its
contributions to the marketing program directly to the suppliers, such as advertising agencies. As a result, our
marketing expenditures generally reflect less than half of the amount spent in a given period promoting our
brands and products in the Philippines. Marketing expenses only include the amounts we pay to third party
service providers and do not include the salaries and associated costs of our marketing staff, which we record
under general and administration expenses.
General and administrative expenses General and administrative expenses include executive and other head
office salaries, the salaries and administrative costs of our finance and administration and marketing staff and
other administrative costs such as professional fees, office rent and executive travel.
Operating profit margin We define our operating profit margin as our income from operations as a percentage
of our net revenue. We use this measure to assess the overall operating performance of the business, excluding
the impact of our financing activities and taxation.
Income taxes The tax rate on corporate income in the Philippines was 32% until November 1, 2005 and is
currently 35%. Under current law, this rate will continue until December 31, 2008, when current law stipulates
that it will reduce to 30%. Our effective tax rate for a period may differ from the applicable tax rate because of
a variety of factors, but principally because of differences in timing between the recognition of revenue and costs
under applicable accounting principles and their recognition under taxation law.
44
Three month period ended September 30, 2007 compared with three month period ended September
30, 2006
Summary
Three month
Three month
period ended period ended

September 30, September 30,
2007
2006
% change
3,209.7
2,753.0
820.0
169.4
105.7
17.4
16.2
22.6
12.5
38.6
(P
=, in millions)
Gross sales.......................................................................................................
Net sales ..........................................................................................................
Gross profit .....................................................................................................
Income from operations ..................................................................................
Net income......................................................................................................
3,767.7
3,198.9
1,005.0
190.6
146.5
Our net income for the three month period ended September 30, 2007 was P
=147 million, an increase of P
=41
million, or 38.6% from the three month period ended September 30, 2006. Net sales rose by P
=446 million, or
16.2%, but this increase was partially offset by a P
=261 million, or 13.5%, increase in cost of goods sold and a
P
=164 million, or 25.2%, increase in operating expenses.
Gross Sales
Gross sales increased from P
=3,210 million in the three month period ended September 30, 2006 to P
=3,768 million
in the three month period ended September 30, 2007, an increase of 17.4%.
Net Sales
Net sales increased from P
=3,199 million
in the three month period ended September 30, 2007, an increase of P
=446 million or 16.2%. Sales volumes
increased from 29 million cases in the three month period ended September 30, 2006 to 33 million cases in the
three month period ended September 30, 2007, an increase of 4 million cases or 13.0%. Overall, net price per
eight ounce case equivalents increased 2.8% from P
=95.6 in fiscal 2006 to P
=98.3 in the three month period ended
September 30, 2007, principally reflecting the larger proportion of higher-priced non-carbonated beverage sales.
Carbonated beverages Sales volumes of carbonated beverages increased 10.5% from 26.1 million cases in the
three month period ended September 30, 2006 to 28.9 million cases in fiscal 2007, reflecting overall industry
growth. The 2.0% increase in net prices for carbonated beverages largely reflected higher prices for the one liter
RGB package and growth in sales of higher priced PET bottles.
Non-carbonated beverages Sales volumes of non-carbonated beverages increased 37.8% from 2.7 million
cases in the three month period ended September 30, 2006 to 3.7 million cases in the three month period ended
September 30, 2007, reflecting the expansion of our non-carbonated beverage distribution and overall category
growth. The 3.3% decrease in net prices for non-carbonated beverages mainly reflected the introduction of
lower-priced products.
Carbonated beverages
Three
Three
month
month
period
period
ended
ended
September September
2007
2006
Sales volume1 ...................

Net price per case ............
Net Sales2 ........................
28.9
89.1
2,573.8
26.1
87.4
2,284.0
Non-carbonated beverages
Three
Three
month
month
period
period
ended
ended
% September September
change
2007
2006
10.5
2.0
12.7
3.7
170.1
625.1
2.7
175.9
469.0
Total
Three
Three
month
month
period
period
ended
ended
% September September
change
2007
2006
37.8
(3.3)
33.3
32.6
98.3
3,198.9
28.8
95.6
2,753.0
%
change
13.0
2.8
16.2
(footnotes continued on following page)

45
Notes:
(1)
Number of eight ounce case equivalents, in millions
(2)
P
=, in millions
Cost of goods sold

Cost of goods sold increased from P
=2,194
million in the three month period ended September 30, 2007, an increase of P
=261 million or 13.5%. The increase
was largely driven by volume growth.
The majority, or P
=176 million, of the increase in cost of goods sold represented higher raw materials costs. This
was primarily due to the increase in sugar and concentrate costs. The P
=13 million, or 2.5% increase in the sugar
cost reflected volume growth, partially offset by a decline in the average price for sugar from P
=27,636 per ton in
the three month period ended September 30, 2006 to P
=25,413 per ton in the three month period ended September
30, 2007, a decrease of approximately 8%. Our concentrate cost per case increased by 5%, principally reflecting
the product mix shift towards non-carbonated beverages, which have higher concentrate costs. Our packaging
cost increased from P
=367.5 million in the three month period ended September 30, 2006 to P
=398.8 million in the
three month period ended September 30, 2007 primarily reflecting the volume growth, partially offset by lower
peso prices for plastic bottles, caps/closures, crowns and labels.
The following table shows the major components of our cost of goods sold for the three months ended September
30, 2006 and 2007.
Three month period ended September 30,
2006
Materials and supplies...........................................................................

Delivery and freight...............................................................................
Depreciation and amortization..............................................................
Salaries, wages and employee benefits ..................................................
Rental and utilities ................................................................................
Repairs and maintenance ......................................................................
Other .....................................................................................................
Total..................................................................................................
2007
(P
=, millions)
(P
=, millions)
1,463.3
127.6
134.2
53.1
60.2
41.8
52.8
1,933.0
75.7
6.6
6.9
2.8
3.1
2.2
2.7
100.0
1,639.6
165.6
153.0
63.7
69.4
47.1
55.5
2,193.9
74.7
7.6
7.0
2.9
3.2
2.1
2.5
100.0
Selling and distribution expenses

Selling and distribution expenses increased from P
=374.6 million in the three month period ended September 30,
2006 to P
=446.7 million in the three month period ended September 30, 2007, an increase of P
=72 million or
19.3%. Distribution expenses increased by P
=16.8 million, or 14.0%, reflecting an increase in the number of
warehouses from 98 as at September 30, 2006 to 101 at September 30, 2007. Sales commissions increased by
P
=11.2 million, or 96.9%, principally reflecting payments for exceeding incentive targets. Personnel expenses
increased by P
=11.0 million, or 20.1% reflecting salary increases effective July 1, 2007 and cost of additional
personnel. Depreciation and amortization increased by P
=7.5 million, or 15.0%, mainly reflecting an increase in
the number of powered coolers placed with retailers. The cost of outside services increased by P
=6.5 million, or
68.9%, mainly reflecting the cost of temporary labor to deliver the higher volumes. Repairs and maintenance
increased by P
=6.2 million, or 28.5%, reflecting increased maintenance costs for automotive and marketing
equipment. Delivery and freight expenses increased by P
=5.6 million, or 13.1%, mainly as a result of increased
deliveries and higher gasoline prices. Our selling and distribution expenses represented 13.6% and 14.0% of net
revenue in the three month period ended September 30, 2006 and the three month period ended September 30,
2007, respectively.
46
Marketing
Our marketing expense increased from P
=134.5 million in the three month period ended September 30, 2006 to
P
=42.1 million or 31.3%. This
increase resulted from increases to match higher budgeted revenues together with additional investment to
support further growth. Marketing expense represented 4.9% and 5.5% of net revenue in the three month period
ended September 30, 2006 and the three month period ended September 30, 2007, respectively.
General and administrative expenses
General and administrative expenses increased from P
=141.5 million in the three month period ended September
30, 2006 to P
=49.6 million
or 35.1%. The increase was primarily due to higher accrual for bonuses reflecting our improved performance,
increases in repairs and maintenance costs, utilities and outside services. Our general and administrative expenses
represented 5.1% and 6.0% of net revenue in fiscal 2006 and fiscal 2007, respectively.
Income from operations
The foregoing factors resulted in an increase in income from operations of P
=21.2 million, or 12.5%. Our
operating margin for the three month period ended September 30, 2007 was 6.0%, compared to 6.2% for the
three month period ended September 30, 2006.
Income tax
Income tax expense was P
=48.6 million for the three month period ended September 30, 2007, which was equal
to an effective tax rate of 24.9%, compared with an effective tax rate of 34.6% for the three month period ended
September 30, 2006. Subsequent to August 10, 2007, when we completed our financial statements for the 2007
fiscal year, we received a ruling from the Philippines Bureau of Internal Revenue which allowed the acceleration
of certain deductions relating to the acquisition cost of bottles and shells. This would have had the effect of
reducing current tax payable by P
=87 million and increasing deferred tax expense and liability by P
=76 million. The
effect of this ruling was recognized in the three month period ended September 30, 2007. This has resulted in a
one-off tax benefit that is reflected in this period.
The income tax expense that pertains to current taxes and deferred taxes accounted for (P
=66.1) million and
P
=114.7 million, respectively, of the total income tax expense in the three month period ended September 30,
2007.
Net income
The foregoing factors resulted in an increase in net income of P
=40.8 million, or 38.6%. Our net income margin
for the three month period ended September 30, 2007 was 4.6%, compared to 3.8% for the three month period
ended September 30, 2006.
Fiscal year ended June 30, 2007 compared with fiscal year ended June 30, 2006
Summary
Fiscal 2007
Fiscal 2006
% change
(P
=, in millions)
Gross sales.......................................................................................................
Net sales ..........................................................................................................
Gross profit .....................................................................................................
Net income......................................................................................................
15,062.2
12,916.2
4,156.2
1,495.1
1,001.4
12,803.4
10,992.8
3,740.0
1,344.9
868.7
17.6
17.5
11.1
11.2
15.3
Our net income for fiscal 2007 was P

=1,001 million, an increase of P
=133 million, or 15.3% from fiscal 2006. Net
sales rose by P
=1,923 million, or 17.5%, but this increase was partially offset by a P
=1,507 million, or 20.8%,
increase in cost of goods sold and a P
=266 million, or 11.1%, increase in operating expenses.
47
Gross Sales
=12,803 million in fiscal 2006 to P
=15,062 million in fiscal 2007, an increase of
17.6%.
Net Sales
=12,916 million in fiscal 2007, an increase of P
=1,923
million or 17.5%. Sales volumes increased from 120 million cases in fiscal 2006 to 133 million cases in fiscal
2007, an increase of 13 million cases or 10.7%. Overall, net price per eight ounce case equivalents increased
6.2% from P
=91.8 in fiscal 2006 to P
=97.4 in fiscal 2007, reflecting the factors described below.
Carbonated beverages Sales volumes of carbonated beverages increased 9.6% from 110 million cases in fiscal
2006 to 120 million cases in fiscal 2007, reflecting an increase of approximately 2% in our market share. The
6.1% increase in net prices for carbonated beverages largely reflected price increases taken to offset the impacts
of cost increases (principally sugar) and a price rise coinciding with an increase in the rate of VAT from 10% to
12% in February 2006.
Non-carbonated beverages Sales volumes of non-carbonated beverages increased 22.2% from 10 million cases
in fiscal 2006 to 12 million cases in fiscal 2007, reflecting continuing geographical expansion of our
non-carbonated beverage distribution and overall category growth, partially offset by lower production in
November and December as we resolved a production issue at our Muntinlupa plant. The 1.3% increase in net
prices for non-carbonated beverages mainly reflected a shift in the sales mix towards the higher-priced Gatorade.
Sales volume1 ...................

Net Sales2 ........................
Total
Fiscal
Fiscal
Fiscal
Fiscal
Fiscal
Fiscal
2007
2006
change
2007
2006
change
2007
2006
change
120.4
89.5
10,775
109.9
84.3
9,262
9.6
6.1
16.3
12.1
176.5
2,142
9.9
174.2
1,730
22.2
1.3
23.8
132.6
97.4
12,916
119.8
91.8
10,993
10.7
6.2
17.5
Notes:
(1)
(2)
P
=, in millions
Cost of goods sold

=8,760 million in fiscal 2007, an increase of
P
=1,507 million or 20.8%. Of the total 20.8% increase, approximately 10.7% reflected volume growth, while the
remaining 10.1% reflected increases in the costs per case.
The majority, or P
=1,114 million, of the increase in cost of goods sold represented higher raw materials costs. This
was primarily due to the increase in sugar and concentrate costs. The average price for sugar increased from
P
=22,980 per ton in fiscal 2006 to P
=26,273 per ton in fiscal 2007, an increase of approximately 14.3%. The
increase reflected a period of high global sugar prices, although prices moderated towards the end of fiscal 2007.
Our concentrate cost per case increased by 10.4%, reflecting the price increases (which resulted in increased gross
revenue, which is the denominator in calculating concentrate costs) and the product mix shift towards
non-carbonated beverages, which have higher concentrate costs. Our packaging cost increased from P
=1,462
million in fiscal 2006 to P
=1,675 million in fiscal 2007 primarily resulting from the increase in PET cost per case
of approximately 14.6%, which reflected both price increases and the higher volume growth in non-carbonated
beverages, a greater proportion of which are packaged in PET.
48
The following table shows the major components of our cost of goods sold for fiscal 2006 and fiscal 2007.
2006

Other .....................................................................................................
Total..................................................................................................
2007
(P
=, millions)
(P
=, millions)
5,565.4
450.2
485.4
232.1
218.8
137.9
163.0
7,252.8
76.7
6.2
6.7
3.2
3.0
1.9
2.3
100.0
6,679.8
646.3
561.1
235.4
248.3
149.4
239.7
8,760.0
76.3
7.4
6.4
2.7
2.8
1.7
2.7
100.0

=1,594 million in fiscal 2007,
an increase of P
=160 million or 11.1%. Delivery and freight expenses increased by P
=51 million, or 36.0%, mainly
as a result of increased volumes and an 18% increase in freight rates, which principally reflected increases in the
cost of fuel. The 13.6% increase in distribution expenses reflects an increase in the number of warehouses from
99 as at June 30, 2006 to 101 at June 30, 2007. The 15.3% increase in depreciation and amortization mainly
reflected an increase in the number of powered coolers placed with retailers. Our selling and distribution
expenses represented 13.1% and 12.3% of net revenue in fiscal 2006 and fiscal 2007, respectively.
Marketing
Our marketing expense increased from P
=424 million in fiscal 2006 to P
=468 million in fiscal 2007, an increase of
P
=44 million or 10.4%. This increase reflects additional investment to support newly-introduced non-carbonated
beverage products, as well as supporting our increased volumes of carbonated beverages. PepsiCo contributed a
larger amount to our joint marketing program, reflecting its matching obligation under the Exclusive Bottling
Appointments together with an additional unilateral contribution. These amounts were paid directly to suppliers
and are therefore not reflected in our income statement. Marketing expense represented 3.9% and 3.9% of net
revenue in fiscal 2006 and fiscal 2007, respectively.
General and administrative expenses increased from P
=599 million in fiscal 2007,
an increase of P
=63 million or 11.6%. The increase was primarily due to a 13.7% increase in salaries, wages and
employee benefits, reflecting increased headcount, scheduled salary increases and increased performance
bonuses, and a P
=16 million or 13.7% increase in rental and utilities and outside services in fiscal 2007. Our
general and administrative expenses represented 4.9% and 4.6% of net revenue in fiscal 2006 and fiscal 2007,
respectively.
=150 million, or 11.2%. Our
operating margin for fiscal 2007 was 11.6%, compared to 12.2% for fiscal 2006.
Income tax
=518 million for fiscal 2007, which was equal to an effective tax rate of 34.1%,
compared with an effective tax rate of 32.6% for fiscal 2006. The provision for income tax that pertains to
current taxes and deferred taxes accounted for P
=363 million or 70% and P
=155 million or 30%, respectively, of
the total income tax expense in fiscal 2007. The corporate tax rate in the Philippines increased from 32% to 35%
on November 1, 2005.
Net income
The foregoing factors resulted in an increase in net income of P
=133 million, or 15.3%. Our net income margin
for fiscal 2007 was 7.8%, compared to 7.9% for fiscal 2006.
49
Fiscal year ended June 30, 2006 compared with fiscal year ended June 30, 2005.
Summary
Fiscal 2006
Fiscal 2005
% change
(P
=, in millions)
Gross sales.......................................................................................................
Net sales ..........................................................................................................
Gross profit .....................................................................................................
Net income......................................................................................................
12,803.4
10,992.8
3,740.0
1,344.9
868.7
10,581.1
8,932.5
3,309.8
1,053.2
767.3
21.0
23.1
13.0
27.7
13.2
Our net income in fiscal 2006 was P

=869 million, an increase of P
=102 million, or 13.2% from the comparable
period in 2005. Net sales rose by P
=2,060 million, or 23.1%, but this increase was partially offset by a P
=1,630
million, or 29.0%, increase in cost of goods sold and a P
=139 million, or 6.1% increase in operating expenses.
Gross Sales
=2,222
million or 21.0%.
Net Sales
=2,061
million or 23.1%. Sales volumes increased from 107.7 million cases in fiscal 2005 to 119.8 million cases in fiscal
2006, an increase of 12.1 million cases or 11.2%. Overall, net prices per eight ounce case increased by
approximately 10.6% as a result of the increase in non-carbonated beverages as a percentage of total sales from
7.2% in fiscal 2005 to 15.7% in fiscal 2006.
Carbonated beverages Sales volumes of carbonated beverages increased 5.7% from 103.9 million cases in
fiscal 2005 to 109.9 million cases in fiscal 2006, reflecting an approximate 2% increase in our market share. The
5.8% increase in net prices for carbonated beverages reflected tactical and opportunistic price increases in
multi-serve packs.
Non-carbonated beverages Sales volumes of non-carbonated beverages increased 160.5% from 3.8 million
cases in fiscal 2005 to 9.9 million cases in fiscal 2006, reflecting the full year impact of non-carbonated beverage
sales compared to fiscal 2005, when we began selling non-carbonated beverages, and the geographical expansion
of our non-carbonated beverage product range and distribution off a low base. The 1.8% increase in net prices
for non-carbonated beverages reflected a shift in the sales mix towards the higher priced Gatorade.
Sales volume1 ...................

Net Sales2 ........................
Total
Fiscal
2006
Fiscal
2005
%
change
Fiscal
2006
Fiscal
2005
%
change
Fiscal
2006
Fiscal
2005
%
change
109.9
84.3
9,262.4
103.9
79.7
8,287.0
5.7
5.8
11.8
9.9
174.2
1,730.4
3.8
171.1
645.5
163.2
1.8
168.1
119.8
91.8
10,992.8
107.7
82.9
8,932.5
11.2
10.6
23.1
Notes:
(1)
(2)
P
=, in millions
Cost of goods sold

=7,253 million in fiscal 2006, representing an
increase of P
=1,630 million or 29.0%. Of the total 29.0% increase, approximately 11.2% reflected volume
growth, while approximately 17.8% reflected increases in the costs per case.
50
The majority, or P
=1,333 million, of the increase in cost of goods sold represented higher raw materials costs. This
mainly resulted from the increase in sugar and concentrate costs. The average price for sugar increased by 14.7%
from P
=20,028 per ton in fiscal 2005 to P
=22,980 per ton in fiscal 2006. Our concentrate costs per case increased
by 18.1%, reflecting the price increases and the shift in sales mix to non-carbonated beverages, which have higher
concentrate costs. Our packaging costs increased by 28.0% from P
=1,462 million
in fiscal 2006, reflecting the volume growth in non-carbonated beverages packaged in more costly PET bottles.
Delivery and freight costs increased by P
=113 million, or 33.4%, from P
=337.5 million in fiscal 2005 to P
=450.2
million in fiscal 2006, largely reflecting the increase in our sales of non-carbonated beverages, which incur freight
costs to transport them from Muntinlupa to our other plants for distribution.
The following table shows the major components of our cost of goods sold for fiscal 2005 and fiscal 2006.
2005

Other .....................................................................................................
Total..................................................................................................
2006
(P
=, millions)
(P
=, millions)
4,232.1
444.8
337.5
265.6
174.9
110.0
57.8
5,622.7
75.3
7.9
6.0
4.7
3.1
2.0
1.0
100.0
5,565.4
485.4
450.2
232.1
218.8
137.9
163.0
7,252.8
76.7
6.7
6.2
3.2
3.0
1.9
2.3
100.0

=1,435 million in fiscal 2006,
representing an increase of P
=210 million or 17.1%. The increased expenses principally reflect the effect of the
higher volumes and the increased reach of our distribution network, together with increased freight charges and
higher depreciation reflecting larger numbers of coolers placed. Our selling and distribution expenses represented
13.7% and 13.1% of net revenue in fiscal 2005 and fiscal 2006, respectively.
Marketing
Our marketing expense decreased from P
=424 million in fiscal 2006, representing
a decrease of P
=100 million or 19.1%. The decrease in our marketing expense was due primarily to the significant
marketing support from PepsiCo in December 2005. Marketing expense represented 5.9% and 3.9% of net
revenue in fiscal 2005 and fiscal 2006, respectively.
General and administrative expenses increased slightly from P
=508 million to P
=536 million, representing an
increase of P
=28 million or 5.7%. This was primarily attributable to increases in contracted services, travel and
transportation and rental and utilities expenses caused mainly by general increases in fuel price in 2006. Salaries,
wages and employee benefits, which constitute the largest part of general and administrative expenses, remained
unchanged. Our general and administrative expenses represented 5.7% and 4.9% of net revenue in fiscal 2005
and fiscal 2006, respectively.
=292 million, or 27.7%. Our
operating margin for fiscal 2006 was 12.2%, compared to 11.8% for fiscal 2005.
Income tax
=421 million, which was equal to an effective tax rate of 32.6%, compared with an
effective tax rate of 15.3% in fiscal 2005, when we recognized P
=179 million of previously unrecognized deferred
income tax assets as a result of the assessment that our deferred tax assets had become fully recoverable in future
years in fiscal 2005. Without the impact of deferred taxes, the effective tax rate in fiscal 2005 would have been
28.1%. The corporate tax rate in the Philippines increased from 32% to 35% on November 1, 2005.
51
Net income
The foregoing factors resulted in an increase in net income from operations of P
=101 million, or 13.2%. Our net
income margin decreased from 8.6% in fiscal 2005 to 7.9% in fiscal 2006 primarily as a result of the increase
in the income tax rate discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Our principal requirements for liquidity are for purchases of raw materials and payment of other operating
expenses, investments in our float of RGBs and plastic cases and refrigeration equipment and repayment of debt.
In recent years, we have met these requirements substantially out of operating cash flow, and have incurred only
short-term debt to assist with temporary liquidity requirements. Historically, we have maintained higher levels of
long term debt, which we have almost completed repaying. As of September 30, 2007, our cash on hand was
higher than our outstanding bank debt. However, our current liabilities exceeded our current assets by
approximately P
=951 million, due in part to the fact that the credit terms offered by many of our suppliers are
more generous than those we offer to most of our customers.
We expect that our operating cash flow will continue to be sufficient to fund our operating expenses for the
foreseeable future, and we will use the proceeds we receive from this offering to increase our investment in RGBs,
plastic cases and refrigeration equipment and to launch several new products nationally. See Use of Proceeds.
Cash Flows
The following discussion of our cash flows for fiscal 2007, 2006 and 2005 and the three month period ended
September 30, 2007 should be read in conjunction with the statements of cash flows included in the financial
statements included herein.
Cash flows from operating activities
Net cash provided by operating activities for the three month period ended September 30, 2007 was P
=274
million, while we had a net profit before tax for the same period of P
=195 million. Cash generated from operating
income (after adding back the non-cash items of which depreciation and amortization amounted to P
=221 million)
was P
=443 million while cash spent for working capital was P
=158 million and interest income was P
=4 million.
These were partially reduced by interest expense of P
=14 million.
Net cash provided by operating activities for fiscal 2007 was P
=2,121 million, while we had a net profit before tax
for the same period of P
=1,520 million. Cash generated from operating income (after adding back the non-cash
items of which depreciation and amortization amounted to P
=814 million) was P
=2,385 million while cash from
working capital was P
=18 million. These were partially reduced by income
tax payment of P
=276 million and interest expense of P
=66 million.
=1,290 million. Cash generated from operating income (after adding back the non-cash
=703 million) was P
=2,150 million and interest income
received was P
=18 million while net cash spent for working capital was P
=80 million. Income taxes paid amounted
to P
=328 million while interest expense paid was P
=81 million.
=906 million. Cash generated from operating income (after adding back the non-cash
=655 million) was P
=1,642 million while cash from
working capital was P
=29 million. These were partially reduced by income
tax payment of P
=140 million and interest expense of P
=83 million.
Cash flows from investing activities
Our net cash used in investing activities in fiscal 2005, fiscal 2006, fiscal 2007 and the three month period ended
September 30, 2007 was P
=1,082 million, P
=996 million, P
=1,701 million and P
=462 million, respectively. Our
expenditures for investing activities primarily relate to investments in property, plant and equipment, in
particular the purchase of bottling machinery and associated equipment and purchases of RGBs and plastic
shells. See Business Production and Capital Expenditures below for more details of our uses of capital.
52
Cash flows from financing activities

Our net cash used in financing activities in the three month period ended September 30, 2007 was P
=199 million,
which reflected payment of cash dividends of P
=400 million and repayment of long term debt of P
=179 million,
partially offset by proceeds from short term borrowings of P
=380 million. Our net cash used in financing activities
in fiscal 2007 was P
=266 million, which reflected the repayment of long-term debt of P
=167 million and cash
dividends payment to our shareholders of P
=99 million. Our net cash used in financing activities in fiscal 2006 was
P
=538 million, which reflected the repayment of P
=280 million of notes and cash dividends to shareholders of P
=298
million, partially offset by the incurrence of P
=40 million of long-term debt. Our net cash used in financing
activities in fiscal 2005 was P
=519 million, which reflected the repayment of a shareholder loan of P
=400 million,
long-term debt of P
=114 million and cash dividends to shareholders of P
=99 million, partially offset by the issuance
of P
=95 million principal amount of notes.
The following table shows selected information from our statements of cash flows for fiscal 2005, fiscal 2006 and
fiscal 2007.
Three month
period ended
Net cash provided by operating activities ..............................

Net cash provided by/(used in) investing activities ................
Net cash provided by/(used in) financing activities................
Net increase/(decrease) in cash and cash equivalents.............
Cash and cash equivalents .....................................................
September 30,
2005
2006
2007
2007
(P
=, millions)
(P
=, millions)
(P
=, millions)
(P
=, millions)
1,611.3
(1,082.0)
(519.0)
10.3
333.1
1,679.0
(996.1)
(538.3)
144.7
477.8
2,121.3
(1,700.8)
(266.0)
154.5
632.3
274.1
(462.0)
(199.2)
(387.0)
245.3
Net Current Liabilities

We had net current liabilities of P
=959.7 million, P
=729.6 million, P
=960.2 million and P
=950.7 million as at June 30,
2005, 2006 and 2007 and September 30, 2007, respectively. The following table shows the breakdown of our
net current liabilities as at September 30, 2007.
P
=, in millions
U.S.$, in millions
Current Assets
Cash and cash equivalents ........................................................................................
Receivables net .....................................................................................................
Inventories net ......................................................................................................
Due from a related party ..........................................................................................
Prepaid expenses and other current assets ................................................................
245.3
771.7
667.3
134.9
63.4
5.5
17.1
14.8
3.0
1.4
Total current assets ...................................................................................................
1,882.6
41.8
Current Liabilities
Notes payable............................................................................................................
Accounts and acceptances payable and accrued expenses ........................................
Income tax payable ...................................................................................................
Due to a related party...............................................................................................
Current portion of long-term debt............................................................................
428.6
2,065.7
203.5
52.2
83.3
9.5
45.8
4.5
1.2
1.8
Total current liabilities ..............................................................................................
2,833.3
62.8
Net current liabilities.................................................................................................
950.7
21.0
53
Capital Expenditures
The table below sets out our capital expenditures in fiscal 2005, fiscal 2006 and fiscal 2007, together with our
budgeted capital expenditures for fiscal 2008.
Expenditure
Year ended June 30,
2005
2006
2007
2008
(in P
= millions)
(actual).....................................................................................................................................................
(actual).....................................................................................................................................................
(actual).....................................................................................................................................................
(budgeted) ................................................................................................................................................
1,060.2
938.9
1,616.8
2,408.0
We have historically sourced funding for capital expenditures through internally-generated funds and long-term
borrowings.
Components of our capital expenditures for fiscal 2005, fiscal 2006 and fiscal 2007 are summarized below:
2005
2006
2007
(in P
= millions)
Bottles and cases .............................................................................................

Property, plant and equipment........................................................................
380.0
680.2
509.3
429.6
697.9
918.9
Total............................................................................................................
1,060.2
938.9
1,616.8
We have budgeted P
=2,408 million for capital expenditures for fiscal 2008. The budgeted capital expenditures for
fiscal 2008 are summarized below:
Expenditure
P
=
U.S.$
(in millions)
Bottles and cases ......................................................................................................................

Property, plant and equipment.................................................................................................
954
1,454
21.2
32.3
Total.....................................................................................................................................
2,408
53.5
In addition to maintaining a level of ongoing capital expenditure broadly consistent with that incurred in recent
periods, which we expect to fund from cash flow from operations, we expect to use the net proceeds to us of this
offering to make further capital expenditures to invest in future growth, as set out under Use of Proceeds.
The figures in our capital expenditure plans are based on managements estimates and have not been appraised
by an independent organization. In addition, our capital expenditure plans are subject to a number of variables,
including: possible cost overruns; construction/development delays; the receipt of environmental and other
approvals; changes in managements views of the desirability of current plans; the identification of new projects;
and macroeconomic factors such as the Philippines economic performance and interest rates. There can be no
assurance that we will execute our capital expenditure plans as contemplated at or below estimated costs.
54
Debt facilities
We have the following credit facilities as of September 30, 2007:
We have fixed-rate long term debt facilities of P

=1,179 million available as at September 30, 2007 under
facilities with two Philippine banks, of which we had drawn P
=250 million as at September 30, 2007. As at
September 30, 2007, the unpaid balance was P
=104 million.
We have an Omnibus line of credit with a number of Philippine banks consisting of commitments for short
term loans, letters of credit, Documents against Acceptances/Documents against Payment (DA/DP) facilities
trust receipts. The total commitment under the line of credit is P
=1,840 million, of which we had drawn P
=272
million under letters of credit and P
=429 million under short-term loans as at September 30, 2007. All
facilities under the Omnibus line bear interest at floating rates consisting of a margin over current
Philippine treasury rates.
We also have a P
=465 million domestic Bills Purchased line, which was undrawn as at September 30, 2007.
For further details of the terms of these facilities, see Material Contracts.
Off-Balance Sheet Arrangements
As of September 30, 2007, except for operating lease obligations, there were no off-balance sheet arrangements
or obligations that were likely to have a current or future effect on our financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Contractual Commitments
The following table summarizes our contractual obligations as of September 30, 2007:
Contractual obligations and commitments payments due by period
Total
Fiscal
Fiscal
After fiscal
2008
2009-2012
2012
(in P
= millions)
Long-term debt maturities............................................

Notes payable/short-term debt .....................................
Operating lease obligations ..........................................
Purchase commitments .................................................
104.2
428.6
559.9
272.0
62.5
428.6
64.2
266.6
41.7
210.7
5.4
285.0
Total .........................................................................
1,364.7
821.9
257.8
285.0
See Material Contracts.

Market Risk
We are subject to various market risks, including risks from changes in commodity prices, interest rates and
currency exchange rates.
Commodity prices The risk from commodity price changes relates to our ability to recover higher product
costs through price increases to customers, which may be limited due to the competitive pricing environment that
exists in the Philippine beverage market and the willingness of consumers to purchase the same volume of
beverages at higher prices. Our most significant commodity exposure is to the Philippine sugar price. See Risk
Factors Our business requires a significant supply of raw materials and energy, the limited availability or
increased costs of which could adversely affect our business and financial results. Our ability to achieve certainty
with respect to sugar prices is limited by the unwillingness of Philippine sugar producers to enter into sales
contracts of longer than one years duration and the absence of suitable financial instruments to hedge the
Philippine sugar price. Assuming that other variables remained constant, we estimate that a 10% increase or
decrease in the price we paid for sugar in fiscal 2006 and fiscal 2007 would have resulted in a corresponding
55
increase or decrease to our cost of goods sold of P

=186 million and P
=230 million, or 3% and 3% of our cost of
goods sold, respectively. We are also exposed to changes in market prices for PET, aluminum and crude oil. It
should be noted, however, that changes in raw materials prices generally affect our competitors as well. As a
result, historically, over time, we have generally been able to pass these cost increases onto customers.
Interest rates Substantially all of our debt bears interest at a floating rate, which exposes us to changes in
interest rates. As of September 30, 2007, we had approximately P
=533 million in outstanding debt. Our interest
expense in fiscal 2006 and fiscal 2007 was P
=80 million and P
=52 million respectively.
Foreign currency exchange risk In fiscal 2007, approximately 13.5% of our costs were denominated in foreign
currencies, principally US dollars. These costs include our purchases of packaging materials and bottling
equipment. We partially reduce our exposure to a depreciation in the Philippines peso by maintaining short-term
cash balances in US dollars and, from time to time, buying foreign currencies at spot rates when we anticipate
imbalances. However, we continue to have substantial unhedged exposures. Assuming that other variables
remained constant, we estimate that a 10% increase or decrease in Philippines peso relative to the US dollar in
fiscal 2006 and fiscal 2007 would have resulted in a corresponding decrease or increase in our cost of goods sold
of P
=74 million and P
=72 million, respectively. In addition to these direct costs, we would expect that a substantial
depreciation in the Philippines peso would have a general inflationary effect on prices of imported commodities,
including fuel.
Taxes
In 2005, Republic Act No. 9337 was enacted into law, amending various provisions of the 1997 National
Internal Revenue Code. Among the reforms introduced by Republic Act No. 9337 are the following:
An increase in the corporate income tax rate from 32.0% on net taxable income to 35.0% of net taxable
income effective on November 1, 2005, with a reduction to 30.0% of net taxable income beginning January
1, 2009;
Grant of authority to the Philippine President upon the recommendation of the Philippine Secretary of
Finance to increase the 10% VAT rate to 12.0%, effective January 1, 2006, subject to compliance with
certain economic conditions (this VAT increase was implemented with effect from February 1, 2006); and
Expanding the scope of transactions subject to VAT and limiting the amount of VAT credits that can be
claimed.
Recent and prospective changes in accounting policies

The Philippine Financial Reporting Standards Council (FRSC), formerly the Philippine Accounting Standards
Council, issued new and revised accounting standards effective for fiscal years beginning on or after January 1,
2005. The new standards are called Philippine Accounting Standards (PAS) and PFRS. We have adopted and
implemented PFRS and our financial statements as of and for the years ended June 30, 2005, 2006 and 2007 and
as of September 30, 2007 and for the three months ended September 30, 2006 and 2007 included in this
Prospectus have been prepared in accordance with PFRS. For further discussion of these new accounting
standards as relevant to us, see Note 2 and Note 3 to our audited financial statements contained elsewhere in this
Prospectus.
The FRSC has issued new accounting standards that will be effective for our accounting periods subsequent to
June 30, 2007. To the best of our knowledge, these new accounting standards will not require a prospective
change in any of our accounting policies.
56
Business
OVERVIEW
Pepsi, Pepsi Light, Pepsi Max, 7Up, Diet 7Up, Mountain Dew, Gatorade, Lipton Iced Tea, Tropicana, Propel and
Sting. In fiscal 2007, we sold 120.4 million eight-ounce case equivalents of carbonated beverages and 12.1
million eight-ounce case equivalents of non-carbonated beverages.
We manufacture and package our products at 11 production plants throughout the Philippines, and distribute
them through 101 warehouses and 99 sales offices (generally co-located), together with an extensive third party
distribution network, to approximately 275,000 outlets, including supermarkets, restaurants, bars, and small
grocery stores. Most of our carbonated beverages and some of our non-carbonated beverages are sold in
returnable glass bottles, or RGBs, which are returned to the retailer upon consumption of the beverage for
repayment of a deposit and subsequently collected, washed and reused.
Pepsi-Cola has been continuously manufactured in the Philippines since 1946, when the business that we now
operate was first established. We were incorporated on May 3, 1989 when the business was acquired by interests
associated with the Lorenzo family. Affiliates of the Guoco Group acquired the company in 1997 and sold a
minority stake to PepsiCo in 1998. The Guoco Group currently holds 40.3%. PepsiCo holds 32.9%. Our other
minority shareholders include The Nassim Fund, which holds 21.6%, and Orion Land, Inc., which holds 4.5%.
Other small shareholders, including certain executives and employees, own the remaining 0.7%. For information
regarding our expected shareholder structure following completion of this offering, see Principal and Selling
Shareholders. We have not, in the past three years, been a party to any material reclassification, merger,
consolidation or purchase or sale of a significant amount of assets.
COMPETITIVE STRENGTHS
We believe that our competitive strengths include:
Strong relationship with PepsiCo in addition to licensing us to produce PepsiCo products, PepsiCo
provides us with marketing support and contributes the benefit of its global experience and expertise in
production and distribution. PepsiCo has an active product development program. We are able to access
PepsiCos new products for the Philippines market, so that we do not need to make large product
development expenditures. We, PepsiCo and certain PepsiCo affiliates have entered into a new 10-year
Exclusive Bottling Appointment, dated as of April 11, 2007. A particular benefit of the agreement is that
it provides for fixed pricing (as a percentage of the sales price of the finished product) for beverage
concentrates, locking in a major component of our cost of goods sold at what we believe is a favorable rate.
Note, however, that PepsiCo could terminate the agreement early if we commit certain breaches. See
Relationship with PepsiCo and Risk Factors Because we produce our products under licenses from
PepsiCo and depend upon PepsiCo to provide us with concentrates, marketing support and access to new
products, changes in our relationship with PepsiCo could adversely affect our business and financial
results.
The brands we license from PepsiCo include some of the worlds best-known brands, including Pepsi, Diet
Pepsi, Pepsi Max, Pepsi Light, Mountain Dew, 7Up, Diet 7Up and Gatorade. We license Liptons Iced Tea
from a PepsiCo/Unilever joint venture. There is a high degree of awareness of global brands in the
Philippines, due in part to the prevalence of the English language, the consumption of Western, and
particularly U.S., media and entertainment and the large numbers of Philippine citizens who work overseas
or have relatives who do so. Pepsi has been continuously marketed in the Philippines for the last 61 years.
We believe that our high brand recognition enables us to sell more products with a lower marketing cost
than a competitor with lesser-known brands. PepsiCo named us its 2006 Pepsi Bottler of the Year
Asia.
57
Business
Strong portfolio of non-carbonated beverage products we entered the non-carbonated beverage

market in 2004, and since then, we have introduced five new brands in the Philippines, including
Tropicana, Gatorade, and Lipton Iced Tea, and launched over 80 new products (including new flavors,
packages and sizes) in new categories including juices, iced teas, sports drinks, energy drinks and vitamin
waters. We believe that our ability to execute new brand and product launches, particularly in the
fast-growing non-carbonated beverage space, will be a key to our future success.
Established manufacturing and distribution platform a majority of the carbonated beverages

consumed in the Philippines are sold in RGBs, which results in more affordable products for consumers.
Selling RGBs requires significant capital investment in a float of RGBs and plastic shells and a capitaland labor-intensive distribution network that is able both to deliver products to the many small outlets
through which beverages are sold and collect empty RGBs for reuse. The RGB model also requires that
bottling plants are located nearby the markets they serve. Currently, we believe that only we and one other
competitor have an established platform for manufacturing and distributing beverages in RGBs throughout
the Philippines. We believe we have exhibited a proven ability to manage large-scale operations, quality
control mechanisms and supply chain relationships across our 11 locations throughout the country, and
that the cost and complexity involved in establishing such a platform represent significant barriers to entry
for potential competitors.
Experienced management team our senior management team has an average of over 18 years
experience in the beverages industry. Our CEO was previously a senior executive with the Guoco Group
and our CFO has been seconded to us by PepsiCo. We believe that the ability to draw from the deep
management pool that these major shareholders possess represents a significant additional competitive
advantage. Over recent years, our management has taken an active stance to build a strong organization
based on the solid foundation of our companys values. The Management Development Program and other
leadership training courses within Pepsi University allow for the development of future leaders within and
reinforce our succession planning program.
Stable financial base in recent years, we have consistently generated positive operational cash flow, and
as of September 30, 2007, had only P
=532.8 million of outstanding debt. As of September 30, 2007, our debt
to equity ratio was 15.4%. We believe that our stable cash flow and low debt give us a solid platform for
future growth, as well as the flexibility to weather future economic downturns.
STRATEGY
We have two principal strategic goals: to extract greater profitability out of our existing brands and production
assets by increasing our market share; and to diversify our product portfolio, in particular by capitalizing on the
growing demand for beverages associated with health and wellness by rolling out new products targeting these
categories.
The key elements of our strategy include:
Increase market share in carbonated beverages we aim to increase our share of the market for
carbonated beverages by increasing the reach of our distribution network. This will include a significant
investment in the infrastructure necessary to increase the number of outlets in which our products are sold,
including increasing our investment in RGBs, plastic cases and in-store refrigeration equipment. We believe
this is integral to increasing our market share in carbonated beverages and to expanding our
non-carbonated beverage business. Within the carbonated beverage category, we aim to defend our volume
and market share for regular cola, while aggressively growing Mountain Dew, 7Up and non-sugar colas.
Increasing production capacity we intend to increase our production capacity by overcoming

approaching capacity constraints in our production of carbonated beverages and expanding our the
capacity to produce non-carbonated beverages, which we currently produce only at our Muntinlupa plant
in Metro Manila, at other plants. We intend to achieve both objectives by installing combi lines, capable
of producing both carbonated and non-carbonated beverages in both RGB and PET bottles, in at least four
of our plants outside Metro Manila by 2009. We believe that expanding production capacity at our other
plants will enable us to lower our freight and distribution costs. Using combi lines enables us to deploy
production capacity efficiently in response to changing demand.
58
Business
Expanding our non-carbonated beverage portfolio as a response to increasing health awareness in

the Philippines, we have expanded our range of non-carbonated beverage products. We intend to further
diversify this range by continuing to add new products from the PepsiCo development pipeline and believe
that further growth is possible in the hydration sector with our sports and vitamin water beverage products.
In addition, we aim to capitalize on the strength of our Gatorade, Tropicana, Lipton and Propel brands and
to drive sales and profit by expanding these products into more affordable packaging formats. Ultimately,
our aim is to obtain and hold the number one or two market share ranking in each of our major
non-carbonated beverage product categories.
RELATIONSHIP WITH PEPSICO

We have a significant ongoing commercial and operational relationship with PepsiCo, which is fundamental to
our business. PepsiCo has substantial influence over our strategy and operations. We regard PepsiCo as a
supportive and valued partner in our business, whose interests are in most respects closely aligned with our own.
PepsiCo beneficially owns approximately 32.9% of our Shares. Assuming we sell 380,782,893 new Shares in this
offering, upon completion of the offering, PepsiCos holding will be reduced to approximately 29.5%. Four of
our directors, Messrs. McEachern, Bhatnagar, Berry and Minges, are senior executives with PepsiCo. Mr. Berry
is PepsiCos country manager for the Philippines.
PepsiCo is the owner of our beverage brands other than Liptons Iced Tea and licenses us to manufacture and sell
PepsiCo products in the Philippines under an Exclusive Bottling Appointment, or EBA. We are also a party to
a Performance Agreement, which requires us to maintain certain levels of marketing and capital expenditure
throughout the term of the EBA. We have a license to manufacture and sell Liptons Iced Tea under a separate
Exclusive Bottling Appointment with a PepsiCo/Unilever joint venture.
Our products and production processes must meet PepsiCo standards. PepsiCo regularly tests our products and
inspects our bottling plants for compliance with its standards, and has the right under the EBA to require us to
correct deficiencies in our production processes, and to cease production at non-compliant facilities, until faults
are rectified.
We are obliged under the EBA with PepsiCo to vigorously promote the sale of PepsiCo beverages within the
Philippines. We have a joint marketing program with PepsiCo. Under the EBA, we and PepsiCo are obliged to
contribute equally to the cost of the marketing plan, including all advertising and promotions. However, in
practice, PepsiCo has from time to time made additional contributions to the marketing program, which are
generally intended to offset additional capital and other expenditures that we have made to develop our business
beyond our obligations under the Performance Agreement. In recent years, PepsiCo has made additional
unilateral marketing contributions, although there can be no assurance that these will continue. We may only use
advertising, promotional materials and packaging that PepsiCo has approved.
We are prohibited from manufacturing or selling non-PepsiCo products that would compete with the PepsiCo
products to which we have rights, including any cola products other than Pepsi-Cola and its derivatives.
We must purchase from PepsiCo all of the concentrates we use to produce our beverages (with the exception of
Tropicana premium juice, which we purchase as a finished product). Under the EBA, we pay fixed prices for the
concentrates, calculated as a percentage of the wholesale price we charge for the relevant product. As a result,
concentrate prices are payable in Philippine pesos, although the pricing formula does contain a U.S. dollar floor
price to ensure that PepsiCo recovers its costs in the event of a significant fall in the value of the Philippine peso.
We regularly exchange information with PepsiCo regarding many aspects of our business, including production,
marketing and distribution, and PepsiCo provides us with considerable assistance in these aspects, including the
benefit of the experience of PepsiCo in other territories. PepsiCo undertakes extensive product development, and
we are able to provide input into the product development process as well as access new products that PepsiCo
develops. We have a right of first refusal prior to PepsiCo licensing any other party to bottle any PepsiCo beverage
product in the Philippines that has not been licensed to us.
The terms of the Exclusive Bottling Appointments and the Performance Agreement are summarized under the
heading Related Party Transactions.
59
Business
PRODUCTS
We divide our products into carbonated and non-carbonated beverages. The following table shows our major
carbonated beverage brands and the products we market under them.
Product
Description
Packages
Pepsi-Cola ........................ Cola. Also available in four low-calorie

variants: Pepsi Light, Diet Pepsi, Pepsi Max
and Pepsi Deluxe.
7 oz, 8 oz, 12 oz and 1 liter RGB, 500 ml

and 1.5 liter PET bottle, 355 ml aluminum
can, post-mix syrup.
7Up .................................. Lemon-lime flavor. Also available as

low-calorie Diet 7Up.
7 oz and 12 oz RGB, 500 ml and 1.5 liter

PET bottle, 355 ml aluminum can, post-mix
syrup.
Mountain Dew ................ Citrus flavor.
12 oz RGB, 500 ml and 1 liter PET bottle,

post-mix syrup.
Mirinda............................ Orange flavor.
8 oz and 12 oz RGB, 500 ml and 1 liter PET

bottle, post-mix syrup.
The following table shows our major non-carbonated beverage brands and the products we market under them.
Product
Description
Packages
Tropicana......................... Most of our Tropicana sales are of Tropicana 8 oz RGB, 355 ml PET bottle, 200 ml and
250 ml tetra packs, 1 liter catering packs. We
Twister fruit juice drinks, containing
sell Tropicana Pure Premium in Tetra cartons.
approximately 13% to 18% fruit juice. We
currently produce Tropicana Twister in orange
and pineapple flavors. We also import and sell
a small amount of Tropicana Pure Premium
100% orange juice.
Lipton .............................. Ready-to-drink iced tea. Available in black
lemon, red tea, Japanese green tea, peach and
mango flavors.
8 oz RGB, 355 ml, 450 ml and 1.5 liter PET

bottle, 200 ml and 250 ml tetra packs. We
also sell Lipton iced tea powder.
Gatorade .......................... Sports drink containing electrolytes to assist

rehydration and recovery from exercise.
Available in Orange Chill, Blue Bolt,
Pink Lemonade, tropical fruit, grape, and
lemon-lime flavors.
400 ml non-returnable glass bottle, 500 ml

and 1.5 liter PET bottle.
Sting................................. Energy drink.
8 oz RGB.
Propel............................... Lightly flavored, vitamin-fortified vitamin

water. Currently available in orange and
apple flavors.
500 ml PET bottle.
During fiscal 2006 and fiscal 2007, brand Pepsi beverages accounted for 47.4% and 48.4% of our gross sales
revenue and 53.0% and 53.7% of our sales volume, respectively.
60
Business
PRODUCTION
We operate 11 bottling plants located throughout the Philippines, as shown on the following map.
We produce all of our PET bottle, aluminum can and non-returnable glass bottle products at our main
Muntinlupa plant. We also produce both carbonated and non-carbonated products in RGBs at Muntinlupa.
Currently, all of our other plants produce only carbonated beverages in RGBs. The use of RGBs and the resultant
two-way distribution chain requires us to locate our plants in close proximity to markets. Each plant consists of
one or more production lines that are generally dedicated to a particular package format and size and either
carbonated or non-carbonated beverages. The following chart shows the lines that operate at each of our plants,
what they produce and their maximum operating capacity. The actual volume produced is affected by the size of
package produced, the number of times the line is switched over to a different package or product and the
amount of scheduled and unscheduled downtime for maintenance and repairs.
Province
Plant
Luzon ......................................................................... Muntinlupa

San Fernado
Rosario
Naga
Visayas ....................................................................... Cebu
Tanauan
Bacolod
Iloilo
Mindanao................................................................... Davao
Cagayan de Oro
Zamboanga
Number of lines
Weighted average
capacity utilization(1)
9
3
2
1
1
1
1
1
2
1
1
72%
41%
72%
37%
100%
55%
67%
100%
63%
81%
74%
Note:
(1)
Actual production during fiscal 2007 as a percentage of capacity. Capacity reflects our estimate of available capacity based on
standard utilization assumptions including hours worked, time required for maintenance and cleaning, product mix and other
variables.
61
Business
The following flow chart illustrates the production process for carbonated beverages.
WATER
PROCESS
Raw Water
SYRUP PREPARATION/BLENDING
PROCESS
FILLING/PACKAGING
Clean Bottle
Feed
Ingredients
Mixing
6 Stages
Water
Treatment
Process
Product Filling
Syrup
Blending
Water
Meets
PepsiCo
Standards
Product
Packaging
Beverage
Blending
Warehousing and
Distribution
The following flow chart illustrates the production process for non-carbonated beverages.
WATER
PROCESS
NCB BLENDING
Raw Water
Ingredients
Mixing
6 Stages RO
Water
Treatment
Process
Beverage
Blending
Water Meets
PepsiCo
Standards
PROCESS
FILLING AND
PACKAGING
Clean Bottle
Product Filling
Packaging and
Labeling
Pasteurization
Warehousing and
Distribution
Our bottling lines are fully mechanized, except for the process of unloading cases of used RGBs from pallets at
the start of our RGB lines and loading finished bottles onto pallets at the end. We maintain our bottling
equipment using a computerized system that is designed to schedule regular preventative maintenance and parts
replacement ahead of failure.
62
Business
Our bottling plants source their power needs primarily from the Philippine electricity grid, although each plant
has back-up diesel generators that are capable of maintaining limited operations in the event of power
interruptions.
Raw materials
Other than Tropicana pure orange juice, each of our products consists of a base of flavor concentrate, which we
dilute with water and, in the case of non-low-calorie beverages, sweeten with sugar. The flavor concentrates of
low-calorie beverages already contain artificial sweeteners. In addition, we add carbon dioxide to our carbonated
beverages. Our main raw materials costs are concentrates, sugar and packaging. We purchase the concentrates
from PepsiCo and its affiliates under the Exclusive Bottling Appointments. PepsiCo imports the concentrates into
the Philippines and maintains a warehouse near our Muntinlupa plant from where we take delivery of our
concentrate requirements. We purchase sugar from a small number of suppliers in the Philippines, generally
under short-term contracts of up to a year. In fiscal 2007, we purchased sugar from five suppliers, the largest of
which supplied us with 51% of our sugar requirements. The sugar industry in the Philippines is protected by a
system of import quotas and tariffs, as a result of which prices may from time to time exceed prices available on
the international markets. We also purchase carbon dioxide and other additives from local producers. We source
our water from wells drilled underneath our production plants. We purchase frozen concentrated orange and
other fruit juice for inclusion in our Tropicana juice drink products from suppliers in Florida and Brazil approved
by PepsiCo.
Our principal packaging cost is for glass bottles. The RGB sales model requires us to maintain a float of bottles
equal to approximately 15 to 21 days of peak month sales. During fiscal 2007, we purchased approximately 2.5
million cases of new bottles to replace lost or damaged bottles and support increased volumes. We purchase glass
bottles from suppliers based in the Philippines, Malaysia and China. We also maintain a float of approximately
3 million plastic cases, which we use to transport RGBs. We purchase plastic cases from two suppliers in the
Philippines. We also purchase other bottling and packaging supplies, such as PET bottles, closures, aluminum
cans, labels and cartons from multiple suppliers in the Philippines, Thailand, Hong Kong and Malaysia. Our
average annual bottle turnover rate is 10.2.
Quality Control
We adhere to a strict system of quality control over our production operations. Our production processes are
subject to extensive Philippine government regulation. See Regulation Consumer protection. We are also
obliged by our contractual arrangements with PepsiCo to adhere to PepsiCos global production standards,
which are in a number of respects more stringent than the comparable governmental regulation. Our quality
control procedures encompass standards for procuring and storing raw materials, water treatment and storage,
processing and inventory storage. These procedures include strict hygiene standards that detail processes for
cleaning and maintaining bottling equipment and safe material handling, and standards covering matters such as
clothing, the wearing of hairnets, movement between production areas and personal hygiene for individual
employees involved in production.
We continuously monitor our compliance with quality control standards. We have a total of 165 full-time quality
control staff. Each of our plants operates a laboratory that continually samples and tests our products, and our
quality control staff performs regular inspections and audits to test compliance with our standards. Before
launching a new product, or putting a new bottling line into operation, we perform extensive testing to ensure
consistent compliance with quality standards. In addition, we are subject to inspection by the Philippine Bureau
of Food and Drugs under applicable legislation (see Regulation) and by PepsiCo under the terms of our
Exclusive Bottling Appointment. PepsiCo regularly tests our finished products, including products that it
purchases anonymously from retailers, for compliance with PepsiCo quality standards.
PACKAGING
We package the majority of our products in a mixture of RGBs and PET bottles in both single-serve and
multi-serve sizes and single-serve aluminum cans. We sell our premium Tropicana juice line in Tetra Pak cartons.
We also sell post-mix syrup to restaurants, bars and convenience stores in cylinders and bag in a box format.
In fiscal 2007, approximately 77% of our sales by volume and 69% by value consisted of beverages in RGBs,
mostly of 355ml and one liter capacity. Using RGBs enables us to offer products at lower prices, making them
available to a wider cross-section of the Philippines population.
63
Business
The following table shows a percentage breakdown of our net sales and sales volume by package type for fiscal
2005, fiscal 2006 and fiscal 2007.
Year ended June 30,
2005
2006
2007
Net
Sales
Net
Sales
Net
Sales
sales(1)
volume(2)
sales(1)
volume(2)
sales(1)
volume(2)
Returnable glass bottles.......................

Non-returnable glass bottles................
PET bottles ..........................................
Aluminum cans....................................
Other ...................................................
6,864.0
240.7
724.9
591.7
511.2
89.2
0.9
5.9
3.3
8.4
7,681.4
514.8
1,594.1
648.8
553.7
93.6
2.0
11.9
3.4
8.9
8,906.2
635.8
2,154.3
641.6
578.3
101.9
2.5
15.5
3.2
9.5
Total ................................................
8,932.5
107.7
10,992.8
119.8
12,916.2
132.6
Notes:
(1)
P
=, in millions.
(2)
Number of eight ounce case equivalents, in millions.
SALES, MARKETING AND DISTRIBUTION

We sell our products through approximately 275,000 points of sale in the Philippines, including supermarkets,
convenience stores, bars, small grocery stores known as sari-sari stores and neighborhood restaurants known
as carinderias. Of these, the sari-sari stores and carinderia are by far the most numerous, although the sales
volume of these individual outlets is typically very small. In larger outlets, such as supermarkets, which stock the
products of a number of beverage suppliers, our marketing efforts tend to focus on increasing the amount of shelf
space and the number of displays in the outlet. Smaller outlets may have a relationship with only one or two
beverage suppliers, and so our efforts are directed towards securing the account. In outlets where our products
are sold for immediate consumption, part of our efforts is to ensure that our products are suitably cooled and we
offer many outlets branded refrigeration equipment, as well as signage and other merchandising.
Package mix is an important factor in our marketing efforts. In most areas of the country, our principal
containers for carbonated beverages are the 355ml RGB, which is typically sold cold for immediate consumption
and the one-liter RGB, which, as a multi-serve container, is typically consumed at home or used by restaurants.
PET containers and cans are more suitable for outlets such as supermarkets where products are sold unchilled
for later consumption, and areas that are not part of our distribution system for RGBs. PET bottles and cans are
generally priced at a higher cost per milliliter of beverage.
We tailor our marketing efforts to meet the needs of our various customer bases. For example, for sales in large
supermarkets where customers are more likely to be shopping for value, we seek to emphasize larger take
home presentations or multi-packaging of smaller size formats. These presentations offer a lower price per
milliliter and meet the needs of the family shopper. In contrast, in smaller retail operations consumers seek
convenience. Therefore, higher percentage of buyers look for higher value, and, consequently, for single serve
RGBs for immediate consumption or multi-serve RGBs for home consumption. In tailoring our marketing
efforts, we consider:
the demographics of the various groups of consumers;
the types of locations where they might be purchasing or consuming soft drinks;
the price levels their particular consumption patterns will support;
regional and personal differences in desired product mix and availability;
unmet niche markets; and
the actions of our competitors.
64
Business
We, together with PepsiCo, implement a joint marketing strategy to promote the sale and consumption of our
products. We advertise our products intensively through television, radio, print, billboards throughout the
Philippines. We also make extensive use of in-store point-of-sale advertising to reinforce the national and local
advertising and to stimulate demand. We run seasonal and one-off promotions, and sponsor or otherwise acquire
rights to associate our brands with major sporting and other events. We also benefit from PepsiCos large global
advertising presence and brand recognition.
We rely extensively on advertising, consumer sales promotions and non-price retailer incentive programs. We
design these programs to target the particular preferences of the soft drink consumer. Incentive programs include
providing retailers with refrigerators and coolers for the display and cooling of soft drink products. These
refrigerators and coolers are generally provided through lease at little or no charge. Our incentive programs also
include providing free point-of-sale display materials and complimentary soft drink products. Sales promotions
include sponsorship of community activities, sporting, cultural and social events. They also include consumer
sales promotions, such as contests, sweepstakes and give-aways. Our primary marketing campaign in 2007
included promotions, advertising and local marketing activities aimed at consumers such as a promotion
whereby consumers were invited to send text messages for a chance to win prizes such as cell phones and
downloads such as ringtones and games.
We rely on a number of channels to reach retail outlets, including direct sales, distributors and wholesalers.
However, the backbone of our distribution system is what we refer to as our Entrepreneurial Distribution
System, which consists of independent contractors who service one or more sales routes, usually by truck,
selling directly to retail outlets and collecting empty RGBs. We pay these contractors a distribution margin
representing an agreed percentage of gross sales. The majority of these contractors own their own trucks
(although we sometimes assist with finance), but rely on our network of sales offices and warehouses. At
September 30, 2007, our Entrepreneurial Distribution System consisted of approximately 971 contractors
servicing approximately 1,789 routes. In fiscal 2007, approximately 53.7% of our net sales revenue was derived
from our Entrepreneurial Distribution System. See Material Contracts Distribution Arrangements.
We also employ our own sales force, which principally sells to what we refer to as the modern trade channel,
consisting largely of supermarkets and restaurant and convenience store chains. Most of these sales are credit
sales that are fulfilled by third party distributors. In fiscal 2007, the modern trade channel accounted for
approximately 17% of our net sales revenue. See Material Contracts Distribution Arrangements.
We also sell products to third party wholesalers and distributors, which on sell them to retail outlets. In fiscal
2007, third party wholesalers and distributors accounted for approximately 19% of our net sales revenue.
According to ACNielsen, as of September 2007, on a volume-weighted basis, we sold our products to
approximately 46% of the available sales outlets for soft drinks in the Philippines (excluding outlets where soft
drinks are sold for consumption on-premises). One of our goals is to increase that percentage through both
increasing the reach of our distribution system by adding routes and increasing penetration by adding outlets on
our existing routes that currently do not stock our products.
COMPETITION
The beverage market in the Philippines is highly competitive. We compete primarily on the basis of advertising
and marketing programs to create brand awareness, price and price promotions, new product development,
distribution methods and availability, packaging and customer goodwill. We believe that brand recognition is a
primary factor affecting our competitive position. If the reputation of our brands were to be damaged, it could
significantly reduce our competitiveness. See Risk Factors If we are unable to maintain brand image and
product quality, or if we encounter other product issues such as product recalls, our business may suffer.
Our principal competitor in the carbonated beverages market is The Coca-Cola Company, which recently
acquired the 65% of the Philippines Coca-Cola bottling operation that it did not already own. The Coca-Cola
Company manufactures and sells both the globally known Coca-Cola brands and a line of lower priced
carbonated beverages. The Coca-Cola Company is the market leader by revenue and volume in the Philippines.
Historically, our carbonated beverage products have been priced slightly below the comparable products of The
Coca-Cola Company. See Risk Factors We may not be able to compete successfully within the highly
competitive carbonated and non-carbonated beverage markets.
65
Business
We also compete with a number of smaller manufacturers, including regional competitors that compete
principally on price, including, in particular, RC Cola in Metro Manila. However, we believe that the substantial
investment in multiple plants, distribution infrastructure and systems and the float of RGBs and plastic shells
required to operate a nation-wide beverage business using RGBs represents a significant barrier to potential
competitors in widening their reach.
The market for non-carbonated beverages is more fragmented. Both The Coca-Cola Company and San Miguel
Corporation have strong brands across a number of product categories. However, independent manufacturers
have strong positions in particular categories, including Universal Robina Corporation, whose product is the
market leader in the iced tea category and Zesto Corporation, which is the market leader in the fruit drink
category. In recent years, the non-carbonated beverage market has been relatively fluid, with frequent product
launches and shifting consumer preferences. We expect that these trends will continue.
SEASONALITY
Sales of our products are affected by the weather, generally being higher in the hot, dry months from March
through June and lower during the wetter monsoon months or July through October. We adjust our production
levels to reflect our historical experience of seasonal varieties. In addition, the Philippines is at risk of typhoons
during the monsoon period. Typhoons usually result in substantially reduced sales in the affected are, and have,
in the past, interrupted production at our plants in affected areas. While these factors lead to a natural seasonality
in our sales, unseasonable weather could also significantly affect sales and profitability compared to previous
comparable periods. We also tend to experience a period of higher sales around the Christmas/New Year holiday
period in late December through early January.
RESEARCH AND DEVELOPMENT
We spent approximately P
=68,510, P
=21,254 and P
=275,336 on research and development in fiscal 2007, fiscal
2006 and fiscal 2005, respectively.
EMPLOYEES
As of September 30, 2007, we employed approximately 2,550 people, of which approximately 51% are
employed in manufacturing and logistics, 27% are in sales operations, 19% are in general and administrative
functions and 3% are in marketing. In addition, we generally have between 800 and 1,600 casual employees
working in our business at any time, mostly as manual laborers. We contract with third party manpower and
services firms for the supply of this labor. The number of casual employees we require varies seasonally, with
generally higher numbers during our peak months of March through June. At September 30, 2007, we had 1,536
casual employees.
All of our permanent production employees at our bottling plants and sales offices are represented by a union.
We are party to 14 collective bargaining agreements, with separate agreements for the sales and the non-sales
forces in some cases. The collective bargaining agreements contain economic and non-economic provisions (such
as salary increase and performance incentive, sale commission, laundry allowance, per diem, bereavement
assistance, union leave, calamity loan, and assistance to employees cooperative), which generally have a term of
three years and remain binding on the successors-in-interest of the parties, while the representation aspect is valid
for five years.
We believe that our relations with both our unionized and non-unionized employees are good. We have not
experienced any work stoppages due to industrial disputes since 1999.
The following table provides a breakdown of permanent employee headcount, divided by function, as of
September 30, 2007:
Total Number of
Employees
2,553
66
Manufacturing
Logistics
Sales and
Distribution
Marketing
General and
Administrative
856
438
688
78
493
Business
We place significant emphasis on training our personnel to increase their skill levels, ensure consistent application
of our procedures and to instill an appreciation of our corporate values. We operate Pepsi University, a
full-time training facility consisting of four classrooms.
We have adopted a compensation policy which we believe to be competitive with industry standards in the
Philippines. Salaries and benefits are reviewed periodically and adjusted to retain current employees and attract
new employees. Performance is reviewed annually and employees are rewarded based on the attainment of
pre-defined objectives.
We operate a defined benefit pension scheme for all of our regular and full-time employees, under which we pay
retiring employees a lump sum amount equal to 150% of the employees monthly salary at retirement for each
year of service with us. We pay a total and permanent disability benefit equal to the affected employees accrued
retirement benefit at the time of the disability. We maintain a fund to pay future benefits under the plan, and carry
a liability on our balance sheet representing the difference between the value of the plan assets and the present
value of our actuarially-assessed defined benefit obligations.
PROPERTIES
As a foreign-owned company, we are not permitted to own land in the Philippines. As a result, we lease the land
on which our bottling plants, warehouses and sales offices are located.
Our head office and main bottling plant are located at Km 29, National Road, Tunasan, Muntinlupa City, 1773
Philippines. The premises are leased from certain members of the Batista family. On December 16, 2002, we
extended the lease for 12 years, to expire on November 24, 2014 and renewable at the option of the parties. We
are liable to pay monthly rent, which is valued per square meter and increases over the years, plus value added
tax. We have the right of first refusal in case the lessors want to sell the premises. If we do not exercise the right
of first refusal, the lessors shall ensure that the lease will be honored by the buyer. Under the terms of the lease,
upon the expiration of the lease the building shall become the property of the lessors while permanent
improvements which may be removed without damage to the premises, including machinery and equipment,
shall remain our property.
We lease the land on which our other 10 bottling plants are located from our affiliate, Nadeco Realty. Since
February 2007, we have held only 40% of Nadeco Realtys shares by number and voting power, with the
remainder being owned by Philippine Nationals. As a result, under the relevant Philippine law, Nadeco Realty
is a Philippine National, and may therefore invest in, hold, purchase, lease, develop and sell real properties and
is qualified to directly own private land in the Philippines. Beginning February 1, 2007, the terms of the leases
with Nadeco Realty have been renegotiated. The leases will expire on January 31, 2022, but are renewable for
another period of 25 years under the same terms and conditions except for the monthly rental which will be based
on the existing market rate at the time of the renewal. The annual rental for the 10 lots is approximately P
=4.783
million, subject to a 10% increase every three years. Under the terms of the leases, we own the buildings
themselves, as well as leasehold improvements, machinery and equipment, fixtures, and appurtenances, which
appear as assets in our balance sheet. However, under the terms of the lease, permanent improvements shall
become the property of the lessors upon expiration of the lease. But permanent improvements which may be
removed without damage to the premises, including machinery and equipment, shall remain our property.
In addition to our bottling plants, at September 30, 2007, we lease the land on which our 101 warehouses and
99 sales offices (generally co-located) are located. We have a total of approximately 412,016.4 square meters of
warehouse space, and approximately 102,851.6 square meters of office space.
Other than these buildings, leasehold improvements, machinery and equipment, fixtures and appurtenances, and
our shares in our affiliates and certain properties held through our affiliates, we do not hold significant
properties.
We do not intend to acquire any material real estate property in the next 12 months.
67
Business
INTELLECTUAL PROPERTY
We do not own any intellectual property that is material to our business. Under the Exclusive Bottling
Appointments, we are authorized to use brands and the associated trademarks owned by PepsiCo, the relevant
PepsiCo affiliates, and, in the case of the Lipton brand and trademarks, Unilever N.V. We register the trademark
licenses with the Philippine Intellectual Property Office. Certificates of Registration filed after January 1998 are
effective for a period of 10 years from the registration date unless sooner cancelled, while those filed before
January 1998 are effective for 20 years from the registration date. The table below summarizes most of the
current Certificates of Registration as well as pending applications for Pepsi, Pepsi Max, Mirinda, Mountain
Dew, 7Up, Diet 7Up, Gatorade, Propel, Tropicana, Sting and Lipton Iced Tea.
Mark
Pepsi Max..........................................................................
1995 Pepsi Logo in Color .................................................
1996 Pepsi Logo in Color .................................................
Pepsi ..................................................................................
Mirinda .............................................................................
Mountain Dew ..................................................................
Mountain Dew Logo.........................................................
7Up and design..................................................................
Diet 7Up Logo in Color ....................................................
7Up....................................................................................
Gatorade............................................................................
Gatorade and lightning bolt design...................................
Propel ................................................................................
Tropicana Twister..............................................................
Tropicana...........................................................................
Sting...................................................................................
Lipton ................................................................................
Lipton Splash design .........................................................
Lipton Ice Tea Logo in Color............................................
Filing Date
February 7,
April 24,
August 26,
October 18,
January 23,
June 5,
June 5,
August 28,
September 22,
February 26,
November 27,
February 9,
August 23,
December 6,
December 14,
March 10,
March 28,
December 18,
November 17,
1994
1997
1997
2004
1986
2000
2000
1980
2003
2007
1992
2004
2002
1990
1982
2006
2003
2003
2006
Expiration
June 23, 2020

February 24, 2005
September 28, 2023
February 19, 2017
May 10, 2009
January 18, 2014
October 30, 2014
February 18, 2008
August 28, 2015
Pending application
June 29, 2015
August 28, 2015
January 17, 2015
August 18, 2013
January 14, 2020
June 18, 2017
June 8, 2016
May 28, 2017
Pending application
The composition of the concentrates from which we manufacture our products is a trade secret of PepsiCo, to
which we do not have access.
A discussion of the extent to which our operations depend or are expected to depend on the foregoing intellectual
property rights and the nature of our agreements with PepsiCo with respect to such rights can be found under
the headings Related Party Transactions and Risk Factors Because we produce our products under licenses
from PepsiCo and depend upon PepsiCo to provide us with concentrates, marketing support and access to new
products, changes in our relationship with PepsiCo could adversely affect our business and financial results.
INSURANCE
We maintain insurance coverage over our bottling plants, including the machinery and equipment against fire and
lightning, riot, strike and malicious damage and earthquake, typhoon and flood. However, this coverage is
limited to repairing or replacing damaged property and does not cover loss of profits in the event of business
interruption. We also maintain public liability insurance, motor vehicle insurance, payroll insurance, fidelity
insurance, goods in transit insurance and death and total or partial disability insurance with respect to our
employees. We cannot, however, assure you that the amount of cover we have will be adequate in the event of
a covered event, or that our insurers will pay our claim in full or promptly. Our insurance policies are subject to
customary deductibles and exclusions.
68
Business
LEGAL PROCEEDINGS
From time to time, we are involved in litigation in the ordinary course of our business. The majority of the cases
in which we are a party are cases we bring to recover debts in relation to unpaid receivables by our trade partners
or in relation to cash or route shortages, private criminal prosecutions that we bring (generally for low value
offenses such as theft of product or distribution equipment, fraud, and bouncing checks), labor cases for alleged
illegal dismissal (which are usually accompanied by demands for reinstatement in our company without loss of
seniority rights, payment of separation pay, and payment of backwages, moral and exemplary damages, and
attorneys fees), a small number of civil cases brought against us based on diverse causes of action, and consumer
cases brought against us involving allegations of defective products.
As a result of a promotion in 1992, civil cases were filed against us in which thousands of individuals claimed
to hold numbered bottle crowns that entitled them to a cash prize. The Philippine Supreme Court has consistently
held in at least seven final and executory decisions in the last five years that we are not liable to pay the amounts
claimed. In the most recent of these decisions, the Supreme Court dismissed a similar claim, reiterating that it is
bound by its pronouncement in a number of cases involving this promotion. By virtue of the precedential effect
of the decided cases, we expect the remaining cases to be dismissed in due course. Of the remaining cases, 13 cases
involving at least 88 claimants are still with the Regional Trial Courts, 10 cases involving 465 claimants which
have been dismissed by the Regional Trial Courts are pending transmittal to the Court of Appeals, 11 cases
involving at least 25 claimants are pending with the Court of Appeals and two cases are pending with the
Supreme Court.
We do not believe that the litigation in which we are currently involved or which is presently pending or
threatened against us is material to us, either individually or in the aggregate. For further discussion relating to
consumer protection, see Regulation Philippine Regulatory Matters Consumer Protection.
We have not, in the past three years, been involved in any bankruptcy, receivership or other similar proceedings.
A pending claim in the Philippines courts regarding the sale of certain PCPPI Shares
Certain shareholders of PCPPI, namely Orion Land, Inc. (Orion Land) and Hong Way Holdings, Inc. (Hong
Way), together with Nassim Capital Pte. Ltd (Nassim Capital), have been impleaded as co-defendants of
Orion I Holdings Philippines, Inc. (Orion I), and Orion Is wholly-owned subsidiary, Orion Brands
International, Inc. (Orion Brands), in a complaint filed in March 2007 by Asset Pool A (SPV-AMC), Inc.
(APA) with the Regional Trial Court of Makati, Branch 143 entitled Asset Pool A (SPV-AMC), Inc. vs. Orion
I Holdings Philippines, Inc., Orion Brands International, Inc., Nassim Capital Pte. Ltd., Orion Land, Inc., Hong
Way Holdings, Inc., Felipe U. Yap, David C. Go, Yuen Po Seng, Daisy Parker, and Ronald Sugapong . and
docketed as Civil Case No. 07-268.
We are not a party to, nor have we been impleaded in, such complaint or any of its incidents.
The second amended complaint in Civil Case No. 07-268 alleges that Orion I was a surety for loans extended
by APAs assignors (Bank of the Philippine Islands, or BPI, and Metropolitan Bank & Trust Company, or
Metrobank) for the principal amounts of P
=49.8 million and P
=106 million, respectively, and that some time in
2006, APA became the assignee of these loans. It also alleges that, subsequent to the default by the principal
debtor and Orion I, and subsequent also to a decision by the Regional Trial Court of Makati City (Branch 59)
in the main collection case involving BPI ordering the principal debtor and Orion I to pay BPI P
=62.1 million plus
legal interest, Orion Brands sold its shares in PCPPI in two tranches: the first to Orion Land and Hong Way for
a total of P
=717 million and the second to Nassim Capital Pte. Ltd. for U.S.$21 million. The Nassim Fund, a
Selling Shareholder, is a different entity, separate and distinct from Nassim Capital, the party impleaded in the
litigation. Nassim Capital is a fund manager. The Nassim Fund is a hedge fund.
In a motion to dismiss ad cautelam, Nassim Capital questioned the jurisdiction of the Court over it on the ground
that it is not a corporation doing business in the Philippines and besides, it is not the buyer of the PCPPI Shares.
Nassim Capitals motion to dismiss has been denied by the trial court. Nassim Capital has filed a motion for
reconsideration of the denial order, which motion is still pending.
69
Business
Relying on Article 1381 of the Civil Code on rescissibility of contracts entered into in fraud of creditors, APA
seeks to have the sales of the PCPPI shares rescinded and any release of the sale proceeds restrained. In addition,
APA is claiming P
=5 million as attorneys fees and P
=3 million as litigation expenses.
The trial court has already denied APAs application for issuance of a temporary restraining order and a writ of
preliminary injunction and thus a trial should proceed pursuant to the Philippine Rules of Court. The orders of
denial were elevated by APA to the Court of Appeals, which, on September 11, 2007, (i) denied APAs application
for a writ of preliminary injunction to freeze the proceeds of the sales of PCPPI shares sold by Orion I and Orion
Brands to Hong Way, Orion Land and The Nassim Fund, to prohibit Orion I and Orion Brands from using such
proceeds and to direct Orion I and Orion Brands to deposit the proceeds of sale of the subject PCPPI shares in
a banking institution, and (ii) accepted the offer of Orion I to post a bond in the amount of P
=62.5 million to
answer for any damages that APA may suffer as a result of the non-issuance of the writ. Pursuant to the order,
Orion I posted with the Court of Appeals the aforesaid bond in the amount of P
=62.5 million. Furthermore, on
June 21, 2006, in the appeal of the main collection case, APAs claim of being the assignee of BPIs loans was
denied by the Court of Appeals on the ground that the assignment was in violation of the Special Purpose Vehicle
Law. This incident is now pending in the Supreme Court and is docketed as G.R. No. 176669. Meanwhile, the
decision of the Regional Trial Court in the main collection case holding the principal debtor and Orion I liable
to BPI was subsequently affirmed by the Court of Appeals. The principal debtor and Orion I moved for
additional time to make their appeal in the Supreme Court, but this was denied on a technical ground. The
principal debtor and Orion I have sought a second reconsideration. If this is denied by the Supreme Court, the
Regional Trial Courts decision in the main collection case in favor of BPI, as affirmed by the Court of Appeals,
will become final and executory.
On October 19, 2007, the trial court admitted APAs Third Amended Complaint in Civil Case No. 07-268, which
seeks to also rescind any future disposition by Orion Land, Hong Way, and Nassim Capital Pte. Ltd of the PCPPI
shares. However, the trial court denied APAs prayer for injunctive relief to enjoin Orion Land, Hong Way, and
Nassim Capital Pte. Ltd from using or disposing of such shares.
Meanwhile, APA filed a motion for partial reconsideration of the order dated September 11, 2007, insofar as it
directed APA to produce the specific sale documents from BPI to APA, and a motion for production seeking
production by the defendants of the sale documents covering the PCPPI shares. The parties were given their
respective periods to file their responsive pleadings to these motions. Once these are filed, both motions will be
deemed submitted for resolution.
So far, none of the claims have been decided on a final and executory basis. Various incidents arising from the
claims are pending resolution not only on the level of the trial court but also in the Court of Appeals and the
Supreme Court. Secondary Offer Shares include shares that were purchased by The Nassim Fund from Orion
Brands. None of the Selling Shareholders has been enjoined from disposing of its Secondary Offer Shares as a
result of the filing of the complaint.
The Nassim Fund has issued an undertaking to indemnify the PSE in connection with the disposition of its PCPPI
shares pursuant to the offering.
70
Industry
The information in this section has been extracted from publicly available documents from various sources and
has not been independently verified by the Company, the Selling Shareholders, the International Underwriter, the
Joint Domestic Lead Underwriters or any other person. Much of this information is based on estimates and
subject to certain assumptions, which may not prove correct, and should therefore be regarded as indicative only
and treated with appropriate caution.
OVERVIEW OF THE GLOBAL BEVERAGE INDUSTRY
The global beverage industry can be divided into liquid refreshment beverages (LRBs), alcoholic beverages, hot
drinks and food drinks. Liquid refreshment beverages refer to carbonated soft drinks (CSDs), sports beverages,
bottled water, ready-to-drink (RTD) tea and coffee, fruit beverages, energy drinks and concentrates. In 2006,
off-trade sales of LRBs, that is, sales of LRBs for consumption outside the place of purchase, amounted to
U.S.$323 billion, or 379 billion liters, representing the largest sector of the overall global beverage market,
according to Euromonitor. For the period 2000 to 2006, the off-trade sales of the LRB market grew at a
compounded annual growth rate (CAGR) of 6.1% by sales value and 5.7% by sales volume.
Within the LRB category, CSDs are the largest beverage type by sales value and volume. According to
Euromonitor, in 2006, off-trade sales of CSDs reached U.S.$125 billion, or 148 billion liters, representing 39%
of both off-trade LRB sales value and volume. For the period 2000 to 2006, the off-trade sales of the CSD market
grew at a CAGR of 4.2% by sales value and 2.2% by sales volume. The CSD market is generally a marketplace
led by dominant global manufacturers with considerable brand equity and high barriers to entry.
According to Euromonitor, in 2006, off-trade sales of non-carbonated beverages (NCBs) amounted to
U.S.$198 billion, or 231 billion liters, representing the remaining 61% of both off-trade LRB sales value and
volume. For the period 2000 to 2006, the off-trade sales of the NCB market grew at a CAGR of 7.5% by sales
value and 8.3% by sales volume, exceeding the CSD category growth rate. The NCB market, in contrast to the
CSD market, is a developing market with a broad range of product innovation and greater potential for growth.
Below is a chart showing the breakdown of 2006 total LRB market by sales value and volume.
2006 LRB Sales Value
RTD
coffee
3%
Others
1%
RTD tea
7%
Concentrates
3%
Functional
drinks
8%
2006 LRB Sales Volume
Concentrates
1%
RTD
tea
5%
RTD
coffee
1%
Others
1%
Functional
drinks
3%
Carbonated
soft drink
39%
Carbonated
soft drink
39%
Bottled water
39%
Bottled water
19%
Fruit beverage
20%
Fruit beverage
12%
Source: Euromonitor - Global Soft Drinks & Hot Drinks 2006; off-trade sales only
Note: Functional drinks include sports beverages
71
Industry
INDUSTRY TRENDS
Over the past six years, the LRB industry has been largely impacted by two key trends: changing consumer
attitudes towards health and wellness and rising disposable incomes in general.
Over the past six years, consumers have developed greater health awareness and have increasingly linked diet and
lifestyle to their health and wellness. This has caused a gradual shift in consumer preference away from drinks
with high sugar content or artificial ingredients, such as carbonated soft drinks and concentrates, and into
non-carbonated beverages such as bottled water, sports and energy drinks, fruit beverages and RTD tea beverages
that are perceived to be healthier. CSD manufacturers have responded with a range of low-calorie and low-sugar
variants, as well as, juice or tea-based carbonates. Manufacturers have also turned to vitamin and mineral
fortification to reinvigorate their existing carbonated soft drink trademarks. The table below shows NCBs as a
percentage of the total LRB market by sales volume for the period 2000 to 2006.
NCBs as a Percentage of the Total LRB Market by Sales Volume
100%
90%
80%
70%
53%
54%
56%
58%
59%
60%
61%
47%
46%
44%
42%
41%
40%
39%
2000
2001
2002
2003
2004
2005
2006
60%
50%
40%
30%
20%
10%
0%
CSD
NCB
Source: Euromonitor data - Global Soft Drinks & Hot Drinks 2006; off-trade sales
NCBs have also been affected by health and wellness trends. Juice manufacturers have increased their focus on
the use of fortified ingredients and low-calorie variants. In addition, naturally healthy exotic fruits have emerged
as key ingredients in juices. RTD tea manufacturers have increasingly marketed teas natural healthy properties
and functional value.
Rising disposable incomes in general have also affected the beverage industry. The increase in discretionary
spending power has allowed consumers greater freedom in terms of product purchases. Consumers have shifted
from lower-priced concentrates and carbonated beverages to higher-priced non-carbonated beverages, such as
fruit beverages, fortified and non-fortified bottled water and RTD tea and coffee.
72
Industry
These two trends have been an important factor in the growth of both CSD and NCB beverages over the past
six years. According to Euromonitor, during this period, global CSD volume grew at a rate of 2.2% compared
to NCB volume growth of 8.3% (including concentrates volume growth of 2.4%). Below is a table which shows
global sales volume of CSD and NCB beverages from 2000 to 2006.
Global Sales Volume 2000-2006 (million liters)
00-06
2000
2001
2002
2003
2004
2005
2006
CAGR
Total CSD .....................

NCB
Bottled water..................
Fruit beverages ...............
RTD tea .........................
Functional drinks ...........
RTD coffee.....................
Concentrates ..................
Other..............................
129,411
133,190
135,413
137,636
141,609
144,184
147,831
2.2%
86,320
34,624
10,098
6,629
2,224
2,113
1,319
96,138
36,267
11,979
7,195
2,282
2,172
1,437
105,453
38,193
13,082
7,922
2,310
2,222
1,549
117,993
40,086
14,356
8,413
2,382
2,304
1,645
126,763
41,905
15,553
9,389
2,449
2,362
1,766
138,003
43,472
16,837
10,659
2,640
2,389
1,871
149,361
44,856
18,264
11,838
2,734
2,438
1,983
9.6%
4.4%
10.4%
10.1%
3.5%
2.4%
7.0%
Total NCB .....................

Total LRB ......................
143,326
272,737
157,471
290,660
170,732
306,145
187,179
324,814
200,187
341,796
215,869
360,053
231,475
379,306
8.3%
5.7%
Source: Euromonitor - Global Soft Drinks & Hot Drinks 2006; off-trade sales
From 2000 to 2006, LRB global sales value grew at a CAGR of 6.1%, outpacing sales volume growth during
the same period.
Global Sales Value 2000-2006 (US$ millions)
2000
2001
2002
2003
2004
2005
2006
00-06
CAGR
Total CSD ......................

NCB
Bottled water..................
Fruit beverages ...............
RTD tea .........................
Functional drinks ...........
RTD coffee.....................
Concentrates ..................
Other..............................
98,214
99,594
98,561
105,991
114,403
120,522
125,488
4.2%
34,884
46,798
15,482
13,567
7,236
8,406
1,661
36,789
47,457
16,512
13,967
7,169
8,251
1,668
38,465
48,825
17,194
15,331
7,261
8,302
1,742
44,772
52,949
19,399
17,189
8,037
9,102
1,855
50,347
58,265
22,366
20,574
8,865
9,976
2,009
55,680
61,419
23,821
23,817
9,515
10,649
2,108
60,895
63,575
24,102
26,278
9,414
11,108
2,178
9.7%
5.2%
7.7%
11.6%
4.5%
4.8%
4.6%
Total NCB .....................

Total LRB ......................
128,034
226,248
131,812
231,406
137,120
235,681
153,303
259,294
172,403
286,806
187,009
307,531
197,550
323,038
7.5%
6.1%
Source: Euromonitor - Global Soft Drinks & Hot Drinks 2006; off-trade sales
OVERVIEW OF THE PHILIPPINES

The Philippines consists of an archipelago of over 7,100 islands in the western Pacific Ocean. The islands are
commonly divided into three island groups (Luzon, the Visayas and Mindanao) and 17 Administrative Regions.
The city of Manila, in Luzon, is the national capital and second largest city after its suburb Quezon City.
According to the Economist Intelligence Unit, the population of the Philippines is estimated at 91.1 million in
2007.
73
Industry
Philippine Economy
The Philippines is an industrialized country in South-East Asia. In 2006, the Philippines was ranked as the 24th
largest economy in the world by the World Bank according to purchasing power parity. Reflecting its varied
resource endowment, the Philippine economy is diversified. In 2005, according to the Economist Intelligence
Unit, the agricultural sector accounted for 14.3% of GDP, the industry sector for 32.3% and the services sector
for 53.4%. Most industries are concentrated in the urban areas around metropolitan Manila. Below is a table
summarizing key statistics of the Philippine economy.
Key Economic Statistics
As of and for the year ended December 31,
Population (million) ......

GDP (U.S.$ billion at
PPP) ..........................
% growth ......................
GDP per capita (U.S.$
at PPP) ......................
Personal disposable
income (U.S.$ billion)
Source:
2000
2001
2002
2003
2004
2005
2006
2007
Forecast
79.7
81.4
83.0
84.6
86.2
87.9
89.5
91.1
305
9.4%
316
3.6%
330
4.4%
346
4.8%
377
8.6%
408
8.2%
443
8.6%
485
9.5%
3,827
3,880
3,970
4,090
4,370
4,640
4,960
5,330
40.7
38.4
41.4
43.5
46.4
48.8
54.9
64.0
Economist Intelligence Unit.
According to the central bank of the Philippines (Bangko Sentral ng Pilipinas), in 2007, the Philippine
Government reported that GDP grew by 7.1% and 7.5% in the first and second quarters of 2007, respectively,
and 7.3% for the first half of 2007. The second quarter growth in 2007 is the highest in 20 years, making the
Philippines one of the fastest-growing economies in South-East Asia. Philippine Government officials attributed
this growth to low inflation, expansion of government spending and private consumption and increased
infrastructure spending.
OVERVIEW OF THE PHILIPPINES LIQUID REFRESHMENT BEVERAGE INDUSTRY
Influenced by Western culture and heritage, the Philippines demographic has developed a strong preference for
Western food and drinks. According to Euromonitor, Philippine LRB consumption volume (includes both
off-trade and on-trade sales) is expected to reach 6,719 million liters or approximately 70 liters per capita.
According to Euromonitor, in 2005, Philippines off-trade LRB consumption was one of the highest among its
Southeast Asian peers, such as: Thailand, Indonesia, Malaysia, and Vietnam. However, Philippine LRB
consumption is much lower when compared to more developed countries such as Japan, Hong Kong and South
Korea. Below is a chart, based on Euromonitor data, which compares LRB consumption among Asian countries.
2005 LRB Per Capita Consumption in Asia-Pacific
(litres per capita)
160
140
120
106
83
80
40
23
31
41
53
56
61
70
3
0
Vietnam
China
Malaysia
Thailand
Indonesia Philippines Singapore
South
Korea
Source: Euromonitor report Soft Drinks - World dated April 2007; off-trade sales volume only
74
Taiwan
Hong
Kong
Japan
Industry
According to Euromonitor, Philippine LRB off-trade sales volume is expected to reached 6,085 million liters in
2007. From 2000 to 2007F, Philippine LRB off-trade sales volume is expected to grow at a CAGR of 7.6%.
Below is a table which shows total Philippine LRB sales volume from 2000 to 2007F.
Philippine LRB Sales Volume 2000-2007F
7,000
2000 - 2007F CAGR 7.6%
(million liters)
6,085
5,676
6,000
5,299
4,956
5,000
4,000
4,528
3,655
3,900
4,182
3,000
2000
2001
2002
2003
2004
2005
2006
2007F
Source: Euromonitor, as of August 2006; includes off-trade sales volume only
According to Euromonitor, Philippine LRB off-trade sales value is expected to reach P

=200 billion. From 2000 to
2007F, Philippine LRB sales value is expected to grow at a CAGR of 11.4%.
Below is a table which shows total Philippine LRB sales value from 2000 to 2007F.
Philippine LRB Sales Value 2000-2007F
(billion pesos)
250
2000 - 2007F CAGR 11.4%

200
200
182
162
150
130
100
94
106
145
117
50
0
2000
2001
2002
2003
2004
2005
2006
2007F
Source: Euromonitor, data as of August 2006; includes off-trade sales value only
Philippine LRB sales value has grown faster than consumption value as NCBs, which are typically priced at
higher levels than CSDs, have grown at a faster rate than CSDs.
75
Industry
According to Euromonitor, CSDs made up 51% of the total 2005 Philippine LRB sales volume and 55% of the
total 2005 Philippine LRB sales value. Below is a table which shows the breakdown of the Philippine LRB
market.
Philippine LRB Volume Breakdown 2005
Functional
drinks
0.5%
RTD tea
0.7%
Philippine LRB Sales Value Breakdown 2005

Functional
Concentrates
drinks
5.4%
1.0%
RTD coffee
RTD tea
0.1%
0.9%
Concentrates
0.3%
RTD coffee
0.1%
Fruit beverages
11.6%
Fruit beverages
17.2%
CSD
50.5%
CSD
54.9%
Bottled water
36.3%
Bottled water
20.5%
Source: Euromonitor report Soft Drinks in Philippines, as of August 2006; off-trade and on-trade sales
CARBONATED SOFT DRINKS

Carbonated soft drinks have historically been a mainstay in most Philippine households. The Philippine CSD
market is a highly competitive market with high barriers of entry. According to Euromonitor, the CSD market
experienced stagnant or declining sales volume growth and decline during the years from 2000 to 2007F,
declining at a CAGR of 1.3% over the period. Below is a graph which shows Philippine CSD sales volume from
2000 to 2007F.
Philippine CSD Sales Volume 2000-2007F
(million liters)
4,000
3,000
2000 - 2007F CAGR (1.3%)

2,457
2,505
2,543
2000
2001
2002
2,518
2,461
2,385
2,302
2,235
2003
2004
2005
2006
2007F
2,000
1,000
0
During the same period, the Philippine CSD market experienced modest sales value growth of 4.7% per annum,
primarily due to inflation and opportunistic price increases by CSD manufacturers. Below is a graph which shows
Philippine CSD sales value from 2000 to 2007F.
76
Industry
Philippine CSD Sales Value 2000-2007F

125
2000 - 2007F CAGR 4.7%

86
91
91
82
88
78
2002
2003
2004
2005
2006
2007F
(billion pesos)
100
75
73
66
50
25
0
2000
2001
According to Euromonitor, the CSD industry growth is expected to remain stable for the next three years.
Philippine CSD Volume Growth 2007F-2009F
4,000
Philippine CSD Sales Value Growth 2007F-2009F

150
2007F - 2009F CAGR (2.2%)
2007F - 2009F CAGR 0.9%
125
2,235
2,181
2,138
2,000
(billion pesos)
(million liters)
3,000
100
91
92
93
2007F
2008F
2009F
75
50
1,000
25
0
0
2007F
2008F
2009F
Source: Euromonitor as of August 2006; off-trade sales
FLAVOR TYPE
The CSD category can be segmented by flavor type, with the most common being: cola, lime, orange and citrus.
The cola flavor has historically dominated the CSD market in the Philippines based on its long history dating
back to the 1920s. According to ACNielsen, as of March 2007, cola flavor accounted for 66% of all CSD
volume. Below is a chart showing CSD volume share by flavor in the Philippines.
77
Industry
Philippine CSD Flavor by Volume March 2007

Citrus
9.1%
Others
1.0%
Lime
14.1%
Cola
66.3%
Orange
9.6%
Source: ACNielsen CSD Historical Volume Splits as of March 2007
COMPETITION
The Philippine CSD sector is largely controlled by international beverage companies with strong brand
recognition and presence in the Philippines. According to ACNielsen, as of September 2007, Coca-Cola Bottlers
Philippines, Inc. (CCBPI) currently leads the CSD market with a majority market share based on total sales
volume. Cosmos Bottling Company, also owned by The Coca-Cola Company, ranked second in market share,
followed by PCPPI. Domestic companies, such as Zest-O Corp., are also active players within the CSD market.
Below is a table which shows CSD market share, which is based, in part, on AC Neilsen Retail Index Service data
for the Philippines total market as of September 2007.
Philippine CSD Market Share
Company
%
Market
Share
CCBPI ......................................................................................................................................................................
CBC .........................................................................................................................................................................
PCPPI ......................................................................................................................................................................
ARC ........................................................................................................................................................................
Others ......................................................................................................................................................................
48.4%
23.3%
17.4%
8.7%
2.2%
Total ........................................................................................................................................................................
100.0%
NON-CARBONATED BEVERAGES
Unlike the CSD category, the NCB category represents a broad spectrum of beverage types and flavors. NCBs can
be segmented into: bottled water, fruit beverages, sports drinks, energy drinks, RTD tea and coffee, soya
products, fruit powders and others. NCB types differ widely based on flavor, pricing, packaging and sizing, and
overall customer preference all of which affect sales volume and value.
BOTTLED WATER
The bottled water segment includes still bottled water, carbonated bottled water, flavored water, functional water
and bulk water. Since the late 1990s, the Filipino population has become increasingly accustomed to bottled
water. Greater acceptance of bottled water has been in part caused by the countrys unreliable public water
system. According to Euromonitor, from 2000 to 2007F, bottled water volume grew at a CAGR of 20.6% and
sales value at a CAGR of 25.0%. The industry is projected to grow at a CAGR of 12.1% and 20.4%, for sales
volume and sales value, respectively, for the next three years.
78
Industry
Philippine Bottled Water Sales Volume 2000-2009F

2007F - 2009F CAGR 11.0%
5,000
3,855
(million liters)
4,000
2000 - 2007F CAGR 20.6%
3,505
3,130
2,734
3,000
1,990
2,000
1,000
843
1,013
2000
2001
1,226
2,348
1,556
0
2002
2003
2004
2005
2006
2007F
2008F
2009F
Philippine Bottled Water Sales Value 2000-2009F

140,000
2007F - 2009F CAGR 19.6%
111,858
(million pesos)
120,000
94,585
100,000
78,172
2000 - 2007F CAGR 25.0%
80,000
64,133
60,000
50,749
40,000
20,000
16,427
19,707
23,751
2000
2001
2002
30,364
39,401
0
2003
2004
2005
2006
2007F
2008F
2009F
Source: Euromonitor, data as of August 2006; includes off-trade sales value only
In the Philippines, bottled water actively competes with alternative water sources including: water vending
machines and water refill stations. These bottled water alternatives appeal to consumers who seek cheaper
sources of drinkable water. Water vending machines or ATMs (Automatic Tubig Machines) are typically found
in smaller cities and offer drinkable water for P
=1.00 per cup. Among the bottled water manufacturers, Philippine
Beverage Partners Inc., Asia Brewery Inc., Philippine Spring Water Resources Inc. and Nestl Waters Philippines
Inc. make up the competitive landscape.
FRUIT BEVERAGES
Consumption of fruit juice in the Philippines remains extremely low in comparison to Western countries and is
largely limited to children and impulse single-serve trial purchases. This may be due to the relatively high price
of juice compared to its CSD alternatives. Fruit beverages were the second largest NCB type by sales value and
volume in 2007F. According to Euromonitor, during the period from 2000 to 2007F, fruit beverage sales volume
grew at a CAGR of 10.1% and is projected to grow at a CAGR of 9.0% from 2007F to 2009F. Fruit beverage
sales value grew at a CAGR of 14.6% from 2000 to 2007F and is projected to grow at a CAGR of 13.7% from
2007F to 2009F. Growth during the historical period was primarily driven by Zest-O Corp.s introduction of
low-price RTD single-serve foil packs aimed at the budget customer. In contrast, Pepsi-Colas Tropicana Twister
premium juice is sold in plastic PET bottles at a higher price point. Below is a table that shows fruit beverage
off-trade sales volume and value for 2000-2009F.
79
Industry
Philippine Fruit Beverages Sales Volume 2000-2009F

2007F - 2009F CAGR 9.0%
(million liters)
1,000
2000 - 2007F CAGR 10.1%
800
600
400
331
356
386
2000
2001
2002
425
521
470
584
650
713
772
200
0
2003
2004
2005
2006
2007F
2008F
2009F
Philippine Fruit Beverages Sales Value 2000-2009F
(billion pesos)
50
2007F - 2009F CAGR13.7%
40
30
20
10
34
2000 - 2007F CAGR14.6%
12
13
15
10
2000
2001
2002
2003
20
17
23
26
30
0
2004
2005
2006
2007F
2008F
2009F
Source: Euromonitor, as of August 2006; includes off-trade sales value only
Competition within the juice sector remains relatively fragmented. Zest-O Corp. has cultivated a large market
share with its low-priced and low percentage fruit juice content beverage. Competition and overall volume
growth is expected to increase as industry players plan to increase their juice product offerings and leverage their
existing distribution network.
Below is a table which shows fruit beverage market share in the greater Manila area, which is based, in part, on
AC Neilsen Retail Index Service data for such market in the greater Manila area as of September 2007.
Fruit Beverage Market Share in the Greater Manila Area
Company
%
Market
Share
Zesto(1) ....................................................................................................................................................................
Philippine Beverage .................................................................................................................................................
PCPPI ......................................................................................................................................................................
Others ......................................................................................................................................................................
52.6%
1.5%
6.9%
38.9%
Total ........................................................................................................................................................................
100.0%
Note: (1) Excludes Funchum brand beverages
80
Industry
RTD TEA
While other Asian countries share a strong preference for tea, Philippine consumers prefer coffee and other
Western drinks. Prior to the last quarter of 2004, RTD tea remained largely unpopular in the Philippines and only
available through high-priced foreign imports. In 2004, the Philippine per capita consumption of RTD tea was
200ml, among the lowest of all Asian countries, compared to the Asia Pacific per capita average of over three
liters.
According to Euromonitor, during the period from 2000 to 2007F, RTD tea sales volume grew at a CAGR of
46.1% and is projected to grow at a CAGR of 43.6% from 2007F to 2009F. The RTD tea sales value grew at
a CAGR of 48.9% from 2000 to 2007F and is projected to grow at a CAGR of 60.4% from 2007F to 2009F.
Below is a table that shows RTD tea off-trade sales volume and value for 2000-2009F.
Philippine RTD Tea Sales Volume 2000-2009F
(million liters)
100
2007F - 2009F CAGR 43.6%
80
56
60
2000 - 2007 CAGR 46.1%
40
40
27
20
2
2000
2001
2002
2003
2004
11
18
0
2005
2006
2007F
2008F
2009F
Philippine RTD Tea Sales Value 2000-2009F

3,386
4,000
(million pesos)
2007F - 2009E CAGR 60.4%

2000 - 2007 CAGR 48.9%
3,000
2,160
2,000
1,317
793
1,000
81
89
99
109
2000
2001
2002
2003
471
314
0
2004
2005
2006
2007F
2008F
2009F
Growth in the sector was primarily driven by Universal Robina Corporations (URC) introduction of its C2
Cool & Clean Green Tea (C2) drink launched in late 2004. C2 debuted with a low average retail price of
P
=12.00 and quickly penetrated not only the typical iced tea target audience, but also the mass population. The
retail price was particularly low given that plastic PET bottles are often priced at a premium to other packaging
formats. Since the introduction of C2 and competing products, acceptance of RTD tea is expected to grow
boosted by affordable packaging formats, continuing product innovation into green, red and yellow tea and
active marketing of the functional benefits of drinking tea.
The RTD tea segment is led by URC, which has established a strong market position with a large market share.
Other active players in the sector include: CCBPI (Nestea), PCPPI (Lipton) and Zest-O Corp. (One).
81
Industry
Below is a table which shows RTD tea market share, which is based, in part, on AC Neilsen Retail Index Service
data for the Philippines total market as of September 2007.
Philippine RTD Tea Market Share
%
Market
Share
Company
URC ........................................................................................................................................................................
CCBPI ......................................................................................................................................................................
PCPPI ......................................................................................................................................................................
Zesto .......................................................................................................................................................................
Others ......................................................................................................................................................................
77.7%
8.3%
5.5%
5.3%
3.2%
Total ........................................................................................................................................................................
100.0%
SPORTS AND ENERGY

Growth in the sports and energy segment was positively influenced by recent trends towards a healthier, more
active lifestyle. In 2005, sports drinks became increasingly more attractive through easy-to-carry plastic bottles,
further increasing demand growth. Energy drinks target a similar audience. In the Philippines, manufacturers of
sports and energy drinks use sponsorships with professional athletic teams, including those in the Philippine
Basketball Association, to reach their target audiences.
According to Euromonitor, during the period from 2000 to 2007F, sports and energy sales volume grew at a
CAGR of 10.6% and is projected to grow at a CAGR of 13.4% from 2007F to 2009F. The sports and energy
sales value grew at a CAGR of 14.1% from 2000 to 2007F and is projected to grow at a CAGR of 11.7% from
2007F to 2009F. Below is a table that shows sports and energy off-trade sales volume and value for 2000-2009F.
Philippine Sports and Energy Sales Volume 2000-2009F
2007F - 2009F CAGR 13.4%
70
2000 - 2007F CAGR 10.6%
(million liters)
60
51
50
40
30
19
22
24
27
21
2000
2001
2002
2003
2004
30
35
39
45
20
10
0
2005
82
2006
2007F
2008F
2009F
Industry
Philippine Sports and Energy Sales Value 2000-2009F

2007F - 2009F CAGR 11.7%
5,000
(million pesos)
4,094
4,000
2000 - 2007F CAGR 14.1%

2,934
3,000
2,000
1,304
1,441
1,604
2000
2001
2002
1,850
2,146
3,284
3,673
2,518
1,000
0
2003
2004
2005
2006
2007F
2008F
2009F
Although the sports segment accounts for relatively small sales volume contributions compared to other beverage
types, strong growth dynamics and relatively higher price points are projected to make the sports and energy
segments increasingly important revenue contributors within the overall liquid refreshment beverage market.
Within the Philippines, Pepsi-Colas Gatorade is a leader in the sports drink segments. Other competing sports
drinks include: Rush, CCBPIs Powerade, 100 Plus, Aktivade and Sunbolt.
Below is a table which shows sports drinks market share, which is based, in part, on AC Neilsen Retail Index
Service data for the Philippines total market as of September 2007.
Philippine Sports Drinks Market Share
%
Company
Market
Share
PCPPI ......................................................................................................................................................................
Others ......................................................................................................................................................................
91.1%
8.9%
Total ........................................................................................................................................................................
100.0%
83
Regulation
PHILIPPINE REGULATORY MATTERS
Our operations and properties are subject to regulation by various national and local government agencies and
bodies in the Philippines.
Consumer Protection
As a producer of beverages for human consumption, we are subject to regulation by the Bureau of Food and
Drugs of the Philippines (BFAD), which is the policy formulation and monitoring arm of the Department of
Health of the Philippines (DOH) on matters pertaining to food and the formulation of rules, regulations, and
standards in accordance with the Food, Drugs, Devices, and Cosmetics Act (Rep. Act No. 3720, as amended by
Executive Order No. 175) and the Consumer Act (Rep. Act No. 7394). These laws provide for the minimum
guidelines for the safety and quality of food and food products as well as the branding and labeling requirements
for these products.
The Food, Drugs, Devices, and Cosmetics Act prohibits the manufacture, importation, exportation, sale, offering
for sale, distribution, or transfer of any food that is adulterated or misbranded. In addition, the Consumer Act
prohibits the sale, offer for sale, distribution in commerce, or importation of food that does not conform to the
required quality and safety standards of the law.
In implementation of these laws, the BFAD allows for the optional registration of locally produced food for local
market distribution but requires the mandatory registration of imported food and food products. Imported food
that fails to comply with the applicable consumer product quality and safety standards, has been determined to
be injurious, unsafe, and dangerous, is substandard, or has a material defect will not be admitted into the
Philippines.
It is our policy to register all our locally-produced products for local market distribution. These include Pepsi
Cola, Pepsi Light, Pepsi Max, Mirinda, Mountain Dew, 7Up, Diet 7Up, Mug Root Beer, Lipton Iced Teas,
Gatorade Sports Drinks, Tropicana Twister Juices, Sting Energy Drinks, Premier Bottled Water and other
variants. We also have certificates of product registration from BFAD for the products that we import. Each of
our plants has a valid and current License to Operate as a Food Manufacturer of Non-Alcoholic Beverages from
BFAD. These licenses are renewed annually in accordance with applicable regulations. Any findings and gaps
found during the regulatory audit and inspection are thoroughly discussed with BFAD inspectors and compliance
commitments are re-issued. There are no pending findings or gaps that are material or that may materially affect
the operation of each plant or all the plants as a whole.
We are also registered as a Distributor and Exporter of finished products. This registration is required when we
co-pack some products with imported finished products and distribute these for sale locally. We, through our
Muntinlupa plant, also engage in the export of certain products. Accordingly, our Muntinlupa plant has been
recognized by BFAD as a Good Manufacturing Practice Certified Plant.
All product formulations and standards developed by PepsiCo and produced locally are based on existing local
food regulations and, if certain ingredients are not listed with the BFAD, an application for use of certain food
components are sought based on food products allowed in the United States Food and Drugs Administration
Code of Federal Regulations.
It is our policy that all compulsory labeling, fair packaging, and branding of our products comply with the
standards set by the BFAD. We have complied with the necessary pre-approval analyses, and have obtained the
requisite approvals prior to releasing new or updated labels, packaging, or brand claims. In certain cases, we have
also provided optional information on the products in accordance with the guidelines set by law. All our label
claims go through the normal evaluation process when we apply for registration of the product of BFAD.
The Consumer Act also prohibits any false, deceptive or misleading advertisement for the purpose of inducing
the purchase of consumer products. An advertisement is considered false, deceptive or misleading if it is does not
conform to the law or is misleading in a material respect. Specific advertising requirements are prescribed for
food.
84
Regulation
In all instances when we change the specific claims that we make about our products, we are required to submit
the proposed change in the formulation, labeling and commercial presentation of the product to BFAD for
approval before use. All of our claims have been subject to BFAD approval.
The BFAD regularly inspects our production facilities to ensure compliance with applicable standards. If we are
found to be in violation of the law or the implementing rules and regulations, the BFAD has the power to impose
fines, require us to change our packaging, labeling, or advertising, require us to undertake remedial actions at our
production facilities, order us to stop production of some or all of our products, or order us to stop production
at one or more of our facilities.
It is our policy to comply strictly with the standards set by BFAD and the Philippine Department of Trade &
Industry for our products. There are no pending findings or gaps that are material or that may materially affect
the operation of any of our plants.
ENVIRONMENTAL MATTERS
Our production facilities are subject to environmental regulation under a variety of national and local laws and
regulations, which, in particular, control our emissions of air pollutants, water, and noise. We are generally
regulated by two major government agencies, namely, the Department of Environment and Natural Resources
(DENR) and the Laguna Lake Development Authority (LLDA). The DENR, through the Environmental
Management Bureau (EMB) and the Pollution Adjudication Board (PAB), implements the national
environmental laws, including regulations pertaining to hazardous waste management. The LLDA, which is an
attached agency of the DENR, regulates the effluent discharges of industries located within the Laguna Lake
basin. Our main production plant in Muntinlupa is located within the vicinity of the Laguna Lake, and is thus
under the LLDAs jurisdiction.
Environmental laws have become more complex and costly to comply with. While the foregoing agencies actively
monitor our compliance with environmental regulations as well as investigate complaints brought by the public,
we are required to police our own compliance with environmental regulations and prevent any incident that
could expose us to fines, civil or even criminal sanctions, considerable capital and others costs and expenses for
refurbishing or upgrading our environmental compliance system and resources, third-party liability such as
clean-ups, injury to communities and individuals, including loss of life.
Environmental Compliance Certificate
The Environmental Impact Statement System (EIS System) requires proponents of environmentally-critical
projects or those located in areas classified as environmentally critical to secure an Environmental Compliance
Certificate (ECC). The EIS System is concerned with assessing the environmental impact of the proposed
project and developing a program of environmental safeguards and enhancement and protective measures.
The ECC is a certification that the proposed project will not cause a significant negative impact, that the
proponent has complied with all the requirements of the EIS System, and that the proponent is committed to
implement its approved Environmental Management Plan or, if an Initial Environmental Examination (IEE) is
required, that the proponent will comply with the mitigation measures provided therein.
As a pre-requisite for the issuance of the ECC, proponents of environmentally-critical projects are required to
submit to the EMB an Environmental Impact Statement (EIS) while proponents of projects located in an
environmentally critical area are generally required to submit an IEE to the concerned DENR Regional Office.
Projects which were operational prior to 1982 are not covered by the EIS System. For confirmatory purposes, the
DENR may issue a Certificate of Non-Coverage but the absence of such a certificate does not subject the entity
to any penalty or liability. Our Muntinlupa, Rosario, San Fernando and Cebu plants have valid and current
ECCs, while the remainder of our plants are not covered by this requirement, having been in existence prior to
the implementation of the EIS System. Any expansion in these plants, however, will require an EIS and an ECC.
85
Regulation
Our plants that are covered by ECCs are subject to specific environmental monitoring standards including
establishing a multi-partite monitoring team and an Environmental Monitoring Fund (EMF). This
multi-partite monitoring team monitors compliance with the conditions of the ECC, the Environmental
Management Plan, and applicable laws, rules, and regulations. Regular self-monitoring is likewise required.
While we work closely with the local government and other agencies regarding environmental matters, the
DENR has not required us to establish an EMF.
If the DENR determines that certain projects pose a significant public risk or if rehabilitation or restoration is
required, then it will also require the proponent to create an Environmental Guarantee Fund (EGF). The EGF
is intended to fund the rehabilitation of areas affected by environmental damage and the resulting deterioration
of environmental quality, and will be managed by an EGF Committee and subject to an agreement between the
proponent and the EMB. None of these standards are, however, applicable to any of our plants, and the DENR
has not called our attention to this requirement.
Should we be found to be in violation of any of the requirements under the EIS System, our applicable ECCs may
be suspended or revoked, we may be subjected to significant fines, or both. In case of grave violations, the EMB
has the power to issue a Cease and Desist Order which could curtail the operations of the affected facility. These
findings and impositions may gravely affect our production which could result in a failure to meet demands for
our products.
Pollution Control
The PAB requires that permits be obtained for the construction, installation, modification, operation, extension,
or addition to sewage works as well as for industrial or commercial establishment if the operation of the
establishment will discharge waste into the water, air, or land resources or will otherwise alter their physical,
chemical, or biological properties. As part of the permitting procedure, the law authorizes the DENR to
encourage the adoption of waste minimization and waste treatment technologies when such technologies are
deemed cost effective.
Philippine emission standards are governed by the Clean Air Act. Increasingly stringent standards in emissions
from all sources may be required to maintain or improve the air quality. Thus, pollution controls or expenditures
may be required for us to comply with the law. Failure to meet the emission standards would be a ground for the
revocation of the ECC. It may also result in the closure or suspension of development, construction or operation
of our facilities.
We have obtained, or are in the process of renewing, the necessary permits to operate air pollution source and
control installations for all our plants. Furthermore, we have obtained, or are in the process of renewing, all the
necessary discharge permits for our wastewater treatment facilities in all our plants. In the event that the DENR
reviews and resets effluent standards, it usually provides for a grace period of not more than five years if it
determines that our operation would require significant retooling, upgrading, or as may be necessary for the
establishment of an environmental management standard.
So far, we have been in compliance with the pollution emission standards set by law, and we have not been cited
by the PAB or the DENR for any violation. As part of the approval process, we also have appointed a Pollution
Control Officer for the affected facilities. This Pollution Control Officer is accredited by the DENR and is
responsible for securing the necessary permits and renewals, monitoring pollution source and control facilities to
ensure compliance with the air, noise, and water quality standards of the DENR, including coordinating with the
DENR and other relevant bodies to facilitate compliance. Our facilities may be inspected by the PAB.
Investigations may be conducted on conditions relating to possible or imminent pollution. If we are found to be
in violation of these rules and regulations, then we could be subject to a fine. The operation of our facilities may
also be temporarily suspended if the discharge exceeds the prescribed standards. Furthermore, if the DENR
imposes new waste minimization and waste treatment technologies and/or imposes stricter effluent standards, we
may incur additional costs and may be required to renew discharge permits. The permits to operate air pollution
source and control installation may be subject to additional requirements.
In cooperation with our suppliers and the DENR, we have begun shifting our boilers from bunker oil to a mix
of bunker and fuel. While the new mixture costs more than bunker oil, we believe that shifting to a more efficient
fuel system (which has lower sulfur content than bunker oil) which produces cleaner emissions supports our
long-term view of aiding in the protection of the environment. We continue to study the ways of upgrading our
facilities with a view of increasing efficiency in production and lessening effluents.
86
Regulation
Under the Ecological Solid Waste Management Act, we are required to segregate solid waste at the source and
store each type of waste in a separate container. However, the prohibition does not apply to packaging which is
not environmentally friendly, but for which no commercially available alternative has been determined. In
compliance with these standards, we actively practice waste segregation for our scrap metals, cullets, plastic,
biodegradable and non-biodegradable materials for proper disposal.
The Toxic Substances and Nuclear Wastes Control Act regulates the importation, manufacture, processing, sale,
distribution, use and disposal of chemical substances and mixtures which tend to bring health or environmental
risk. Our Davao, Muntinlupa, San Fernando and Rosario plants utilize certain equipment which may have
minimal amounts of radioactive material. In this regard, we have individuals in each of these plants that have
been trained with and are accredited by the Philippine Nuclear Research Institute who can handle nuclear
materials. None of our other plants has these equipment.
Pursuant to the Sanitation Code, we have also obtained sanitary permits for our plants from the local health
offices, which are subject to renewal every year.
Costs and Effects of Compliance with Environmental Laws
Compliance with all applicable environmental laws and regulations, such as the Environmental Impact Statement
System, the Pollution Control Law, the Laguna Lake Development Authority Act of 1966, the Clean Air Act, the
Solid Waste Management Act and the Clean Water Act, has not had, and in our opinion, is not expected to have,
a material effect on our capital expenditures, earnings or competitive position. Annually, we invest about P
=39
million and P
=33 million in wastewater treatment and air pollution abatement, respectively, in our facilities.
Water Appropriation
The appropriation of water from groundwater by way of deep wells is classified as use of water for industrial
purposes, which not only includes the utilization of water in factories or industrial plants, but also the use of such
as an ingredient of a finished product. In appropriating water for purposes of our beverages, we are required to
secure the necessary water permit from the National Water Resources Board (NWRB). As part of the
regulatory regime, as an appropriator of groundwater, we are required to pay water charges to the NWRB in
accordance with the maximum volume to be diverted or withdrawn, the maximum rate of diversion or
withdrawal, the point of diversion or location of the wells, the place of use, and the purposes of the use.
Except for our Cebu and Tanauan plants, all our other plants source their water requirements from the ground
inside the plant premises. While we have applied for applications from the NWRB in our plants, a number of
these applications have remained pending due to the opposition of the local water districts who insist that we
purchase water from them. In other cases, we have raised the pendency of these applications to the appropriate
appellate boards. For our Muntinlupa plant, we still utilize old wells that have been in existence prior to the
enactment of the Water Code.
Should we drill additional wells, we will be required to obtain the necessary licenses for this purpose. In all cases,
should we be found to be in violation of any of the regulations governing the drawing of groundwater which
causes grave damage, the NWRB may impose fines and issue a Cease and Desist Order which could curtail the
operations of the affected facilities. Consequently, we would be required to pay to the local government water
bodies a fee for drawing groundwater. These findings and impositions may affect our production. Considering,
however, that the cost of water for our operations (where we only use approximately 15% of our water
requirements for beverages, while the rest is used for cleaning and maintenance, and which we pass through our
waste water treatment facility) is very low, any additional fee for drawing our purchasing water would not be
materially adverse to affect our operations.
Land Ownership
Under the Philippine Constitution, land ownership is limited to Philippine citizens and corporations with 60%
of the capital of which is owned by Philippine Nationals. As a result, we are not allowed to own land in the
Philippines considering that more than 40% of our issued and outstanding capital stock is owned by
non-Philippine nationals. We do, however, hold long-term leases over the lands on which our plants and facilities
are situated. We are allowed to sell, transfer, convey, lease, mortgage or encumber these plants or facilities.
87
Regulation
Controlled Precursors and Essential Chemicals

Pursuant to the Comprehensive Dangerous Drugs Act, we have obtained from the Philippine Drug Enforcement
Agency the license to handle controlled precursors and essential chemicals. The license authorizes us, as the end
user, to conduct laboratory analysis or technical research using hydrochloric acid, sulfuric acid and potassium
permanganate in our Iloilo, Bacolod, Cagayan de Oro and Davao plants.
Self-Generation Facility
As provided under Republic Act No. 9136, the ERC has issued Certificates of Compliance for our self-generation
facilities located at 10 of our 11 plants.
We are in the process of filing the application for our San Fernando plant.
If we are found to have violated the obligations and standards set forth in the Certificates of Compliance, the
ERC may require us to pay fines and suspend our operations.
88
Board of Directors and Senior Management

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Our overall management and supervision is undertaken by our Board. Our executive officers and management
team cooperate with the Board by preparing appropriate information and documents concerning our business
operations, financial condition and results of operations for our review. Currently, the Board consists of 10
members, of which two are independent directors.
As of the date of this Prospectus, our directors and executive officers are as follows:
Name
Age Citizenship
Position
Micky Yong ...........................
61 Singapore
Chairman of the Board and Chief Executive Officer
Ron McEachern .....................
55 Canada
Non-Executive Director
Rahul Bhatnagar ....................
49 India
James Eng, Jr..........................
65 United States
Varun Berry............................
46 India
Tsang Cho Tai (Allan Tsang)
57 United Kingdom Non-Executive Director
Rafael Moreno Alunan III .....
59 Philippines
Jose M. Periquet, Jr ...............
62 Philippines
Timothy E. Minges ................
49 United States
Oscar S. Reyes .......................
61 Philippines
Partha Chakrabarti ................
43 India
Senior Vice President and Chief Financial Officer
Felix S. Yu..............................
58 Philippines
Executive Vice President, National Sales Operations
Roberto H. Goce ...................
54 Philippines
Senior Vice President and Special Assistant, Office of the CEO
Daniel D. Gregorio, Jr............
55 Philippines
Senior Vice President for Manufacturing and Logistics
Ma. Rosario C. Z. Nava .......
39 Philippines
Corporate Secretary
Messrs. McEachern, Bhatnagar, Minges and Berry were appointed to the Board by PepsiCo, Messrs. Yong, Eng,
Periquet and Tsang were appointed to the Board by the Guoco Group and Messrs. Alunan and Reyes were
appointed to the Board as independent directors in accordance with the provisions of the Cooperation Agreement
between the Guoco Group and PepsiCo. Under the Cooperation Agreement, the Guoco Group and PepsiCo have
agreed that, after the completion of this offering, our Board will consist of four directors nominated by Guoco,
four directors nominated by PepsiCo and two independent directors. See Related Party Transactions
Transactions with Guoco and PepsiCo Cooperation Agreement. Mr. Chakrabarti, our CFO, remains an
employee of PepsiCo and has been seconded to us under a formal secondment agreement. Under the secondment
agreement, PepsiCo remains obliged to pay Mr. Chakrabartis salary and benefits, while we pay PepsiCo an
amount that we and PepsiCo have agreed is a typical CFO salary in the Philippines, being P
=450,000 per month.
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Micky M.S. Yong Mr. Yong is our Chief Executive Officer and Chairman of our Board. Mr. Yong has held
the office of CEO since 2002, but was a director since the Guoco Group acquired its interest in us in 1997. Since
1989, Mr. Yong has served as President of Guoco Assets (Philippines), Inc., the Guoco Groups principal
investment vehicle in the Philippines. Mr. Yong was the country manager and director of Dao Heng Bank Phils.,
and a director of First Lepanto Taisho Insurance, Tutuban Properties Inc., Guoco Securities Phils., and several
other corporations under the Guoco Group. Mr. Yong holds a Bachelor of Science degree in Business
Administration from the University of Singapore.
Ron McEachern Mr. McEachern is the President of PepsiCo International for Asia, and is responsible for
PepsiCo lines of business including Frito-Lay and Quaker Foods products, soft drinks, Tropicana Juices and
Gatorade in China, India and all of the Asia Pacific Rim countries. Mr. McEachern has been working for PepsiCo
in Asia for the past 11 years and has held his current position since 2003. He is a Director of Pepsi-Lipton
International, Serm Suk PLC in Thailand and Shanghai Pepsi-Cola Beverages Co Ltd in Mainland China. Prior
to his Asian assignment, Mr. McEachern held numerous PepsiCo assignments in North America and Europe
including Senior Vice President for Canada and Central USA, President of Pepsi-Cola Beverages Canada and
Region Vice President for Pepsi-Cola International in Western Europe. Prior to joining PepsiCo in 1984, Mr.
McEachern worked for Procter & Gamble Canada. Mr. McEachern holds an MBA in Finance and Marketing
from York University in Toronto and a BSc in Biology from Queens University in Kingston, Ontario.
Rahul Bhatnagar Mr. Bhatnagar is Vice President & CFO, Asia Region, for PepsiCo International, where he
leads the finance function for both beverages and food throughout the Asia region. Mr. Bhatnagar joined PepsiCo
in 1996 as CFO of the India beverage business, and has served in his current role since 2003. Prior to joining
PepsiCo, he spent two years as CFO of Seagram India, and, before that, he spent seven years with Nestle India
in the finance function in various leadership roles, the last of which was as the Financial Controller of the
business. He started his career as a management consultant in India and the United States. He holds an MBA
degree from the Wharton School, an honors BA degree in Economics from St. Stephens College, Delhi University
and is a member of the Institute of Chartered Accountants in India. Mr. Bhatnagar is a member of our audit
committee.
James Eng, Jr. - Mr. Eng has been an Executive Director of Guoco Group Limited since 2001. He is responsible
for group staff support functions for the Guoco Group. Before he joined the Guoco Group in 1994, Mr. Eng
previously worked with Hiram Walker, a Division of Allied-Lyons. Postings included New York, Miami, London,
Hong Kong and Windsor Canada. During his time with Brout, Issacs & Co., Certified Public Accountants in
New York City, he was responsible for the Management Services Division and was a Management Consultant
in New York for Computer Methods Corporation. He holds a Bachelor of Business Administration from the
University of North Carolina.
Varun Berry Mr. Berry is PepsiCos country manager for the Philippines, a post he has held since 2001. He
joined PepsiCo in India in 1993 and has held a variety of marketing and operating roles within the organization.
Prior to joining PepsiCo, he was a marketing manager for Unilever. He holds an MBA and a Bachelor of
Engineering from the Panjab University - Chandigarh.
Tsang Cho Tai (Allan Tsang) Mr. Tsang is the Chief Financial Officer of Guoco Group Limited. He is a fellow
member of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified
Accountants as well as an associate member of the Institute of Chartered Accountants in England and Wales. Mr.
Tsang was an associate of an international firm of accountants before joining the Guoco Group in 1989. Mr.
Tsang is a member of our audit committee.
Rafael Moreno Alunan III Mr. Alunan is currently President of the First Philippine Infrastructure Development
Corp. and sits on the board of several of its operating subsidiaries. He also sits on the Boards of Sun Life of
Canada (Philippines) Inc., Sun Life Financial Plans, Inc., Sun Life Balanced Fund, Inc. and the Management
Association of the Philippines. Mr. Alunan is also President of Kilosbayan, a non-profit, non-partisan
ethics-oriented peoples organization and a columnist for Business World. He served in the cabinets of President
Fidel Ramos and President Corazon Aquino as Secretary of the Interior and Local Government and Secretary of
Tourism, respectively. He holds a double degree in Business Administration and History-Political Science from
the De La Salle University and a Masters degree in Public Administration from Harvard University.
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Jose M. Periquet, Jr. Mr. Periquet is President and Chief Executive Officer of Metropolitan Insurance
Company, Inc., a position has held since 1999. He has been employed by Metropolitan Insurance since 1985,
when he joined as Acting President and Manager. He previously served in a number of managerial roles with AIU
(Philippines), Inc. Mr. Periquet is also a director of MIC Holdings Inc., Bradstock Insurance Brokers Inc. and The
Athenaeum Condominium Corporation. Mr. Periquet holds a Bachelors degree, majoring in economics, from
Ateneo de Manilia and a Masters degree in economics from Fordham University.
Timothy E. Minges Mr. Minges is General Manager, Asia Pacific Markets for PepsiCo International. Mr.
Minges has been with PepsiCo since 1983, and has held managerial roles in the United States, Thailand,
Indonesia and China. He is also a director of Kirin-Tropicana, Inc. in Japan, Serm Suk PLC in Thailand and P.T.
Indofood Frito-Lay Makmur in Indonesia. He holds a Bachelor of Science in accounting from Miami University.
Oscar S. Reyes Mr. Reyes is currently Chairman of Link Edge, Inc. and a member of the Board of Directors
of the Philippine Long Distance Telephone Company, Bank of the Philippine Islands, Manila Water Co., as well
as a number of other companies. He previously served the Shell Companies in the Philippines in various
capacities, including Country Chairman, President of Pilipinas Shell Petroleum Corporation and Managing
Director of Shell Phil. Exploration B.V. He previously held the positions of Vice-President for Finance, Legal and
Corporate Affairs, Vice-President for Human Resources of Pilipinas Shell; Area Finance Adviser for South
America and Regional Planning Adviser for Western Hemisphere & Africa Region for the Shell International
Petroleum Co. of London; and General Manager for Treasury and Planning of the Pilipinas Shell. Outside the
Shell Group of Companies, Mr. Reyes served as Executive Vice President and General Manager of Philippine
Petroleum Corporation, Consultant for National Steel Corporation and its affiliated companies and as Project
Team Leader and Head of the Special Studies of the Private Development Corporation of the Philippines. Mr.
Reyes is a graduate of the Ateneo de Manila University with a Bachelor of Arts Degree Major in Economics (cum
laude). His post-graduate studies include Business Management Consultants and Trainers Program of the Japan
Productivity Center/Asian Productivity Organization in Japan and Hong Kong; International Management
Development Program leading to Diploma in Business Administration and Certificate in Export Promotion in
Waterloo University, Ontario, Canada; European Business Program from the United Kingdom, Netherlands,
France, Germany and Switzerland; Master in Business Administration studies at the Ateneo Graduate School of
Business Administration; Program for Management Development from the Harvard Business School; and a
Commercial Management Study Program at the Lensbury Centre of the Shell International Petroleum Co. in
United Kingdom. Mr. Reyes is a member of our audit committee.
Partha Chakrabati Mr. Chakrabati is our Senior Vice President and Chief Financial Officer, a position he has
held since he joined us in September, 2006. Mr. Chakrabati has been employed by PepsiCo since 1994, and he
remains a PepsiCo employee while holding his current post while on secondment from PepsiCo. Mr. Chakrabati
began his career with PepsiCo in India, where he held a number of positions before moving to Vietnam as CFO
of PepsiCos business there. Before joining PepsiCo, he worked for ICI India. He holds a Bachelor of Commerce
from the University of Calcutta and qualified as a Chartered Accountant in India.
Felix S. Yu Mr. Yu is our Executive Vice-President, National Sales Operations. He joined the predecessor of
PCPPI in 1983, and has served in various roles in sales and plant management. He was appointed to his present
role in 2004. Prior to joining Pepsi, he worked for the CFC-URC Group of companies, and before that Nestl
Philippines. He holds a Bachelor of Science degree in business administration from De La Salle University,
Manila.
Roberto H. Goce Mr. Goce is our Senior Vice-President and Special Assistant, Office of the CEO. His
background is in sales and logistics. Prior to joining us in 1997, Mr. Goce worked for San Miguel Corporation,
and before that, he held various positions in the grains and fertilizer industries. His experience encompasses
business planning, management and organization audits, and training and development. Mr. Goce holds a
Bachelor of Science in business management from Ateneo de Manila University, and is a founding member of the
Distribution Management Association of the Philippines.
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Daniel D. Gregorio, Jr. Mr. Gregorio is our Senior Vice-President for Manufacturing and Logistics, a role he
has held since 1998. He began his career as a systems analyst for Coca-Cola Bottling Phils Inc. and rose to the
position of Chief Accountant. In 1987, he moved to Indonesia as country General Manager for Coca-Cola
Amatil, the owner of the local Coca-Cola bottler. Mr. Gregorio holds a Bachelor of Science in Industrial
Engineering.
Ma. Rosario C. Z. Nava Ms. Nava is our Corporate Secretary. She is a practicing lawyer and a member of
the Integrated Bar of the Philippines since 1995. She is also Director and Corporate Secretary of Solectron
Philippines Inc. and Corporate Secretary of CPAC Monier Philippines, Inc. She graduated with a Bachelor of
Science degree in Management (Legal Management major) with honors from the Ateneo de Manila University
in 1988 and a Juris Doctor degree from the Ateneo de Manila University School of Law in 1994.
Of the above-mentioned directors and officers, the Company is not aware of any family relationship up to the
fourth civil degree among the directors or executive directors of the Company.
Significant Employees
No single person is expected to make a significant contribution to the business since the Company considers the
collective efforts of all its employees as instrumental to the overall success of the Companys performance.
Involvement in Certain Legal Proceedings of Directors and Executive Officers
None of the members of our Board nor any of our executive officers have been or are involved in any criminal,
bankruptcy or insolvency investigations or proceedings for the past five years and up to the date of this
Prospectus. None of the members of our Board nor any of our executive officers have been convicted by final
judgment of any offense punishable by the laws of the Republic of the Philippines or of any other nation or
country. None of the members of our Board nor any of our executive officers have been or are subject to any
order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities, commodities or banking activities. None of the
members of our Board nor any of our executive officers have been found by a domestic or foreign court of
competent jurisdiction (in a civil action), the Commission or comparable foreign body, or a domestic or foreign
Exchange or other organized trading market or self regulatory organization, to have violated a securities or
commodities law or regulation.
Corporate Governance
Our Board approved PCPPIs Manual on Corporate Governance on June 21, 2007 in order to monitor and
assess our compliance with leading practices on good corporate governance as specified in our Manual and
Philippine SEC circulars. The Manual highlights areas for compliance improvement and sets out actions to be
taken by PCPPI. PCPPI will submit a certificate attesting to compliance with the Manual to the Philippine SEC
and the PSE before the end of each year. PCPPI will begin submitting the certificate of compliance to the
Philippine SEC and the PSE in January 2008.
COMMITTEES OF THE BOARD
Our Board has maintained an audit committee since 2004. Pursuant to our Manual, our Board created two
additional committees: a compensation and remuneration committee and a nomination committee, and
appointed Board members thereto. Each member of the respective committees named below has been holding
office as of the date of this Prospectus and will serve until his successor shall have been elected and qualified.
Audit Committee
Our Audit Committee is responsible for assisting the Board in its fiduciary responsibilities by providing an
independent and objective assurance to our management and shareholders of the continuous improvement of our
risk management systems, business operations and the proper safeguarding and use of our resources and assets.
The Audit Committee provides a general evaluation of and assistance in the overall improvement of our risk
management, control and governance processes.
92
The Audit Committee must be comprised of at least three Directors, preferably with accounting and financial
background. Two of the members must be independent directors, including the chairman of the Committee. The
Audit Committee reports to the Board and is required to meet at least once every three months. As of the date
of this Prospectus, the members of the Committee were: Messrs. Bhatnagar, Tsang, Alunan and Reyes.
Compensation and Remuneration Committee
Our Compensation and Remuneration Committee is responsible for objectively recommending a formal and
transparent framework of remuneration and evaluation for the members of the Board and its key executives. The
Compensation and Remuneration Committee must be comprised of at least three Directors, including one
independent director who reports directly to our Board. The Committee is required to meet at least once per year.
As of the date of this Prospectus, the members of the Committee were Messrs. Yong, Eng, Minges and Alunan.
Nomination Committee
Our Nomination Committee is responsible for providing shareholders with an independent and objective
evaluation of and assurance that the members of its Board are competent and will foster our long-term success
and secure our competitiveness. The Nomination Committee must comprise at least three Directors, including
one independent director. The Nomination Committee reports directly to the Board and is required to meet at
least once a year. As of the date of this Prospectus, the members of the Committee were: Messrs. Yong, Eng,
Minges and Alunan.
EXECUTIVE COMPENSATION
Summary compensation table
The following tables identify our Chief Executive Officer and the four most highly compensated executive
officers and summarize their aggregate compensation in fiscal 2005, fiscal 2006, fiscal 2007 and the three month
period ended September 30, 2007. Mr. Chakrabarti, our CFO since September 2006, and his predecessor,
Stephen Carty, have served under a secondment arrangement between us and PepsiCo. Under this arrangement,
PepsiCo has continued to employ them and pay their salary and benefits, and we have paid PepsiCo a monthly
amount of P
=450,000. The tables below include the amount we pay PepsiCo, which is not necessarily the amount
that PepsiCo paid their employees.
September 30, 2007
Salary
Name
CEO and four most highly compensated

executive officers
Micky Yong ..............................................
Felix Yu ....................................................
Partha Chakrabarti...................................
Daniel Gregorio........................................
Roberto Groce..........................................
Total .........................................................
All other officers and directors as a
group unnamed ....................................
Bonus
Total
(in P
= millions)
Position
Chairman and CEO

EVP National Sales and Operations
SVP & CFO
SVP Manufacturing and Logistics
SVP Special Assistant to the CEO
12.0
12.0
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Year ended June 30, 2007

Salary
Name
CEO and four most highly compensated

executive officers
Micky Yong ..............................................
Felix Yu ....................................................
Partha Chakrabarti/Stephen Carty ...........
Daniel Gregorio........................................
Roberto Groce..........................................
Total .........................................................
Position
Bonus
Total
(in P
= millions)
Chairman and CEO

SVP & CFO

group unnamed ....................................
42.3
19.3
61.6

Salary
Name
CEO and the four most highly

compensated executive officers
Micky Yong ..............................................
Felix Yu ....................................................
Stephen Carty ...........................................
Daniel Gregorio........................................
Roberto Groce..........................................
Total .........................................................
Position
Bonus
Total
(in P
= millions)
Chairman and CEO

SVP & CFO

group unnamed ....................................
42.1
18.8
60.9

Salary
Name
CEO and the four highly compensated

executive officers
Micky Yong ..............................................
Felix Yu ....................................................
Stephen Carty ...........................................
Daniel Gregorio........................................
Roberto Groce..........................................
Total .........................................................
group unnamed ....................................
Position
Bonus
Total
(in P
= millions)
Chairman and CEO

SVP & CFO
41.9
8.3
50.2
Standard arrangements
We pay our non-executive directors US$1,000 for every meeting and committee meeting, except for audit
committee meetings, for which we pay US$2,000. The directors associated with PepsiCo and the Guoco Group
have agreed to forego such payments. Apart from the foregoing, there are no standard arrangements pursuant
to which of our directors are compensated, or are to be compensated, directly or indirectly, for any services
provided as a director.
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Other arrangements
There are no other arrangements pursuant to which any director of PCPPI was compensated, or is to be
compensated, directly or indirectly, for any service provided as a director.
EMPLOYMENT CONTRACTS BETWEEN US AND NAMED EXECUTIVE OFFICERS
There are no special employment contracts between us and the named executive officers.
WARRANTS AND OPTIONS OUTSTANDING
There are no outstanding warrants or options held by our President/CEO, the named executive officers, and all
officers and directors as a group.
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Related Party Transactions

TRANSACTIONS WITH PEPSICO
PepsiCo is a related party of ours because of:
its 32.9% beneficial interest in our Shares (which will be reduced to 29.5% upon completion of the
offering);
the four PepsiCo employees (Messrs. McEachern, Bhatnagar, Minges and Berry) who sit on our board of
directors; and
the control that PepsiCo exercises over our operations as the licensor of our products and the sole vendor
of our beverage concentrate requirements for those products.
We have a number of agreements with PepsiCo that are fundamental to our business, and we regularly enter into
transactions with PepsiCo. See Risk Factors Because we produce our products under licenses from PepsiCo
and depend upon PepsiCo to provide us with concentrates, marketing support and access to new products,
changes in our relationship with PepsiCo could adversely affect our business and financial results and Risk
Factors We may have potential conflicts of interest with PepsiCo, which could result in PepsiCos objectives
being favored over our objectives.
The significant transactions and agreements are summarized below.
Exclusive Bottling Appointments
Exclusive Bottling Appointment with PepsiCo
Our principal Exclusive Bottling Appointment (EBA), dated as of April 11, 2007, covers Pepsi, Diet Pepsi,
Pepsi Light, Pepsi Max, Mirinda, Mountain Dew, 7Up, Diet 7Up, Gatorade, Propel and Tropicana. On May 14,
2007, we entered into a further agreement with PepsiCo by which Sting, our energy drink product, was added
to the EBA, with certain consequential amendments, which are reflected below. Under the EBA, PepsiCo (or the
PepsiCo subsidiary that owns the relevant product) appoints us as its exclusive bottler to manufacture, market
sell and/or distribute the beverages in the Philippines. The term of the EBA is 10 years.
We are obliged to purchase all of our concentrate requirements to manufacture the beverages from PepsiCo at
prices calculated in accordance with the EBA. The concentrate prices are a fixed percentage (which varies from
product to product) of the wholesale price of the relevant product, payable in Philippine pesos. These prices are,
however, subject to a U.S. dollar floor price.
PepsiCo (and the relevant PepsiCo subsidiaries) retain ownership of all of the trademarks relating to the
beverages. PepsiCo will protect and defend the trademarks at its cost, but has no liability to us for any loss or
damage we suffer as a result of any litigation concerning the trademarks or for any consequential damages that
we have concerning PepsiCos ownership of the trademarks.
We agree to strictly follow all instructions and directions issued by PepsiCo from time to time for preparing,
bottling, selling and distributing the beverages to the extent necessary to maintain the high quality of the
beverages at all time. Under this clause, PepsiCo requires us to observe its global beverage standards. See
Business Quality Control. The EBA also requires us to maintain our bottling plants in a thoroughly clean
and sanitary condition, to comply with all applicable governmental regulations, and to filter all of the water we
use in bottling the beverages through activated carbon and sand filters. We must make and record all water and
beverage tests that PepsiCo specifies, retain the results for at least 10 years, and furnish them to PepsiCo or its
designee upon request. We are obliged to provide PepsiCo or its designee with samples of our products and the
water we use in bottling, and we have agreed to permit agents of PepsiCo, upon prior notice, to enter our plants
at any time during working hours and to inspect the facilities, equipment and materials used in preparing,
bottling, selling and distributing the beverages, to check operations and methods and to take with them samples
of the products and the water, materials and supplies used in bottling the beverages.
We must also provide PepsiCo with a range of financial and operational information.
96
We are obliged to push vigorously the sale of the products throughout the Philippines in all package sizes specified
by PepsiCo. Without limiting our general obligation, we are obliged to fully meet and increase the demand and
share of market for the beverages throughout the Philippines and secure full distribution up to the maximum sales
potential through all distribution channels or outlets available to soft drinks, using any and all equipment
reasonably necessary to secure such distribution. We are obliged to fully exploit new packages, package sizes and
beverage opportunities. We must service all accounts with adequate frequency to keep them at all times fully
supplied with the beverages, must use adequate salesmen and trucks and must fully cooperate in and vigorously
push PepsiCos cooperative advertising and sales promotion programs and campaigns in the Philippines. We are
also obliged to invest necessary capital and make such expenditures to maintain a sufficient inventory of bottles,
cartons, containers and cases as may be required and to replace all or part of such inventory as may be required
to meet PepsiCos standards of quality and appearance.
We are obliged to actively advertise the beverages and vigorously engage in sales promotion activities in the
Philippines. Under the EBA, we and PepsiCo are obliged to contribute equally to the cost of the marketing plan,
including all advertising and promotional expenses. However, in practice, PepsiCo has from time to time made
additional contributions to the marketing program, which are generally intended to offset additional capital and
other expenditures that we have made to develop our business beyond our obligations under the Performance
Agreement. We and PepsiCo will enter into a Cooperative Advertising and Marketing Agreement each year
during the term of the EBA. In order to ensure consistency of image, we will only use advertising strategies
developed by PepsiCo, and only use advertising and promotional materials furnished and recommended by
PepsiCo. We, PepsiCo and the Guoco Group shareholders have also entered into a Performance Agreement
relating primarily to the ongoing level of investment in our business. PepsiCo can terminate the EBA if we breach
either the Cooperative Advertising and Marketing Agreement or the Performance Agreement.
Other than the PepsiCo products to which the EBA relates, we may not manufacture, distribute or sell any other
cola, lemon, lime, or combination lemon-lime drink, sports drink, juice or beverage containing any juice content,
or any other beverage marketed as an energy and/or power and/or mind and body enhancing drink or any
beverage that has Taurine, Inositol or vitamins B3, B6 or B12 added, or any other beverage that imitates or can
be confused with the beverages that are the subject of the EBA. We also may not produce any beverage that uses
any trademark, designation or trade dress that imitates or is likely to be confused with PepsiCos trademarks,
designations or trade dress.
PepsiCo is not obliged to issue bottling agreements for other PepsiCo products to us. However, we have a right
of first refusal prior to PepsiCo issuing such an agreement to another party in the Philippines, which right we
must exercise within 60 days.
PepsiCo may terminate the EBA upon the occurrence of any one of the following events:
Our failure to perform or comply with the terms or conditions of the appointment, provided that PepsiCo
must give us written notice of the failure and 30 days to rectify it;
Certain specified competitors or any manufacturer or distributor anywhere in the world of any product
which competes with the beverages licensed to us acquires 10% or more of our Shares;
Any person (other than the existing shareholders) acquires 20% or more of our Shares.
We discontinue bottling the beverages for a period of 30 consecutive days;
Certain events related to our insolvency or bankruptcy;
A change in our management or control of our business by virtue of any law, decree, order, rule, regulation,
ordinance or any other similar cause; or
The termination of any of our EBAs (except the Lipton EBA (defined below)).
In addition, if in the reasonable opinion of PepsiCo, we should at any time fail to push vigorously the sale of the
beverages, or secure full coverage therefore in any part of the Philippines, PepsiCo may, after notifying us of the
failure and allowing us three months to correct the failure, remove that area from our appointment and deal with
it as PepsiCo sees fit, without prejudicing PepsiCos other rights under the EBA.
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Exclusive Bottling Appointment with Pepsi Lipton International Limited

Our Exclusive Bottling Appointment (Lipton EBA), dated as of April 11, 2007, with Pepsi Lipton International
Limited (a PepsiCo/Unilever joint venture), covers Lipton Iced Tea beverages. Under the Lipton EBA, Pepsi
Lipton agrees to supply concentrate for the Lipton beverages exclusively to us in the Philippines and appoints us
as its exclusive bottler to manufacture, market, sell and/or distribute the Lipton beverages in the Philippines. The
term of the Lipton EBA is five years.
We are obliged to purchase all of our concentrate requirements to manufacture the Lipton beverages from Pepsi
Lipton at prices calculated in accordance with the Lipton EBA. We agree to sell the Lipton beverages to retailers
in the Philippines at no more than prevailing competitive market prices and, to the extent permitted by law, Pepsi
Lipton will advise from time to time the maximum price which we may charge to retailers. We and Pepsi Lipton
will jointly decide the retail prices for the Lipton beverages.
Pepsi Lipton is the licensee (with the power to sublicense) of the trademarks registered in the Philippines with
respect to the Lipton beverages. We are authorized to use the trademarks on the terms and conditions of the
trademark sublicense as set forth in the Lipton EBA.
We agree to manufacture the Lipton beverages according to Pepsi Liptons manufacturing standards. We agree
to permit Pepsi Lipton, its officers and agents, upon prior notice, to inspect and audit the materials, plants,
facilities, equipment and methods used in preparing, packaging, storing and handling the Lipton beverages and
to inspect and audit our quality control records. We agree to package and sell the Lipton beverages only in
authorized containers approved by Pepsi Lipton. We are solely responsible for quality assurance with respect to
the Lipton beverages and will follow the procedures set out in the quality assurance manual to be provided by
Pepsi Lipton.
We must provide Pepsi Lipton with a range of financial and operational information, as Pepsi Lipton may from
time to time prescribe.
We are obligated to try to maximize sales of the Lipton beverages and to satisfy demand for the Lipton beverages
in the Philippines by making maximum use of our distribution system and infrastructure. We are obliged to
actively advertise the Lipton beverages and vigorously engage in sales promotion activities in the Philippines. We
and Pepsi Lipton each agree to contribute 50% of marketing expenditures, which expenditures shall be fixed by
mutual agreement. We and Pepsi Lipton shall enter into a Cooperative Advertising and Marketing Agreement
each year during the term of the Lipton EBA. All labeling, advertising or promotion will be in accordance with
the trademark license of Pepsi Lipton and shall be subject to prior approval by Pepsi Lipton.
Pepsi Lipton may terminate the Lipton EBA at any time on 6 months notice; provided that PepsiCo and Unilever
have terminated their joint venture agreement in relation to Pepsi Lipton. Either party may terminate the Lipton
EBA if the other party materially breaches the Lipton EBA (and fails to remedy such breach within 60 days
following notice thereof) and in the event of certain matters related to the other partys insolvency, liquidation
or bankruptcy. Pepsi Lipton may also terminate the Lipton EBA upon any of the following events:
The Lipton EBA ceases to be in conformity with any applicable law or regulation in the Philippines;
The public authority having jurisdiction refuses to record us as a registered user of any trademarks in
respect of the Lipton beverages;
Control of us passes to persons whom Pepsi Lipton regards as unsuitable;
We fail for 30 consecutive days to manufacture or distribute Lipton beverages;
We fail to achieve volume targets under certain circumstances;
Any license held by us and granted by PepsiCo, or any of its subsidiaries, is terminated; or
We challenge the validity of any of the trademarks in respect of the Lipton beverages.
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We shall have sole responsibility for compliance with all applicable regulations and laws in the Philippines. We
must have product liability and personal and property damage insurance in an amount sufficient to satisfy any
claim advanced against Pepsi Lipton and, if requested by Pepsi Lipton, furnish a certificate of such insurance or
other proof of adequate insurance coverage.
TRANSACTIONS WITH GUOCO AND PEPSICO
Performance Agreement
On April 11, 2007, we entered into a performance agreement with PepsiCo, Orion Brands International, Guoco
Assets (Philippines), Inc. and Hong Way Holdings, Inc. to meet certain marketing and investment levels, as
required by the EBA. The agreement requires us to:
spend from 2007 to 2017 an amount equal to a specified percentage of the advertising and marketing cost
of each 8-oz case with a sales floor for carbonated soda drinks, Tropicana, Gatorade and Propel;
make certain investments from 2007 to 2017 based on a minimum percentage of our sales to expand our
manufacturing capacity for both carbonated and non-carbonated beverages;
invest in a minimum number of coolers per year to support distribution expansion from 2007 to 2017;
expand our distribution capabilities in terms of the number of active routes, the number of new routes and
the number of trucks used for distribution support; and
to observe financial guidelines as set by our Board.
Cooperation Agreement
On June 26, 2007, Guoco Assets (Philippines), Inc., Hong Way Holdings, Inc., Guoco Group Limited, PepsiCo,
and Quaker Global Investments B.V. entered into a cooperation agreement with regard to their actions as
shareholders. Subject to transfers that are permitted in accordance with the terms of the Cooperation Agreement,
each of the Guoco Group and the PepsiCo Group agreed to collectively hold not less than 50% plus one share
of the shareholdings in PCPPI during the term of the Cooperation Agreement. For a period of three years after
the initial public offering of PCPPI shares and the admission of such shares to listing on the PSE, each of the
Guoco Group and the PepsiCo Group agreed to inform the other of any intended sale of Shares (in whole or in
part) and the other party would have the right to approve or reject such intended sale of Shares. If the party does
not approve the intended sale in writing within 14 days written notice of the intended sale, it was agreed that
no such sale will or can be effected. Under no circumstances can the shares in PCPPI be transferred to any entity
which competes with any of the beverages manufactured, sold or distributed by us. In the case of contravention
of the transfer restrictions set out in the Cooperation Agreement, the parties agree that the offending party shall
pay to the other liquidated damages in the amount equivalent to 3.8% of the weighted average trading price of
the last thirty days prior to the date of transfer multiplied by the number of shares transferred in contravention
of the transfer restrictions.
The parties also agree to cooperate on:
approval of the annual operating plan, including the balance sheet and profit & loss account;
management structure, including the appointment of certain key executives;
operations issues, such as the sale of a business, any merger of our company or disposal of any assets in
excess of 15% of the net book value of assets;
substantial changes in the business activities of our company;
issuance of guarantees, not in the ordinary course of business;
external borrowings that is not contemplated by the annual operating plan;
changes in the capital structure of the company that are not contemplated by the annual operating plan;
99
any related party transactions, other than those on commercial arms length terms or in excess of U.S.$1
million;
granting by us of any warrants, conversion rights, or other contingent rights to equity that are not
contemplated by the annual operating plan, except for any employee stock option scheme which has been
approved by our Board;
declaration or dividend payments, other than in accordance with any agreed dividend policy;
changes to the terms of employment for significant executives and directors;
changes of any accounting methods unless required by law; and
any amendment and renewal of the EBA.
The agreement will immediately terminate upon the mutual agreement of all the parties to the agreement or either
the Guoco Group or the PepsiCo Group owning less than 15% of the shareholding in PCPPI.
AGREEMENTS INVOLVING NADECO REALTY AND NADECO HOLDINGS
We own 40% of the outstanding capital stock of Nadeco Realty.
Nadeco Realty owns the land on which our 10 plants and several sales offices are located. We lease the land for
a period of 25 years and may renew for another 25 years.
Under a Trust Agreement with Nadeco Realty, we agreed to transfer from time to time all of our rights in loans
and obligations, including the accessory or collateral agreement to be foreclosed, and to bid and subsequently
own past due loans and obligations secured by real estate properties, in favor of Nadeco Realty, to be held in trust
and for the benefit exclusively of qualified Filipino purchasers. The trusteeship shall be irrevocable and shall be
valid until full ownership of the trust properties is vested in the beneficiaries.
We have an agreement with Nadeco Holdings, which owns 60% of the outstanding capital stock of Nadeco
Realty. We agreed, among others, to support each others candidates for election to the board of directors and
for appointment of the by-law officers, and to fix higher quorum and voting requirements for certain
fundamental corporate acts. Nadeco Holdings right to sell all or portion of their shareholdings in Nadeco Realty
is subject to certain limitations, such as they shall offer first the same shares to us for the same price or
consideration and under the same terms and conditions as the sellers may give to a third party.
We have a similar agreement with the individuals who own 60% of the outstanding capital stock of Nadeco
Holdings. We agreed, among others, to support each others candidates for election to the board of directors and
for appointment of the by-law officers, and to fix higher quorum and voting requirements for certain
fundamental corporate acts. The individual shareholders right to sell all or portion of their shareholdings in
Nadeco Holdings is subject to certain limitations, such as they shall offer first the same shares to us for the same
price or consideration and under the same terms and conditions as the sellers may give to a third party.
100
Principal and Selling Shareholders

PRINCIPAL SHAREHOLDERS
The following table sets forth our shareholders of record as of the date of this prospectus:
Percentage of Total
Name of Shareholder
Number of Shares Held
Outstanding Shares
1,089,101,362
32.87%
477,340,000
857,788,628
716,943,294
149,841,502
20,000,000
1,974,498
100
1
1
14.41%
25.89%
21.64%
4.52%
0.01%
0.00%
0.00%
0.00%
0.00%
Quaker Global Investments B.V. .......................................

Guoco Group
Guoco Assets (Philippines), Inc. ....................................
Hong Way Holdings, Inc. .............................................
The Nassim Fund ..............................................................
Orion Land, Inc.................................................................
Micky Yong.......................................................................
PCPPI employees ...............................................................
Pepsi-Cola Far East Trade Development, Inc....................
Rafael M. Alunan III.........................................................
Oscar S. Reyes ..................................................................
Guoco Assets (Philippines), Inc. and Hong Way Holdings, Inc. are both affiliates of the Guoco Group.
SELLING SHAREHOLDERS
The table below shows, for each Selling Shareholder, the number of Shares held before the Offer, the number of
Shares to be sold by such Selling Shareholder in the Offer (assuming no exercise and full exercise of the
Over-Allotment Option with respect to such Selling Shareholders Shares), and the number of Shares such Selling
Shareholder will own immediately after the Offer (assuming 171,352,302 Shares, in the aggregate, are sold
pursuant to exercise in full of the Over-Allotment Option).
Shares
% of
before Offer
Shares
as of March
out- Shares to be
31, 2007 standing sold in Offer
Selling Shareholder
Guoco Assets
(Philippines), Inc........
The Nassim Fund ..........
Shares
available to
be sold
under OverAllotment
Option
Shares held
after Offer
Shares held
%(1) after Offer(2)
%(2)
477,340,000
716,943,294
14.4
21.6
221,745,036
539,820,751
171,352,302
255,594,964
177,122,543
6.9
4.8
255,594,964
5,770,241
6.9
0.2
Sub-total ........................ 1,194,283,294
36.0
761,565,787
171,352,302
432,717,507
11.7
261,365,205
7.1
(3)
.... 2,118,706,092
64.0
3,261,054,772
88.3 3,432,407,074
92.9
Total.......................... 3,312,989,386
100.0%
761,565,787
171,352,302 3,693,772,279
100.0% 3,693,772,279
100.0%
Other shareholders
Notes:
(1)
Includes the 380,782,893 Primary Shares and assumes no Shares are sold pursuant to the Over-Allotment Option.
(2)
Includes the 380,782,893 Primary Shares and assumes full exercise of the Over-Allotment Option and 171,352,302 Shares are sold
by The Nassim Fund in connection with the Over-Allotment Option.
(3)
Share information provided for reference only. These other shareholders are not participating as selling shareholders in the Offer.
101
SECURITY OWNERSHIP OF CERTAIN RECORD AND BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Record and Beneficial Owners
Security ownership of certain record and beneficial owners of more than 5.0% of our voting securities as of
September 30, 2007:
Name of
Beneficial
Owner/
Relationship
Title of Class
Name/Address of Record Owners
with Record
of Securities
and Relationship with Us
Owner
Citizenship
No. of Shares
Approximate
Held
% of Ownership
Common ........... Guoco Assets (Philippines), Inc.

20th Floor LKG Tower
6801 Ayala Avenue, Makati City
1226 Philippines
Shareholder
Same
Non-Philippine
477,340,000
14.41%
Common ........... Quaker Global Investments B.V.

Zonnebaan 35, 3542 EB Utrecht
The Netherlands
Shareholder
Same
Non-Philippine
1,089,101,362
32.87%
Common ........... The Nassim Fund

10 Frere Felix de Valois St.
Port Louis
Mauritius
Shareholder
Same
Non-Philippine
716,943,294
21.64%
Common ........... Hong Way Holdings, Inc.

1226 Philippines
Shareholder
Same
Non-Philippine
857,788,628
25.89%
Common ........... Orion Land, Inc.

1226 Philippines
Shareholder
Same
Philippine
149,841,502
4.52%
Upon completion of the offering, assuming no exercise of the Over-Allotment Option, existing shareholders of
the Company will hold approximately 69% of our Shares. Assuming no exercise of the Over-Allotment Option,
and that all of the International Shares are held by foreign shareholders and that all of the Domestic Shares are
held by Philippine shareholders, our level of foreign ownership will be approximately 86.6%.
Security Ownership of Management
Title of Class
of Securities
Name of beneficial owner
Common .................. Micky Yong
102
Position
Chairman/CEO
Amount & nature of

beneficial ownership
20,000,000 Shares,
owned directly
Citizenship
Singapore
% of total
outstanding
Shares
0.6%
Voting Trust Holders of 5.0% or More

As of the date of this Prospectus, there were no persons holding more than 5.0% of a class of Shares under a
voting trust or similar agreement.
Changes in Control
There has been no change in control of us since September 30, 2007.
103
Description of Share Capital

HISTORICAL SHARE CAPITAL INFORMATION
Our authorized share capital as of September 30, 2007 was 5,000,000,000 Shares with a par value of P
=0.15 per
Share.
Upon incorporation, our authorized capital stock was P
=1,000,000.00 divided into 10,000 shares with par value
of P
=100.00 per share. We increased our authorized capital stock to P
=730,000,000.00 divided into 7,300,000
shares with par value of P
=100.00 per share on July 14, 1989, and, on July 27, 1989, we issued 5,472,500 new
shares out of our authorized but unissued capital stock, thus rendering our share capital fully subscribed and
paid.
On July 31, 1991, we reclassified our shares and further increased our authorized capital stock to
P
=1,000,000,000.00 consisting of 6,000,000 Class A shares and 4,000,000 Class B shares of common stock with
par value of P
=100.00 per share. On August 23, 1993, we issued 120,000,000 additional shares from our
authorized but unissued capital stock, rendering our share capital fully subscribed and paid.
On August 11, 1995, we again increased our authorized capital stock to P
=2,000,000,000.00 consisting of
20,000,000 shares of common stock with par value of P
=100.00 per share, and declassified our shares. Our
subscribed and paid-up share capital then was P
=1,500,000,000.00.
On June 26, 1998, we effected a stock split at a ratio of 100:1 and further increased our authorized capital stock
to P
=5,000,000,000.00 dividend into 5,000,000,000 shares of common stock with par value of P
=1.00 per share.
Of this amount, P
=2,820,000.00 worth of shares were subscribed while P
=2,400,000,000.00 worth of shares were
paid.
On March 10, 1999, we issued 492,989,386 new shares out of our authorized but unissued capital stock. Our
subscribed capital stock thus became P
=3,312,989,386.00 while our paid-up capital stock became
P
=3,111,989,386.00.
On April 15, 2004, we decreased our authorized capital stock to P
=750,000,000.00 divided into 5,000,000,000
shares with par value of P
=0.15 per share. Our subscribed capital stock was then P
=496,948,407.90 while our
paid-up capital stock was P
=466,798,407.90.
To date, our authorized capital stock is P
=750,000,000.00 divided into 5,000,000,000 shares of stock with par
value of P
=0.15 per share. Of this amount, P
=496,948,407.90 worth of shares has been subscribed and paid.
We have not made any sale of unregistered or exempt securities, including any issuance of securities constituting
an exempt transaction, in the past three years.
OBJECTS AND PURPOSES
Our articles of incorporation state that our primary purpose is to engage in, operate, conduct, and maintain the
business of manufacturing, importing, buying, selling, handling, distributing, trading, or otherwise dealing in, at
wholesale and (to the extent allowed by law) retail, drinks and other beverages in bottles, cans, and other
containers or dispensers, and other related goods of whatever nature, and any and all materials, supplies, and
other goods used or employed in or related to the manufacture of such finished products.
Under Philippine law, a corporation may invest its funds in any other corporation or business or for any purpose
other than the primary purpose for which it was organized when approved by a majority of the board of directors
and ratified by the stockholders representing at least two-thirds of the outstanding capital stock, at a
stockholders meeting duly called for the purpose; provided, however, that where the investment by the
corporation is reasonably necessary to accomplish its primary purpose, the approval of the stockholders shall not
be necessary.
104
SHARE CAPITAL
Subject to approval by the Philippine SEC, a corporation may increase or decrease its authorized capital stock,
provided that the change is approved by a majority of the board of directors and by shareholders representing
at least two-thirds of the outstanding capital stock of the corporation voting at a shareholders meeting duly
called for the purpose. However, our articles of incorporation provide that for so long as the Appointments
remain effective, (i) the affirmative vote of PepsiCo, if applicable, shall be required for the amendment of our
articles of incorporation (which includes the increase or decrease of our authorized capital stock) insofar as such
amendment affects PepsiCos rights and interests; and (ii) the affirmative vote of 6623% of the directors present
at a board meeting shall be required for any change in our capital structure not contemplated by the relevant
Annual Operating Plan.
A corporation is empowered to acquire its own Shares for a legitimate corporate purpose, provided that the
corporation has unrestricted retained earnings or surplus profits sufficient to pay for the shares to be acquired.
Examples of instances in which the corporation is allowed to purchase its own shares are: elimination of
fractional shares arising out of stock dividends, the purchase of shares of dissenting shareholders exercising their
appraisal right as referred to below and the collection or compromise of an indebtedness to the corporation
arising out of an unpaid subscription in a delinquency sale or to purchase delinquent shares during such sale.
When a corporation repurchases its own shares, the shares become treasury shares, which may be resold at a
reasonable price fixed by the board of directors.
The Board is authorized to issue shares from treasury from time to time. Treasury shares may be issued to any
person, corporation or association, whether or not a shareholder of ours, including our officers or employees for
such consideration in money as the Board may determine.
LIMITATIONS ON OWNERSHIP
Foreign Ownership
We have a 40% equity interest in Nadeco Realty. Nadeco Realty is a Philippine corporation authorized to invest
in, hold, purchase, lease, develop and sell real properties. Its authorized capital stock is divided into Class A
shares and Class B shares, with Class A shares being limited to Philippine Nationals. Nadeco Realty is a
subsidiary of Nadeco Holdings Corporation (Nadeco Holdings), a Philippine corporation of which 60% of the
capital stock outstanding and entitled to vote is owned by citizens of the Philippines. We own the remaining 40%.
Nadeco Holdings in turn owns Class A shares in Nadeco Realty representing 60% of the capital stock
outstanding and entitled to vote.
Our ownership in Nadeco Realty is within the nationality limits under Philippine law. This affiliate, therefore, is
a Philippine National and is qualified to directly own private land. See Philippine Foreign Exchange and Foreign
Ownership Controls.
In the event, however, that we decide to hold private land, we must comply with Philippine law requirements that
would constitute us as a Philippine National and allow us to directly own private lands in the Philippines. During
that period, foreign ownership in us would be limited to a maximum of 40% of our issued and outstanding
capital stock and entitled to vote. Accordingly, we would not be able to allow the issuance or the transfer of
shares to persons other than Philippine Nationals and would not be able to record transfers in our books if such
issuance or transfer would result in our ceasing to be a Philippine National for purposes of complying with the
restrictions on foreign ownership discussed above.
See Philippine Foreign Exchange and Foreign Ownership Controls Foreign Ownership Controls. See also
Material Contracts Arrangements Relating to Nadeco.
105
Non-Competition
So long as the EBA remains in effect, our articles of incorporation and by-laws generally prohibit acquisitions of
our Shares that result in:
a change of control;
a manufacturer, bottler, seller or distributor of competing beverages acquiring 10% or more of our Shares;
or
20% or more of our Shares being acquired by any person other than our current shareholders.
RESTRICTIONS ON ISSUANCE AND DISPOSAL OF SHARES

Lock-Up
We, Quaker Global Investments B.V., Hong Way Holdings, Inc, Orion Land Inc. and the Selling Shareholders
have each agreed with the International Underwriter that, other than in connection with the Over-Allotment
Option and certain other exceptions, for a period of 180 days after the First Closing Date, neither us nor any
person acting on our behalf will, without the prior written consent of the International Underwriter, issue, offer,
sell, contract to sell, pledge or otherwise dispose of (or publicly announce any such issuance, offer, sale or disposal
of) any Shares or securities convertible or exchangeable into or exercisable for Shares or warrants or other rights
to purchase Shares or any security or financial product whose value is determined directly or indirectly by
reference to the price of the underlying securities, including equity swaps, forward sales and options. See Plan
of Distribution.
Others
Existing shareholders who own an equivalent of at least 10% of our issued and outstanding Shares after the Offer
are required under the revised listing rules of the PSE applicable to companies applying for listing on the PSE First
Board, not to sell, assign or otherwise dispose of their Shares for a minimum period of 180 days after the Listing
Date. Quaker Global Investments B.V. and Hong Way Holdings, Inc. are covered by this lock-up requirement.
This lock-up does not apply to the Optional Shares.
Except for the issuance of Offer Shares pursuant to the Offer or Shares for distribution by way of stock dividends
and certain option grants and issuances under employee incentive schemes, the PSE will require us, as a condition
to the listing of the Shares, not to issue new shares in capital or grant any rights to or issue any securities
convertible into or exchangeable for, or otherwise carrying rights to acquire or subscribe to, any shares in its
capital or enter into any arrangement or agreement whereby any new shares or any such securities may be issued
for a period of 180 days after the Listing Date.
These restrictions are in addition to the contractual lock-up described above.
Furthermore, under the Cooperation Agreement dated June 26, 2007 between Guoco Assets (Philippines), Inc.,
Hong Way Holdings, Inc., Guoco Group Limited, PepsiCo., and Quaker Global Investments B.V., each of Guoco
Group and the PepsiCo Group have agreed, for a period of three years after the initial public offering of PCPPI
shares and the admission of such shares to listing on the PSE, to inform the other of any intended sale of Shares
(in whole or in part) and the other party would have the right to approve or reject such intended sale of Shares.
If the party does not approve the intended sale in writing within 14 days written notice of the intended sale, it
was agreed that no such sale can or will be effected.
Voting Rights
Our Shares have full voting rights.
The Philippine Corporation Code provides that voting rights cannot be exercised with respect to Shares declared
delinquent, treasury shares, or if the shareholder has elected to exercise his right of appraisal referred to below.
106
Pre-Emptive Rights
The Philippine Corporation Code confers pre-emptive rights on shareholders of a Philippine corporation entitling
such shareholders to subscribe for all issues or other dispositions of equity related securities by the corporation
in proportion to their respective shareholdings, regardless of whether the equity related securities proposed to be
issued or otherwise disposed of are identical to the shares held. A Philippine corporation may provide for the
denial of these pre-emptive rights in its articles of incorporation. Our articles of incorporation currently contain
such a denial of pre-emptive rights on all classes of shares issued by us and therefore further issues of Shares
(including treasury shares) can be made without offering such Shares on a pre-emptive basis to the existing
shareholders.
Derivative Rights
Philippine law recognizes the right of a shareholder to institute proceedings on behalf of the corporation in a
derivative action in circumstances where the corporation itself is unable or unwilling to institute the necessary
proceedings to redress wrongs committed against the corporation or to vindicate corporate rights as, for
example, where the directors themselves are the malefactors.
Appraisal Rights
The Philippine Corporation Code grants a shareholder a right of appraisal in certain circumstances where he has
dissented and voted against a proposed corporate action, including:
an amendment of the articles of incorporation which has the effect of adversely affecting the rights attached
to his shares or of authorizing preferences in any respect superior to those of outstanding shares of any class
or of extending or shortening the term of corporate existence;
the sale, lease, exchange, transfer, mortgage, pledge or other disposal of all or substantially all the assets of
the corporation;
a merger or consolidation; and
investment by the corporation of funds in any other corporation or business or for any purpose other than
the primary purpose for which it was organized.
In these circumstances, the dissenting shareholder may require the corporation to purchase its shares at a fair
value, which, in the case of disagreement, is determined by three disinterested persons, one of whom shall be
named by the shareholder, one by the corporation, and the third by the two thus chosen. Regional Trial Courts
will, in the event of a dispute, determine any question about whether a dissenting shareholder is entitled to this
right of appraisal. The remedy will only be available if the corporation has unrestricted retained earnings
sufficient to support the purchase of the shares of the dissenting shareholders. From the time the shareholder
makes a demand for payment until the corporation purchases such shares, all rights accruing on the shares,
including voting and dividend rights, shall be suspended, except the right of the shareholder to receive the fair
value of the share.
BOARD OF DIRECTORS
Unless otherwise provided by law or our articles of incorporation, our corporate powers are exercised, our
business conducted, and our property controlled by the Board, which is composed of ten members, including two
independent directors within the meaning set forth in Section 38 of the SRC. Under Philippine law, each director
must own at the time of election one share of our capital stock. The Board of Directors shall be elected during
each regular meeting of shareholders at which shareholders representing at least a majority of the outstanding
capital stock are present, either in person or by proxy. Subject to the rule on independent directors under
pertinent laws and rules, each shareholder shall be entitled to nominate such number of directors representing
each shareholder as shall be proportional to the percentage of outstanding shares which such shareholder shall
own in PCPPI. A shareholder shall be entitled to nominate the replacement(s) for the director(s) who were
nominated by such shareholder or director representing such shareholder (as the case may be). Except in cases
where a vacancy in the Board of Directors is due to the removal of a director or an increase in the number of
directors (which vacancy shall be filled by the shareholder in a regular or special meeting called for that purpose),
107
a majority of the remaining directors, if still constituting a quorum (or, in the event the remaining directors do
not constitute a quorum, all the shareholders), shall vote to elect that replacement(s) so nominated. Under
Philippine law, representation of foreign ownership on the Board is limited to the proportion of the foreign
shareholding.
Directors may only act collectively; individual directors have no power as such. Six directors, which is a majority
of our total directors, constitute a quorum for the transaction of corporate business. Every decision of a majority
of the quorum duly assembled as a board is valid as a corporate act. However, the election of officers shall require
the vote of a majority of all the members of the Board of Directors. In addition, our articles of incorporation
provide that for so long as the Appointments remain effective, the affirmative vote of 6623% of the directors
present at a board meeting shall be required for sale of the business or any merger of the Company; disposal of
any of our assets which have a value in excess of 15% of the net book value of all our assets not contemplated
in the relevant Annual Operating Plan; substantial change in our business activities not contemplated in the
relevant Annual Operating Plan; any external borrowing not contemplated in the relevant Annual Operating
Plan; issuance of any guarantee by the Company other than in the ordinary course of business and, even if in the
ordinary course of business, to any shareholder holding at least 5% of our issued and outstanding capital stock
or any affiliate of any such shareholder; any change in our capital structure not contemplated by the relevant
Annual Operating Plan; any related party transaction involving us and any shareholder holding at least 5% of
our issued and outstanding capital stock or its affiliate which are (i) other than in the ordinary course of business,
or (ii) are in excess of the equivalent of U.S.$1,000,000.00; granting by the Company of any warrants, conversion
rights, or other contingent rights to equity not contemplated by the relevant Annual Operating Plan, except for
any employee stock option scheme which has been approved by the Board of Directors; terms of employment
(including compensation, severance, or termination) for by-law officers and directors other than such terms as
passed upon and recommended by the Remunerations and Compensation Committee; and change of any
accounting methods unless required by law.
Our by-laws provide that the Board should create an executive committee composed of five members, at least
three of whom are members of the Board. The executive committee may act on such specific matters within the
competence of the Board as may be delegated to it by a majority vote of the Board, except with respect to: (i)
approval of any action for which shareholders approval is also required; (ii) the filling of vacancies in the Board;
(iii) amendment or repeal of the by-laws or the adoption of new by-laws; (iv) the amendment or repeal of any
resolution of the Board which by its express terms is not so amenable or repealable; and (v) the distribution of
cash dividends to shareholders. The act of the executive committee is valid when (a) it is approved by the majority
of all its members in a meeting duly called where a quorum is present or (b) it bears the written approval of all
its incumbent members without necessity of a formal meeting.
Any vacancy occurring in the Board, other than by removal by the stockholders or an increase in the number of
directors, may be filled by the vote of at least a majority of the remaining directors, if still constituting a quorum.
The vacancy resulting from the removal of a director by the stockholders in the manner provided by law may be
filled by election at the same meeting of stockholders without further notice, or at any regular or at any special
meeting of stockholders called for the purpose, after giving the proper notice. A director so elected to fill a
vacancy shall be elected only for the unexpired term of his predecessor in office.
SHAREHOLDERS MEETINGS
Annual or Regular Shareholders meetings
The Philippine Corporation Code requires all Philippine corporations to hold an annual meeting of shareholders
for corporate purposes including the election of directors. Our by-laws provide for regular annual meetings on
any day in October of each year as the Board may fix at our principal office or at some other place in Metro
Manila as may be designated by our Board in the notice. If the date of the annual meeting falls on a legal holiday,
the annual meeting shall be held on the next succeeding business day, which is not a legal holiday, at such hour
as may be specified in the notice of said meeting.
Special Shareholders meeting
Special meetings of the shareholders may be called by: (i) the Board upon request of shareholders representing
one-third or more of the fully-paid capital stock, or (ii) our President.
108
Notice of Shareholders meeting

Whenever shareholders are required or permitted to take any action at a meeting, a written notice of the meeting
shall be given stating the place, date, and time of the meeting. Under our by-laws, as amended, and subject to the
rules on proxies and information statements, notices for regular or special meetings of the shareholders shall be
mailed to the last known post office address of each shareholder not less than ten days prior to any such meeting.
In the case of a special meeting, the notice shall state the purpose of the meeting and shall be sent by the person
issuing the call. Notice of any meeting may be waived expressly or impliedly by any shareholder.
Notwithstanding such notice requirements under our by-laws, we are required under the SRC to send to our
shareholders of record at least 15 business days prior to the date of the annual or special meeting, an information
statement and proxy form (in case of proxy solicitation) relating to such shareholders meeting.
Quorum
Except in instances where the assent of shareholders representing two-thirds of the outstanding capital stock is
required by the Philippine Corporation Code to approve a corporate act (usually involving fundamental
corporate changes), a majority of our outstanding capital stock must be present in person or represented by proxy
in order to constitute a quorum for the election of directors and for the transaction of any business whatsoever.
In the absence of a quorum, the meeting shall be adjourned until the required number is present.
Voting
At all meetings of shareholders, a shareholder may vote in person or by proxy executed in writing by the
shareholder or his duly authorized attorney-in-fact. Unless otherwise provided in the proxy, it shall be valid only
for the meeting at which it has been presented to the Corporate Secretary.
Fixing record dates
Our by-laws provide that our stock and transfer book may be closed as the Board may from time to time
determine for a period not exceeding 20 days before the annual or any special meeting of stockholders, or before
the day appointed for the payment of any dividend, or before any date on which rights of any kind or in
connection with which our stocks are to be determined or exercised. In lieu of closing the said books, however,
our Board may fix in advance a day as the record date for the determination of stockholders to be entitled to have
or exercise the right to receive notices, to vote, to receive dividends, or to receive or exercise any such rights. In
the event that the stock and transfer book is to be closed, the Corporate Secretary may be directed by the Board
to give notice of such closing.
Notwithstanding the provisions of our by-laws on the setting of the record dates, the Philippine SEC may, from
time to time, promulgate rules for listed companies relating to the fixing of such record dates. Under existing
Philippine SEC rules, cash dividends declared by corporations whose shares are listed on the PSE shall have a
record date which shall not be less than 10 nor more than 30 days from the date of declaration. With respect to
stock dividends, the record date shall not be less than 10 nor more than 30 days from the date of shareholder
approval, provided however, that the record date set shall not be less than 30 trading days from receipt by the
PSE of the notice of declaration of stock dividend. If no record date is set, under Philippine SEC rules the record
date will be deemed fixed at 15 days from the date of the stock dividend declaration. In the event that a stock
dividend is declared in connection with an increase in authorized capital stock, the corresponding record date
shall be fixed by the Philippine SEC.
Matters pertaining to proxies
Shareholders may vote at all meetings the number of Shares or Preferred Shares registered in their respective
names, either in person or by proxy duly given in writing and duly presented to and received by the Corporate
Secretary at least three days before the date of the meeting for inspection and recording before the time set for
the meeting. No proxy bearing the signature that is not legally acknowledged by the Corporate Secretary shall
be honored at the meetings.
Proxies executed abroad must be duly authenticated by the Philippine Embassy or Consular Office.
No member of the PSE and no broker/dealer shall give any proxy, consent or authorization, in respect of any
securities carried for the account of a customer to a person other than the customer, without the express written
authorization of such customer. The proxy executed by the broker shall be accompanied by a certification under
oath stating that before the proxy was given to the broker, he had duly obtained the written consent of the
persons in whose account the shares are held.
109
There shall be a presumption of regularity in the execution of proxies and shall be accepted if they have the
appearance of prima facie authenticity in the absence of a timely and valid challenge.
In the validation of proxies, a special committee of inspectors shall be designated or appointed by the board of
directors which shall be empowered to pass on the validity of proxies. Any dispute that may arise pertaining
thereto, shall be resolved by the Philippine SEC upon formal complaint filed by the aggrieved party, or by the
Philippine SEC officer supervising the proxy validation process.
Proxies should comply with the relevant provisions of the Philippine Corporation Code, the SRC, and Philippine
SEC Memorandum Circular No. 5 (series of 1996) issued by the Philippine SEC.
Dividends
Under Philippine law, a corporation can only declare dividends to the extent that it has unrestricted retained
earnings that represent the undistributed earnings of the corporation which have not been allocated for any
managerial, contractual or legal purposes and which are free for distribution to the shareholders as dividends. A
corporation may pay dividends in cash, by the distribution of property or by the issuance of shares. Stock
dividends may only be declared and paid with the approval of shareholders representing at least two-thirds of the
outstanding capital stock of the corporation voting at a shareholders meeting duly called for the purpose.
The Philippine Corporation Code generally requires a Philippine corporation with retained earnings in excess of
100%, of its paid-in capital to declare and distribute as dividends the amount of such surplus. Notwithstanding
this general requirement, a Philippine corporation may retain all or any portion of such surplus in the following
cases: (i) when justified by definite expansion plans approved by the board of directors of the corporation; (ii)
when the required consent of any financing institution or creditor to such distribution has not been secured; (iii)
when retention is necessary under special circumstances, such as when there is a need for special reserves for
probable contingencies; or (iv) when the non-distribution of dividends is consistent with the policy or
requirement of a government office. Philippine corporations whose securities are listed on any stock exchange are
required to maintain and distribute an equitable balance of cash and stock dividends, consistent with the needs
of shareholders and the demands for growth or expansion of the business.
Transfer of Shares and Share register
Upon the listing of the Shares, all transfers of Shares on the PSE shall be effected by means of a book-entry
system. Under the book-entry system of trading and settlement, a registered stockholder shall transfer legal title
over the Shares to such nominee, but retains beneficial ownership over the Shares. The transfer of legal title is
done by surrendering the stock certificate representing the Shares to participants of the PDTC System (i.e.,
brokers and custodian banks) that, in turn, lodges the same with the PCD Nominee Corporation, a corporation
wholly owned by the PDTC (the PCD Nominee). A stockholder may request upliftment of the Shares from the
PDTC in which case a certificate of stock will be issued to the stockholder and the Shares registered in the
stockholders name in our books. See The Philippine Stock Market. Philippine law does not require transfers
of our Shares to be effected on the PSE, but any off-exchange transfers will subject the transferor to a capital gains
tax that may be significantly greater than the stock transaction tax applicable to transfers effected on an
exchange. See Philippine Taxation. All transfers of Shares on the PSE must be effected through a licensed stock
broker in the Philippines.
Issues of Shares
Subject to otherwise applicable limitations, we may issue additional Shares to any person for consideration
deemed fair by the Board, provided that such consideration shall not be less than the par value of the issued
Shares. No share certificates shall be issued to a subscriber until the full amount of the subscription together with
interest and expenses (in case of delinquent shares) has been paid and proof of payment of the applicable taxes
shall have been submitted to our Corporate Secretary.
Share certificates
Certificates representing the Shares will be issued in such denominations as shareholders may request, except that
certificates will not be issued for fractional shares. Shareholders wishing to split their certificates may do so upon
application to our stock transfer agent. Shares may also be lodged and maintained under the book-entry system
of the PDTC. See The Philippine Stock Market.
110
Mandatory tender offers

In general, under the SRC and its implementing rules and regulations, it is mandatory for any person or group
of persons acting in concert intending to acquire at least (a) 35% of (i) any class of any equity security of a
corporation listed in the Philippines or (ii) any class of any equity security of a Philippine corporation with assets
of at least 50 million and having 200 or more shareholders with at least 100 shares each; (b) 35% of such equity
over a period of 12 months; or (c) less than 35% of such equity that would result in ownership of over 51% of
the total outstanding equity, to make a tender offer to all the shareholders of the target corporation on the same
terms. Generally, in the event that the securities tendered pursuant to such an offer exceed that which the
acquiring person or group of persons is willing to take up, the securities shall be purchased from each tendering
shareholder on a pro-rata basis, disregarding fractions, according to the number of securities tendered by each
security holder. Where a mandatory tender offer is required, the acquirer is compelled to offer the highest price
paid by him for such shares during the past six months. Where the offer involves payment by transfer or
allotment of securities, such securities must be valued on an equitable basis. However, if any acquisition of even
less than 35.0% would result in ownership of over 51.0% of the total outstanding equity, the acquirer shall be
required to make a tender offer for all the outstanding equity securities to all remaining shareholders of the said
corporation at a price supported by a fairness opinion provided by an independent financial advisor or equivalent
third party. The acquirer in such a tender offer shall be required to accept any and all securities thus tendered.
Fundamental matters
The Philippine Corporation Code provides that certain significant acts may only be implemented with
shareholders approval. The following require the approval of shareholders representing at least two-thirds of the
issued and outstanding capital stock of the corporation in a meeting duly called for the purpose:
(i)
amendment of the articles of incorporation;
(ii)
removal of directors;
(iii) sale, lease, exchange, mortgage, pledge or other disposition of all or a substantial part of the assets of the
corporation;
(iv) investment of corporate funds in any other corporation or business or for any purpose other than the
primary purpose for which the corporation was organized;
(v)
issuance of stock dividends;
(vi) delegation to the board of directors of the power to amend or repeal by-laws or adopt new by-laws;
(vii) merger or consolidation;
(viii) an increase or decrease in capital stock;
(ix) extension or shortening of the corporate term;
(x)
creation or increase of bonded indebtedness;
(xi) dissolution of the corporation;

(xii) ratification of contracts of a director or officer with the corporation; and
(xiii) entering into a management contract with another corporation where: (a) a stockholder or stockholders
representing the same interest of both the managing and the managed corporations own or control more
than one-third of the total outstanding capital stock entitled to vote of the managing corporation and (b)
a majority of the members of the board of directors of the managing corporation also constitute a majority
of the members of the board of directors of the managed corporation.
Moreover, our articles of incorporation state that for so long as the Appointments remain effective, the
affirmative vote of PepsiCo, if applicable, shall be required for the validity of the following acts: amendment of
our articles of incorporation or by-laws insofar as such amendment affects PepsiCos rights and interests; and
expanding the range of product to be produced, sold or distributed by us, including any product not licensed to
us by Pepsico or its affiliate without the prior affirmative written consent of PepsiCo.
111
Accounting and auditing requirements

Philippine stock corporations are required to file copies of their annual financial statements with the Philippine
SEC. Corporations whose shares are listed on the PSE are also required to file quarterly financial statements (for
the first three quarters) with the Philippine SEC and the PSE. Shareholders are entitled to request copies of the
most recent financial statements of the corporation which include a balance sheet as at the end of the most recent
tax year and a profit and loss statement for that year. Shareholders are also entitled to inspect and examine the
books and records that the corporation is required by law to maintain.
The Board is required to present to shareholders at every annual meeting a financial report of our operations for
the preceding year. This report is required to include audited financial statements.
112
Description of Properties
As a foreign-owned company, we are not permitted to own land in the Philippines. As a result, we lease the land
on which our bottling plants, warehouses, and sales offices are located.
Our head office and main bottling plant are located at Km 29, National Road, Tunasan, Muntinlupa City, 1773
Philippines. The premises are leased from certain members of the Batista family. On December 16, 2002, we
extended the lease for 12 years, to expire on November 24, 2014 and renewable at the option of the parties. We
are liable to pay monthly rent, which is valued per square meter and increases over the years, plus value added
We lease the land on which our other 10 bottling plants are located from our affiliate, Nadeco Realty. Beginning
February 1, 2007, the terms of the leases with Nadeco Realty have been renegotiated. The leases will expire on
January 31, 2022 and are renewable for another period of 25 years under the same terms and conditions except
for the monthly rental which will be based on the existing market rate at the time of the renewal. The annual
rental for the 10 lots is approximately P
=4.783 million, subject to a 10% increase every three years. Under the
terms of the leases, we own the buildings themselves, as well as leasehold improvements, machinery and
equipment, fixtures, and appurtenances, which appear as assets in our balance sheet. Under the terms of the lease,
permanent improvements shall become the property of the lessors upon expiration of the lease. But permanent
In addition to our bottling plants, at September 30, 2007, we leased the land on which our 101 warehouses and
Other than these buildings, leasehold improvements, machinery and equipment, fixtures and appurtenances, and
our shares in our affiliates and certain properties held through our affiliates, we do not hold significant
properties.
The following table sets out the status of land that is material for purposes of our products manufacturing and
distribution facilities:
Location
Area
(sq.m.)
Parcels
of Land
Muntinlupa Plant .............
70,165
Title was issued in the name of Eduardo Batista, Yolanda Yatco,

Herminia Roman and Teresita Batista.
San Fernando Plant..........
43,231
Titles were issued in the name of Nadeco Realty.
Rosario Plant ...................
32,068
Titles were issued in the name of Nadeco Realty. Three of these

titles were administratively reconstituted under Republic Act No.
26. Pursuant to this law, such reconstitution is subject to the right
of any person whose interest in the property was duly noted in
the original at the time it was lost or destroyed.
Davao Plant .....................
20,001
Title was issued in the name of Nadeco Realty.
Cebu Plant........................
46,216
Titles were issued in the name of Nadeco Realty for six parcels of
land. The remaining parcels are covered by tax declarations in the
name of Nadeco Realty.
Tanuan Plant ....................
11,382
10
Bacolod Plant ...................
14,799
Title Status as of September 30, 2007

113
Description of Properties
Area
Parcels
Location
(sq.m.)
of Land
Iloilo Plant........................
30,000
Cagayan de Oro Plant .....
20,557
Zamboanga Plant.............
33,966
Titles were issued in the name of Nadeco Realty. The titles

contain an annotation showing that the land was mortgaged to
PNB under the Supplement to the Mortgage Trust Indenture to
secure the obligation in the initial amount of =
P5,000,000.00 and
all other obligations forming part of the secured obligations.
Naga Plant .......................
10,000
Cabuyao Sales Office .......
9,975
Batangas Sales Office .......
10,000
Hinigaran Sales Office .....
1,229
Cadiz Sales Office ............
2,500
San Jose del Monte ..........
480
Calauan ............................
2,000
Title was issued in the name of Nadeco Realty. It was

administratively reconstituted under Republic Act No. 26.
Pursuant to this law, such reconstitution is subject to the right of
any person whose interest in the property was duly noted in the
original at the time it was lost or destroyed.
Guimba ............................
138
Tarlac ...............................
150
Title was issued in the name of Nadeco Realty. It contains an

annotation showing that the land is subject to an adverse claim in
favor of a certain Arsenio Arzadon.
Butuan..............................
856
Butuan..............................
27,125
114
Title Status as of September 30, 2007
Material Contracts
The following are summaries of the material terms of the principal contracts related to our products
manufacturing and distribution facilities and should not be considered to be a full statement of the terms and
provisions of such contracts. Accordingly, the following summaries are subject to the full text of each contract.
In addition to the contracts described here, certain material agreements with our related parties are described
under Related Party Transactions.
PURCHASE OF RAW MATERIALS
We purchase our aluminum cans and ends from suppliers outside of the Philippines. The supply arrangements
may cover more than one year, with fixed volume commitment for the contract duration and with stipulation for
price adjustments depending on market prices (such as the London Metal Exchange). The cans must conform to
standards and must be approved by PepsiCo or its affiliate prior to any commercial application of the products.
We also source other packaging materials from Asia, with credit terms ranging from 30 to 90 days.
PURCHASE OF CAPITAL EQUIPMENT
We source our equipment (such as packaging equipment, pallet stackers, wrappers, strappers and air conveyor
systems) from various suppliers in Asia. The equipment is subject to the usual warranties, and we are entitled to
return the equipment and be entitled to a refund or replacement in case the plant capacity is less than the rated
capacity.
DISTRIBUTION AGREEMENTS
We rely on a number of channels to reach retail outlets, including direct sales, distributors and wholesalers.
Multi-Route Entrepreneurial Distribution System Agreement
The backbone of our distribution system is what we refer to as our Entrepreneurial Distribution System. We
enter into a Multi-Route Entrepreneurial Distribution System Agreement with an operator (Operator). The
Operator is an independent contractor who agrees to buy our Beverage Products (which refers to the contents
and not to the plastic shells and returnable glass bottles containing the soft drink, which are valued separately)
based on the agreed monthly sales target at the prevailing wholesale price with the applicable container deposits,
fees and discounts. The Operator normally provides all the delivery trucks and a storage area for the Beverage
Products. All purchases are on cash basis, but we may grant credit terms. In case of credit purchases, the Operator
shall assign collaterals to us to secure payment and loss of Beverage Products, shells and bottles. The agreement
is for a term of five years and renewable for another five years. Within six months or in some cases, one year, from
the termination of the agreement, the Operator is prohibited from selling competitive beverage products.
The arrangement may take two forms. Under the first category, the Operator agrees to exclusively sell the
Beverage Products to his assigned geographic territory composed of identified active potential outlets registered
in his route book. The Operator agrees to follow the prescribed itinerary in his route book. We will provide 50%
of the required route vehicles, which shall be subject to a Motor Vehicle Sub-Lease Agreement between us and
the Operator. We may grant credit terms up to a maximum of 15 days. The Operator may terminate the
agreement due to closure or discontinuance of its business, subject to its undertaking to return the route vehicles
which we provided. We may also terminate the agreement upon our termination of the Entrepreneurial
Distribution System or Pepsi Partners System (which is described below) for any reason. Reimbursement for
expenses incurred as a result of our pre-termination (unless the termination is for any of the causes specifically
allowed under the agreement) may be the subject of further negotiations.
Under the second category, the Operator agrees to sell exclusively these products to his assigned territory
comprising of a specific geographic area, market channels and outlets. The Operator shall implement the pre-sell
or conventional selling system or both. However, the Operator cannot sell to direct accounts, which consist of
key accounts, retail chain stores and large wholesalers identified in the exclusion list and which shall be serviced
by us. The Operator shall maintain no less than 3 days inventory and no more than 3 weeks supply at any given
time. The Operator shall maximize productivity of all trade supports and marketing equipment, such as powered
115
Material Contracts
coolers and ice coolers provided by us, and shall be accountable for the marketing equipment issued by us to his
outlets. We may grant credit terms up to a maximum of 30 days. We may terminate the agreement for any reason.
Reimbursement for expenses incurred as a result of our pre-termination (unless the termination is for any of the
causes specifically allowed under the agreement) may be subject of further negotiations. Furthermore, we have
the option to recover any part or all of the Operators unsold inventory on credit and any marketing or other
support we granted.
Pepsi Partner System Agreement
The Pepsi Partner is an independent contractor who commits to buy a minimum number of raw cases of Beverage
Products at the agreed wholesale price on a pick-up or delivered basis less discounts. The quotas are designated
on per month and per year bases. The Pepsi Partner may, at his option, exchange his inventory of containers or
make a deposit on delivered containers based on the applicable deposit value. In either case, he shall maintain a
sufficient inventory of containers in-trade to meet his minimum monthly purchase requirements. The Pepsi
Partner agrees to sell and distribute the Beverage Products exclusively to outlets authorized in his assigned
territory, which is composed of identified active potential outlets registered in his route book.
The Pepsi Partner shall provide all the delivery trucks required. As support, however, we will shoulder the cost
of 50% of the number of trucks provided by the Pepsi Partner, in the form of Pepsi Products worth P
=250,000 for
each truck. The Pepsi Partner shall also provide a storage area for the Beverage Products. Should we, through our
own personnel or third party delivery contractors or through other Entrepreneurial Delivery System Operators,
withdraw Beverage Products from the Pepsi Partners warehouse, we shall pay the Pepsi Partner a contract
warehousing fee.
All purchases are on a cash-on-delivery basis. However, we may grant credit terms up to a maximum of 30 days.
In some contracts, the Pepsi Partner agrees to assign and execute a Deed of Assignment of Time Deposit in our
favor, which will be applicable to all purchases and will answer for any default in the payment of accounts and
any loss of beverage products, shells and bottles.
The agreement is for a term of five years and renewable for another five years. The Pepsi Partner may terminate
the agreement due to closure or discontinuance of his business, subject to his undertaking to reimburse us a
proportionate amount of the Pepsi products given him. We may also terminate the agreement upon our
termination of the Entrepreneurial Distribution System or Pepsi Partners System for any reason. Reimbursement
for expenses incurred as a result of our pre-termination (unless the termination is for any of the causes specifically
allowed under the agreement) may be subject of further negotiations. Furthermore, we have the option to recover
any part or all of the Operators unsold inventory on credit and any marketing or other support we granted.
Within six months from the termination of the agreement, the Operator is prohibited from selling competitive
beverage products.
SALES AGREEMENTS
Our arrangements with large supermarkets are commonly covered by trading term agreements wherein we grant
credit terms of 30 days.
In the case of smaller outlets, we may procure the outlet to sell our products to the exclusion of similar products
and specify minimum monthly products sales. In exchange, we grant customer trade concessions such as
marketing support for the duration of the contract, opening support fund for a designated number of existing
outlets, outlet opening support for future outlets, product support, and discounts on syrups and canned products.
WAREHOUSING AGREEMENTS
We have non-exclusive two-year warehousing contracts. The contractor is accountable for all our assets stored
with it, such as soft drinks, containers, vehicles, office fixtures and equipment, marketing collaterals, and other
PCPPI materials, from the time that such assets are received by the contractor up to issuance thereof to our
personnel or our designated third party contractors. We handle cashiering, credit, and settlement controls and
shall be the custodian of cash and cash items received from the contractor.
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Material Contracts
We pay the contractor a flat rate per case. A minimum volume of cases per month shall be guaranteed to the
contractor. Any soft drinks and container shortages, spoiled soft drinks, and broken glass and shells shall be
charged to the contractor at prevailing wholesale prices through a corresponding deduction from the monthly
payment to the contractor. The contractor shall post a surety bond in an amount representing the total value of
soft drinks and containers computed based on our standard days on hand.
LEASE AGREEMENTS
As a foreign-owned company, we are not permitted to directly own land in the Philippines. As a result, we lease
the land on which our bottling plants, warehouses, and sales offices are located.
Muntinlupa Plant
Our head office and main bottling plant are located at Km 29, National Road, Tunasan, Muntinlupa City,
Philippines 1773. The premises are leased from certain members of the Batista family. On December 16, 2002,
we extended the lease for 12 years, to expire on November 24, 2014 and renewable at the option of the parties.
We are liable to pay monthly rent, which is valued per square meter and increases over the years, plus value added
Other Bottling Plants
We lease the land on which our other 10 bottling plants from our affiliate, Nadeco Realty. Beginning February
1, 2007, the terms of the leases with Nadeco Realty have been renegotiated. The leases will expire on January
31, 2022 and are renewable for another period of 25 years under the same terms and conditions except for the
monthly rental which will be based on the existing market rate at the time of the renewal. The annual rental for
the 10 lots is approximately P
=4.783 million. Under the terms of the leases, we own the buildings themselves, as
well as leasehold improvements, machinery and equipment, fixtures, and appurtenances, which appear as assets
in our balance sheet. Under the terms of the lease, permanent improvements shall become the property of the
lessors upon expiration of the lease. But permanent improvements which may be removed without damage to the
premises, including machinery and equipment, shall remain our property.
We also entered into a contract of lease dated February 1, 2007 with Nadeco Realty for the lease of a 7-hectare
lot located at the Light Industry and Science Park in Cabuyao, Laguna. The lot is the site for a business office unit
that manages the sales and related operations of the Southern Luzon region. This is also the site where the Pepsi
University facilities are located. The lease has a term of 25 years, expiring on January 31, 2032, and is
automatically renewable for another 25 years. The annual rent (exclusive of value added taxes and real property
taxes) is P
=1,716,102, subject to a 10% increase every three years.
Other Sales Offices and Warehouses
In addition to our bottling plants, at September 30, 2007, we lease the land on which our 101 warehouses and
117
Material Contracts
LOAN ARRANGEMENTS
The following is a schedule of our loan obligations as of September 30, 2007:
Creditor
Short Term
Land Bank of the Philippines ................................................................
China Banking Corporation..................................................................
Rizal Commercial Banking Corp ..........................................................
Metropolitan Bank and Trust Corp. .....................................................
Peso Loan
=
P48,600,000.00
100,000,000.00
50,000,000.00
100,000,000.00
100,000,000.00
30,000,000.00
Subtotal .................................................................................................
Long Term
Metropolitan Bank and Trust Corp. .....................................................
Subtotal .................................................................................................
TOTAL..................................................................................................
104,166,666.55
Total
=
P148,600,000.00
50,000,000.00
100,000,000.00
130,000,000.00
428,600,000.00
104,166,666.55
104,166,666.55
=
P532,766,666.55
We executed promissory notes in favor of the various lenders, and the terms are described below.
Land Bank of the Philippines
For our short-term loans, we issued two promissory notes, the first note for P
=48.6 million and the second note
for P
=100 million. The first note was renewed for P
=48.6 million on September 14, 2007 with maturity date of
March 12, 2008. The interest rate is 6.0% per annum, payable monthly and subject to repricing. The principal
shall be subject to a single payment. The loan is secured by a Mortgage Participation Certificate (MPC) under
the Mortgage Trust Indenture (MTI) in favor of the Philippine National Bank (PNB).
The second note has an issue date of August 1, 2007 and a maturity date of January 28, 2008. The initial interest
rate is 5.8% per annum, payable monthly and subject to repricing. The principal shall be subject to a single
payment. The loan is also secured by the MPC.
China Banking Corporation
We issued a promissory note for P
=50 million on August 19, 2007 with maturity date of February 13, 2008. The
initial rate is 6.125% per annum, payable monthly and subject to repricing. The principal shall be subject to a
single payment. The loan is secured by the MPC.
Rizal Commercial Banking Corp.
We issued a promissory note for P
=100 million on August 6, 2007 with maturity date of February 4, 2008. The
initial rate is 5.8% per annum, payable monthly and subject to monthly repricing. The loan is secured by the
MPC.
Metropolitan Bank and Trust Corp.
For our short-term loans, we issued two promissory notes; the first note for P
=100 million and second note for
P
=30 million. The first note has an issue date of August 15, 2007 and a maturity date of February 11, 2008. The
initial rate is 6.00% per annum, payable monthly and subject to repricing. The principal shall be subject to a
The second note has an issue date of August 21, 2007 and a maturity date of February 18, 2008. The initial
interest rate is 6.00% per annum, payable monthly and subject to repricing. The principal shall be subject to a
118
Material Contracts
For our long-term loans, we issued five promissory notes for the original amount of P
=50 million each, which are
subject to the Loan Agreement dated August 18, 2004. As of September 30, 2007, the total balance of these loans
is P
=104.2 million. The interest rate of each of these five promissory notes is pegged at 90 days Mart 1 plus 2.5
spread. As of September 30, 2007, the interest rate of each of these five promissory notes was 6.8522% per
annum.
The first note has an issue date of October 6, 2004 and a maturity date of October 6, 2009. On October 6, 2007,
the interest rate was priced at 6.8522% per annum, payable quarterly and subject to quarterly repricing which
is matched with the other long term notes. The principal shall be subject to scheduled amortization payments.
However, prepayment of principal was allowed provided that payment was made on the repricing date to avoid
prepayment penalties. The loan is secured by the MPC.
The second note has an issue date of February 9, 2005 and a maturity date of October 6, 2009. On October 6,
2007, the interest rate was priced at 6.8522% per annum, payable quarterly and subject to quarterly repricing
which his matched with the other long term notes. The principal shall be subject to scheduled amortization
payments. However, prepayment of principal was allowed provided that payment was made on the repricing date
to avoid prepayment penalties. The loan is secured by the MPC.
The third note has an issue date of March 2, 2005 and a maturity date of October 6, 2009. On October 6, 2007,
The fourth note has an issue date of March 14, 2005, and a maturity date of October 6, 2009. On October 6,
2007, the interest rate was priced at 6.8522% per annum, payable quarterly and subject to quarterly repricing
which is matched with the other long term notes. The principal shall be subject to scheduled amortization
payments. However, prepayment of principal was allowed provided that payment was made on the repricing date
to avoid prepayment penalties. The loan is secured by the MPC pursuant to the MTI in favor of PNB.
The fifth note has an issue date of March 21, 2005 and a maturity date of October 6, 2009. On October 6, 2007,
SECURITY ARRANGEMENTS
Mortgage Trust Indenture with PNB
On January 3, 1996, we and Nadeco Realty (collectively referred to as the Company) executed a Mortgage
Trust Indenture (MTI) in favor of the Philippine National Bank (Trustee).
As security for the payment of the Secured Obligations and the faithful performance of the MTI and the Credit
Agreements, the Company constituted in favor of the Trustee, acting in behalf and for the pro-rata and pari-passu
benefit of the Creditors, a first mortgage in the following:
all the parcels of land on which our Rosario, Davao, Cebu, Tanauan, Bacolod and Cagayan de Oro Plants
are located, which parcels are owned by Nadeco Realty, and the buildings, improvements, machinery and
equipment;
all property, whether owned now or subsequently acquired by the Company, in replacement for any of the
above properties;
all property, whether owned now or subsequently acquired by the Company, which may be installed or
incorporated in the above properties;
119
Material Contracts
all assets presently mortgaged to other existing creditors and shall be automatically included in the MTI
upon release of mortgage from said creditors; and
all proceeds of any of the foregoing, except income derived from ordinary course of business.
The Company shall maintain the Sound Value (cost of reproduction less depreciation, or in case of land the fair
market value, as determined by an independent appraiser in accordance with generally accepted principles of
appraisal) at a level at least equal to the Required Collateral Value (Sound Value equivalent to at least 150% for
real estate properties and 200% for chattels of the total outstanding Secured Obligations). The Company shall
not make any alteration upon or demolish any Collateral or permit to be done upon the Collateral anything that
may impair the value or the security intended to be established by virtue of the MTI, unless prior consent of the
Trustee is obtained.
The Company shall insure and maintain the insurance at its own expense the. The insurance policies shall be
made payable and/or endorsed in favor of the Trustee. All proceeds of insurance policies shall be deemed assigned
to the Trustee.
If any Collateral shall be lost or damaged or shall suffer an appreciable depreciation in value, the Company may
be required to give additional security to an amount at least equal to the total value of the Collateral at the time
of loss, damage, or depreciation, which total value shall not be less than the Required Collateral Value.
Availments/drawdowns under the credit facilities aggregate P
=100 million. The aggregate principal amount of
promissory notes, credit accommodations, and other obligations which may be secured by the MTI shall be such
amount as may be authorized by the Board of the Company to be so secured. But the issuance of Mortgage
Participation Certificates (MPCs) shall not result in any impairment of the Required Collateral Value. The
Trustee shall issue MPCs to each creditor upon registration of the MTI with the appropriate Registry of Deeds
and upon compliance with the above requirements.
Upon full payment or lawful discharge of any Secured Obligation covered by MPCs, the holder shall surrender
to the Trustee such MPCs for cancellation. Upon occurrence of an Event of Default, the Trustee shall foreclose
the MTI judicially or extra-judicially. If the proceeds is not sufficient to discharge all Secured Obligations, the
Company shall pay the deficiency.
The written consent of the holders of MPCs representing 60% of the total outstanding amount of Secured
Obligations shall be required for any amendment or waiver of the terms and conditions of the MTI. But no
consent shall be required for subjecting additional properties subsequently owned by the Company to the MTI
or for incurring by the Company of additional obligation which shall be secured by the MTI.
Mortgage Trust Indenture with RCBC
On May 7, 1990 we executed a MTI in favor of Rizal Commercial Banking Corporation (RCBC), with RCBC
acting for the pari passu benefit of the other creditors.
The MTI is meant to secure the aggregate amount of P
=341 million that we borrowed from different banks and
financial institutions which is the subject of separate loan/credit agreements.
A first mortgage was constituted over properties and assets of the company in favor of RCBC for and in behalf
of the Creditors-Beneficiaries. The MTI defined mortgaged property as all rolling stock and inventories of
bottles and shells and other properties which are acceptable to the motgagee-trustee and creditors-beneficiaries
holding more than fifty percent of the principal component of the Total Outstanding Amount, which, at said time
are covered or intended to be covered by the lien of this Indenture, whether such lien be created by these presents,
or by subsequent conveyance or delivery to the mortgagee-trustee hereunder or otherwise. The Required
Mortgage Value is at least equal to 200% of the principal component of the Total Outstanding Amount.
We undertook under the MTI to keep all the mortgaged property adequately insured against all loss or damage
by an insurance company or companies acceptable to RCBC and the Creditors-Beneficiaries holding more than
fifty percent of the principal component of the total outstanding amount.
120
Material Contracts
The MTI also provided for the issuance of MPCs to be delivered to the Creditor-Beneficiaries as evidence of their
interests and participation in the MTI. However, no provision in the MPC shall alter or impair the companys
obligations under the MTI. In the event of payment or discharge of any portion of our obligation, the interest and
participation of the Creditor-Beneficiaries in the mortgaged properties shall be proportionately reduced and the
Mortgagee-Trustee shall thereupon cancel the MPC and issue a new MPC. As among the Creditor-Beneficiaries,
there is no preference, priority, or distinction as to the lien over the mortgaged properties by reason of the
difference in time of the issue and assignment of the MPC.
The MPC is transferable if accomplished under and pursuant to the terms of the MTI. We have a right of first
refusal in the event of a voluntary assignment or transfer of the credits secured by a MPC together with the
certificate. The transfer or assignment of the MPC shall be valid only if the same was made and entered upon the
books of RCBC and authenticated by us.
So long as the MPCs remain outstanding, we cannot, without the previous written assent of the
Creditors-Beneficiaries representing 66.66% of the total outstanding amount, enter into any plan or agreement
of merger or consolidation with any corporation or corporations, whether or not affiliated with us, in which we
or our successor shall be a party. However, such consent is not required where we are the surviving entity.
The MTI likewise stipulates that, except for ordinary business practice, we cannot remove any of the mortgaged
property from the places where they were situated, installed, or used at the time of the execution of the MTI, nor
alter, destroy, or demolish any building or property covered by the lien of the Indenture, nor do or permit to be
done upon the mortgaged property anything that may impair the value thereof or the security of such lien,
without the previous written consent of RCBC.
Upon an occurrence of an Event of Default, RCBC can foreclose the mortgaged property, either judicially or
extra-judicially, if the holders of more than 66.66% of the principal component of the total outstanding amount
at the time shall have given written or verified written instructions to it to foreclose on the mortgaged property.
121
The Philippine Stock Market

The information presented in this section has been extracted from publicly available documents which have not
been prepared or independently verified by us, the International Underwriter, the Joint Domestic Lead
Underwriters or any of their respective subsidiaries, affiliates or advisors in connection with sale of the Offer
Shares.
BRIEF HISTORY
The Philippines initially had two stock exchanges, the Manila Stock Exchange, which was organized in 1927, and
the Makati Stock Exchange, which began operations in 1963. Each exchange was self-regulating, governed by
its respective Board of Governors elected annually by its members.
Several steps initiated by the Government have resulted in the unification of the two bourses into the PSE. The
PSE was incorporated in 1992 by officers of both the Makati and the Manila Stock Exchanges. In March 1994,
the licenses of the two exchanges were revoked. While the PSE maintains two trading floors, one in Makati City
and the other in Pasig City, these floors are linked by an automated trading system which integrates all bid and
ask quotations from the bourses.
In June 1998, the Philippine SEC granted the PSE Self-Regulatory Organization status, allowing it to impose
rules as well as implement penalties on erring trading participants and listed companies. On August 8, 2001, PSE
completed its demutualization, converting from a non-stock member-governed institution into a stock
corporation in compliance with the requirements of the SRC. The PSE has an authorized capital stock of 36.8
million, of which 15.3 million is subscribed and fully paid-up. Each of the 184 member-brokers was granted
50,000 shares of the new PSE at a par value of P
=1.00 per share. In addition, a trading right evidenced by a
Trading Participant Certificate was immediately conferred on each member broker allowing the use of the
PSEs trading facilities. As a result of the demutualization, the composition of the PSE Board of Governors was
changed, requiring the inclusion of seven brokers and eight non-brokers, one of whom is the President. On
December 15, 2003, the PSE listed its shares by way of introduction at its own bourse as part of a series of
reforms aimed at strengthening the Philippine securities industry.
Classified into financial, industrial, holding firms, property, services, and mining and oil sectors, companies are
listed either on the PSEs First Board, Second Board or the Small and Medium Enterprises Board. Each index
represents the numerical average of the prices of component stocks. The PSE has an index, referred to as the
PHISIX, which as at the date thereof reflects the price movements of selected stocks listed on the PSE, based on
traded prices of stocks from the various sectors. The PSE shifted from full market capitalization to free float
market capitalization effective April 3, 2006 simultaneous with the migration to the free float index and the
renaming of the PHISIX to PSEi. The PSEi includes 30 selected stocks listed on the PSE.
With the increasing calls for good corporate governance, PSE has adopted an online daily disclosure system to
improve the transparency of listed companies and to protect the investing public.
122
The table below sets forth movements in the composite index from 1995 to 2007, and shows the number of listed
companies, market capitalization, and value of shares traded for the same period:
SELECTED STOCK EXCHANGE DATA
Composite
Number
Aggregate
Combined
index at
closing
of listed
companies
market
capitalization
value of
turnover
(in P
= billions)
(in P
= billions)
1,545.7
2,121.1
1,261.3
1,373.7
1,938.6
2,577.6
2,142.6
2,083.2
2,973.8
4,766.2
5,948.4
7,172.8
7,978.5
379.0
668.9
588.0
408.7
713.9
357.6
159.5
159.7
145.4
206.6
383.5
572.6
1,338.2
Calendar Year
1995 .......................................................................................
1996 .......................................................................................
1997 .......................................................................................
1998 .......................................................................................
1999 .......................................................................................
2000 .......................................................................................
2001 .......................................................................................
2002 .......................................................................................
2003 .......................................................................................
2004 .......................................................................................
2005 .......................................................................................
2006 .......................................................................................
2007 ......................................................................................
2,594.2
3,170.6
1,869.2
1,968.8
2,142.9
1,494.5
1,168.1
1,018.4
1,442.4
1,822.8
2,096.0
2,982.5
3,621.6
205
216
221
221
226
230
232
234
236
236
237
240
244
Source: PSE
TRADING
The PSE is a double auction market. Buyers and sellers are each represented by stock brokers. To trade, bids or
ask prices are posted on the PSEs electronic trading system. A buy (or sell) order that matches the lowest asked
(or highest bid) price is automatically executed. Buy and sell orders received by one broker at the same price are
crossed at the PSE at the indicated price. Transactions are generally invoiced through a confirmation slip sent to
customers on the trade date (or the following trading day). Payment of purchases of listed securities must be made
by the buyer on or before the third trading day after the trade. For Small-Denominated Treasury Bonds,
settlement is on the day the trade was made.
Trading on the PSE starts at 9:30 am and ends at 12:00 pm with a ten-minute extension during which
transactions may be conducted, provided that they are executed at the last traded price and are only for the
purpose of completing unfinished orders. Trading days are Monday to Friday, except legal and special holidays.
Minimum trading lots range from ten to 5,000,000 shares depending on the price range and nature of the security
traded. Odd-sized lots are traded by brokers on a board specifically designed for odd-lot trading.
To maintain stability in the stock market, daily price swings are monitored and regulated. Under current PSE
regulations, when the price of a listed security moves up by 50.0% or down by 40.0% in one day (based on the
previous closing price or last posted bid price, whichever is higher), the price of that security is automatically
frozen by the PSE, unless there is an official statement from the relevant company or a government agency
justifying such price fluctuation, in which case the affected security can still be traded but only at the frozen price.
If the issuer fails to submit such explanation, a trading halt is imposed by the PSE on the listed security the
following day. Resumption of trading shall be allowed only when the disclosure of the issuer is disseminated,
subject again to the trading band.
SETTLEMENT
The Securities Clearing Corporation of the Philippines (SCCP) is a wholly-owned subsidiary of the Philippine
Stock Exchange, Inc. and was organized primarily as a clearance and settlement agency for SCCP-eligible trades
executed through the facilities of the PSE. It is responsible for: (a) synchronizing the settlement of funds and the
123
transfer of securities through delivery versus payment, as well as clearing and settlement of transactions of
clearing members, who are also Trading Participants of the PSE; (b) guaranteeing the settlement of trades in the
event of a Trading Participants default through the implementation of its Fails Management System and
administration of the Clearing and Trade Guaranty Fund; and (c) performance of risk management and
monitoring to ensure final and irrevocable settlements of trades.
CENTRAL DEPOSITORY
In 1995, the Philippine Depository Trust Corporation (formerly the Philippine Central Depository, Inc.), was
organized to establish a central depository in the Philippines and introduce scripless or book-entry trading in the
Philippines. On December 16, 1996, the PDTC was granted a provisional license by the Philippine SEC to act as
a central securities depository. All listed securities at the PSE have been converted into book-entry settlement in
the PDTC. The depository service of the PDTC provides the infrastructure for lodgment (deposit) and upliftment
(withdrawal) of securities, pledge of securities, securities lending and borrowing and corporate actions including
shareholders meetings, dividend declarations and rights offerings. The PDTC also provides depository and
settlement services for non-PSE trades of listed equity securities. For transactions on the PSE, the security element
of the trade will be settled through the book-entry system, while the cash element will be settled through the
current settlement banks, RCBC and Equitable PCI Bank.
In order to benefit from the book-entry system, securities must be immobilized into the PDTC system through
a process called lodgment. Lodgment is the process by which shareholders transfer legal title (but not beneficial
title) over their shares of stock in favor of the PCD Nominee, whose sole purpose is to act as nominee and legal
title holder of all shares of stock lodged into the PDTC. Immobilization is the process by which the warrant
or share certificates of lodging holders are cancelled by the transfer agent and a new warrant or stock certificate
covering all the warrants or shares lodged (Jumbo Certificate) is issued in the name of the PCD Nominee. This
trust arrangement between the participants and PDTC through the PCD Nominee is established by and explained
in the PDTC Rules and Operating Procedures approved by the Philippine SEC. No consideration is paid for the
transfer of legal title to PCD Nominee. Once lodged, transfers of beneficial title of the securities are accomplished
via book-entry settlement.
Under the current the PDTC system, only participants (e.g., brokers and custodians) will be recognized by the
PDTC as the beneficial owners of the lodged equity securities. Thus, each beneficial owner of Shares through his
participant, will be the beneficial owner to the extent of the number of shares held by such participant in the
records of the PCD Nominee. All lodgments, trades and uplifts on these shares will have to be coursed through
a participant. Ownership and transfers of beneficial interests in the shares will be reflected, with respect to the
participants aggregate holdings, in the PDTC system, and with respect to each beneficial owners holdings, in the
records of the participants. Beneficial owners are thus advised that in order to exercise their rights as beneficial
owners of the lodged shares, they must rely on their participant-brokers and/or participant-custodians.
Any beneficial owner of shares who wishes to trade his interests in the shares must course the trade through a
participant. The participant can execute PSE trades and non-PSE trades of lodged equity securities through the
PDTC system. All matched transactions in the PSE trading system will be fed through the SCCP, and into the
PDTC system. Once it is determined on the settlement date (trading date plus three trading days) that there are
adequate securities in the securities settlement account of the participant-seller and adequate cleared funds in the
account of the participant-buyer with the relevant settlement bank, the PSE trades are automatically settled in the
CCSS, in accordance with the SCCP and PDTC Rules and Operating Procedures. Once settled, the beneficial
ownership of the securities is transferred from the participant-seller to the participant-buyer without the physical
transfer of stock certificates covering the traded securities.
If a stockholder wishes to withdraw his stockholdings from the PDTC System, the PDTC has a procedure of
upliftment under which the PCD Nominee will transfer back to the stockholder the legal title to the Shares lodged
by surrendering the Jumbo Certificate of the PCD Nominee to a transfer agent which then issues a new stock
certificate in the name of the shareholder and a new Jumbo Certificate of the PCD Nominee for the balance of
the lodged Shares. The expenses for upliftment are for the account of the uplifting shareholder.
In the depository set-up, shares are simply immobilized, wherein customers certificates are cancelled and a new
Jumbo Certificate is issued in the name of PCD Nominee. Transfers among/between broker and/or custodian
accounts, as the case may be, will only be made within the book-entry system of PDTC. However, as far as the
124
issuing corporation is concerned, the underlying certificates are in the nominees name. In the registry set-up,
settlement and recording of ownership of traded securities will already be directly made in the corresponding
issuing companys transfer agents books or system. Likewise, recording will already be at the beneficiary level
(whether it be a client or a registered custodian holding securities for its clients), thereby removing from the
broker its current de facto custodianship role.
Issuance Of Certificated Shares
On or after the listing of the shares on the PSE, any beneficial owner of the shares may apply to PDTC through
his broker or custodian-participant for a withdrawal from the book-entry system and return to the conventional
paper-based settlement. If a stockholder wishes to withdraw his stockholdings from the PDTC System, the PDTC
has a procedure of upliftment under which PCD Nominee will transfer back to the stockholder the legal title to
the shares lodged by surrendering the Jumbo Certificate of the PCD Nominee to a transfer agent which then
issues a new stock certificate in the name of the uplifting shareholder and a new Jumbo Certificate to the PCD
Nominee for the balance of the lodged shares. The expenses for upliftment are on the account of the uplifting
shareholder.
Upon the issuance of certificated shares in the name of the person applying for upliftment, such shares shall be
deemed to be withdrawn from the PDTC book-entry settlement system, and trading on such shares will follow
the normal process for settlement of certificated securities. The expenses for upliftment of beneficial ownership
in the shares to certificated securities will be charged to the person applying for upliftment. Pending completion
of the upliftment process, the beneficial interest in the shares covered by the application for upliftment is frozen
and no trading and book-entry settlement will be permitted until certificated shares shall have been issued by the
relevant companys transfer agent.
125
Philippine Foreign Exchange and Foreign Ownership Controls

REGISTRATION OF FOREIGN INVESTMENTS AND EXCHANGE CONTROLS
Under current BSP regulations, an investment in Philippine securities (such as the Shares) must be registered with
the BSP if the foreign exchange needed to service the repatriation of capital and the remittance of dividends,
profits and earnings derived from such shares is to be sourced from the Philippine banking system. The
application for registration may be done directly with the BSP or through a custodian bank duly designated by
the foreign investor. A custodian bank may be a commercial bank or an offshore banking unit registered with the
BSP to act as such and appointed by the investor to register the investment, hold shares for the investor, and
represent the investor in all necessary actions in connection with his investments in the Philippines. Applications
for registration must be accompanied by: (i) purchase invoice, subscription agreement and proof of listing on the
PSE (either or both); (ii) credit advice or bank certificate showing the amount of foreign currency inwardly
remitted and converted into pesos; and (iii) transfer instructions from the stockbroker or dealer, as the case may
be.
Upon registration of the investment, proceeds of divestments, or dividends of registered investments, are
repatriable or remittable immediately and in full through the Philippine banking system, net of applicable tax,
without need of further BSP approval. Remittance is permitted upon presentation of the BSP registration
document, at the exchange rate applicable on the date of actual remittance. Pending registration or reinvestment,
divestment proceeds, as well as dividends of registered investments, may be lodged temporarily in interest-bearing
deposit accounts. Interest earned thereon, net of taxes, may also be remitted in full. Remittance of divestment
proceeds or dividends of registered investments may be reinvested in the Philippines if the investments are
registered with the BSP or the investors custodian bank.
The foregoing is subject to the power of BSP, with the approval of the President of the Philippines, to restrict the
availability of foreign exchange during an exchange crisis, when an exchange crisis is imminent, or in times of
national emergency.
FOREIGN OWNERSHIP CONTROLS
The Philippine Constitution and related statutes set forth restrictions on foreign ownership of companies engaged
in certain activities, among them the ownership of private land.
In connection with the ownership of private land, Section 7 of Article XII of the Philippine Constitution, in
relation to Section 3 of Article XII of the Philippine Constitution and Chapter 5 of Commonwealth Act No. 141,
states that no private land shall be transferred or conveyed except to citizens of the Philippines or to corporations
or associations organized under the laws of the Philippines at least 60.0% of whose capital is owned by such
citizens.
Republic Act No. 7042, as amended, otherwise known as the Foreign Investments Act of 1991, reserves to
Philippine Nationals all areas of investment in which foreign ownership is limited by mandate of the Constitution
and specific laws. Section 3(a) of Republic Act No. 7042 defines a Philippine National as:
a citizen of the Philippines;
a domestic partnership or association wholly owned by citizens of the Philippines;
a trustee of funds for pension or other employee retirement or separation benefits where the trustee is a
Philippine National and at least 60.0% of the fund will accrue to the benefit of the Philippine Nationals;
a corporation organized under the laws of the Philippines of which at least 60.0% of the capital stock
outstanding and entitled to vote is owned and held by citizens of the Philippines; and
a corporation organized abroad and registered as doing business in the Philippines under the Philippine
Corporation Code of which 100.0% of the capital stock outstanding and entitled to vote is wholly owned
by Filipinos.
126
Philippine Foreign Exchange and Foreign Ownership Controls
However, the Foreign Investments Act of 1991 states that where a corporation (and its non-Filipino shareholders)
own stock in a Philippine SEC-registered enterprise, at least 60.0% of the capital stock outstanding and entitled
to vote of both the investing corporation and the investee corporation must be owned and held by citizens of the
Philippines. Further, at least 60.0% of the members of the board of directors of both the investing corporation
(i.e., the Philippine National) and the investee corporation must be Philippine citizens in order for the investee
corporation to be considered a Philippine National.
As of the date of this Prospectus, we do not own land. Nonetheless, we do have an equity interest in a corporation
that directly owns land. Our ownership in this affiliate, however, is within the nationality limits under Philippine
law. This affiliate is, therefore, a Philippine National and is qualified to directly own private land.
In the event, however, that we decide to hold private land, we must comply with Philippine law requirements that
would constitute us as a Philippine National and allow us to directly own private lands in the Philippines. During
that period, foreign ownership in us would be limited to a maximum of 40.0% of our issued and outstanding
capital stock and entitled to vote. Accordingly, we would not be able to allow the issuance or the transfer of
Shares to persons other than Philippine Nationals and would not be able to record transfers in our books if such
issuance or transfer would result in our ceasing to be a Philippine National for purposes of complying with the
restrictions on foreign ownership discussed above.
Compliance with the required ownership by Philippine Nationals of a corporation is to be determined on the
basis of outstanding capital stock whether fully paid or not, but only such stocks which are generally entitled to
vote are considered. As of the date of this Prospectus, the Guoco Group beneficially owns 1,335,128,628 Shares,
representing 40.3% of our issued and outstanding capital stock entitled to vote. After completion of the Offer,
and assuming the Over-Allotment Option is not exercised, the Guoco Group will beneficially own 1,113,383,592
Shares, representing 30.1% of our issued and outstanding capital stock entitled to vote.
127
Philippine Taxation
The statements made regarding taxation in the Philippines are based on the laws in force at the date hereof and
are subject to any changes in law occurring after such date. The following summary does not purport to be a
comprehensive description of all of the tax considerations that may be relevant to a decision to invest in the
Shares and does not purport to deal with the tax consequences applicable to all categories of investors, some of
which (such as dealers in securities) may be subject to special rates. Prospective purchasers of the Shares are
advised to consult their own tax advisors concerning the tax consequences of their investment in the Shares.
As used in this section, the term resident alien refers to an individual whose residence is within the Philippines
and who is not a citizen thereof; a non-resident alien is an individual whose residence is not within the
Philippines and who is not a citizen of the Philippines; a non-resident alien who is actually within the Philippines
for an aggregate period of more than 180 days during any calendar year is considered a non-resident alien
engaged in trade or business in the Philippines; otherwise, such non-resident alien who is actually within the
Philippines for an aggregate period of 180 days or less during any calendar year is considered a non-resident
alien not engaged in trade or business in the Philippines. A resident foreign corporation is a foreign
corporation engaged in trade or business within the Philippines; and a non-resident foreign corporation is a
non-Philippine corporation not engaged in trade or business within the Philippines.
TAX ON DIVIDENDS
Cash and property dividends received from a domestic corporation by individual shareholders who are either
citizens or alien residents of the Philippines are subject to a final withholding tax at the rate of 10.0%. Cash and
property dividends received by non-resident alien individuals engaged in trade or business in the Philippines are
subject to a 20.0% tax on the gross amount thereof, while cash and property dividends received by non-resident
alien individuals not engaged in trade or business in the Philippines are subject to tax at 25.0% of the gross
amount, subject, however, to the applicable preferential tax rates under tax treaties executed between the
Philippines and the country of residence or domicile of such non-resident foreign individuals.
Cash and property dividends received from a domestic corporation by another domestic corporation or by
resident foreign corporations are not subject to tax while those received by non-resident foreign corporations are
subject to tax at the rate of 35.0%.
The 35.0% rate for dividends paid to a non-resident foreign corporation may be reduced to a lower rate. It may
be reduced to 15.0% if the country of domicile of the non-resident foreign corporation allows a credit equivalent
to 20.0% for taxes deemed to have been paid in the Philippines.
Philippine tax authorities have prescribed certain procedures for availment of tax treaty relief. Subject to the
approval by Philippine BIR of PCPPIs application for tax treaty relief, PCPPI withholds taxes at a reduced rate
on dividends to be paid to a non-resident holder, if such non-resident holder provides PCPPI with proof of
residence and if applicable, individual or corporate status. Proof of residence for an individual consists of
certification from his embassy, consulate, or other equivalent certifications issued by the proper government
authority, or any other official document proving residence. If the regular tax rate is withheld by PCPPI instead
of the reduced rates applicable under a treaty, the non-resident holder of the Shares may file a claim for refund
from the BIR. However, because the refund process in the Philippines requires the filing of an administrative
claim and the submission of supporting information, and may also involve the filing of a judicial appeal, it may
be impractical to pursue such a refund.
Stock dividends distributed pro-rata to any holder of Shares of stock are not subject to Philippine income tax.
However, the sale, exchange or disposition of Shares received as stock dividends by the holder is subject to the
capital gains or stock transaction tax.
128
Philippine Taxation
Tax treaties
The following table lists some of the countries with which the Philippines has tax treaties and the tax rates
currently applicable to non-resident holders who are residents of those countries:
Stock transaction
Jurisdiction
Canada......................................................................................
France .......................................................................................
Germany ...................................................................................
Japan.........................................................................................
Singapore ..................................................................................
United Kingdom........................................................................
United States .............................................................................
tax on sale or
Capital gains tax
disposition
effected through
due on disposition
of Shares outside
Dividends
the PSE
the PSE
25(1)
15(2)
15(3)
25(4)
25(5)
25(6)
25(7)
Exempt(8)
Exempt(8)
0.5
Exempt(8)
Exempt(8)
Exempt(10)
Exempt(8)
Exempt(8)
Exempt(8)
5/10(9)
Exempt(8)
Exempt(8)
Exempt(10)
Exempt(8)
Notes:
(1)
15% if recipient company controls at least 10% of the voting power of the company paying the dividends.
(2)
10% if the recipient company holds directly at least 10% of the voting shares of the company paying the dividends.
(3)
10% if the recipient company owns directly at least 25% of the capital of the company paying the dividends.
(4)
10% if the recipient company holds directly at least 25% of either the voting shares of the company paying the dividends or of the
total shares issued by that company during the period of 6 months immediately preceding the date of payment of the dividends.
(5)
15% if during the part of the paying companys taxable year which precedes the date of payment of dividends and during the whole
of its prior taxable year at least 15% of the outstanding shares of the voting stock of the paying company was owned by the recipient
company.
(6)
15% if the recipient company is a company which controls directly or indirectly at least 10% of the voting power of the company
paying the dividends.
(7)
20% if during the part of the paying corporations taxable year which precedes the date of payment of dividends and during the whole
of its prior taxable year at least 10% of the outstanding shares of the voting stock of the paying corporation was owned by the
recipient corporation.
(8)
Capital gains are taxable only in the country where the seller is a resident, provided if the shares are not those of a corporation the
assets of which consist principally of real property situated in the Philippines; in which case the sale is subject to Philippine taxes.
(9)
Under the RP-Germany Tax Treaty, capital gains from the alienation of shares of a Philippine corporation may be taxed in the
Philippines irrespective of the nature of the assets of the Philippine corporation. Tax rates are 5% on the net capital gains realized
during the taxable year not in excess of 100,000 and 10% on the net capital gains realized during the taxable year in excess of
100,000.
(10) Under the RP-UK Tax Treaty, capital gains on the sale of the stock of Philippine corporations are subject to tax only in the country
where the seller is a resident, irrespective of the nature of the assets of the Philippine corporation.
SALE, EXCHANGE OR DISPOSITION OF SHARES

Capital gains tax, if sale was made outside the PSE
Net capital gains realized by a resident or non-resident other than a dealer in securities during each taxable year
from the sale, exchange or disposition of shares of stock outside the facilities of the PSE, unless an applicable
treaty exempts such gains from tax or provides for preferential rates, are subject to tax as follows: 5.0% on gains
not exceeding P
=100,000 and 10.0% on gains over P
=100,000. An application for tax treaty relief must be filed
(and approved) by the Philippine tax authorities in order to obtain an exemption under a tax treaty.
129
Philippine Taxation
Taxes on transfer of Shares listed and traded at the PSE

A sale or other disposition of shares of stock through the facilities of the PSE by a resident or a non-resident
holder; other than a dealer in securities, is subject to a stock transaction tax at the rate of 0.5% of the gross selling
price or gross value in money of the shares of stock sold or otherwise disposed, unless an applicable tax law or
treaty exempts such sale from said tax. This tax is required to be collected by and paid to the Philippine
Government by the selling stockbroker on behalf of his client. The stock transaction tax is classified as a
percentage tax in lieu of a capital gains tax. Under certain tax treaties, the exemptions from capital gains tax
discussed herein may not be applicable to the stock transaction tax.
In addition, a VAT of 12.0% is imposed on the commission earned by the PSE-registered broker, and is generally
passed on to the client.
DOCUMENTARY STAMP TAX
The original issue of shares of stock is subject to documentary stamp tax of P
=1.00 for each P
=200.00 par value
or a fraction thereof, of the shares of stock issued. The transfer of shares of stock is subject to a documentary
stamp tax of P
=0.75 for each P
=200.00 par value or a fractional part thereof of the share of stock transferred.
However, for a period of five years from March 20, 2004, the sale, barter or exchange of shares of stock listed
and traded at the PSE shall be exempt from documentary stamp tax. In addition, the borrowing and lending of
securities executed under the Securities Borrowing and Lending Program of a registered exchange, or in
accordance with regulations prescribed by the appropriate regulatory authority, are likewise exempt from
documentary stamp tax. However, the securities borrowing and lending agreement should be duly covered by a
master securities borrowing and lending agreement acceptable to the appropriate regulatory authority, and
should be duly registered and approved by the BIR.
ESTATE AND GIFT TAXES
The transfer of shares of stock upon the death of an individual holder to his heirs by way of succession, whether
such holder was a citizen of the Philippines or an alien, regardless of residence, is subject to Philippine taxes at
progressive rates ranging from 5.0% to 20.0%, if the net estate is over P
=200,000. Individual and corporate
holders, whether or not citizens or residents of the Philippines, who transfer shares of stock by way of gift or
donation are liable to pay Philippine donors tax on such transfer of shares ranging from 2.0% to 15.0% of the
net gifts during the year exceeding P
=100,000. The rate of tax with respect to net gifts made to a stranger (i.e., one
who is not a brother or sister (whole or half blood), spouse, ancestor, lineal descendant or relative by
consanguinity within the fourth degree of relationship) is a flat rate of 30.0%.
Estate and donors taxes, however, shall not be collected in respect of intangible personal property, such as shares
of stock: (a) if the decedent at the time of his death or the donor at the time of the donation was a citizen and
resident of a foreign country which at the time of his death or donation did not impose a transfer tax of any
character, in respect of intangible personal property of citizens of the Philippines not residing in that foreign
country, or (b) if the laws of the foreign country of which the decedent or donor was a citizen and resident at the
time of his death or donation allows a similar exemption from transfer or death taxes of every character or
description in respect of intangible personal property owned by citizens of the Philippines not residing in that
foreign country.
TAXATION OUTSIDE THE PHILIPPINES
Shares of stock in a domestic corporation are considered under Philippine law as situated in the Philippines and
the gain derived from their sale is entirely from Philippine sources; hence such gain is subject to Philippine income
tax and the transfer of such shares by gift (donation) or succession is subject to the donors or estate taxes stated
above.
130
Philippine Taxation
The tax treatment of a non-resident holder of shares of stock in jurisdictions outside the Philippines may vary
depending on the tax laws applicable to such holder by reason of domicile or business activities and such holders
particular situation. This Prospectus does not discuss the tax considerations on non-resident holders of shares of
stock under laws other than those of the Philippines.
EACH PROSPECTIVE HOLDER SHOULD CONSULT WITH ITS OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF PURCHASING, OWNING AND
DISPOSING OF THE OFFER SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE,
LOCAL AND NATIONAL TAX LAWS.
131
Plan of Distribution
342,704,000 of the Offer Shares (the Domestic Offer Shares) are being offered and sold by us and Guoco
Assets (Philippines), Inc. at the Offer Price in the Philippines (the Domestic Offer). 228,361,000 of the
Domestic Offer Shares are being offered to all of the trading participants of the PSE (the PSE Brokers), with
1,717,000 per trading participant, and 114,343,000 of Domestic Offer Shares are being offered to local small
investors (Local Small Investors) in the Philippines. 799,644,680 Shares, or approximately 70% of the Shares
comprising the Firm Offer, are being offered for subscription outside the Philippines by the International
Underwriter. The Domestic Underwriters will underwrite on a firm commitment basis the Offer Shares relating
to the Domestic Offer and the International Underwriter will underwrite on a firm commitment basis the Offer
Shares relating to the International Offer. There is no arrangement for any of the Domestic Underwriters or the
International Underwriter to return to us any of the Offer Shares relating to the Domestic Offer or the
International Offer.
THE DOMESTIC OFFER
Domestic Offer Shares shall initially be offered by us and Guoco Assets (Philippines), Inc. to the PSE Brokers and
Local Small Investors during the Domestic Offer. The PSE shall allocate the Domestic Offer Shares among the
PSE Brokers. Each PSE Broker shall initially be allocated 1,717,000 Offer Shares (computed by dividing the
Domestic Offer Shares by 133 PSE Brokers) and subject to reallocation as may be determined by the PSE. Prior
to the closing of the Domestic Offer, any allocation of Domestic Offer Shares not taken up by the PSE Brokers
and Local Small Investors shall be distributed by the Domestic Underwriters to their respective clients or the
general public prior to the close of the Domestic Offer. Domestic Offer Shares not taken up by the PSE Brokers,
the Local Small Investors, the Domestic Underwriters clients or the general public shall be purchased by the
Domestic Underwriters.
To facilitate the Domestic Offer, we and Guoco Assets (Philippines), Inc. have appointed ATR KimEng and BDO
Capital, who shall act as the Joint Domestic Lead Underwriters. We, Guoco Assets (Philippines), Inc. and the
Joint Domestic Lead Underwriters have entered into a Domestic Underwriting Agreement, whereby the Joint
Domestic Lead Underwriters and Domestic Participating Underwriters agreed to underwrite the Domestic Offer
Shares on a firm commitment basis.
ATR KimEng was incorporated in the Philippines in 1990. It has an authorized capital stock of P
=1,000 million,
of which approximately P
=760 million represents its paid up capital. ATR KimEng obtained its license to operate
an investment house in 1993 and is licensed by the Philippine SEC to engage in underwriting or distribution of
securities to the public. Its senior executives have extensive experience in the capital markets and were involved
in a lead role in a substantial number of major equity and debt issues, both locally and internationally. ATR
KimEng has underwritten several public and private offerings of equity and debt in the Philippines since 1993.
ATR KimEng and its affiliates have engaged in transactions with and performed various investment banking and
securities brokerage services for us and our subsidiaries and affiliates in the past and may do so from time to time
in the future. ATR KimEng has no direct relationship with us in terms of Share ownership. Other than as one of
the Joint Domestic Lead Underwriters for the Offer, ATR KimEng does not have any material relationship with
us. ATR KimEng does not have any right to designate or nominate a member of our Board.
BDO Capital was incorporated in the Philippines in 1998. It has an authorized capital stock of P
=400 million, of
which approximately P
=300 million represents its paid up capital. BDO Capital obtained its license to operate an
investment house in 1998 and is licensed by the Philippine SEC to engage in underwriting or distribution of
securities to the public. Its senior executives have extensive experience in the capital markets and were involved
in a lead role in a substantial number of major equity and debt issues, both locally and internationally. BDO
Capital has underwritten several public and private offerings of equity and debt in the Philippines since 1998.
132
BDO Capital and its affiliates have engaged in transactions with and performed various investment banking and
securities brokerage services for us and our subsidiaries and affiliates in the past and may do so from time to time
in the future. BDO Capital has no direct relationship with us in terms of Share ownership. Other than as one of
the Joint Domestic Lead Underwriters for the Offer, BDO Capital does not have any material relationship with
us. BDO Capital does not have any right to designate or nominate a member of our Board.
On or before January 23, 2008, the PSE Brokers shall submit to the designated representative of the PSE Listings
Department their respective firm orders and commitments to purchase Offer Shares. Domestic Offer Shares not
taken up by PSE Brokers and Local Small Investors will be distributed by the Domestic Underwriters directly to
its clients and the general public and whatever remains will be purchased by the Domestic Underwriters.
The Joint Domestic Lead Underwriters shall receive the commitment to purchase forms and the corresponding
payments of each PSE Broker and Local Small Investors, and will be responsible for crossing the number of
secondary Domestic Offer Shares on the Listing Date through a special block trade, subject to the terms and
conditions of the Domestic Offer. The Joint Domestic Lead Underwriters shall receive from us a fee equivalent
to 3% of the total proceeds of the Domestic Offer Shares sold in the Domestic Offer. PSE Brokers who take up
Domestic Offer Shares shall be entitled to a selling fee of 1% of Domestic Offer Shares taken up and purchased
by the relevant PSE Brokers. The selling fee, less a withholding tax of 10%, will be paid to the PSE Brokers within
ten Banking Days after the Listing Date.
All of the Domestic Offer Shares are or shall be lodged with PDTC and shall be transferred to the PSE Brokers
in scripless form through a block trade executed by the Joint Domestic Lead Underwriters. PSE Brokers may
maintain the Domestic Offer Shares in scripless form or opt to have the stock certificates issued to them by
requesting an upliftment of the relevant Domestic Offer Shares from PDTCs electronic system after the closing
of the Domestic Offer.
THE INTERNATIONAL OFFER
We and the Selling Shareholders, through the International Underwriter, are offering 799,644,680 Firm Shares
(excluding the Over-Allotment Option described below) in the International Offer (i) outside the Philippines and
the United States to non-U.S. persons in reliance on Regulation S under the U.S. Securities Act and (ii) in the
United States to qualified institutional buyers in reliance on Rule 144A under the U.S. Securities Act.
The International Underwriting Agreement is subject to certain conditions and may be subject to termination by
the International Underwriter if certain circumstances, including force majeure, occur on or before the Offer
Shares are listed on the PSE. Under the terms and conditions of the International Underwriting Agreement, the
International Underwriter is committed to underwrite the International Offer on a firm-commitment basis and
to purchase or procure purchasers for all of the Offer Shares to be offered in the International Offer. The closing
of the International Offer is conditional on the closing of the Domestic Offer. The closing of the Domestic Offer
and the International Offer are expected to occur concurrently.
The International Underwriter and its affiliates have engaged in transactions with and performed various
investment banking, commercial banking and other services for us and our subsidiaries and affiliates in the past
and may do so from time to time in the future. However, all services provided by the International Underwriter,
including in connection with the Offer, have been provided as an independent contractor and not as a fiduciary
to us.
The International Underwriter does not have any right to designate or nominate a member of our Board. The
International Underwriter has no direct relations with us in terms of share ownership and other than as
International Underwriter for the Offer, it does not have any material relationship with us.
133
The Over-Allotment Option

In connection with the Offer, The Nassim Fund has granted the Stabilizing Agent an Over-Allotment Option,
which is exercisable in whole or in part beginning on or after the Listing Date and ending on the date 30 days
from the date of this Prospectus, to purchase up to 15% of the total number of Firm Shares on the same terms
and conditions as the Firm Shares as set forth herein. In connection therewith, the Stabilizing Agent has entered
into a greenshoe agreement with The Nassim Fund with respect to an additional 171,352,302 Shares to cover
over-allocations under the International Offer. Any Shares that may be delivered to the Stabilizing Agent under
the greenshoe agreement will be conveyed to The Nassim Fund either through the purchase of Shares in the open
market by the Stabilizing Agent in the conduct of stabilization activities or through the exercise of the
Over-Allotment Option by the Stabilizing Agent.
Up to 171,352,302 Optional Shares may be over-allotted and the Stabilizing Agent may effect price stabilization
transactions for a period beginning on or after the Listing Date but extending no later than 30 days from the date
of this Prospectus. The Stabilizing Agent may purchase Shares in the open market only if the market price of the
Shares falls below the Offer Price. Such activities may stabilize, maintain or otherwise affect the market price of
the Shares which may have the effect of preventing a decline in the market price of the Shares and may also cause
the price of the Shares to be higher than the price that otherwise would exist in the open market in the absence
of these transactions. If the Stabilizing Agent commences any of these transactions, it may discontinue them at
any time. Once the Over-Allotment Option has been exercised by the Stabilizing Agent, it will no longer be
allowed to purchase Shares in the open market for the conduct of stabilization activities.
Lock-Up
We, Quaker Global Investments B.V., Hong Way Holdings, Inc., Orion Land, Inc., and the Selling Shareholders
have each agreed with the International Underwriter that, subject to certain exceptions, for a period of 180 days
after the First Closing Date, neither we nor any person acting on our behalf will, without the prior written
consent of the International Underwriter, issue, offer, sell, contract to sell, pledge or otherwise dispose of (or
publicly announce any such issuance, offer, sale or disposal of) any Shares or securities convertible or
exchangeable into or exercisable for any Shares or warrants or other rights to purchase Shares or any security or
financial product whose value is determined directly or indirectly by reference to the price of the underlying
securities, including equity swaps, forward sales and options.
Selling Restrictions
Philippines
No securities, except of a class exempt under Section 9 of the SRC or unless sold in any transaction exempt under
Section 10 thereof, shall be sold or distributed by any person within the Philippines unless such securities shall
have been registered with the Philippine SEC on Form 12-1 and the registration statement has been declared
effective by the Philippine SEC.
134
Legal Matters
Certain legal matters as to matters of Philippine law relating to the Offer will be passed upon for us by Romulo
Mabanta Buenaventura Sayoc and de los Angeles, our legal counsel, and for the International Underwriter and
the Joint Domestic Lead Underwriters by Picazo, Buyco, Tan, Fider and Santos, legal counsel to the International
Underwriter and the Joint Domestic Lead Underwriters.
Certain legal matters as to United States federal law will be passed upon for us by Skadden, Arps, Slate, Meagher
& Flom LLP, our United States legal counsel, and for the International Underwriter by Allen & Overy, United
States legal counsel to the International Underwriter.
None of the foregoing legal counsel has any direct or indirect interest in us.
135
Independent Public Accountants

MS & Co., independent certified public accountants, audited our financial statements without qualification as
of and for the years ended June 30, 2005, 2006 and 2007 and as of September 30, 2007 and for the three months
ended September 30, 2006 and 2007, all included in this Prospectus. Such financial statements are included in
this Prospectus on MS & Co.s authority as independent public accountants. MS & Co. has agreed to the
inclusion of its reports in this Prospectus.
MS & Co. has acted as our external auditors since the fiscal year ended June 30, 2003. Ms. Emerald Anne C.
Bagnes is our current audit partner and has served as such since the fiscal year ended June 30, 2006. We have not
had any disagreements on accounting and financial disclosures with our current external auditors for the same
periods or any subsequent interim period. MS & Co. has neither shareholdings in us nor any right, whether
legally enforceable or not, to nominate persons or to subscribe for the securities in us. MS & Co. will not receive
any direct or indirect interest in us or in any securities thereof (including options, warrants or rights thereto)
pursuant to or in connection with the Offer. The foregoing is in accordance with the Code of Ethics for
Professional Accountants in the Philippines set by the Board of Accountancy and approved by the Professional
Regulation Commission.
In relation to the audit of our annual financial statements, our Corporate Governance Manual provides that the
audit committee shall, among other activities (i) evaluate significant issues reported by the external auditors in
relation to the adequacy, efficiency and effectiveness of our policies, controls, processes and activities; (ii) ensure
that other non-audit work provided by the external auditors are not in conflict with their functions as external
auditors; and (iii) ensure our compliance with acceptable auditing and accounting standards and regulations.
The following table sets out the aggregate fees billed for each of the last two fiscal years for professional services
rendered by MS & Co., excluding fees directly related to the Offer.
2006
2007
(in P
= thousands)
Audit and Audit-Related Fees:

Fees for services that are normally provided by the external auditor in connection with
statutory and regulatory filings or engagements..............................................................
All other fees ............................................................................................................................
2,541
2,820
Total.....................................................................................................................................
2,541
2,820
MS & Co. does not have any direct or indirect interest in us.
136
Financial Statements and Independent Auditors Reports

CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND ITS SUBSIDIARIES AS OF AND
FOR THE YEARS ENDED JUNE 30, 2005 AND 2006 AND FINANCIAL STATEMENTS OF THE
COMPANY AS OF AND FOR THE YEAR ENDED JUNE 30, 2007.
Page
Auditors Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-2
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-4
Income Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-5
Statements of Changes in Shareholders Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-6
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-7
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-8
CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND ITS SUBSIDIARIES AS OF AND

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006 AND FINANCIAL STATEMENTS OF THE
COMPANY AS OF AND FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007
Page
Auditors Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-40
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-42
Income Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-43
Statements of Changes in Shareholders Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-44
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-45
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-46
F-1
Manabat Sanagustin & Co.

Certified Public Accountants
(Formerly Laya Mananghaya & Co.)
22/F Philamlife Tower, 8767 Paseo de Roxas
Makati City 1226, Metro Manila, Philippines
Telephone
Fax
Internet
E-mail
+63 (2) 885 7000

+63 (2) 893 8507
+63 (2) 894 1985
+63 (2) 816 6595
www.kpmg.com.ph
manila@kpmg.com.ph
PRC-BOA Registration No. 0003

SEC Accreditation No. 0004-FR-1
BSP Accredited
REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
We have audited the accompanying financial statements of Pepsi-Cola Products Philippines, Inc. (the Company),
which comprise the balance sheet as at June 30, 2007, and the statement of income, statement of changes in
equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and
other explanatory notes. We have also audited the accompanying consolidated financial statements of Pepsi-Cola
Products Philippines, Inc. and Subsidiary (collectively referred to as the Group), which comprise the
consolidated balance sheets as at June 30, 2006 and 2005, and the consolidated statements of income,
consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended,
and a summary of significant accounting policies and other explanatory notes.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with Philippine Financial Reporting Standards. This responsibility includes: designing, implementing and
maintaining internal control relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our
audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditors consider internal control relevant to the entitys preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the financial statements.
F-2
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Company as of June 30, 2007, and its financial performance and its cash flows for the year then ended in
accordance with Philippine Financial Reporting Standards. Also, in our opinion, the consolidated financial
statements present fairly, in all material respects, the consolidated financial position of the Group as of June 30,
2006 and 2005, and its consolidated financial performance and its consolidated cash flows for the years then
ended in accordance with Philippine Financial Reporting Standards.
August 10, 2007

Makati City, Metro Manila
F-3

BALANCE SHEETS
(Amounts in Thousands)
June 30
Company
2007
Group
2006
Group
2005
Note
(See Note 2)
(See Note 2)
(See Note 2)
4
5, 15
6, 11
=
P632,272
828,277
600,899
61,045
=
P477,827
658,735
512,536
31,677
=
P333,121
647,272
401,679
54,438
2,122,493
1,680,775
1,436,510
505,474
133,286
1,687,581
2,158,107
40,444
137,963
1,324,111
2,440,205
195,450
75,726
1,091,836
2,417,629
196,343
37,842
4,662,855
4,035,492
3,743,650
=6,785,348
P
=
P5,716,267
=
P5,180,160
P
=48,600
=
P48,600
=
P328,400
2,201,248
271,130
400,000
53,453
241,666
1,962,094
183,653
99,367
116,666
1,821,084
92,150
154,615
3,216,097
2,410,380
2,396,249
41,667
203,909
333,334
131,574
117,672
255,752
159,527
125,175
Total Noncurrent Liabilities ..............................................
245,576
582,580
540,454
Total Liabilities ..................................................................
3,461,673
2,992,960
2,936,703
496,948
59,473
(1,018)
2,768,272
3,323,675
496,948
59,473
274,569
1,892,317
2,723,307
496,948
59,473
265,995
1,421,041
2,243,457
=
P5,716,267
=
P5,180,160
ASSETS
Current Assets
Cash and cash equivalents ....................................................
Receivables - net ....................................................................
Inventories .............................................................................
Prepaid expenses and other current assets ............................
Total Current Assets ..........................................................
Noncurrent Assets
Investments in associates .......................................................
7
Due from a related party ......................................................
15
Bottles and cases - net ...........................................................
8, 11
Property, plant and equipment - net ..................................... 7, 9, 11
Deferred income tax - net .....................................................
14
Other assets - net ..................................................................
10
Total Noncurrent Assets ....................................................

Current Liabilities
Notes payable ........................................................................
Accounts payable and accrued expenses ...............................
Income tax payable ...............................................................
Dividends payable .................................................................
Due to a related party ...........................................................
Current portion of long-term debt ........................................
6, 8, 9,
11, 13
6, 12,
15, 26
14
28
15
13
Total Current Liabilities ....................................................

Long-term debt - net of current portion ...............................
Accrued retirement cost - net of current portion ..................
Deferred income tax ..............................................................
13
12, 26
7, 14
Equity
Capital stock .........................................................................
27
Additional paid-in capital .....................................................
Effect of dilution of ownership .............................................
7
Revaluation increment on land ............................................. 7, 9, 14
Retained earnings ..................................................................
7, 28
Total Equity .......................................................................
=6,785,348
P
See Notes to the Financial Statements.
F-4

STATEMENTS OF INCOME
Years Ended June 30
NET SALES ..........................................................................
COST OF GOODS SOLD ....................................................
Company
2007
Group
2006
Group
2005
Note
(See Note 2)
(See Note 2)
(See Note 2)
16 , 24
15, 17,
20, 21,
26, 29
=
P12,916,212
=
P10,992,812
=
P8,932,480
8,760,036
7,252,766
5,622,652
4,156,176
3,740,046
3,309,828
1,594,249
1,434,773
1,224,877
598,529
468,291
536,321
424,059
507,537
524,215
2,661,069
2,395,153
2,256,629
1,495,107
1,344,893
1,053,199
GROSS PROFIT ...................................................................

OPERATING EXPENSES
Selling and distribution .........................................................
General and administrative ...................................................

Marketing expenses ...............................................................
9, 15,
18, 20,
21, 26,
29
15, 19,
20, 21,
26, 29
INCOME FROM OPERATIONS ........................................

NET FINANCE AND OTHER INCOME (EXPENSE) ......
7, 11,
13, 22
INCOME BEFORE INCOME TAX ....................................

PROVISION FOR INCOME TAX ......................................
14
NET INCOME .....................................................................
24,520
(55,272)
(146,938)
1,519,627
518,241
1,289,621
420,876
906,261
138,917
=
P1,001,386
=
P868,745
=
P767,344
Basic Earnings Per Share .......................................................
23
=
P0.30
P
=0.26
P
=0.23
Dividends Per Share ..............................................................
28
=
P0.12
P
=0.12
P
=0.03
F-5

STATEMENTS OF CHANGES IN EQUITY
Years Ended June 30
Note
CAPITAL STOCK ................................................................
27
ADDITIONAL PAID-IN CAPITAL .....................................

EFFECT OF DILUTION OF OWNERSHIP .......................
DEPOSITS ON FUTURE STOCK SUBSCRIPTIONS
Balance at beginning of year .................................................
Conversion to shareholders loan ..........................................
30
Balance at end of year ...........................................................

REVALUATION INCREMENT ON LAND
Transfer to retained earnings ................................................
Increase in revaluation increment .........................................
Effect of change in tax rate ...................................................
7
9
14

RETAINED EARNINGS
Net income for the year ........................................................
Transfer from revaluation increment on land .......................
Dividends declared ................................................................
F-6
Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P496,948
=
P496,948
=
P496,948
59,473
59,473
59,473
(1,018)
265,995
1,072
7,502
265,995
274,569
265,995
1,892,317
1,001,386
274,569
(400,000)
1,421,041
868,745
(397,469)
753,064
767,344
(99,367)
2,768,272
1,892,317
1,421,041
=3,323,675
P
=
P2,723,307
=
P2,243,457
274,569
(274,569)
7
28
400,404
(400,404)

STATEMENTS OF CASH FLOWS
Years Ended June 30
Note
CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax .....................................................
Adjustments for:
Depreciation and amortization .........................................
Interest expense .................................................................
Provisions for probable losses in values of bottles and
cases, machinery and equipment, idle assets,
impairment losses, inventory obsolescence and
contingencies - net ........................................................ 5, 6, 8, 9
Interest income ..................................................................
22
Share in net earnings of associates ....................................
7
Loss (gain) on sale of property and equipment ................
Amortization of goodwill ..................................................
10
Operating income before working capital changes ...............
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables ....................................................................
Inventories .....................................................................
Prepaid expenses and other current assets ....................
Increase in accounts payable and accrued expenses .........
Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P1,519,627
=
P1,289,621
=
P906,261
813,537
52,439
702,587
80,011
655,032
84,278
25,222
(18,050)
(6,792)
(759)
93,924
(14,278)
(1,859)
12,908
(24,946)
458
7,698
2,385,224
1,641,689
(168,955)
(115,445)
(12,370)
356,609
(78,237)
(119,974)
4,545
113,900
(264,157)
(133,714)
15,930
545,552
Cash generated from operations ...........................................

Interest received .....................................................................
Income taxes paid .................................................................
Interest paid ..........................................................................
2,445,063
17,934
(275,758)
(65,988)
2,070,240
17,942
(328,282)
(80,857)
1,805,300
28,854
(139,661)
(83,181)
Net cash provided by operating activities .............................
2,121,251
1,679,043
1,611,312
=
P5,269
=
P2,522
=
P2,784
9
8
7
10
(918,905)
(697,858)
(632)
(88,646)
(429,612)
(509,289)
(59,689)
(680,166)
(380,024)
(24,580)
(1,700,772)
(996,068)
(1,081,986)
(166,667)
(99,367)
39,633
(279,800)
(298,102)
(114,022)
94,800
(400,404)
(99,367)
Net cash used in financing activities .....................................
(266,034)
(538,269)
(518,993)
NET INCREASE IN CASH AND CASH EQUIVALENTS .

CASH AND CASH EQUIVALENTS AT BEGINNING OF
YEAR ................................................................................
154,445
144,706
10,333
477,827
333,121
322,788
P
=632,272
=
P477,827
=
P333,121
CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposals of property and equipment ............
Net additions to:
Property, plant and equipment ..........................................
Bottles and cases ...............................................................
Investments in associates ...................................................
Increase in other assets ..........................................................
5
6
2,150,006
12
Net cash used in investing activities ......................................

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from (repayments of):
Long-term debt .................................................................
Notes payable ...................................................................
Shareholders loan .............................................................
Cash dividends paid ..............................................................
CASH AND CASH EQUIVALENTS AT END OF YEAR ..
13
11
30
28

F-7

NOTES TO THE FINANCIAL STATEMENTS
(Amounts in Thousands, Except Number of Shares and Par Value per Share and When Otherwise Stated)
1.
General
Pepsi-Cola Products Philippines, Inc. (the Company) was registered with the Philippine Securities and
Exchange Commission (SEC) on March 8, 1989 primarily to engage in manufacturing, sales and
distribution of carbonated soft-drinks (CSD) and non-carbonated beverages (NCB) to retail, wholesale,
restaurants and bar trades. The Companys registered office and principal place of business is at Km. 29,
National Road, Tunasan, Muntinlupa City.
The Companys associate (formerly a wholly-owned subsidiary), Nadeco Realty Corporation (NRC), was
incorporated under Philippine laws primarily to engage in the real estate business. On November 30, 2004,
PCPPI Alpha Realty Corporation (Alpha) and PCPPI Beta Realty Corporation (Beta), both wholly-owned
subsidiaries of the Company, merged with NRC, with the latter as the surviving corporation. As a result,
all of the assets and liabilities, as well as rights and obligations of Alpha and Beta became assets, liabilities,
rights and obligations of NRC in fiscal year 2005. On February 1, 2007, a change in NRCs capital
structure decreased the Companys ownership interest to 40% (see Note 7).
The financial statements of the Company as of and for the year ended June 30, 2007 were authorized for
issue by the Companys Chief Financial Officer, as designated by the Board of Directors (BOD), on August
10, 2007.
2.
Basis of Preparation
Statement of Compliance
The financial statements in fiscal year 2007 refer to the accounts of the Company while the financial
statements for fiscal years 2006 and 2005 refer to the consolidated accounts of the Company and NRC
(collectively referred to as Group). The financial statements have been prepared in accordance with
Philippine Financial Reporting Standards (PFRS).
Basis of Measurement
The financial statements have been prepared on a historical cost basis.
Basis of Consolidation
The 2006 and 2005 Group financial statements reflect the consolidated accounts of the Company and NRC
(which was then accounted for as a subsidiary). Intra-group balances and any unrealized gains and losses
or income and expenses arising from intra-group transactions are eliminated in the consolidation.
Unrealized gains arising from transactions with subsidiaries are eliminated to the extent of the Groups
interest in the entity. Unrealized losses are eliminated in the same way as unrealized gains, but only to the
extent that there is no evidence of impairment.
The financial statements of the Group are prepared for the same reporting period as the Company, using
uniform accounting policies for like transactions and other events in similar circumstances.
A subsidiary is an enterprise that is controlled by the Company and whose accounts are included in the
Groups financial statements. Control exists when the Company has the power, directly, or indirectly, to
govern the financial and operating policies of an entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable or convertible are taken into
account. The financial statements of the subsidiary are included in the Groups financial statements from
the date that control commences until the date control ceases.
Functional and Presentation Currency
The financial statements are measured using the currency of the primary economic environment in which
the entity operates. The financial statements are presented in Philippine Peso, which is also the Groups
functional currency and all values are rounded to the nearest thousand except number of shares and par
value per share and when otherwise indicated.
F-8
Use of Judgments and Estimates

The preparation of the financial statements in conformity with PFRS requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the amounts
reported in the financial statements. The estimates and assumptions used in the accompanying financial
statements are based upon managements evaluation of relevant facts and circumstances as of the date of
the financial statements. Actual results could differ from these estimates.
Judgments, estimates and underlying assumptions are reviewed on an ongoing basis and are based on
historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. Revisions to accounting estimates are recognized in the period in
which the estimate is revised and in any future periods affected.
The following presents the summary of these judgments and estimates, which have the most significant
effect on the amounts recognized in the financial statements:
Judgments
Leases
The Company has entered into various lease agreements as lessee. The Company has determined that the
lessor retains all significant risks and rewards of ownership of these properties which are leased out under
operating lease agreements.
Rent expense pertaining to these leased properties amounted to P
=61 million in 2007 and 2006 each year
and P
=53 million in 2005 (see Note 29).
Functional Currency
Based on the economic substance of the underlying circumstances relevant to the Group, the functional
currency has been determined to be the Philippine Peso. It is the currency that mainly influences the sales
price of goods and the cost of providing these goods.
Contingencies
The Company is currently involved in various legal proceedings. The estimate of the probable costs for the
resolution of these claims has been developed in consultation with outside counsel handling the Companys
defense relating to these matters and is based upon an analysis of potential results. The Company currently
does not believe that these proceedings will have a material adverse effect on its financial statements. It is
possible, however, that future results of operations could be materially affected by changes in the estimates
or in the effectiveness of the strategies relating to these proceedings (see Note 29).
Estimates
Estimated Allowance for Impairment Losses on Receivables
The Company maintains allowance for impairment losses at a level considered adequate to provide for
potential uncollectible receivables. The Company performs regular review of the age and status of these
accounts, designed to identify accounts with objective evidence of impairment and provides these with the
appropriate allowance for impairment losses. The review is accomplished using a combination of specific
and collective assessment approaches, with the impairment losses being determined for each risk grouping
identified by the Company. The amount and timing of recorded expenses for any period would differ if the
Company made different judgments or utilized different methodologies. An increase in allowance for
impairment losses would increase the recorded operating expenses and decrease current assets.
As of June 30, 2007, 2006 and 2005, allowance for impairment losses on receivables amounted to P
=67
million, P
=105 million and P
=93 million, respectively. The carrying value of receivables amounted to P
=828
million, P
=659 million and P
=647 million as of June 30, 2007, 2006 and 2005, respectively (see Note 5).
F-9
Estimated Net Realizable Value of Inventories

In determining the net realizable value of inventories, the Company considers inventory obsolescence based
on specific identification and as determined by management for inventories estimated to be unsaleable in
the future. The Company adjusts the cost of inventory to recoverable value at a level considered adequate
to reflect market decline in value of the recorded inventories. The Company reviews on a continuous basis
the product movement, changes in consumer demands and introduction of new products to identify
inventories which are to be written down to net realizable values.
As of June 30, 2007, 2006 and 2005, the amounts to write down inventories to net realizable values were
P
=15 million, P
=17 million and P
=27 million, respectively. The carrying value of inventories amounted to P
=601
million, P
=513 million and P
=402 million as of June 30, 2007, 2006 and 2005, respectively (see Note 6).
Amortization of the Excess of Cost of Containers over Deposit Values
The excess of the acquisition costs of the returnable bottles and cases over their deposit values is deferred
and amortized over their estimated useful lives (EUL) principally determined by their historical breakage
and trippage.
As of June 30, 2007, 2006 and 2005, accumulated amortization of excess of cost over deposit values of
returnable bottles and cases amounted to P
=2.29 billion, P
=1.97 billion and P
=1.71 billion, respectively (see
Note 8).
Estimated Allowance for Unusable Containers
An allowance for unusable containers is maintained based on specific identification and as determined by
management to cover bottles and shells that are no longer considered fit for use in the business, obsolete
or in excess of the Companys needs.
The Company has no allowance for unusable containers as of June 30, 2007 due to write-off and reversal
during fiscal year 2007. As of June 30, 2006 and 2005, allowance for unusable containers amounted to P
=46
million and P
=50 million, respectively (see Note 8).
Estimated Useful Lives of Property, Plant and Equipment
The Company reviews annually the EUL of property, plant and equipment based on the period over which
the assets are expected to be available for use and are updated if expectations differ from previous estimates
due to physical wear and tear, and technical or commercial obsolescence. It is possible that future results
of operations could be materially affected by changes in these estimates brought about by changes in the
factors mentioned. A reduction in the EUL of property, plant and equipment would increase the recorded
depreciation and amortization expenses and decrease noncurrent assets.
The EUL are as follows:
Number of Years
Buildings and leasehold improvements .......................................................................

Machinery and other equipment ................................................................................
Furniture and fixtures .................................................................................................
20 or term of the lease,

whichever is shorter
3 - 10
10
As of June 30, 2007, 2006 and 2005, property, plant and equipment, net of accumulated depreciation,
amortization and impairment losses, amounted to P
=2.16 billion, P
=2.44 billion and P
=2.42 billion,
respectively (see Note 9).
F-10
Estimated Allowance for Impairment Losses on Other Financial Assets and Non-Financial Assets
The Group assesses impairment on other financial and non-financial assets whenever events or changes in
circumstances indicate that the carrying amount of such asset may not be recoverable. The factors that the
Company considers important which could trigger an impairment review include the following:
significant changes in the manner of use of the acquired assets or the strategy for overall business; and
An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.
In fiscal year 2007, there was no provision for impairment losses provided on the Companys investments
in associates, which includes goodwill amounting to P
=9.5 million. Investments in associates amounted to
P
=505 million as of June 30, 2007 (see Note 7).
There was no provision for impairment losses provided on the Groups goodwill relating to its investment
in NRC in fiscal years 2006 and 2005. Goodwill (which is included under Other Assets account in the
balance sheets) amounted to P
=9.4 million as of June 30, 2006 and 2005 (see Note 10).
In fiscal year 2007, an impairment loss amounting to P
=20 million (included under Selling and Distribution
Expenses in the statements of income) was recognized for marketing equipment (see Note 18). As of June
30, 2006 and 2005, allowance for impairment losses on property, plant and equipment amounted to P
=24
million and P
=29 million, respectively. The said allowance was fully written-off in fiscal year 2007 (see Note
9).
There was no allowance for impairment losses on idle assets (included under Other Assets account in the
balance sheets) as of June 30, 2007 as compared to P
=57 million and P
=79 million as of June 30, 2006 and
2005, respectively, due to write-off made during the fiscal year 2007 (see Note 10).
Realizability of Deferred Income Tax Assets
The Group reviews the carrying amounts of deferred income tax assets at each balance sheet date and
reduces deferred income tax assets to the extent that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred income tax assets to be utilized.
As of June 30, 2007, 2006 and 2005, deferred income tax assets amounted to P
=129 million, P
=195 million
and P
=196 million, respectively. There were no unrecognized deferred income tax assets as of June 30, 2007
and 2006, while unrecognized deferred income tax assets amounted to P
=1 million as of June 30, 2005 (see
Note 14).
Pension and Other Employee Benefits
The determination of the obligation and cost of pension and other employee benefits is dependent on the
selection of certain assumptions used by the actuary in calculating such amounts. Those assumptions
include among others, discount rate, rate of expected return on plan assets and salary increase rate (see
Note 26). In accordance with PFRS, actual results that differ from the Companys assumptions, subject to
the 10% corridor test, are accumulated and amortized over future periods and therefore, generally affect
the recognized expense and recorded obligations in such future periods.
As of June 30, 2007, 2006 and 2005, the Company has unrecognized net actuarial losses (gain) amounting
to P
=4 million, P
=86 million and (P
=12 million), respectively (see Note 26).
F-11
3.
Significant Accounting Policies

The following explains the significant accounting policies which have been adopted in the preparation of
the financial statements.
Changes in Accounting Policies
The accounting policies adopted are consistent with those of the previous financial years except for the
adoption of the amended Philippine Accounting Standards (PAS) and Philippine Interpretation International Financial Reporting Interpretations Committee (IFRIC) as discussed below which became
mandatory for years beginning on or after January 1, 2006. Adoption of these amendments to PAS and
interpretations effective July 1, 2006 did not have any effect on the Group except for the additional
disclosures included in the financial statements.
Amendment to PAS 19, Employee Benefits - Actuarial Gains and Losses, Group Plans and
Disclosures, provides an option for recognizing actuarial gains and losses in post-employment defined
benefit plans in full in the period in which they occur, outside profit or loss. The amendment also (a)
specifies how group entities should account for defined benefit group plans in their separate or
individual financial statements and (b) requires entities to give additional disclosures. The adoption
of amendments to PAS 19 does not have an effect on the Companys result of operations and financial
position. The Company elected to continue to recognize a portion of actuarial gains and losses in
profit and loss if the cumulative unrecognized actuarial gains and losses at the end of the previous
reporting period exceeded the greater of 10% of the present value of defined obligation or 10% of
the fair value of plan assets. The Company does not participate in any multi-employer plans.
Additional disclosures required by the amendments were included in the financial statements, where
applicable (see Note 26).
The adoption of the following standards had no impact on the Groups financial statements:
Amendment to PAS 21, The Effects of Changes in Foreign Exchange Rates;
Amendment to PAS 39, Financial Instruments: Recognition and Measurement - The Fair Value
Option;
Philippine Interpretation - IFRIC 4, Determining Whether an Arrangement Contains a Lease; and
Philippine Interpretation - IFRIC 8, Scope of PFRS 2 Share-based Payment.
New Standards, Amendment to Standard and Interpretations Not Yet Adopted

The following are the new standards, amendment to standard and interpretations which are not yet
effective for the fiscal year ended June 30, 2007, and have not been applied in preparing these financial
statements:
F-12
PFRS 7, Financial Instruments: Disclosures. This will be effective for financial years beginning on or
after January 1, 2007. PFRS 7 introduces new disclosures to improve the information about financial
instruments. It requires the disclosure of quantitative and qualitative information about exposure to
risks arising from financial instruments, including specified minimum disclosures about credit risk,
liquidity risk and market risk, as well as sensitivity analysis to market risk. It replaces PAS 30,
Disclosures in the Financial Statements of Banks and Similar Financial Institutions, and the disclosure
requirements of PAS 32, Financial Instruments: Disclosures and Presentation. The Company will
apply PFRS 7 effective July 1, 2007. Additional disclosures will be included in the Companys
financial statements when the standard is adopted on July 1, 2007.
Amendment to PAS 1, Presentation of Financial Statements - Capital Disclosures. This will be

effective for financial years beginning on or after January 1, 2007. This introduces disclosures about
the entitys objectives, policies and processes for managing capital; quantitative data about what the
entity regards as capital; whether the entity has complied with any capital requirements; and if it has
not complied, the consequences of such non-compliance. These new disclosures will be included in the
Companys financial statements when the standard is adopted on July 1, 2007.
PFRS 8, Operating Segments. This will be effective for financial years beginning on or after January
1, 2009 and will replace PAS 14, Segment Reporting. This PFRS adopts a management approach to
reporting segment information. The information reported would be that which management uses
internally for evaluating the performance of operating segments and allocating resources to those
segments. It is required for adoption only by entities whose debt or equity instruments are publicly
traded, or are in the process of filing with the SEC for the purposes of issuing any class of instruments
in a public market. The Company will assess the impact of this standard to its current manner of
reporting segment information when it adopts the standard on July 1, 2009.
Philippine Interpretation - IFRIC 10, Interim Financial Reporting and Impairment. This becomes
effective for financial years beginning on or after November 1, 2006. This interpretation prohibits the
reversal of impairment losses on goodwill and available-for-sale investments recognized in interim
financial reports even if the impairment is no longer present at the balance sheet date. This
interpretation has no significant impact on the financial statements.
Philippine Interpretation - IFRIC 11, IFRS 2 - Group and Treasury Share Transactions. This
interpretation will be effective for financial years beginning on or after January 1, 2008. This
describes how to apply PFRS 2, Share-based Payment to share-based payment arrangements
involving an entitys own equity instruments and share-based payment arrangements of subsidiaries
involving equity instruments of its parent company. This interpretation has no significant impact on
the financial statements.
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and
the revenue can be measured reliably.
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net
of returns and discounts. Revenue is recognized when the significant risks and rewards of ownership have
been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible
return of goods can be estimated reliably, and there is no continuing involvement with the goods. Transfer
of risk and rewards of ownership coincides with the delivery of the products to the customers.
Cost and Expense Recognition
The financial statements are prepared on the accrual basis of accounting. Under this basis, costs and
expenses are recognized when they occur and are reported in the financial statements in the periods to
which they relate.
Cash and Cash Equivalents
Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that
are readily convertible to known amounts of cash with original maturities of three months or less from
dates of acquisition and that are subject to an insignificant risk of change in value.
Receivables
Receivables are recognized and carried at original invoice amount less an allowance for impairment losses.
An allowance for impairment losses is maintained at a level considered adequate to provide for probable
uncollectible receivables. The level of this allowance is evaluated by management on the basis of factors that
affect the collectibility of the accounts. A review of the age and status of receivables, designed to identify
accounts to be provided with allowance, is performed regularly.
F-13
Inventories
Inventories are valued at the lower of cost and net realizable value. Cost is determined by the moving
average method. Net realizable value is the estimated selling price in the ordinary course of business, less
estimated costs necessary to make the sale.
An allowance is provided to reduce inventory to net realizable value due to obsolescence and possible losses
based on specific identification method. When inventories are sold, the related allowance is reversed in the
same period.
Bottles and Cases
Bottles and cases include returnable glass bottles and cases stated at deposit values and the excess of the
acquisition costs of returnable bottles and cases over their deposit values, which is deferred and amortized
using the straight-line method over their estimated useful lives (5 years for returnable bottles and 7 years
for cases), which are principally determined by their actual historical breakage and trippage.
An allowance is provided for excess, unusable and obsolete returnable bottles and cases based on the
specific identification method.
Investments in Associates
Associates are those entities in which the Company has significant influence, but not control, over the
financial and operating policies and which are neither subsidiaries nor joint ventures of the Company. The
financial statements include the Companys share of the total recognized earnings and losses of associates
on an equity accounted basis, from the date that significant influence commences until the date that
significant influence ceases. When the Companys share of losses exceeds the cost of the investment in an
associate, the carrying amount of that interest is reduced to nil and recognition of further losses is
discontinued except to the extent that the Company has incurred legal or constructive obligations or made
payments on behalf of the associate.
Property, Plant and Equipment
Property, plant and equipment are carried at cost (which comprises its purchase price and any directly
attributable cost of bringing the asset to working condition and location for its intended use) less
accumulated depreciation, amortization and impairment losses, if any.
Subsequent costs that can be measured reliably are added to the carrying amount of the asset when it is
probable that future economic benefits associated with the asset will flow to the Company. The cost of
day-to-day servicing of an asset is recognized as expense in the period in which it is incurred.
Depreciation is computed on a straight-line basis over the EUL of the assets. Leasehold improvements are
amortized over the EUL of the improvements or the term of the lease, whichever is shorter.
The EUL and depreciation and amortization method are reviewed at each balance sheet date to ensure that
the period and depreciation and amortization method are consistent with the expected pattern of economic
benefits from those assets.
When an asset is disposed of, or is permanently withdrawn from use and no future economic benefits are
expected from its disposal, the cost and accumulated depreciation, amortization and impairment losses, if
any, are removed from the accounts and any resulting gain or loss arising from the retirement or disposal
is reflected in current operations.
Prior to the dilution of the Companys ownership in NRC in fiscal year 2007, all the parcels of land owned
by NRC, which were carried at revalued amounts, were presented at fair value at the date of revaluation.
Revaluations are performed by an independent firm of appraisers with sufficient regularity to ensure that
the carrying amount does not differ materially from that which would be determined using fair values at
the balance sheet date. Any increase in revaluation is credited to the revaluation increment unless it offsets
F-14
a previous decrease in value of the same asset recognized in the statements of income. A decrease in value
is recognized in the statements of income when it exceeds the increase previously recognized in the
revaluation increment. Upon disposal, any related revaluation increment is transferred from the revaluation
increment to retained earnings. The excess of the appraised values over the acquisition costs of the parcels
of land is presented under the Revaluation Increment on Land account in the 2006 and 2005
consolidated statements of changes in equity.
Goodwill
Goodwill represents the excess of acquisition cost of investment over the fair value of the net identifiable
assets of the investee companies at the date of acquisition. Goodwill is stated at cost less accumulated
amortization and impairment in value, if any. The amount was initially amortized on a straight-line method
over the estimated useful life of 20 years. Upon adoption of PFRS 3 effective July 1, 2005, goodwill is no
longer amortized; instead, the net carrying amount is subjected to annual impairment assessment. Goodwill
is shown under the Other Assets account in the 2006 and 2005 consolidated balance sheets. In fiscal year
2007, goodwill is included as part of Investments in Associates account.
Financial Assets and Liabilities
Date of Recognition. The Company recognizes a financial asset or a financial liability in the balance sheets
when it becomes a party to the contractual provisions of the instrument. In the case of a regular way
purchase or sale of financial assets, recognition and derecognition, as applicable, is done using settlement
date accounting.
Initial Recognition of Financial Instruments. Financial instruments are recognized initially at fair value,
which is the fair value of the consideration given (in case of an asset) or received (in case of a liability). The
fair value of the consideration given or received is determined by reference to the transaction price or other
market prices. If such market prices are not reliably determinable, the fair value of the consideration is
estimated as the sum of all future cash payments or receipts, discounted using the prevailing market rate of
interest for similar instruments with similar maturities. The initial measurement of financial instruments,
except for those designated at fair value through profit and loss (FVPL), includes transaction cost.
Subsequent to initial recognition, the Company classifies its financial assets in the following categories:
held-to-maturity (HTM) financial assets, available-for-sale (AFS) investments, FVPL financial assets, and
loans and receivables. The classification depends on the purpose for which the investments are acquired and
whether they are quoted in an active market. Management determines the classification of its financial
assets at initial recognition and, where allowed and appropriate, re-evaluates such designation at every
reporting date.
Determination of Fair Value. The fair value for financial instruments traded in active markets at the balance
sheet date is based on their quoted market price or dealer price quotation (bid price for long positions and
ask price for short positions), without any deduction for transaction costs. When current bid and asking
prices are not available, the price of the most recent transaction provides evidence of the current fair value
as long as there has not been a significant change in economic circumstances since the time of the
transaction (see Note 25).
For all other financial instruments not listed in an active market, the fair value is determined by using
appropriate valuation techniques. Valuation techniques includes net present value techniques, comparison
to similar instruments for which market observable prices exist, options pricing models, and other relevant
valuation models (see Note 25).
Financial Assets
Financial Assets at FVPL. Financial assets at FVPL include financial assets held for trading and financial
assets designated upon initial recognition as at FVPL.
F-15
Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near
term. Gain or losses on investments held for trading are recognized in the statements of income. Derivatives
are also classified as held for trading unless they are designated as effective hedging instruments.
The Company has no investments classified as financial assets at FVPL.
Loans and Receivables. Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are not entered into with the intention of immediate
or short-term resale and are not designated as AFS or financial asset at FVPL. Loans and receivables are
carried at cost or amortized cost, less impairment in value. Amortization is determined using the effective
interest method. Gains and losses are recognized in income when the loans and receivables are derecognized
or impaired, as well as through amortization process.
The Companys trade and other receivables are included in this category (see Note 5).
HTM Investments. HTM investments are quoted non-derivative financial assets with fixed or determinable
payments and fixed maturities for which the Groups management has the positive intention and ability to
hold to maturity. Where the Group sells other than an insignificant amount of HTM investments, the entire
category would be tainted and classified as AFS investments. After initial measurement, these investments
are measured at amortized cost using the effective interest method, less impairment in value. Amortized cost
is calculated by taking into account any discount or premium on acquisition and fees that are an integral
part of the effective interest rate. Gains and losses are recognized in the statements of income when the
HTM investments are derecognized or impaired, as well as through the amortization process.
The Company has no investments classified under this category.
AFS. AFS investments are non-derivative financial assets that are designated in this category or are not
classified in any of the other categories. Subsequent to initial recognition, AFS investments are carried at fair
value in the balance sheets. Changes in the fair value of such assets are reported in the equity section of the
balance sheets until the investment is derecognized or the investment is determined to be impaired. On
derecognition or impairment, the cumulative gain or loss previously reported in equity is transferred to the
statements of income. Interest earned on holding AFS investments are recognized in the statements of
income using the effective interest rate method.
Financial Liabilities
Financial Liability at FVPL. Financial liabilities are classified in this category if these result from trading
activities or derivative transactions that are not accounted for as accounting hedges, or when the Company
elects to designate a financial liability under this category.
The Company has no designated financial liability at FVPL.
Other Financial Liabilities. This category pertains to financial liabilities that are not held for trading or not
designated as at FVPL upon the inception of the liability. These include liabilities arising from operations
or borrowings.
The financial liabilities are recognized initially at fair value and are subsequently carried at amortized cost,
taking into account the impact of applying the effective interest method of amortization (or accretion) for
any related premium, discount and any directly attributable transaction costs.
Included in this category are the Companys notes payable, accounts payable and long-term debt (see Notes
11, 12 and 13).
F-16
Derecognition of Financial Assets and Liabilities

Financial Assets. A financial asset (or, where applicable a part of a financial asset or part of a group of
similar financial assets) is derecognized when:
the rights to receive cash flows from the asset have expired;
the Company retains the right to receive cash flows from the asset, but has assumed an obligation to
pay them in full without material delay to a third party under a pass-through arrangement; or
the Company has transferred its rights to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset and has neither transferred
nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset
is recognized to the extent of the Companys continuing involvement in the asset.
Financial Liabilities. A financial liability is derecognized when the obligation under the liability is
discharged or cancelled or has expired.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and the recognition of a new liability, and the difference
in the respective carrying amounts is recognized in profit or loss.
Impairment of Financial Assets
The Company assesses at balance sheet date whether a financial asset or group of financial assets is
impaired.
Assets Carried at Amortized Cost. If there is objective evidence that an impairment loss on loans and
receivables carried at amortized cost has been incurred, the amount of loss is measured as the difference
between the assets carrying amount and the present value of estimated future cash flows (excluding future
credit losses) discounted at the financial assets original effective interest rate (i.e., the effective interest rate
computed at initial recognition). The carrying amount of the asset shall be reduced either directly or
through use of an allowance account. The amount of loss shall be recognized in the statements of income.
The Company first assesses whether objective evidence of impairment exists individually for financial assets
that are individually significant, and individually or collectively for financial assets that are not individually
significant. If it is determined that no objective evidence of impairment exists for an individually assessed
financial asset, whether significant or not, the asset is included in a group of financial assets with similar
credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets
that are individually assessed for impairment and for which an impairment loss is or continues to be
recognized are not included in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in the statements
of income, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal
date.
Assets Carried at Cost. If there is objective evidence of an impairment loss on an unquoted equity
instrument that is not carried at fair value because its fair value cannot be reliably measured, or of a
derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the
amount of the loss is measured as the difference between the assets carrying amount and the present value
of estimated future cash flows discounted at the current market rate of return for a similar financial asset.
F-17
Objective evidence that financial assets (including equity securities) are impaired can include default or
delinquency by a borrower, restructuring of a loan or advance by the Company on terms that the Company
would not otherwise consider, indications that a borrower or issuer will enter bankruptcy, the
disappearance of an active market for a security, or other observable data relating to a group of assets such
as adverse changes in the payment status of borrowers or issuers in the group, or economic conditions that
correlate with defaults in the group.
The determination of impairment losses for financial assets is inherently subjective because it requires
material estimates, including the amount and timing of expected recoverable future cash flows. These
estimates may change significantly from time to time, depending on available information.
When a subsequent event causes the amount of impairment loss to decrease, the impairment loss is reversed
through profit or loss.
Classification of Financial Instruments Between Debt and Equity
A financial instrument is classified as debt if it provides for a contractual obligation to:
deliver cash or another financial assets to another entity; or
exchange financial assets or financial liabilities with another entity under conditions that are
potentially unfavorable to the Company; or
satisfy the obligation other than by the exchange of a fixed amount of cash or another financial asset
for a fixed number of own equity shares.
If the Company does not have an unconditional right to avoid delivering cash or another financial asset to
settle its contractual obligation, the obligation meets the definition of a financial liability.
Offsetting Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheets if,
and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an
intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. This is not
generally the case with master netting agreements, and the related assets and liabilities are presented gross
in the balance sheets.
Non-Financial Asset Impairment
The carrying amounts of the Groups non-financial assets such as investments in associates, bottles and
cases, property, plant and equipment and other assets are reviewed at each balance sheet date to determine
whether there is any indication of impairment. If any such indication exists, the assets recoverable amount
is estimated.
An impairment loss is recognized in the statements of income whenever the carrying amount of an asset or
its cash generating unit exceeds its recoverable amount.
The recoverable amount of a nonfinancial asset is the greater of the assets fair value less costs to sell and
its value in use. The fair value less costs to sell is the amount obtainable from the sale of the asset in an arms
length transaction. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset. For an asset that does not generate cash flows largely independent of those
from other assets, the recoverable amount is determined for the cash-generating unit to which the asset
belongs.
F-18
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortization, if no
impairment loss had been recognized. Reversals of impairment are recognized in the statements of income.
Advertising and Marketing Costs
Advertising and marketing costs are charged to operations in the year such costs are incurred.
Finance Income and Expenses
Finance income comprises of interest income on bank deposits and money market placement, dividend
income and foreign currency gains. Interest income is recognized in the statements of income as it accrues,
using the effective interest method. Dividend income is recognized on the date that the Companys right to
receive payment is established.
Finance expenses comprise interest expense on borrowings and foreign currency losses. All finance
expenses are recognized in profit or loss as they accrue.
Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases are recognized in the statements of
income on a straight-line basis over the term of the lease.
Provisions and Contingent Liabilities
A provision is a liability of uncertain timing or amount. It is recognized when the Company has a legal or
constructive obligation as a result of a past event; it is probable that an outflow of economic benefits will
be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation.
Provisions are revisited at each balance sheet date and adjusted to reflect the current best estimate. If the
effect of the time value of money is material, provisions are determined by discounting the expected future
cash flows at a pretax rate that reflects the current market assessment of the time value of money, and,
where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision
due to the passage of time is recognized as interest expense.
Contingent liabilities are not recognized in the financial statements. These are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not
recognized in the financial statements but are disclosed when an inflow of economic benefits is probable.
Income Taxes
Income tax expense for the year comprises current and deferred income tax. Income tax expense is
recognized in the statements of income except to the extent that it relates to items recognized directly in
equity, in which case it is recognized in equity.
Current Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to
be recovered from or paid to the tax authority. The tax rates and tax laws used to compute the current tax
are those that are enacted and substantively enacted as of the balance sheet date.
Deferred Tax
Deferred income tax is provided using the balance sheet liability method. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to temporary difference between the carrying
amounts of assets and liabilities for financial reporting purposes and amounts used for taxation on
F-19
purposes and carryforward benefits of unused tax credits from excess minimum corporate income tax
(MCIT) over regular income tax and the net operating loss carryover (NOLCO). The amount of deferred
income tax provided is based on the expected manner of realization or settlement of the carrying amount
of assets and liabilities, carryforward benefits of MCIT and NOLCO, using the tax rates enacted or
substantively enacted as of the balance sheet date. A deferred income tax asset is recognized only to the
extent that it is probable that future taxable profits will be available against which the deductible temporary
differences and carryforward benefits of MCIT and NOLCO can be utilized. Deferred income tax assets are
reviewed at each balance sheet date and are reduced to the extent that it is no longer probable that the
related tax benefit will be realized.
Retirement Plan
The Company has a funded, noncontributory defined benefit retirement plan covering substantially all of
its regular and full time employees. Retirement costs are actuarially determined using the projected unit
credit method which reflect services rendered by employees to the date of valuation and incorporates
assumptions concerning employees projected salaries. Actuarial gains and losses that exceed 10% of the
greater of the present value of the Companys defined benefit obligation and the fair value of the plan assets
are amortized over the expected average working lives of the participating employees. Similarly, past service
cost is being amortized over the vesting period.
The defined benefit liability is the aggregate of the present value of the defined benefit obligation and
actuarial gains and losses not recognized reduced by past service cost not yet recognized and the fair value
of plan assets out of which the obligation are to be settled directly. If such aggregate is negative, the asset
is measured at the lower of such aggregate or the aggregate of the cumulative unrecognized net actuarial
losses and past service cost and the present value of any economic benefits available in the form of refunds
from the plan or reductions in the future contributions of the plan (the asset ceiling test).
Foreign Exchange Transactions
The functional and presentation currency of the Group is the Philippine Peso. Transactions in foreign
currencies are recorded in Philippine Peso based on the prevailing exchange rates at the date of the
transactions. Foreign currency denominated monetary assets and liabilities are translated using the
exchange rates prevailing at the balance sheet date. Exchange gains or losses arising from translation of
foreign currency denominated items at rates different from those at which they were previously recorded
are credited or charged to current operations.
Earnings Per Share (EPS)
Basic EPS is computed by dividing the net income by the weighted average number of common shares
outstanding during the year, with retroactive adjustments for any stock dividends declared.
Segment Reporting
The Companys operating business is organized and managed according to the nature of the products
provided, with each segment representing a strategic business unit that offers different products and serves
different markets. Financial information on business segments is presented in Note 24.
Related Parties
Parties are considered to be related if one party has the ability to control the other party or exercise
significant influence over the other party in making financial and operating decisions. It includes companies
in which one or more of the directors and/or controlling stockholders of a company either have a beneficial
controlling interest or are in a position to exercise significant influence therein.
Events After the Balance Sheet Date
Post year-end events that provide additional information about the Groups position at the balance sheet
date (adjusting events) are recognized in the financial statements. Post year-end events that are not adjusting
events are disclosed in the notes to financial statements when material.
F-20
4.
Cash on hand and in banks .................................................................

Short-term investments .........................................................................
5.
Group
Group
2007
2006
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P200,919
431,353
P
=138,641
339,186
P
=128,998
204,123
=632,272
P
P
=477,827
P
=333,121
Cash in banks earn interest at the respective bank deposit rates. Short-term investments are made for
varying periods of up to three months depending on the immediate cash requirements of the Group and
earn interest at the respective short-term investment rates.
Receivables
Company 2007
Group 2006
Group 2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P840,364
11,669
43,635
=
P694,979
15,592
53,564
=
P588,277
6,505
145,551
895,668
67,391
764,135
105,400
740,333
93,061
=828,277
P
=
P658,735
=
P647,272
Note
Trade ...........................................................................
Related party ...............................................................
Others ..........................................................................
15
Less allowance for impairment losses .........................
6.
Company
Trade receivables are non-interest bearing and are generally on a 30 to 60 days term.
Inventories
Note
Finished goods:
At cost .....................................................................
At net realizable value .............................................
Work in process:
At cost .....................................................................
Raw and packaging materials:
At cost .....................................................................
Spare parts and supplies:
At cost .....................................................................
Total inventories at lower of cost or net realizable
value ........................................................................
Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P311,658
311,658
P
=246,320
242,272
P
=161,263
159,884
9,723
9,723
13,987
13,987
13,357
13,357
213,045
198,237
187,759
180,335
174,207
158,974
81,281
81,281
81,959
75,942
80,167
69,464
=
P600,899
P
=512,536
P
=401,679
11
11
11
Under the terms of agreements covering liabilities under trust receipts, certain inventories have been
released to the Company in trust for certain local banks. The Company is accountable to these banks for
the trusteed inventories.
In addition, the Companys notes payable and long-term debt are secured by mortgage trusts indentures on
various assets, which include P
=338 million of inventories as of June 30, 2007, 2006 and 2005.
F-21
7.
As of June 30, 2007, investments in associates consist of:
Note
Acquisition cost:
NRC ..........................................................................................................................
Nadeco Holdings Corporation (NHC) .....................................................................
Amount
=
P232,508
132
232,640
(1,018)
Effect of dilution of ownership in NRC .......................................................................
231,622
Accumulated equity in net earnings:
Balance at the date of loss of control .......................................................................
Share in net earnings of associates ...........................................................................
22
Balance at the end of year ........................................................................................
267,060
6,792
273,852
=505,474
P
On February 1, 2007, the Company invested P

=132 for a 39.8% interest in NHC, a domestic company
organized on May 10, 2006 primarily to engage in management of real and other properties. On the same
date, NRC issued additional shares to the Company and NHC in exchange for cash. A larger number of
voting shares was issued to NHC, which led to the eventual dilution of the Companys interest in NRC from
100% to 40% resulting in a loss of control. Accordingly, the accounts of NRC ceased to be consolidated
into the accounts of the Company starting February 1, 2007 and are accounted for as an associate using
the equity method of accounting from such date. As a result, the following accounts were affected:
Land owned by NRC is no longer shown as land in the financial statements of the Company (see Note
9). Accordingly, the balance of revaluation increment (included in the accumulated equity in net
earnings line item in the table above) relating to the fair value adjustments of the said property in prior
periods was reclassified to Retained Earnings account in the statements of changes in equity (see
Note 28) since from NRCs point of view, the land is considered as Investment Property and
accordingly, changes in fair value of the investment property will be recognized in profit and loss. The
corresponding deferred tax liability related to the said land was also derecognized (see Note 14).
Receivables and payables between the Company and NRC are no longer eliminated. Rent income and
expense between the Company and NRC are no longer fully eliminated (see Note 15).
The dilution of the Companys investment in NRC was recognized as an adjustment to equity in the
2007 statement of changes in equity which relates to the decrease in the Companys share in the net
assets of NRC (see above table).
The financial reporting date of NRC and NHC is June 30, 2007. This date is the basis for the application
of the equity method. The equity method of accounting is based on the Companys interest in the net profits
and net assets of NRC and NHC of 99.9% and 39.8%, respectively.
The following are the summarized financial information pertaining to the Companys associates as of and
for the year ended June 30, 2007:
NRC ...................................................
NHC (consolidated) ...........................
Assets
Liabilities
Equity
Revenues
Net Income
=
P750,338
750,495
P
=253,204
253,720
P
=497,134
496,775
P
=15,642
16,048
P
=6,283
285
The Company has no unrecognized losses relating to its investments in associates for the fiscal year 2007.
F-22
8.
Bottles and Cases
Deposit values of returnable bottles and cases on

hand - net of allowance for probable losses of
=45,542 in 2006 and =
P
P50,369 in 2005 ..................
Excess of cost over deposit values of returnable
bottles and cases - net of accumulated
amortization of =
P2,291,810 in 2007, =
P1,964,922
in 2006 and =
P1,705,780 in 2005 ............................
Company
Group
Group
2007
2006
2005
Note
(See Note 2)
(See Note 2)
(See Note 2)
11
=
P312,097
P
=246,900
P
=239,882
11
1,341,914
1,060,758
849,595
1,654,011
33,570
1,307,658
16,453
1,089,477
2,359
=1,687,581
P
=
P1,324,111
=
P1,091,836
Bottles in transit ..........................................................
The Company has no allowance for probable losses as of June 30, 2007 due to write-off of P
=43 million and
reversal of provision of P
=2 million during the fiscal year 2007.
The rollforward of excess of cost over deposit values of returnable bottles and cases is as follows:
Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
Gross carrying amount:

Balance at beginning of year ................................................................
Additions ..............................................................................................
=
P3,025,680
608,044
=
P2,555,376
470,304
=
P2,195,910
359,466
Balance at the end of year ...................................................................
3,633,724
3,025,680
2,555,376
Accumulated amortization:
Amortization for the year ....................................................................
Other movements .................................................................................
1,964,922
329,079
(2,191)
1,705,780
259,716
(574)
1,472,576
233,118
86
Balance at the end of year ...................................................................
2,291,810
1,964,922
1,705,780
Carrying amount:
=
P1,060,758
=
P849,596
P
=723,334
Balance at end of year .........................................................................
=
P1,341,914
=
P1,060,758
=
P849,596
F-23
9.

The movements in this account are as follows:
Machinery
and Other
Land
Measurement basis

July 1, 2004 (Group) ........
Additions ...........................
Disposals ...........................
Transfers ...........................
Construction
Furniture
Equipment Improvements
in Progress
and Fixtures
Cost
Cost
Cost
Cost
=654,526
P
=
P3,878,673
156,992
(182,015)
592,838
=
P583,545
7,552
(3,512)
31,439
P
=154,601
678,952
(755,281)
July 1, 2005 (Group) ........

Additions ...........................
Disposals ...........................
Transfers ...........................
Increase resulting from
revaluations ...................
654,526
36,000
4,446,488
452,655
(131,155)
(14,946)
619,024
23,906
(43,889)
(43,311)
78,272
115,734
(128,656)
June 30, 2006 (Group) .....

Additions ...........................
Effect of deconsolidation ..
Disposals/write-offs ...........
Transfers ...........................
691,598
(691,598)
June 30, 2007 (Company)

Accumulated depreciation,
amortization and
impairment losses:
July 1, 2004 (Group) ........
Depreciation and
amortization ..................
Disposals ...........................
Transfers ...........................
July 1, 2005 (Group) ........
Depreciation and
amortization ..................
Disposals ...........................
Transfers ...........................
1,072
Total
=
P20,294 =
P5,291,639
26
843,522
(738)
(186,265)
784
(130,220)
20,366
1,474
(5,033)
6,730
5,818,676
593,769
(180,077)
(144,183)
1,072
4,753,042
365,868
(358,660)
144,738
555,730
12,104
(5,310)
4,373
65,350
539,803
(149,201)
23,537
1,130
(106)
90
6,089,257
918,905
(691,598)
(364,076)
4,904,988
566,897
455,952
24,651
5,952,488
2,801,744
338,422
17,536
3,157,702
376,020
(179,385)
13,686
3,012,065
412,976
(132,091)
(15,532)
36,217
(2,852)
(341)
1,036
(714)
(322)
371,446
17,536
29,719
(42,489)
(6,637)
750
(4,834)
6,143
413,273
(182,951)
13,023
3,401,047
443,445
(179,414)
(16,026)
June 30, 2006 (Group) .....

Depreciation and
amortization ..................
Provision for impairment
losses .............................
3,393,519
380,588
20,274
3,794,381
Carrying amount:
June 30, 2005 (Group) .....
=
P654,526
=
P1,434,423
=
P247,578
P
=78,272
P
=2,830
P
=2,417,629
June 30, 2006 (Group) .....
P
=691,598
=
P1,475,624
=
P203,691
P
=65,350
P
=3,942
P
=2,440,205
=
P
=1,511,469
P
=
P186,309
P
=455,952
P
=4,377
P
=2,158,107
F-24
Revalued
Buildings and
Leasehold
3,277,418
352,039
19,595
3,649,052
453,438
30,235
785
484,458
20,436
(357,773)
(1,686)
(106)
20,436
(359,565)
The above parcels of land are owned by NRC and were initially appraised in 1997. These were reappraised
in fiscal year 2006 by an independent firm of appraisers based on their market values as of the said date.
The revaluation increase was presented under the Revaluation Increment on Land account in the
statements of changes in equity. Had the land been carried at cost, its carrying amount would have been
P
=263,357. In fiscal year 2007, due to the deconsolidation of NRC, land was no longer included in the
Property, Plant and Equipment account of the Company (see Notes 1 and 7).
A substantial portion of the Companys property, plant and equipment and certain parcels of land owned
by NRC are mortgaged and placed in trust under two mortgage trust indentures to secure the Companys
outstanding long-term debt and a portion of its notes payable (see Notes 11 and 13).
In fiscal year 2007, an impairment loss amounting to P
=20 million (included under Selling and Distribution
Expenses in the statements of income) was recognized for marketing equipment (see Note 18). Allowance
for impairment losses amounted to P
=24 million and P
=29 million as of June 30, 2006 and 2005, respectively.
There was no allowance for impairment losses as of June 30, 2007 as the allowance was fully written-off
in fiscal year 2007.
10.
Other Assets
Input tax on capital goods ...................................................................

Refundable deposits .............................................................................
Goodwill ..............................................................................................
Others - net of accumulated depreciation and allowance for
impairment losses of =
P167,562 in 2006 and =
P219,405 in 2005 .....
Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P102,714
26,389
P
=15,067
25,067
9,410
P
=
19,205
9,410
8,860
26,182
9,227
=137,963
P
P
=75,726
P
=37,842
There was no accumulated depreciation and allowance for impairment losses as of June 30, 2007 due to
write-off of P
=168 million for the fiscal year 2007.
11.
Notes Payable
This account represents a short-term loan from a local bank which is payable in lump sum on September
14, 2007. Interest rate on the said loan is repriced monthly based on negotiated rate or prevailing market
rate. The short-term loan is secured by mortgage trust indentures on inventories, bottles and cases, and real
estate, which include certain restrictions and requirements (see Note 13).
The interest rates at the end of fiscal years 2007, 2006, and 2005 are 6%, 9%, and 10% to 11%,
respectively.
12.
Accounts Payable and Accrued Expenses
Note
Trade payables ............................................................

Accrued expenses ........................................................
Value Added Tax (VAT) payable .................................
Accrued retirement cost - current portion ..................
Bank overdraft ............................................................
Others ..........................................................................
6, 15
26
Company
2007
Group
2006
Group
2005
=
P1,632,272
349,265
18,499
9,745
191,467
=
P1,186,373
486,667
35,235
80,000
81,195
92,624
=
P1,134,946
495,786
10,074
84,360
95,918
=2,201,248
P
=
P1,962,094
=
P1,821,084
F-25
13.
Long-term Debt
This account consists of obligations to the following:
Local banks, payable in equal quarterly installments up to October

6, 2009; with interest that are reset on 90 days MART 1 plus a
designated spread; and collateralized by the Companys mortgage
trust indentures in real estate ...........................................................
Less current portion .............................................................................
Company
Group
Group
2007
2006
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P283,333
241,666
P
=450,000
116,666
P
=410,367
154,615
=41,667
P
P
=333,334
P
=255,752
The loan agreements and the mortgage trust indentures securing all the long-term debt from local banks
and a portion of the notes payable (see Note 11), include certain restrictions and requirements with respect
to, among others, changes in the Companys nature of business and business ownership, declaration of
dividends, disposition and hypothecation of assets, material advances to stockholders and officers, entering
into mergers and consolidations, incurrence of additional debt and maintenance of certain financial ratios.
As of June 30, 2007, the Company is in compliance with these loan covenants.
The range of annual interest rates at the end of the fiscal years 2007, 2006, and 2005 are 7% to 8%, 8%
to 9%, and 9% to 12%, respectively.
14.
Income Taxes
The components of the provision for income tax are as follows:
F-26
Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
Current tax expense and final taxes on interest income ......................

Deferred income tax expense (benefit):
Origination and reversal of temporary differences ..........................
Realized NOLCO ............................................................................
Recognition of previously unrecognized deferred income tax assets
=
P363,235
P
=419,983
P
=257,081
Deferred income tax expense (benefit) ............................................
155,006
893
=518,241
P
P
=420,876
155,006
1,927
17
(1,051)
60,566
(178,730)
(118,164)
P
=138,917
Deferred income tax assets - net are attributable to the following:

Company
Group
Group
2007
2006
2005
(See Note 2)
(See Note 2)
(See Note 2)
Allowance for probable losses in values of bottles and cases,

machinery and equipment, idle assets, impairment losses,
inventory obsolescence and other provisions ...................................
Accrual for retirement costs .................................................................
Past service cost ....................................................................................
NOLCO ...............................................................................................
=
P41,979
64,096
22,799
P
=101,562
74,051
19,837
P
=95,779
78,044
22,503
17
Marketing equipment ...........................................................................
128,874
(88,430)
195,450
196,343
=40,444
P
P
=195,450
P
=196,343
As of June 30, 2007 and 2006, the Company has no unrecognized deferred income tax assets. As of June
30, 2005, unrecognized deferred tax assets amounted to P
=1 million.
In fiscal year 2007, the Company recognized deferred income tax liability amounting to P
=88 million
resulting from the temporary difference relating to the depreciation of marketing equipment purchased
during the year.
Deferred income tax liability amounting to P
=118 million and P
=125 million as of June 30, 2006 and 2005,
respectively, pertain to revaluation increment on NRCs land. The recognition of the deferred income tax
liability in 2006 and 2005 resulted in the reduction of revaluation increment in the statements of changes
in equity by the same amount in fiscal years 2006 and 2005. In fiscal year 2007, the said deferred income
tax liability was derecognized as a result of the loss of control over NRC (see Note 7).
The reconciliation of the provision for income tax computed at the statutory income tax rate to the
provision for income tax shown in the statements of income is as follows:
Income before income tax ....................................................................

Expected tax at 35%, 34% and 32% in fiscal years 2007, 2006, and
2005, respectively ............................................................................
Additions to (reductions in) income tax resulting from the tax effects
of:
Nondeductible expenses ...................................................................
Interest income subjected to final tax ..............................................
Share in net earnings of associates ...................................................
Change in tax rate ...........................................................................
Changes in unrecognized deferred income tax assets ......................
Others ..............................................................................................
Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P1,519,627
=
P1,289,621
=
P906,261
=
P531,869
P
=438,472
P
=290,003
2,528
(4,979)
(2,377)
(45)
(8,755)
=518,241
P
4,839
(4,854)
(15,981)
(1,051)
(549)
P
=420,876
3,472
(3,698)
(172,122)
21,262
P
=138,917
On May 24, 2005, Republic Act No. 9337 entitled An Act Amending the National Internal Revenue
Code, as Amended, with Salient Features (Act), was passed into a law initially effective July 1, 2005. On
the same date, a Temporary Restraining Order (TRO) was issued by the Supreme Court (SC) for the
deferment of the implementation of the Act until such time the TRO is subsequently lifted by the SC. On
November 1, 2005, the TRO was lifted by the SC.
F-27
The Act includes the following significant revisions to the rules of taxation, among others:
15.
a.
Increase in the corporate income tax rate from 32% to 35% with a reduction thereof to 30% starting
January 1, 2009 and onwards;
b.
Increase in unallowable interest rate from 38% to 42% with a reduction thereof to 33% beginning
January 1, 2009;
c.
Increase in VAT rate from 10% to 12% effective February 1, 2006 as authorized by the Philippine
President pursuant to the recommendation of the Secretary of Finance; and
d.
Expanded scope of transactions subject to VAT.

In the regular course of business, transactions with related parties consisted primarily of the following:
a.
The Companys appointment as a franchised bottler of PepsiCo, Inc. (PepsiCo), which has 32.87%
beneficial interest in the Company, was renewed on April 11, 2007 under the principal Exclusive
Bottling Appointment (EBA). The EBA authorizes the Company to bottle, sell and distribute
PepsiCos beverage products in the Philippines, which include various CSD and NCB brands. PepsiCo
supplies the Company with the main raw materials (concentrates) in the production of these beverage
products and shares in the funding of certain marketing programs. The EBA is effective for 10 years
and may be renewed by mutual agreement between PepsiCo and the Company. Total net purchases
from PepsiCo amounted to P
=1.91 billion, P
=2.21 billion and P
=1.48 billion in fiscal years 2007, 2006
and 2005, respectively.
On April 11, 2007, the Company also entered into an exclusive EBA with Pepsi Lipton International
Limited (Pepsi Lipton), a joint venture of PepsiCo. This EBA authorizes the Company to
manufacture, market, sell and distribute Lipton beverages in the Philippines. Pepsi Lipton supplies the
Company with the main raw materials (concentrates) in the production of these beverage products
and shares in the funding of certain marketing programs. The EBA is effective for 5 years and may
be renewed by mutual agreement between Pepsi Lipton and the Company. The Company expects to
purchase from Pepsi Lipton starting July 2007.
The Company has a cooperative advertising and marketing program with PepsiCo and Pepsi Lipton
that sets forth the agreed advertising and marketing activities and participation arrangement during
the years covered by the EBAs. The marketing expenses incurred by PepsiCo in relation to the said
program are not reflected as expenses in the accounts of the Company. In certain instances, the
Company pays for the said expenses and claims reimbursement from PepsiCo.
For the years ended June 30, 2007, 2006 and 2005, the Company incurred marketing expenses
amounting to P
=468 million, P
=424 million and P
b.
F-28
PepsiCo has the right to terminate the Companys EBAs under certain conditions, including failure to
comply with terms and conditions of the appointment subject to written notice and thirty day period
to rectify failure, change of 10% or more of ownership control of the Company, change of more than
20% of ownership control of an entity which controls the Company and which results indirectly in
a change of more than 20% of ownership control of the Company, discontinuance of bottling
beverages for 30 consecutive days, occurrence of certain events leading to the Companys insolvency
or bankruptcy, change in management and control of the business by virtue of law, decree, order, rule,
regulation, ordinance or any other similar cause, or termination of any of the EBAs other than the
Lipton EBA. In addition, if in the reasonable opinion of PepsiCo, the Company should at any time
fail to vigorously market the sale of the beverages in, or secure full coverage for, any part of the
Philippines, PepsiCo may, after notifying the Company of the failure and allowing the Company three
months to correct the failure, remove that area from the Companys appointment.
c.
On April 11, 2007, the Company entered into a Performance Agreement with PepsiCo, Orion Brands
International (Orion Brands), Guoco Assets (Phils.), Inc. and Hong Way Holdings, Inc. to meet
certain marketing and investment levels, as required by the EBA. The agreement requires the
Company to: (1) spend an amount equal to a specified percentage of the sales cost of each 8-oz case
with a sales floor for carbonated soda drinks, Tropicana, Gatorade and Propel from 2007 to 2017;
(2) make certain investments from 2007 to 2017 based on a minimum percentage of the Companys
sales to expand the Companys manufacturing capacity for both carbonated and non-carbonated
beverages; (3) invest in a minimum number of coolers per year to support distribution expansion from
2007 to 2017; (4) expand the Companys distribution capabilities in terms of the number of active
routes, the number of new routes and the number of trucks used for distribution support; and (5)
observe financial guidelines as set by the Companys Board.
d.
Certain real estate properties of NRC were mortgaged to secure the Companys outstanding
long-term debt and a portion of its notes payable (see Notes 9, 11 and 13).
e.
The Company leases certain parcels of land where some of its bottling plants are located from NRC.
Lease expense recognized from February 1, 2007 to June 30, 2007 amounted to P
=2.5 million. There
were no lease expenses recognized on these leases in fiscal years 2006 and 2005 as these were
eliminated upon consolidation. There were no lease expenses recognized for the period from July 1,
2006 to January 31, 2007 resulting from the elimination under the equity method of accounting (see
Notes 7 and 29).
f.
Working capital advances to NRC.
The effects of the foregoing transactions are shown under the appropriate accounts in the financial
statements.
Related Parties
Due from related parties:

NRC ........................................................................
PepsiCo (included under Receivables account) ...
Company
2007
Group
2006
Group
2005
Note
(See Note 2)
(See Note 2)
(See Note 2)
=
P133,286
11,669
P
=
15,592
=
P
6,505
=144,955
P
P
=15,592
P
=6,505
=
P53,453
P
=
=
P
Due to a related party:

NRC ........................................................................
In addition to their salaries, the Company also provides non-cash benefits to directors and executive officers
and contributes to a defined benefit retirement plan on their behalf.
The compensation and benefits of key management personnel are as follows:
Short-term employee benefits ...............................................................

Post-employment benefits ....................................................................
Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P66,168
3,511
P
=69,824
3,402
P
=77,127
3,602
=69,679
P
P
=73,226
P
=80,729
F-29
16.
Net Sales
Gross sales ............................................................................................

Less sales returns and discounts ...........................................................
17.
Personnel expenses ......................................................

Repairs and maintenance ............................................
Outside services ...........................................................
Taxes and licenses .......................................................
Insurance .....................................................................
Miscellaneous ..............................................................
Group
2006
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P15,062,155
2,145,943
=
P12,803,381
1,810,569
=
P10,581,091
1,648,611
=12,916,212
P
=
P10,992,812
=
P8,932,480
Company
Group
Group
2007
2006
2005
Note
(See Note 2)
(See Note 2)
(See Note 2)
15
=
P6,679,823
646,252
561,124
248,264
=
P5,565,414
450,232
485,387
218,772
=
P4,232,095
337,557
444,783
174,892
235,447
149,430
128,459
21,717
1,893
87,627
232,134
137,872
81,484
20,248
1,650
59,573
265,560
109,956
15,976
16,323
1,344
24,166
=8,760,036
P
=
P7,252,766
=
P5,622,652
Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P516,513
=
P454,648
=
P395,804
231,604
211,148
192,488
95,104
86,406
74,505
46,997
44,826
20,436
18,404
5,504
50,314
216,545
183,194
141,536
83,303
82,743
65,112
40,081
35,941
57,068
18,212
6,937
49,453
203,921
166,548
107,347
77,626
64,985
52,389
33,717
29,872
30,596
17,093
6,565
38,414
=1,594,249
P
=
P1,434,773
=
P1,224,877
20
29
15, 21,
26
Selling and Distribution Expenses
Note
Distribution .................................................................
Depreciation and amortization ...................................
Delivery and freight .....................................................
Rental and utilities ......................................................
Sales commissions .......................................................
Provisions ....................................................................
Travel and transportation ...........................................
Insurance .....................................................................
Miscellaneous ..............................................................
F-30
Group
2007
Cost of Goods Sold
Materials and supplies used ........................................

Delivery and freight .....................................................
18.
Company
20
15, 21,
26
20
29
19.
General and Administrative Expenses
Note

Travel and transportation ...........................................
Insurance .....................................................................
Miscellaneous ..............................................................
20.
15, 21,
26
15, 29
Company
Group
Group
2007
2006
2005
(See Note 2)
(See Note 2)
(See Note 2)
P
=336,067
72,714
58,254
41,264
39,235
10,891
2,690
1,809
35,605
=
P295,687
65,242
49,918
34,826
42,209
10,398
2,759
1,751
33,531
=
P295,752
54,066
42,769
35,235
32,870
12,078
3,661
1,684
29,422
=598,529
P
=
P536,321
=
P507,537
Depreciation and Amortization

Depreciation and amortization are distributed as follows:
Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P232,045
329,079
P
=225,671
259,716
P
=211,665
233,118
561,124
485,387
444,783
211,149
183,194
166,548
41,264
34,826
35,235
=813,537
P
P
=703,407
P
=646,566
Company
2007
Group
2006
Group
2005
Note
(See Note 2)
(See Note 2)
(See Note 2)
26
=
P735,842
67,276
P
=692,318
52,048
P
=712,231
53,002
=803,118
P
P
=744,366
P
=765,233
Cost of sales:
Property, plant and equipment .........................................................
Bottles and cases ..............................................................................
Selling and distribution expenses:
General and administrative expenses:
21.
Personnel Expenses
Salaries and wages .......................................................

Retirement cost ...........................................................
F-31
The above amounts are distributed as follows:
Cost of sales .........................................................................................

Selling expenses ....................................................................................
General and administrative expenses ...................................................
22.
Group
Group
2007
2006
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P235,447
231,604
336,067
P
=232,134
216,545
295,687
P
=265,560
203,921
295,752
=803,118
P
P
=744,366
P
=765,233
Net Finance and Other Income (Expense)
Note
Interest income ............................................................

Share in net earnings of associates ..............................
Interest expense ...........................................................
Foreign exchange loss - net .........................................
Other income (expenses) - net .....................................
23.
Company
7
11, 13
Company
Group
Group
2007
2006
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P18,050
6,792
(52,439)
(13,261)
65,378
=
P14,278
(80,011)
(1,361)
11,822
=
P24,946
(84,278)
(38,811)
(48,795)
=24,520
P
=
P(55,272)
=
P(146,938)
Basic Earnings Per Share (EPS)

Basic EPS is computed as follows:
Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
Net income (a) .....................................................................................

=
P1,001,386
=
P868,745
P
=767,344
Number of shares outstanding (b) ....................................................... 3,312,989,386 3,312,989,386 3,312,989,386
Basic EPS (a/b) .....................................................................................
=
P0.30
P
=0.26
P
=0.23
As of June 30, 2007, 2006 and 2005, the Company has no dilutive debt or equity instruments.
24.
Segment Information
As discussed in Note 1, the Company is engaged in the manufacture, sales and distribution of CSD and
NCB. Since its start of commercial operations in 1989, the Companys main products are CSD which
include brands like Pepsi-Cola, 7Up, Mountain Dew and Mirinda.
In fiscal year 2005, the Company began its distribution of NCB products to its consumers following the
installation of NCB production lines in the Muntinlupa Plant in December 2004. The NCB brand category
includes Gatorade, Tropicana/Twister, Lipton and the recently introduced Sting energy drink and Propel
fitness water.
Accordingly, the Company operates in two (2) reportable business segments, which include the CSD and
NCB categories, and only (1) reportable geographical segment which is the Philippines. Thus, a secondary
geographic reporting format is not applicable.
F-32
Analysis of financial information by business segment is as follows:

Company
Group
Group Company
Carbonated Soft Drinks

(In 000,000s)
2007
2006
2005
Group
Group Company
Noncarbonated Beverages
2007
2006
Group
Group
Combined
2005
2007
2006
2005
Net Sales
External sales ....................... =
P12,736 =
P10,950 P
=9,895
Sales discounts and returns . (1,962) (1,688) (1,608)
P
=2,326 P
=1,853
(184)
(123)
P
=686 P
=15,062 =
P12,803 =
P10,581
(40)
(2,146) (1,811) (1,648)
Net sales .............................. =

P10,774 =
P9,262 P
=8,287
P
=2,142 P
=1,730
P
=646
Result
Segment result ..................... =
P3,507 P
=3,190 P
=3,059
Unallocated expenses ...........
Interest and financing
expenses ...........................
Interest income ....................
Foreign exchange loss - net .
Equity in net earnings of
associates .........................
Other income (expenses) net ....................................
Provision for income tax .....
Net income ..........................
Other Information
Segment assets .....................
Investments in and advances
to associates .....................
Other assets .........................
Deferred tax assets ..............
=
P649
P
=550
P
=251
P
=12,916 =
P10,992 P
=8,933
P
=4,156 P
=3,740 P
=3,310
(2,665) (2,395) (2,257)
(52)
18
(13)
(80)
14
(1)
(84)
25
(39)
69
(518)
=
P1,002
12
(421)
(49)
(139)
P
=869
P
=767
=
P5,968 P
=5,445 P
=4,932
639
138
40
76
195
52
196
Combined total assets .........
P
=6,785 P
=5,716 P
=5,180
Segment liabilities ................

Notes payable ......................
Long-term debt ....................
Income and other taxes
payable ............................
Dividends payable and
others ...............................
Deferred tax liabilities .........
=
P2,392 P
=2,057 P
=1,851
49
49
328
283
450
410
Combined total liabilities ....
=
P3,462 P
=2,993 P
=2,937
Capital expenditures ............

Depreciation and
amortization and
impairment of property,
plant and equipment .......
Noncash items other than
depreciation and
amortization ....................
=
P1,592
338
220
124
400
99
118
99
125
P
=939 P
=1,060
814
703
646
30
94
13
There were no intersegment sales recognized between the two reportable segments.
Assets and liabilities of the Company are not specifically identifiable or allocated to each particular
segments.
F-33
25.
Financial Instruments
Financial Risk Management Objectives and Policies
The Companys financial instruments consist of cash and cash equivalents, accounts and other receivables
and payables, notes payable and long-term debt. The main risks arising from the use of these financial
instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk.
The Company reviews policies for managing each of these risks. The Companys risk management policies
are summarized below:
Interest Rate Risk
The Companys exposure to the risk for changes in market interest rate relates primarily to its long-term
debt obligations with variable interest rates. The Companys interest rate risk exposure relates to the 90 day
MART1 benchmark plus a designated bank spread.
Foreign Currency Risk
The Company is exposed to foreign currency risk on purchases that are denominated in currencies other
than the Philippine Peso, mostly in U.S. Dollar and EURO. In respect of monetary assets and liabilities held
in currencies other that the Philippine Peso, the Company ensures that its exposure is kept to an acceptable
level, by maintaining short-term cash placements in U.S. Dollar and buying foreign currencies at spot rates
where necessary to address short-term imbalances.
Credit Risk
Credit risk represents the loss the Company would incur if credit customers and counterparties fail to
perform their contractual obligations. The Company has established controls and procedures to determine
and monitor the creditworthiness of customers and counterparties.
Liquidity Risk
The Company manages liquidity risk by forecasting projected cash flows and maintaining a balance
between continuity of funding and flexibility. Treasury controls and procedures are in place to ensure that
sufficient cash is maintained to cover daily operational and working capital requirements. Management
closely monitors the Companys future and contingent obligations and sets up required cash reserves as
necessary in accordance with internal requirements.
F-34
Fair Values
The fair values together with the carrying amounts of the financial assets and liabilities shown in the
balance sheets are as follows:
Company
Group
Group
2007
2006
2005
Carrying
Cash and cash

equivalents .............
Receivables ................
Due from a related
party ......................
Accounts payable and
accrued expenses ...
Notes payable ............
Dividends payable .....
Due to a related party
Long-term debt,
including current
portion ...................
Carrying
Carrying
Amount
Fair Value
Amount
Fair Value
Amount
Fair Value
=
P632,272
828,277
P632,272
=
828,277
P
=477,827
658,735
P
=477,827
658,735
P
=333,121
647,272
P
=333,121
647,272
133,286
133,286
2,201,248
48,600
400,000
53,453
2,201,248
48,600
400,000
53,453
1,962,094
48,600
99,367
1,962,094
48,600
99,367
1,821,084
328,400
1,821,084
328,400
283,333
283,333
450,000
450,000
410,367
410,367
Estimation of Fair Values

The following summarizes the major methods and assumptions used in estimating the fair values of
financial instruments reflected in the table:
The carrying amount approximates the fair value due to the short maturity.
Receivables/due from a Related Party/Accounts Payable and Accrued Expenses/ Dividends Payable/Due
to a Related Party/ Notes Payable
Current receivables are reported at their net realizable values, at total amounts less allowances for estimated
uncollectible accounts. Current liabilities are stated at amounts reasonably expected to be paid within the
next twelve months or within the Companys operating cycle. In case of long-term receivables, the fair value
is based on present value of expected future cash flows using the applicable discount rates.
Long-term Debt
Long-term debt are reported at their present values, which approximate the cash amounts that would fully
satisfy the obligations as of balance sheet date. The carrying amount approximates fair value since the
interest rates are repriced frequently. These are classified as current liabilities when they become payable
within a year.
26.
Retirement Plan
The Company has a funded, non-contributory defined benefit retirement plan covering substantially all of
its regular and full time employees. Annual cost is determined using the projected unit credit method. The
Companys latest actuarial valuation date is June 30, 3007. The actuarial valuation is made on an annual
basis.
Retirement costs charged to operations amounted to P
=67 million in 2007, P
=52 million in 2006 and P
=53
million in 2005.
F-35
The reconciliation of the assets and liabilities recognized in the balance sheets is shown below:
Present value of obligations .................................................................

Fair value of plan assets .......................................................................
Unfunded obligations ...........................................................................
Unrecognized actuarial net gains (losses) .............................................
Accrued retirement cost .......................................................................
Company
Group
Group
2007
2006
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P366,031
148,454
P
=409,055
111,472
P
=281,872
49,497
217,577
(3,923)
297,583
(86,009)
=
P213,654
232,375
11,512
P
=211,574
P
=243,887
Company
Group
Group
2007
2006
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P9,745
203,909
P
=80,000
131,574
84,360
159,527
=213,654
P
P
=211,574
P
=243,887
The accrued retirement costs are classified in the balance sheets as follows:
Accounts payable and accrued expenses ..............................................

Accrued retirement cost (long-term) ....................................................
The components of retirement cost recognized in the statements of income are as follows:
Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
Current service cost ..............................................................................

Interest cost ..........................................................................................
Expected return on plan assets ............................................................
Amortization of unrecognized net actuarial loss .................................
=
P39,394
38,452
(13,539)
2,969
P
=26,025
33,552
(7,529)
P
=25,505
30,560
(3,063)
Net retirement cost ..............................................................................
=
P67,276
P
=52,048
P
=53,002
Actual return on plan assets ................................................................
=
P7,241
P
=4,362
P
=4,467
Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
The changes in the present value of the defined benefit obligation are as follows:
F-36

Current service cost ..............................................................................
Interest cost ..........................................................................................
Benefits paid .........................................................................................
Actuarial loss (gain) .............................................................................
=
P409,055
39,394
38,452
(16,209)
(104,661)
P
=281,872
26,025
33,552
(26,748)
94,354
P
=260,205
25,505
30,560
(21,482)
(12,916)
Balance at end of year ..........................................................................
=
P366,031
P
=409,055
P
=281,872
The movements in the fair value of plan assets are shown below:
Company
Group
Group
2007
2006
2005
(See Note 2)
(See Note 2)
(See Note 2)

Contributions .......................................................................................
Benefits paid .........................................................................................
Expected return ....................................................................................
Net actuarial loss (inclusive of experience adjustment) .......................
=
P111,472
62,000
(13,013)
13,539
(25,544)
Balance at end of year ..........................................................................
=
P148,454
P
=49,497
80,143
(22,530)
7,529
(3,167)
P
=111,472
P
=13,420
55,900
(21,482)
3,063
(1,404)
P
=49,497
The expense is recognized in the following accounts in the statements of income:
Note
Cost of goods sold ......................................................

Operating expenses .....................................................
17
18, 19
Company
Group
Group
2007
2006
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P25,495
41,781
=
P19,024
33,024
=
P6,359
46,643
=67,276
P
=
P52,048
=
P53,002
The allocation of the fair value of plan assets of the Company as of June 30, 2007, 2006 and 2005 follows:
Company
2007
Investment in fixed income securities ..................................................

Investment in shares of stocks .............................................................
98%
2%
Group
2006
98%
2%
Group
2005
97%
3%
Principal actuarial assumptions at the balance sheet date (expressed as weighted averages) are as follows:
Company
2007
Annual rates
Discount rate ........................................................................................
Expected rate of return on plan assets .................................................
Rate of future salary increase ..............................................................
9.00%
9.00%
7.00%
Group
2006
9.50%
9.50%
9.00%
Group
2005
12.25%
10.00%
9.00%
The historical information of the amounts is as follows:

Company
2007
Group
2006
Group
2005
(See Note 2)
(See Note 2)
(See Note 2)
Present value of the defined benefit obligation ....................................

Fair value of plan assets .......................................................................
=
P366,031
148,454
P
=409,055
111,472
P
=49,497
281,872
Deficit in the plan ................................................................................

Experience adjustments on plan liabilities ...........................................
Experience adjustments on plan assets ................................................
(217,577)
(42,167)
(19,246)
(297,583)
(232,375)
The Company expects to contribute P

=55 million to defined benefit plan in fiscal year 2008.
F-37
27.
Capital Stock
This account consists of:
Company
Group
Group
2007
2006
2005
Shares
Authorized - =
P0.15 par value ...
Issued and outstanding .............
a.
Amount
5,000,000,000 =
P750,000
3,312,989,386 496,948
Shares
Amount
5,000,000,000 =
P750,000
3,312,989,386 496,948
Shares
Amount
5,000,000,000 =
P750,000
3,312,989,386 496,948
On March 22, 2004, the Companys Board of Directors (BOD) approved a quasi-reorganization plan
to eliminate the accumulated deficit of the Company as of June 30, 2003 amounting to P
=4 billion. On
the same date, the Companys BOD approved, as part of the quasi-reorganization, the following:
Decrease in the par value per share from P

=1.00 to P
=0.15 per share, without increasing the
number of shares corresponding thereto, thereby decreasing the Companys authorized capital
stock from P
=5 billion divided into 5,000,000,000 shares with a par value of P
=1.00 per share to
P
=750 million divided into 5,000,000,000 shares with a par value of P
=0.15 per share.
Accordingly, the subscribed and paid-up capital decreased from P
=3.313 billion to P
=497 million;
and
Application of the reduction surplus arising from the decrease in capital stock amounting to
P
=2.816 billion and a portion of the additional paid-in capital amounting to P
=1.427 billion
against the accumulated deficit of the Company as of June 30, 2003.
On April 15, 2004, the SEC approved the said quasi-reorganization.

b.
28.
Retained Earnings
a.
b.
F-38
On April 29, 1998, the Companys BOD approved the implementation of an Employees Stock
Option Plan (ESOP) covering 150,000,000 new shares of stock at P
=1 each, subject to such terms and
conditions to be approved by the Chairman and Vice-Chairman of the Company. As of August 10,
2007 (report date), the terms and conditions of the ESOP have not yet been approved.
The Companys BOD approved several declarations of cash dividends amounting to P

=400 million in
2007, P
=397 million in 2006 and P
=99 million in 2005. Details of each declaration are as follow:
Date of Declaration
Payable to Stockholders
Of Record as of
Date of Payment
February 16, 2005

August 9, 2005
October 21, 2005
April 17, 2006
June 22, 2006
June 21, 2007
February 16, 2005

June 30, 2005
October 31, 2005
April 17, 2006
June 22, 2006
June 21, 2007
February 22, 2005

August 31, 2005
November 11, 2005
April 28, 2006
July 28, 2006
August 20, 2007
The balance of the revaluation increment was reclassified to retained earnings due to loss of control
over NRC (see Note 7).
29.
Commitments and Contingencies

a.
As of June 30, 2007, the Company leases certain parcels of land where its bottling plants and
warehouses are located from third parties and NRC for a period of one to 25 years and are renewable
for another one to 25 years. None of these leases includes contingent rentals. Rent expense pertaining
to these leased properties amounted to P
=61 million in 2007 and 2006 each year and P
=53 million in
2005 (see Notes 15, 17, 18 and 19).
Future rental commitments under such noncancelable operating leases are as follows:
Less than one year .....................................................................

Between one and five years ........................................................
More than five years ..................................................................
b.
30.
Company
Group
Group
2007
2006
2005
(See Note 2)
(See Note 2)
(See Note 2)
=
P62,676
470,329
41,748
P
=53,133
193,285
28,154
P
=35,896
130,395
124,747
=574,753
P
P
=274,572
P
=291,038
The Company is a party to a number of lawsuits and claims relating to tax, labor and other issues
arising out of the normal course of its business. Management and its tax and legal counsels believe
that the outcome of these lawsuits and claims will not materially affect the financial position, financial
performance or liquidity of the Company.
Shareholders Loan and Related Agreements

PepsiCo Global Investments B.V. II (PGI) together with Orion Brands, Guoco Assets (Phils.), Inc. and Hong
Way Holdings, Inc. (the Guoco Group of Companies) entered into loan agreements in December 2000 with
the Company whereby PGI and the Guoco Group of Companies each granted the Company loans
amounting to US$4 million. Under the terms of the loan agreements, the Company shall repay the loans in
eight equal monthly installments starting on July 1, 2002.
Further, the loan agreements provided that if the Company fails to repay any part of the loans and interest
by the Final Maturity Date or upon the occurrence of any event of default as stated in the loan agreements,
PGI and the Guoco Group of Companies shall have the option in their respective sole and absolute
discretion to convert the entire amount of their respective loan and interest which remain outstanding into
equity in the Company.
On September 21, 2001, the Company, PGI, Orion Brands, and PepsiCo together with Guoco Assets
(Phils.), Inc. and Hong Way Holdings, Inc. (the Guoco Shareholders) entered into an agreement whereby
Orion Brands, the Guoco Shareholders and PGI agreed to cancel forthwith and convert into a subscription
deposit not later than December 31, 2003 the total loan of US$8 million or P
=400 million granted to the
Company. Accordingly, the amount is presented as Deposits on Future Stock Subscriptions account in
the statements of changes in equity.
However, in February 2005, the Company, PGI, Orion Brands and PepsiCo, together with the Guoco
Shareholders, agreed to revert the subscription deposit into shareholders loan at its original US dollar
value. This is presented as Conversion to Shareholders Loan in the statements of changes in equity. The
loan was fully paid in April 2005.
The Companys financial non-cash investing and financing activity relates to the abovementioned
conversion of deposits on future stock subscriptions to shareholders loan amounting to P
=400 million in
fiscal year 2005.
F-39

Certified Public Accountants
(Formerly Laya Mananghaya & Co.)
22/F Philamlife Tower, 8767 Paseo de Roxas
Makati City 1226, Metro Manila, Philippines
Telephone
Fax
Internet
E-mail
+63 (2) 885 7000

+63 (2) 893 8507
+63 (2) 894 1985
+63 (2) 816 6595
www.kpmg.com.ph
manila@kpmg.com.ph
PRC-BOA Registration No. 0003

SEC Accreditation No. 0004-FR-1
BSP Accredited
REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Introduction
We have audited the accompanying interim financial statements of Pepsi-Cola Products Philippines, Inc. (the
Company), which comprise the interim balance sheet as at September 30, 2007, and the interim statement of
income, interim statement of changes in equity and interim statement of cash flows for the three months then
ended, and a summary of significant accounting policies and other explanatory notes. We have also audited the
accompanying balance sheet of the Company as of June 30, 2007. We have also audited the accompanying
interim consolidated statement of income, interim consolidated statement of changes in equity and interim
consolidated statement of cash flows of the Company and its subsidiary (the Group) for the three months ended
September 30, 2006, and a summary of significant accounting policies and other explanatory notes.
Managements Responsibility for the Interim Financial Statements
Management is responsible for the preparation and fair presentation of these interim financial statements in
accordance with Philippine Financial Reporting Standards. This responsibility includes: designing, implementing
and maintaining internal control relevant to the preparation and fair presentation of financial statements that are
free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.
Auditors Responsibility
Our responsibility is to express an opinion on these interim financial statements based on our audits. We
conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we
comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the
interim financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditors consider internal control relevant to the entitys preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the financial statements.
F-40
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the interim financial statements present fairly, in all material respects, the financial position of the
Company as of September 30, 2007, and its financial performance and its cash flows for the three months then
ended in accordance with Philippine Financial Reporting Standards. Also, in our opinion, the interim
consolidated financial statements present fairly, in all material respects, the consolidated financial performance
and the consolidated cash flows of the Group for the three months ended September 30, 2006, in accordance
with Philippine Financial Reporting Standards.
December 7, 2007
F-41

INTERIM BALANCE SHEET
AT SEPTEMBER 30, 2007
September 30
2007
June 30
2007
=
P245,266
771,665
667,329
134,860
63,486
P
=632,272
828,277
600,899
133,286
61,045
1,882,606
2,255,779
506,406
1,679,929
505,474
1,687,581
2,368,519
173,181
2,158,107
40,444
137,963
4,728,035
4,529,569
=6,610,641
P
=
P6,785,348
P
=428,600
=
P48,600
2,065,736
203,547
52,154
2,201,248
271,130
53,453
83,332
241,666
400,000
2,833,369
3,216,097
20,835
210,893
75,369
41,667
203,909
Total Noncurrent Liabilities ...............................................................
307,097
245,576
Total Liabilities ...................................................................................
3,140,466
3,461,673
496,948
59,473
(1,018)
2,914,772
496,948
59,473
(1,018)
2,768,272
3,470,175
3,323,675
=6,610,641
P
=
P6,785,348
Note
ASSETS
Current Assets
Cash and cash equivalents ...................................................................... 5, 23, 26
Receivables - net ..................................................................................... 6, 16, 26
Inventories ..............................................................................................
7, 12
Due from a related party ........................................................................ 16, 26
Prepaid expenses and other current assets .............................................
Total Current Assets ...........................................................................
Noncurrent Assets
Investments in associates ........................................................................
Bottles and cases - net ............................................................................
Property, plant and equipment - net .......................................................
Deferred income tax - net .......................................................................
Other assets - net ....................................................................................
8, 23
9, 12
8, 10,
12, 14
15
11
Total Noncurrent Assets .....................................................................

Current Liabilities
Notes payable .........................................................................................
Accounts payable and accrued expenses ................................................

Income tax payable ................................................................................
Due to a related party ............................................................................
Current portion of long-term debt .........................................................
Dividends payable ..................................................................................
7, 9, 10,
12, 14,
23, 26
7, 13,
16, 26,
27
15
16, 26
14, 23,
26
26, 29
Total Current Liabilities .....................................................................

Long-term debt - net of current portion ................................................
Accrued retirement cost - net of current portion ...................................
Deferred income tax - net .......................................................................
Equity
Capital stock ...........................................................................................
Additional paid-in capital .......................................................................
Effect of dilution of ownership ..............................................................
Retained earnings ...................................................................................
Total Equity ........................................................................................
See Notes to the Interim Financial Statements.

F-42
14, 23,
26
13, 27
15
28
8
8, 29

INTERIM STATEMENTS OF INCOME
For the Three Months Ended
September 30
NET SALES ............................................................................................
COST OF GOODS SOLD .....................................................................
Company
Group
2007
2006
Note
(See Note 2)
(See Note 2)
17, 25
16, 18,
21, 22,
27, 30
=
P3,198,850
=
P2,753,000
2,193,884
1,933,041
1,004,966
819,959
446,676
374,564
191,113
176,589
141,479
134,497
814,378
650,540
190,588
169,419
GROSS PROFIT .....................................................................................

OPERATING EXPENSES
Selling and distribution ...........................................................................
General and administrative .....................................................................

Marketing expenses ................................................................................
16, 19,
21, 22,
27, 30
16, 20,
21, 22,
27, 30
16
INCOME FROM OPERATIONS ..........................................................

NET FINANCE AND OTHER INCOME (EXPENSE) ........................
8, 12,
14, 23
INCOME BEFORE INCOME TAX ......................................................

INCOME TAX EXPENSE .....................................................................
15
NET INCOME .......................................................................................

Basic Earnings Per Share ........................................................................
24
4,557
(7,766)
195,145
48,645
161,653
55,935
=
P146,500
P
=105,718
=
P0.04
=0.03
P
F-43

INTERIM STATEMENTS OF CHANGES IN EQUITY
September 30
Note
CAPITAL STOCK ..................................................................................
28
ADDITIONAL PAID-IN CAPITAL .......................................................

EFFECT OF DILUTION OF OWNERSHIP .........................................
REVALUATION INCREMENT ON LAND ........................................
8, 29
RETAINED EARNINGS ........................................................................

Balance at beginning of period ...............................................................
Net income for the period ......................................................................
8, 29
Balance at end of period .........................................................................
F-44
Company
Group
2007
2006
(See Note 2)
(See Note 2)
=
P496,948
P
=496,948
59,473
59,473
(1,018)
274,569
2,768,272
146,500
1,892,317
105,718
2,914,772
1,998,035
=3,470,175
P
=
P2,829,025

INTERIM STATEMENTS OF CASH FLOWS
September 30
Note
CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax ......................................................................
Adjustments for:
Depreciation and amortization ...........................................................
Provisions for probable losses in values of bottles and cases,
machinery and equipment, idle assets, impairment losses,
inventory obsolescence and others - net .........................................
Interest expense ..................................................................................
Interest income ...................................................................................
Share in net earnings of associates .....................................................
Gain on sale of property and equipment ...........................................
Operating income before working capital changes ................................
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables .....................................................................................
Inventories ......................................................................................
Prepaid expenses and other current assets .....................................
Due from a related party - net .......................................................
Decrease in accounts payable and accrued expenses .........................
21
6, 7, 9,
10
23
23
8, 23
Company
2007
Group
2006
(See Note 2)
(See Note 2)
=
P195,145
P
=161,653
221,362
193,945
25,370
6,147
(3,656)
(932)
(596)
29,050
13,895
(3,040)
(1,617)
442,840
393,886
40,972
(74,133)
(2,441)
(2,873)
(119,670)
25,603
(27,362)
6,283
(104,928)
Cash generated from operations .............................................................

Interest received ......................................................................................
Interest paid ............................................................................................
Income taxes paid ...................................................................................
284,695
3,922
(14,077)
(417)
293,482
4,005
(12,211)
(539)
Net cash provided by operating activities ..............................................
274,123
284,737
908
2,430
CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposals of property and equipment .............................
Net additions to:
Property, plant and equipment ...........................................................
Bottles and cases .................................................................................
Increase in other assets ...........................................................................
6
7
16
13
10
10
9
11
Net cash used in investing activities .......................................................

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from (repayments of):
Notes payable .........................................................................................
Long-term debt ...................................................................................
Cash dividends paid ...............................................................................
12
14
29
Net cash provided by (used in) financing activities ................................
(164,024)
(191,126)
(11,288)
(461,963)
(364,008)
380,000
(179,166)
(400,000)
100,000
(99,367)
(199,166)
NET DECREASE IN CASH ..................................................................

AND CASH EQUIVALENTS ................................................................
CASH AND CASH EQUIVALENTS .....................................................
AT BEGINNING OF PERIOD ..............................................................
CASH AND CASH EQUIVALENTS AT END OF PERIOD ...............
(336,374)
(91,279)
(35,218)
633
(387,006)
(78,638)
632,272
477,827
=
P245,266
P
=399,189
F-45

NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Amounts in Thousands, Except Number of Shares and Par Value per Share and When Otherwise Stated)
1.
General
Pepsi-Cola Products Philippines, Inc. (the Company) was registered with the Philippine Securities and
Exchange Commission (SEC) on March 8, 1989 primarily to engage in manufacturing, sales and
distribution of carbonated soft-drinks (CSD) and non-carbonated beverages (NCB) to retail, wholesale,
restaurants and bar trades. The Companys registered office and principal place of business is at Km. 29,
National Road, Tunasan, Muntinlupa City.
The Companys associate (formerly a wholly-owned subsidiary), Nadeco Realty Corporation (NRC), was
incorporated under Philippine laws primarily to engage in the real estate business. On February 1, 2007,
a change in NRCs capital structure decreased the Companys ownership interest to 40% (see Note 8).
The interim financial statements of the Company as of and for the three months ended September 30, 2007
were authorized for issue by the Companys Chief Financial Officer, as designated by the Board of Directors
(BOD), on December 7, 2007.
2.
Basis of Preparation
Statement of Compliance
The interim financial statements as at and for the three months ended September 30, 2007 and the balance
sheet as at June 30, 2007 refer to the accounts of the Company while the interim financial statements for
the three months ended September 30, 2006 refer to the consolidated accounts of the Company and NRC
(collectively referred to as Group). The interim financial statements have been prepared in accordance
with Philippine Financial Reporting Standards (PFRS).
Basis of Measurement
The interim financial statements have been prepared on a historical cost basis.
Basis of Consolidation
The 2006 Group interim financial statements reflect the consolidated accounts of the Company and NRC
(which was then accounted for as a subsidiary). Intra-group balances and any unrealized gains and losses
or income and expenses arising from intra-group transactions are eliminated in the consolidation.
Unrealized gains arising from transactions with subsidiaries are eliminated to the extent of the Groups
interest in the entity. Unrealized losses are eliminated in the same way as unrealized gains, but only to the
extent that there is no evidence of impairment.
A subsidiary is an enterprise that is controlled by the Company and whose accounts are included in the
2006 Groups interim financial statements. Control exists when the Company has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that are presently exercisable or convertible are taken
into account. The interim financial statements of the subsidiary are included in the Groups interim
financial statements from the date that control commences until the date control ceases.
Functional and Presentation Currency
The interim financial statements are measured using the currency of the primary economic environment in
which the entity operates. The interim financial statements are presented in Philippine Peso, which is also
the Companys functional currency and all values are rounded to the nearest thousand except number of
shares and par value per share and when otherwise indicated.
F-46
Use of Judgments and Estimates

The preparation of the interim financial statements in conformity with PFRS requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the amounts
reported in the interim financial statements. The estimates and assumptions used in the accompanying
interim financial statements are based upon managements evaluation of relevant facts and circumstances
as of the date of the interim financial statements. Actual results could differ from these estimates.
Judgments, estimates and underlying assumptions are reviewed on an ongoing basis and are based on
historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. Revisions to accounting estimates are recognized in the period in
which the estimate is revised and in any future periods affected.
The following presents the summary of these judgments and estimates, which have the most significant
effect on the amounts recognized in the interim financial statements:
Judgments
Leases
The Company has entered into various lease agreements as lessee. The Company has determined that the
lessor retains all significant risks and rewards of ownership of these properties which are leased out under
operating lease agreements.
Rent expense pertaining to these leased properties for the three months ended September 30, 2007 and
2006 amounted to P
=20 million and P
Functional Currency
Based on the economic substance of the underlying circumstances relevant to the Company, the functional
currency has been determined to be the Philippine Peso. It is the currency that mainly influences the sales
price of goods and the cost of providing these goods.
Contingencies
The Company is currently involved in various legal proceedings. The estimate of the probable costs for the
resolution of these claims has been developed in consultation with outside counsel handling the Companys
defense relating to these matters and is based upon an analysis of potential results. The Company currently
does not believe that these proceedings will have a material adverse effect on its interim financial
statements. It is possible, however, that future results of operations could be materially affected by changes
in the estimates or in the effectiveness of the strategies relating to these proceedings (see Note 30).
Estimates
Estimated Allowance for Impairment Losses on Receivables
The Company maintains an allowance for impairment losses at a level considered adequate to provide for
potential uncollectible receivables. The Company performs regular review of the age and status of these
accounts, designed to identify accounts with objective evidence of impairment and provides these with the
appropriate allowance for impairment losses. The review is accomplished using a combination of specific
and collective assessment approaches, with the impairment losses being determined for each risk grouping
identified by the Company. The amount and timing of recorded expenses for any period would differ if the
Company made different judgments or utilized different methodologies. An increase in allowance for
impairment losses would increase the recorded operating expenses and decrease current assets.
As of September 30, 2007 and June 30, 2007, allowance for impairment losses on receivables amounted to
P
=83 million and P
=67 million, respectively. The carrying value of receivables amounted to P
=772 million and
P
F-47
Estimated Net Realizable Value of Inventories

In determining the net realizable value of inventories, the Company considers inventory obsolescence based
on specific identification and as determined by management for inventories estimated to be unsaleable in
the future. The Company adjusts the cost of inventory to recoverable value at a level considered adequate
to reflect market decline in value of the recorded inventories. The Company reviews on a continuous basis
the product movement, changes in consumer demands and introduction of new products to identify
inventories which are to be written down to net realizable values.
As of September 30, 2007 and June 30, 2007, inventories were written down to net realizable values by P
=13
million and P
=15 million, respectively. The carrying value of inventories amounted to P
=667 million and P
=601
million as of September 30, 2007 and June 30, 2007, respectively (see Note 7).
Amortization of the Excess of Cost of Containers over Deposit Values
The excess of the acquisition costs of the returnable bottles and cases over their deposit values is deferred
and amortized over their estimated useful lives (EUL) principally determined by their historical breakage
and trippage.
As of September 30, 2007 and June 30, 2007, accumulated amortization of excess of cost over deposit
values of returnable bottles and cases amounted to P
=2.39 billion and P
=2.29 billion, respectively (see Note
9).
Estimated Allowance for Unusable Containers
An allowance for unusable containers is maintained based on specific identification and as determined by
management to cover bottles and shells that are no longer considered fit for use in the business, obsolete
or in excess of the Companys needs.
As of September 30, 2007, allowance for unusable containers amounted to P
=4.6 million. There was no
allowance for unusable containers as of June 30, 2007 due to the write-off and reversal made during the
fiscal year 2007 (see Note 9).
Estimated Useful Lives of Property, Plant and Equipment
The Company reviews annually the EUL of property, plant and equipment based on the period over which
the assets are expected to be available for use and are updated if expectations differ from previous estimates
due to physical wear and tear, and technical or commercial obsolescence. It is possible that future results
of operations could be materially affected by changes in these estimates brought about by changes in the
factors mentioned. A reduction in the EUL of property, plant and equipment would increase the recorded
depreciation and amortization expenses and decrease noncurrent assets.
The EUL are as follows:
Number of Years
Buildings and leasehold improvements .......................................................................

Machinery and other equipment ................................................................................
Furniture and fixtures .................................................................................................
20 or term of the lease,

whichever is shorter
3 - 10
10
As of September 30, 2007 and June 30, 2007, property, plant and equipment, net of accumulated
depreciation, amortization and impairment losses, amounted to P
=2.37 billion and P
=2.16 billion,
respectively (see Note 10).
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Estimated Allowance for Impairment Losses on Other Financial Assets and Non-Financial Assets
The Company assesses impairment on other financial and non-financial assets whenever events or changes
in circumstances indicate that the carrying amount of such asset may not be recoverable. The factors that
the Company considers important which could trigger an impairment review include the following:
significant changes in the manner of use of the acquired assets or the strategy for overall business; and
An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.
For the three months ended September 30, 2007, there was no impairment loss provided on the Companys
investments in associates, which includes goodwill amounting to P
=9.5 million. Investments in associates
amounted to P
=506 million and P
=505 million as of September 30, 2007 and June 30, 2007, respectively (see
Note 8).
There was no impairment loss provided on the Groups goodwill relating to its investment in NRC for the
three months ended September 30, 2006.
As of September 30, 2007 and June 30, 2007, there was no allowance for impairment losses on the
Companys property, plant and equipment (see Note 10).
Allowance for impairment losses on idle assets (included under Other Assets account in the interim
balance sheet) amounted to P
=432 as of September 30, 2007. There was no allowance for impairment losses
on idle assets as of June 30, 2007 due to write-off made during the fiscal year 2007 (see Note 11).
Realizability of Deferred Income Tax Assets
The Company reviews the carrying amounts of deferred income tax assets at each balance sheet date and
reduces deferred income tax assets to the extent that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred income tax assets to be utilized.
As of September 30, 2007 and June 30, 2007, deferred income tax assets amounted to P
=151 million and
P
=129 million, respectively. There were no unrecognized deferred income tax assets as of September 30,
2007 and June 30, 2007 (see Note 15).
Pension and Other Employee Benefits
The determination of the obligation and cost of pension and other employee benefits is dependent on the
selection of certain assumptions used by the actuary in calculating such amounts. Those assumptions
include among others, discount rate, rate of expected return on plan assets and salary increase rate (see
Note 27). In accordance with PFRS, actual results that differ from the Companys assumptions, subject to
the 10% corridor test, are accumulated and amortized over future periods and therefore, generally affect
the recognized expense and recorded obligations in such future periods.
As of September 30, 2007 and June 30, 2007, the Company has unrecognized net actuarial losses
amounting to P
=4 million (see Note 27).
F-49
3.
Significant Accounting Policies

The following explains the significant accounting policies which have been adopted in the preparation of
the interim financial statements:
Except for the adoption of an interpretation, a new standard and an amendment to a standard as described
below, the accounting policies applied in these interim financial statements are the same as those applied
for the Companys annual financial statements as of and for the year ended June 30, 2007:
Philippine Interpretation - International Financial Reporting Interpretations Committee (IFRIC) 10,

Interim Financial Reporting and Impairment. This became effective for financial years beginning on
or after November 1, 2006. This interpretation prohibits the reversal of impairment losses on
goodwill and available-for-sale investments recognized in interim financial reports even if the
impairment is no longer present at the balance sheet date. The adoption of this interpretation had no
significant impact on the interim financial statements.
PFRS 7, Financial Instruments: Disclosures. This became effective for financial years beginning on or
after January 1, 2007. PFRS 7 introduces new disclosures to improve the information about financial
instruments. It requires the disclosure of quantitative and qualitative information about exposure to
risks arising from financial instruments, including specified minimum disclosures about credit risk,
liquidity risk and market risk, as well as sensitivity analysis to market risk. It replaces Philippine
Accounting Standard (PAS) 30, Disclosures in the Financial Statements of Banks and Similar
Financial Institutions, and the disclosure requirements of PAS 32, Financial Instruments: Disclosures
and Presentation. Additional disclosures were included in the interim financial statements as a result
of the adoption of this standard.
Amendment to PAS 1, Presentation of Financial Statements - Capital Disclosures. This will be

effective for financial years beginning on or after January 1, 2007. This introduces disclosures about
the entitys objectives, policies and processes for managing capital; quantitative data about what the
entity regards as capital; whether the entity has complied with any capital requirements; and if it has
not complied, the consequences of such non-compliance. Additional disclosures were included in the
interim financial statements as a result of the adoption of this amendment.
New Standard and Interpretation Not Yet Adopted

The following are the new standard and interpretation which are not yet effective and have not been applied
in preparing these interim financial statements:
PFRS 8, Operating Segments. This will be effective for financial years beginning on or after January
1, 2009 and will replace PAS 14, Segment Reporting. This PFRS adopts a management approach to
reporting segment information. The information reported would be that which management uses
internally for evaluating the performance of operating segments and allocating resources to those
segments. It is required for adoption only by entities whose debt or equity instruments are publicly
traded, or are in the process of filing with the SEC for the purposes of issuing any class of instruments
in a public market. The Company will assess the impact of this standard to its current manner of
reporting segment information when it adopts the standard on July 1, 2009.
Philippine Interpretation - IFRIC 11, IFRS 2 - Group and Treasury Share Transactions. This
interpretation will be effective for financial years beginning on or after January 1, 2008. This
describes how to apply PFRS 2, Share-based Payment, to share-based payment arrangements
involving an entitys own equity instruments and share-based payment arrangements of subsidiaries
involving equity instruments of its parent company. This interpretation has no significant impact on
the interim financial statements.
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and
the revenue can be measured reliably.
F-50
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net
of returns and discounts. Revenue is recognized when the significant risks and rewards of ownership have
been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible
return of goods can be estimated reliably, and there is no continuing involvement with the goods. Transfer
of risk and rewards of ownership coincides with the delivery of the products to the customers.
Cost and Expense Recognition
The interim financial statements are prepared on the accrual basis of accounting. Under this basis, costs and
expenses are recognized when they occur and are reported in the interim financial statements in the periods
to which they relate.
Receivables
Receivables are recognized and carried at original invoice amount less an allowance for impairment losses.
An allowance for impairment losses is maintained at a level considered adequate to provide for probable
uncollectible receivables. The level of this allowance is evaluated by management on the basis of factors that
affect the collectibility of the accounts. A review of the age and status of receivables, designed to identify
accounts to be provided with allowance, is performed regularly.
Inventories
Inventories are valued at the lower of cost and net realizable value. Cost is determined by the moving
average method. Net realizable value is the estimated selling price in the ordinary course of business, less
estimated costs necessary to make the sale.
An allowance is provided to reduce inventory to net realizable value due to obsolescence and possible losses
based on specific identification method. When inventories are sold, the related allowance is reversed in the
same period.
Bottles and Cases
Bottles and cases include returnable glass bottles and cases stated at deposit values and the excess of the
acquisition costs of returnable bottles and cases over their deposit values, which is deferred and amortized
using the straight-line method over their estimated useful lives (5 years for returnable bottles and 7 years
for cases), which are principally determined by their actual historical breakage and trippage.
An allowance is provided for excess, unusable and obsolete returnable bottles and cases based on the
specific identification method.
Associates are those entities in which the Company has significant influence, but not control, over the
financial and operating policies and which are neither subsidiaries nor joint ventures of the Company. The
interim financial statements include the Companys share of the total recognized earnings and losses of
associates on an equity accounted basis, from the date that significant influence commences until the date
that significant influence ceases. When the Companys share of losses exceeds the cost of the investment in
an associate, the carrying amount of that interest is reduced to nil and recognition of further losses is
discontinued except to the extent that the Company has incurred legal or constructive obligations or made
payments on behalf of the associate.
Property, plant and equipment are carried at cost (which comprises its purchase price and any directly
attributable cost of bringing the asset to working condition and location for its intended use) less
accumulated depreciation, amortization and impairment losses, if any.
F-51
Subsequent costs that can be measured reliably are added to the carrying amount of the asset when it is
probable that future economic benefits associated with the asset will flow to the Company. The cost of
day-to-day servicing of an asset is recognized as expense in the period in which it is incurred.
Depreciation is computed on a straight-line basis over the EUL of the assets. Leasehold improvements are
amortized over the EUL of the improvements or the term of the lease, whichever is shorter.
The EUL and depreciation and amortization method are reviewed at each balance sheet date to ensure that
the period and depreciation and amortization method are consistent with the expected pattern of economic
benefits from those assets.
When an asset is disposed of, or is permanently withdrawn from use and no future economic benefits are
expected from its disposal, the cost and accumulated depreciation, amortization and impairment losses, if
any, are removed from the accounts and any resulting gain or loss arising from the retirement or disposal
is reflected in current operations.
Prior to the dilution of the Companys ownership in NRC on February 1, 2007, all the parcels of land
owned by NRC, which were carried at revalued amounts, were presented at fair value at the date of
revaluation. Revaluations are performed by an independent firm of appraisers with sufficient regularity to
ensure that the carrying amount does not differ materially from that which would be determined using fair
values at the balance sheet date. Any increase in revaluation is credited to the revaluation increment unless
it offsets a previous decrease in value of the same asset recognized in the interim statements of income. A
decrease in value is recognized in the interim statements of income when it exceeds the increase previously
recognized in the revaluation increment. Upon disposal, any related revaluation increment is transferred
from the revaluation increment to retained earnings. The excess of the appraised values over the acquisition
costs of the parcels of land is presented under the Revaluation Increment on Land account in the interim
statement of changes in equity for the three months ended September 30, 2006.
Goodwill
Goodwill represents the excess of acquisition cost of investment over the fair value of the net identifiable
assets of the investee companies at the date of acquisition. Goodwill is stated at cost less accumulated
amortization and impairment in value, if any. The amount was initially amortized on a straight-line method
over the estimated useful life of 20 years. Upon adoption of PFRS 3 effective July 1, 2005, goodwill is no
longer amortized; instead, the net carrying amount is subjected to annual impairment assessment. As of
September 30, 2007 and June 30, 2007, goodwill is included as part of Investments in Associates account
in the balance sheets.
Financial Assets and Liabilities
Financial assets and liabilities comprise cash and cash equivalents, trade and other receivables, due from a
related party, notes payable, accounts payable and accrued expenses, due to a related party, dividends
payable and long-term debt.
Date of Recognition. The Company recognizes a financial asset or a financial liability in the interim balance
sheet when it becomes a party to the contractual provisions of the instrument. In the case of a regular way
purchase or sale of financial assets, recognition and derecognition, as applicable, is done using settlement
date accounting.
Initial Recognition of Financial Instruments. Financial instruments are recognized initially at fair value,
which is the fair value of the consideration given (in case of an asset) or received (in case of a liability). The
fair value of the consideration given or received is determined by reference to the transaction price or other
market prices. If such market prices are not reliably determinable, the fair value of the consideration is
estimated as the sum of all future cash payments or receipts, discounted using the prevailing market rate of
interest for similar instruments with similar maturities. The initial measurement of financial instruments,
except for those designated at fair value through profit and loss (FVPL), includes transaction cost.
F-52
Subsequent to initial recognition, the Company classifies its financial assets in the following categories:
held-to-maturity (HTM) financial assets, available-for-sale (AFS) investments, FVPL financial assets, and
loans and receivables. The classification depends on the purpose for which the investments are acquired and
whether they are quoted in an active market. Management determines the classification of its financial
assets at initial recognition and, where allowed and appropriate, re-evaluates such designation at every
reporting date.
Determination of Fair Value. The fair value for financial instruments traded in active markets at the balance
sheet date is based on their quoted market price or dealer price quotation (bid price for long positions and
ask price for short positions), without any deduction for transaction costs. When current bid and asking
prices are not available, the price of the most recent transaction provides evidence of the current fair value
as long as there has not been a significant change in economic circumstances since the time of the
transaction (see Note 26).
For all other financial instruments not listed in an active market, the fair value is determined by using
appropriate valuation techniques. Valuation techniques includes net present value techniques, comparison
to similar instruments for which market observable prices exist, options pricing models, and other relevant
valuation models (see Note 26).
Cash and cash equivalents. Cash includes cash on hand and in banks. Cash equivalents are short-term,
highly liquid investments that are readily convertible to known amounts of cash with original maturities of
three months or less from dates of acquisition and that are subject to an insignificant risk of change in value.
Financial Assets at FVPL. Financial assets at FVPL include financial assets held for trading and financial
assets designated upon initial recognition as at FVPL.
Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near
term. Gain or losses on investments held for trading are recognized in the interim statements of income.
Derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
The Company has no investments classified as financial assets at FVPL.
Loans and Receivables. Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are not entered into with the intention of immediate
or short-term resale and are not designated as AFS or financial asset at FVPL. Loans and receivables are
carried at cost or amortized cost, less impairment in value. Amortization is determined using the effective
interest rate method. Gains and losses are recognized in income when the loans and receivables are
derecognized or impaired, as well as through amortization process.
The Companys trade and other receivables and due from a related party are included in this category (see
Notes 6 and 16).
HTM Investments. HTM investments are quoted non-derivative financial assets with fixed or determinable
payments and fixed maturities for which the Companys management has the positive intention and ability
to hold to maturity. Where the Company sells other than an insignificant amount of HTM investments, the
entire category would be tainted and classified as AFS investments. After initial measurement, these
investments are measured at amortized cost using the effective interest rate method, less impairment in
value. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees
that are an integral part of the effective interest rate. Gains and losses are recognized in the interim
statements of income when the HTM investments are derecognized or impaired, as well as through the
amortization process.
AFS. AFS investments are non-derivative financial assets that are designated in this category or are not
classified in any of the other categories. Subsequent to initial recognition, AFS investments are carried at fair
value in the balance sheets. Changes in the fair value of such assets are reported in the equity section of the
F-53
interim balance sheet until the investment is derecognized or the investment is determined to be impaired.
On derecognition or impairment, the cumulative gain or loss previously reported in equity is transferred to
the interim statements of income. Interest earned on holding AFS investments are recognized in the interim
statements of income using the effective interest rate method.
Financial Liabilities
Financial Liability at FVPL. Financial liabilities are classified in this category if these result from trading
activities or derivative transactions that are not accounted for as accounting hedges, or when the Company
elects to designate a financial liability under this category.
The Company has no designated financial liability at FVPL.
Other Financial Liabilities. This category pertains to financial liabilities that are not held for trading or not
designated as at FVPL upon the inception of the liability. These include liabilities arising from operations
or borrowings.
The financial liabilities are recognized initially at fair value and are subsequently carried at amortized cost,
taking into account the impact of applying the effective interest rate method of amortization (or accretion)
for any related premium, discount and any directly attributable transaction costs.
Included in this category are the Companys notes payable, accounts payable and accrued expenses, due to
a related party, dividends payable and long-term debt (see Notes 12, 13 14, 16 and 29).
Derecognition of Financial Assets and Liabilities
Financial Assets. A financial asset (or, where applicable a part of a financial asset or part of a group of
similar financial assets) is derecognized when:
the rights to receive cash flows from the asset have expired;
the Company retains the right to receive cash flows from the asset, but has assumed an obligation to
pay them in full without material delay to a third party under a pass-through arrangement; or
the Company has transferred its rights to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset and has neither transferred
nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset
is recognized to the extent of the Companys continuing involvement in the asset.
Financial Liabilities. A financial liability is derecognized when the obligation under the liability is
discharged or cancelled or has expired.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and the recognition of a new liability, and the difference
in the respective carrying amounts is recognized in profit or loss.
Impairment of Financial Assets
The Company assesses at balance sheet date whether a financial asset or group of financial assets is
impaired.
F-54
Assets Carried at Amortized Cost. If there is objective evidence that an impairment loss on loans and
receivables carried at amortized cost has been incurred, the amount of loss is measured as the difference
between the assets carrying amount and the present value of estimated future cash flows (excluding future
credit losses) discounted at the financial assets original effective interest rate (i.e., the effective interest rate
computed at initial recognition). The carrying amount of the asset shall be reduced either directly or
through use of an allowance account. The amount of loss shall be recognized in the interim statements of
income.
The Company first assesses whether objective evidence of impairment exists individually for financial assets
that are individually significant, and individually or collectively for financial assets that are not individually
significant. If it is determined that no objective evidence of impairment exists for an individually assessed
financial asset, whether significant or not, the asset is included in a group of financial assets with similar
credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets
that are individually assessed for impairment and for which an impairment loss is or continues to be
recognized are not included in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in the interim
statements of income, to the extent that the carrying value of the asset does not exceed its amortized cost
at the reversal date.
Assets Carried at Cost. If there is objective evidence of an impairment loss on an unquoted equity
instrument that is not carried at fair value because its fair value cannot be reliably measured, or of a
derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the
amount of the loss is measured as the difference between the assets carrying amount and the present value
of estimated future cash flows discounted at the current market rate of return for a similar financial asset.
Objective evidence that financial assets (including equity securities) are impaired can include default or
delinquency by a borrower, restructuring of a loan or advance by the Company on terms that the Company
would not otherwise consider, indications that a borrower or issuer will enter bankruptcy, the
disappearance of an active market for a security, or other observable data relating to a group of assets such
as adverse changes in the payment status of borrowers or issuers in the group, or economic conditions that
correlate with defaults in the group.
The determination of impairment losses for financial assets is inherently subjective because it requires
material estimates, including the amount and timing of expected recoverable future cash flows. These
estimates may change significantly from time to time, depending on available information.
When a subsequent event causes the amount of impairment loss to decrease, the impairment loss is reversed
through profit or loss.
Classification of Financial Instruments Between Debt and Equity
A financial instrument is classified as debt if it provides for a contractual obligation to:
deliver cash or another financial assets to another entity; or
exchange financial assets or financial liabilities with another entity under conditions that are
potentially unfavorable to the Company; or
satisfy the obligation other than by the exchange of a fixed amount of cash or another financial asset
for a fixed number of own equity shares.
If the Company does not have an unconditional right to avoid delivering cash or another financial asset to
settle its contractual obligation, the obligation meets the definition of a financial liability.
F-55
Offsetting Financial Instruments

Financial assets and financial liabilities are offset and the net amount is reported in the interim balance sheet
if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an
intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. This is not
generally the case with master netting agreements, and the related assets and liabilities are presented gross
in the interim balance sheet.
Non-Financial Asset Impairment
The carrying amounts of the Companys non-financial assets such as investments in associates, bottles and
cases, property, plant and equipment and other assets are reviewed at each balance sheet date to determine
whether there is any indication of impairment. If any such indication exists, the assets recoverable amount
is estimated.
An impairment loss is recognized in the interim statements of income whenever the carrying amount of an
asset or its cash generating unit exceeds its recoverable amount.
The recoverable amount of a non-financial asset is the greater of the assets fair value less costs to sell and
its value in use. The fair value less costs to sell is the amount obtainable from the sale of the asset in an arms
length transaction. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset. For an asset that does not generate cash flows largely independent of those
from other assets, the recoverable amount is determined for the cash-generating unit to which the asset
belongs.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortization, if no
impairment loss had been recognized. Reversals of impairment are recognized in the interim statements of
income.
Advertising and Marketing Costs
Advertising and marketing costs are charged to operations in the period such costs are incurred.
Finance Income and Expenses
Finance income comprises of interest income on bank deposits and money market placement, dividend
income and foreign currency gains. Interest income is recognized in the interim statements of income as it
accrues, using the effective interest rate method. Dividend income is recognized on the date that the
Companys right to receive payment is established.
Finance expenses comprise interest expense on borrowings and foreign currency losses. All finance
expenses are recognized in the interim statements of income as they accrue.
Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases are recognized in the interim
statements of income on a straight-line basis over the term of the lease.
Provisions and Contingent Liabilities
A provision is a liability of uncertain timing or amount. It is recognized when the Company has a legal or
constructive obligation as a result of a past event; it is probable that an outflow of economic benefits will
be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation.
F-56
Provisions are revisited at each balance sheet date and adjusted to reflect the current best estimate. If the
effect of the time value of money is material, provisions are determined by discounting the expected future
cash flows at a pretax rate that reflects the current market assessment of the time value of money, and,
where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision
due to the passage of time is recognized as interest expense.
Contingent liabilities are not recognized in the interim financial statements. These are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not
recognized in the interim financial statements but are disclosed when an inflow of economic benefits is
probable.
Income Taxes
Income tax expense for the period comprises current and deferred income tax. Income tax expense is
recognized in the interim statements of income except to the extent that it relates to items recognized
directly in equity, in which case it is recognized in equity.
Current Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to
be recovered from or paid to the tax authority. The tax rates and tax laws used to compute the current tax
are those that are enacted and substantively enacted as of the balance sheet date.
Deferred Tax
Deferred income tax is provided using the balance sheet liability method. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to temporary difference between the carrying
amounts of assets and liabilities for financial reporting purposes and amounts used for taxation on
purposes and carryforward benefits of unused tax credits from excess minimum corporate income tax
(MCIT) over regular income tax and the net operating loss carryover (NOLCO). The amount of deferred
income tax provided is based on the expected manner of realization or settlement of the carrying amount
of assets and liabilities, carryforward benefits of MCIT and NOLCO, using the tax rates enacted or
substantively enacted as of the balance sheet date. A deferred income tax asset is recognized only to the
extent that it is probable that future taxable profits will be available against which the deductible temporary
differences and carryforward benefits of MCIT and NOLCO can be utilized. Deferred income tax assets are
reviewed at each balance sheet date and are reduced to the extent that it is no longer probable that the
related tax benefit will be realized.
Retirement Plan
The Company has a funded, noncontributory defined benefit retirement plan covering substantially all of
its regular and full time employees. Retirement costs are actuarially determined using the projected unit
credit method which reflect services rendered by employees to the date of valuation and incorporates
assumptions concerning employees projected salaries. Actuarial gains and losses that exceed 10% of the
greater of the present value of the Companys defined benefit obligation and the fair value of the plan assets
are amortized over the expected average working lives of the participating employees. Similarly, past service
cost is being amortized over the vesting period.
The defined benefit liability is the aggregate of the present value of the defined benefit obligation and
actuarial gains and losses not recognized reduced by past service cost not yet recognized and the fair value
of plan assets out of which the obligation are to be settled directly. If such aggregate is negative, the asset
is measured at the lower of such aggregate or the aggregate of the cumulative unrecognized net actuarial
losses and past service cost and the present value of any economic benefits available in the form of refunds
from the plan or reductions in the future contributions of the plan (the asset ceiling test).
F-57
Foreign Exchange Transactions

The functional and presentation currency of the Company is the Philippine Peso. Transactions in foreign
currencies are recorded in Philippine Peso based on the prevailing exchange rates at the date of the
transactions. Foreign currency denominated monetary assets and liabilities are translated using the
exchange rates prevailing at the balance sheet date. Exchange gains or losses arising from translation of
foreign currency denominated items at rates different from those at which they were previously recorded
are credited or charged to current operations.
Earnings Per Share (EPS)
Basic EPS is computed by dividing the net income by the weighted average number of common shares
outstanding during the period, with retroactive adjustments for any stock dividends declared.
Segment Reporting
The Companys operating business is organized and managed according to the nature of the products
provided, with each segment representing a strategic business unit that offers different products and serves
different markets. Financial information on business segments is presented in Note 25.
Related Parties
Parties are considered to be related if one party has the ability to control the other party or exercise
significant influence over the other party in making financial and operating decisions. It includes companies
in which one or more of the directors and/or controlling stockholders of a company either have a beneficial
controlling interest or are in a position to exercise significant influence therein.
Events After the Balance Sheet Date
Post year-end events that provide additional information about the Companys position at the balance sheet
date (adjusting events) are recognized in the interim financial statements. Post year-end events that are not
adjusting events are disclosed in the notes to the interim financial statements when material.
4.
Financial Risk Management

The Company has exposure to the following risks from its use of financial instruments:
Credit Risk
Liquidity Risk
Market Risk
This note presents information about the Companys exposure to each of the above risks, the Companys
objectives, policies and processes for measuring and managing risks, and the Companys management of
capital. Further quantitative disclosures are included throughout these interim financial statements, mainly
in Note 26.
The main purpose of the Companys dealings in financial instruments is to fund its operations and capital
expenditures.
The Board of Directors (BOD) has overall responsibility for the establishment and oversight of the
Companys risk management framework. The BOD has established the Executive Committee, which is
responsible for developing and monitoring the Companys risk management policies. The committee
identifies all issues affecting the operations of the Company and reports regularly to the BOD on its
activities.
F-58
The Companys risk management policies are established to identify and analyze the risks faced by the
Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions and the
Companys activities. All risks faced by the Company are incorporated in the annual operating budget.
Mitigating strategies and procedures are also devised to address the risks that inevitably occur so as not to
affect the Companys operations and detriment forecasted results. The Company, through its training and
management standards and procedures, aims to develop a disciplined and constructive control environment
in which all employees understand their roles and obligations.
The Audit Committee performs oversight over financial management functions, specifically in the areas of
managing credit, liquidity, market and other risks of the Company. The Audit Committee directly interfaces
with the internal audit function, which undertakes reviews of risk management controls and procedures
and ensures the integrity of internal control activities which affect the financial management system of the
Company. The results of procedures performed by Internal Audit are reported to the Audit Committee.
Credit Risk
Credit risk represents the risk of loss the Company would incur if credit customers and counterparties fail
to perform their contractual obligations. The Companys credit risk arises principally from the Companys
trade receivables.
The Plant Credit Committees have established a credit policy under which each new customer is analyzed
individually for creditworthiness before standard credit terms and conditions are granted. The Companys
review includes the requirements of updated credit application documents, credit verifications through the
use of no negative record requests and list of blacklisted accounts, and analyses of financial performance
to ensure credit capacity. Credit limits are established for each customer, which serve as the maximum open
amount at which they are allowed to purchase on credit, provided that credit terms and conditions are
observed. The credit limit and status of each customers account is first checked before processing a credit
transaction. Customers that fail to meet the Companys conditions in the pre-load credit checking process
may transact with the Company only on cash basis.
It is the Companys policy to conduct an annual credit review through identification and summarization of
under-performing customers and review and validation of credit violation reports. Based on the summary,
the Plant Credit Committees may upgrade, downgrade, suspend and cancel credit lines.
Most of the Companys customers have been transacting with the Company for several years, and losses
have occurred from time to time. Customer credit risks are monitored through annual credit reviews
conducted on a per plant basis. Results of credit reviews are grouped and summarized according to credit
characteristics, such as geographic location, aging profile and credit violations. Historically, credit
violations have been attributable to bounced checks, and denied, fictitious or absconded credit accounts.
Collateral securities are required for credit limit applications that exceed certain thresholds (see Note 26).
The Company has policies for acceptable collateral securities that may be presented upon submission of
credit applications.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
The Company manages liquidity risk by forecasting projected cash flows and maintaining a balance
between continuity of funding and flexibility. Treasury controls and procedures are in place to ensure that
sufficient cash is maintained to cover daily operational and working capital requirements. Management
closely monitors the Companys future and contingent obligations and sets up required cash reserves as
necessary in accordance with internal requirements.
In addition, the Company has the following credit facilities as of September 30, 2007:
Fixed rate long-term debt facilities of P

=1,179 million available as of September 30, 2007 with two
Philippine banks, which remain undrawn as of September 30, 2007;
F-59
Omnibus line of credit with a number of Philippine banks consisting of commitments for short term
loans, letters of credit and documents against acceptances/documents against payment (DA/DP)
facilities trust receipts. The total commitment under the line of credit is P
=1,840 million, of which the
Company had drawn P
=272 million under letters of credit as of September 30, 2007. All facilities
under the omnibus line bear interest at floating rates consisting of a margin over current Philippine
treasury rates; and
P
=465 million domestic bills purchased line, which is currently undrawn.
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other
market prices will affect the Companys income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimizing the return.
The Company is subject to various market risks, including risks from changes in commodity prices, interest
rates and currency exchange rates.
Commodity Prices
The risk from commodity price changes relates to the Companys ability to recover higher product costs
through price increases to customers, which may be limited due to the competitive pricing environment that
exists in the Philippine beverage market and the willingness of consumers to purchase the same volume of
beverages at higher prices. The Companys most significant commodity exposure is to the Philippine sugar
price.
The Company minimizes its exposure to risks in changes in commodity prices by entering into contracts
with suppliers with duration ranging from six months to one year with fixed volume commitment for the
contract duration and with stipulation for price adjustments depending on market prices.
Interest Rate Risk
The Companys exposure to the risk for changes in market interest rate relates primarily to its long-term
debt obligations with variable interest rates. The Companys interest rate risk exposure relates to the 90 day
MART1 benchmark plus a designated bank spread. The Treasury Department, through its competencies of
managing long-term debt obligations, transacts with creditors to ensure the most advantageous terms and
to reduce exposure to risk of changes in market interest rate.
Foreign Currency Risk
The Company is exposed to foreign currency risk on purchases that are denominated in currencies other
than the Philippine Peso, mostly in U.S. Dollar and EURO. In respect of monetary assets and liabilities held
in currencies other that the Philippine Peso, the Company ensures that its exposure is kept to an acceptable
level, by maintaining short-term cash placements in U.S. Dollar and buying foreign currencies at spot rates
where necessary to address short-term imbalances.
Capital Management
The Companys objectives when managing capital are to increase the value of shareholders investment and
maintain high growth by applying free cash flow to selective investments that would further the Companys
geographic diversification. The Company sets strategies with the objective of establishing a versatile and
resourceful financial management and capital structure.
The Chief Financial Officer has overall responsibility for monitoring of capital in proportion to risk.
Profiles for capital ratios are set in the light of changes in the Companys external environment and the risks
underlying the Companys business operations and industry.
F-60
The Company monitors capital on the basis of the debt-to-equity ratio which is calculated as total debt
divided by total equity. Total debt is equivalent to notes payable and long-term debt. Total equity comprises
all components of equity including capital stock, additional paid-in capital and retained earnings.
There were no changes in the Companys approach to capital management during the period.
The Company has externally imposed capital requirements arising from its loans with local banks. Such
loan agreements include the requirement to maintain a debt-to-equity ratio of not greater than 2:1. The
Company has complied with such externally-imposed capital requirements as of September 30, 2007 and
June 30, 2007. The debt-to equity ratios as of September 30, 2007 and June 30, 2007 are as follows:
5.
September 30
June 30
2007
2007
Debt
Notes payable ...............................................................................................................
Long-term debt .............................................................................................................
=
P428,600
104,167
=
P48,600
283,333
Total debt ......................................................................................................................
532,767
331,933
Equity ............................................................................................................................
Debt-to-equity ratio ......................................................................................................
3,470,175
0.15:1
3,323,675
0.10:1
September 30
2007
June 30
2007
=
P160,266
85,000
P
=200,919
431,353
=245,266
P
P
=632,272
Cash on hand and in banks ..........................................................................................

Short-term investments .................................................................................................
Cash in banks earn interest at the respective bank deposit rates. Short-term investments are made for
varying periods of up to three months depending on the immediate cash requirements of the Company and
earn interest at the respective short-term investment rates.
The Companys exposure to interest rate risk and sensitivity analyses for financial assets and liabilities are
disclosed in Note 26.
6.
Receivables
Note
Trade .............................................................................................
Related party ................................................................................
Others ...........................................................................................
Less allowance for impairment losses

Trade ........................................................................................
Others .......................................................................................
26
16
26
September 30
2007
June 30
2007
=
P801,259
15,462
37,709
P
=840,364
11,669
43,635
854,430
895,668
68,280
14,485
57,565
9,826
82,765
67,391
=771,665
P
P
=828,277
Trade receivables are non-interest bearing and are generally on a 30 to 60 days term.
F-61
The Companys exposure to credit and currency risk and impairment losses related to trade and other
receivables are disclosed in Note 26.
7.
Inventories
September 30
June 30
2007
2007
=
P317,459
317,459
P
=311,658
311,658
11,371
11,371
9,723
9,723
262,079
248,691
213,045
198,237
89,808
89,808
81,281
81,281
=
P667,329
P
=600,899
Note
Finished goods:
At cost ......................................................................................
At net realizable value ..............................................................
Work in process:
At cost ......................................................................................
Raw and packaging materials:
At cost ......................................................................................
Spare parts and supplies:
At cost ......................................................................................
12
12
12
Total inventories at lower of cost and net realizable value ..........
Under the terms of agreements covering liabilities under trust receipts, certain inventories have been
released to the Company in trust for certain local banks. The Company is accountable to these banks for
the trusteed inventories (see Note 12).
In addition, the Companys notes payable and long-term debt are secured by mortgage trusts indentures on
various assets, which include P
=338 million of inventories as of September 30, 2007 and June 30, 2007.
8.
The movements in investments in associates are as follows:
Note
Balance at February 1, 2007 (date of loss of control) ..................................................

Share in net earnings of associates ................................................................................
Balance at June 30, 2007 ..............................................................................................
Share in net earnings of associates ................................................................................
Balance at September 30, 2007 ....................................................................................
23
Amount
=
P498,682
6,792
505,474
932
=
P506,406
On February 1, 2007, the Company invested P

=132 for a 39.8% interest in Nadeco Holdings Corporation
(NHC), a domestic company organized on May 10, 2006 primarily to engage in management of real and
other properties. On the same date, NRC issued additional shares to the Company and NHC in exchange
for cash. A larger number of voting shares was issued to NHC, which led to the eventual dilution of the
Companys interest in NRC from 100% to 40% resulting in a loss of control. Accordingly, the accounts of
NRC ceased to be consolidated into the accounts of the Company starting February 1, 2007 and are
accounted for as an associate using the equity method of accounting from such date. As a result, the
following accounts were affected:
F-62
Land owned by NRC is no longer shown as land in the interim financial statements of the Company
(see Note 10). Accordingly, the balance of revaluation increment (included in the accumulated equity
in net earnings line item in the table above) relating to the fair value adjustments of the said property
in prior periods was reclassified to Retained Earnings account in the 2007 interim statement of
changes in equity (see Note 29) since from NRCs point of view, the land is considered as Investment
Property and accordingly, changes in fair value of the investment property will be recognized in
profit and loss. The corresponding deferred tax liability related to the said land was also
derecognized.
Receivables and payables between the Company and NRC are no longer eliminated. Rent income and
expense between the Company and NRC are no longer fully eliminated (see Note 16).
The dilution of the Companys investment in NRC was recognized as an adjustment to equity in the
2007 interim statement of changes in equity which relates to the decrease in the Companys share in
the net assets of NRC.
The financial reporting date of NRC and NHC is June 30, 2007. The application of the equity method
includes interim results of these associates up to September 30, 2007. The equity method of accounting is
based on the Companys interest in the net profits and net assets of NRC and NHC of 99.9% and 39.8%,
respectively.
The following are the summarized financial information pertaining to the Companys associates:
Assets
Liabilities
Equity
Revenues
Net Income
As of and for the three months ended September 30, 2007
NRC ...................................................
NHC (consolidated) ...........................
=
P750,338
753,067
P
=254,807
255,381
P
=498,083
497,686
=
P2,642
1,695
=
P948
40
Assets
Liabilities
Equity
As of June 30, 2007
NRC .....................................................................................................
NHC (consolidated) .............................................................................
=
P750,338
750,495
P
=253,204
253,720
P
=497,134
496,775
The revenues and net income of NRC and NHC for the three months ended September 30, 2006 were not
shown as these were not considered as associates during the said period. The Company has no
unrecognized losses relating to its investments in associates as of September 30, 2007 and June 30, 2007.
9.
Bottles and Cases

September 30
2007
June 30
2007
12
=
P310,689
P
=312,097
12
1,362,774
1,341,914
1,673,463
6,466
1,654,011
33,570
=1,679,929
P
=
P1,687,581
Note
Deposit values of returnable bottles and cases on hand - net of

allowance for probable losses of =
P4,633 as of September 30,
2007 .........................................................................................
Excess of cost over deposit values of returnable bottles and
cases - net of accumulated amortization of =
P2,385,279 as of
September 30, 2007 and =
P2,291,810 as of June 30, 2007 ......
Bottles in transit ...........................................................................
The Company has no allowance for probable losses as of June 30, 2007 due to write-off of P
=43 million and
reversal of provision of P
=2 million during the fiscal year 2007.
F-63
The rollforward of excess of cost over deposit values of returnable bottles and cases is as follows:
Amount
F-64

Balance at July 1, 2006 .........................................................................................................................
Additions ................................................................................................................................................
=
P3,025,680
608,044
Balance at June 30, 2007 .......................................................................................................................

Additions ................................................................................................................................................
3,633,724
114,329
Balance at September 30, 2007 .............................................................................................................
3,748,053
Accumulated amortization:
Balance at July 1, 2006 .........................................................................................................................
Amortization for the period ...................................................................................................................
Other movements ...................................................................................................................................
1,964,922
329,079
(2,191)
Balance at June 30, 2007 .......................................................................................................................

Amortization for the period ...................................................................................................................
Other movements ...................................................................................................................................
2,291,810
94,298
(829)
2,385,279
Carrying amount:
Balance at June 30, 2007 .......................................................................................................................
P
=1,341,914
=
P1,362,774
10.

The movements in this account are as follows:
Machinery
and Other
Land
Measurement basis

July 1, 2006 (Group) ........
Additions ...........................
Effect of deconsolidation ..
Transfers ...........................
Revalued
=
P691,598
(691,598)
Buildings and
Leasehold
Construction
Furniture
Equipment Improvements
in Progress
and Fixtures
Cost
Cost
Cost
Cost
=
P4,753,042
365,868
(358,660)
144,738
=
P555,730
12,104
(5,310)
4,373
P
=65,350
539,803
(149,201)
Total
=
P23,537 =
P6,089,257
1,130
918,905
(691,598)
(106)
(364,076)
90
June 30, 2007/July 1, 2007

(Company) ....................
Additions ...........................
Transfers ...........................
4,904,988
510,379
(14,559)
368
566,897
66,850
760
455,952
(241,501)
24,651
646
(145)
5,952,488
336,374
(14,559)
983
September 30, 2007

(Company) ....................
5,401,176
634,507
214,451
25,152
6,275,286
3,277,418
352,039
19,595
3,649,052
Accumulated depreciation,
amortization and
impairment losses:
July 1, 2006 (Group) ........
Depreciation and
amortization ..................
Impairment losses .............
June 30, 2007/July 1, 2007

(Company) ....................
Depreciation and
amortization ..................
Transfers ...........................
September 30, 2007

(Company) ....................
Carrying amount:
Audited .........................
September 30, 2007
(Company) ....................
453,438
20,436
(357,773)
3,393,519
30,235
(1,686)
785
(106)
484,458
20,436
(359,565)
380,588
20,274
7,587
164
3,498,154
388,175
20,438
3,906,767
=
P
=1,511,469
P
=
P186,309
P
=455,952
P
=4,377
P
=2,158,107
=
P
=1,903,022
P
=
P246,332
P
=214,451
P
=4,714
P
=2,368,519
119,313
(14,246)
(432)
3,794,381
127,064
(14,246)
(432)
The above parcels of land are owned by NRC and were initially appraised in 1997. These were reappraised
in fiscal year 2006 by an independent firm of appraisers based on their market values as of the said date.
The revaluation increase was presented under the Revaluation Increment on Land account in the 2006
interim statement of changes in equity. Had the land been carried at cost, its carrying amount would have
been P
=263,357. In fiscal year 2007, due to the deconsolidation of NRC, land was no longer included in the
Property, Plant and Equipment account of the Company (see Notes 1 and 8).
A substantial portion of the Companys property, plant and equipment and certain parcels of land owned
by NRC are mortgaged and placed in trust under two mortgage trust indentures to secure the Companys
outstanding long-term debt and a portion of its notes payable (see Notes 12 and 14).
F-65
No impairment loss was recognized for the Companys property, plant and equipment for the three months
ended September 30, 2007 and 2006.
11.
Other Assets
Input tax on capital goods ............................................................................................

Refundable deposits ......................................................................................................
Others - net of accumulated depreciation and allowance for impairment losses on
idle assets of P
=432 as of September 30, 2007 ..........................................................
September 30
June 30
2007
2007
=
P135,837
27,995
P
=102,714
26,389
9,349
8,860
=173,181
P
P
=137,963
There was no accumulated depreciation and allowance for impairment losses on idle assets as of June 30,
2007 due to write-off of P
=168 million for the fiscal year 2007.
12.
Notes Payable
This account represents short-term loans from various local banks which are payable in lump sum on their
respective maturity dates up to March 12, 2008. Interest rates on the said loans are repriced monthly based
on negotiated rates or prevailing market rates. The short-term loans are secured by mortgage trust
indentures on inventories, bottles and cases, and real estate, which include certain restrictions and
requirements (see Note 14).
Terms and conditions of outstanding notes payable as of September 30, 2007 are as follows:
September 30
2007
Interest Rate
Metropolitan Bank & Trust

Company (Metrobank) ..................
Land Bank of the Philippines
(Landbank) .....................................
Rizal Commercial Banking
Corporation ....................................
China Banking Corporation ...............
6%
6%
6%
6.1%
Maturity Date
February 2008
January - March
2008
February 2008
February 2008
Face Value
Carrying
Amount
=
P130,000
P
=130,000
148,600
148,600
100,000
50,000
100,000
50,000
=428,600
P
P
=428,600
Notes payable as of June 30, 2007 represents a short-term borrowing from Landbank payable on
September 14, 2007. The borrowing is payable monthly, with an interest rate of 6% per annum, subject to
monthly repricing.
Interest rates range from 5.8% to 6.5% for the three months ended September 30, 2007 and 8.25% to
8.625% for the three months ended September 30, 2006.
Information about the Companys exposure to interest rate risk and liquidity risk is disclosed in Note 26.
F-66
13.
Accounts Payable and Accrued Expenses
Trade payables ..............................................................................

Accrued expenses ..........................................................................
Bank overdraft ..............................................................................
Value added tax (VAT) payable ....................................................
Accrued retirement cost - current portion ....................................
Others ...........................................................................................
September 30
June 30
Note
2007
2007
7, 16
=
P1,279,516
472,609
208,071
35,165
14,295
56,080
=
P1,632,272
456,084
18,499
9,745
84,648
=2,065,736
P
=
P2,201,248
27
The Companys exposure to currency and liquidity risk related to trade and other payables are disclosed in
Note 26.
14.
Long-term Debt
This account consists of obligations to the following:
September 30
2007
June 30
2007
=
P104,167
83,332
P
=283,333
241,666
=20,835
P
P
=41,667
Local banks, payable in equal quarterly installments up to October 6, 2008; with

interest that are reset on 90 days MART 1 plus a designated spread; and
collateralized by the Companys mortgage trust indentures in real estate ................
Less current portion ......................................................................................................
The loan agreements and the mortgage trust indentures securing all the long-term debt from local banks
and a portion of the notes payable (see Note 12), include certain restrictions and requirements with respect
to, among others, changes in the Companys nature of business and business ownership, declaration of
dividends, disposition and hypothecation of assets, material advances to stockholders and officers, entering
into mergers and consolidations, incurrence of additional debt and maintenance of certain financial ratios.
As of September 30, 2007, the Company is in compliance with these loan covenants.
September 30, 2007
Metrobank ..............
Banco de Oro ..........
Total long-term debt
Maturity
Date
Face Value
Carrying
Amount
2008
2007
=
P250,000
P
=104,167
=
P250,000
P
=104,167
June 30, 2007

Interest
Rate
7.1%
Face Value
Carrying
Amount
=
P250,000
150,000
P
=208,333
75,000
=
P400,000
P
=283,333
Interest
Rate
7.1%
7.6%
The long-term debt obtained from Metrobank was originally payable in equal quarterly installments up to
October 6, 2009. The accelerated payment of P
=104 million to Metrobank shortened the term to up to
October 6, 2008.
Interest rates range from 7.06% to 7.1% for the three months ended September 30, 2007 and 8.3% to
10.6% for the three months ended September 30, 2006.
Information about the Companys exposure to interest rate and liquidity risk is disclosed in Note 26.
F-67
15.
Income Taxes
The components of the income tax expense are as follows:
September 30
Current tax expense (benefit) and final taxes on interest income:

Current period ..........................................................................................................
Prior period ...............................................................................................................
Deferred income tax expense (benefit) from origination and reversal of temporary
differences .................................................................................................................
Company
Group
2007
2006
(See Note 2)
(See Note 2)
=
P20,721
(86,786)
114,710
=48,645
P
P
=60,892
(4,957)
P
=55,935
Subsequent to August 10, 2007 (report date of the Companys June 30, 2007 annual financial statements),
the Company received a ruling from the Bureau of Internal Revenue (BIR) which allowed acceleration of
certain deductions. This reduced its current tax expense and payable by P
=87 million and increased its
deferred tax expense and liability by P
=76 million. The effect of the ruling was recognized in the first quarter
of fiscal year 2008 since this is not considered as an adjusting event of fiscal year 2007.
Deferred income tax assets (liabilities) - net are attributable to the following:
Accrual for retirement costs ..........................................................................................

Allowance for probable losses in values of bottles and cases, idle assets, impairment
losses, inventory obsolescence and others ................................................................
Past service cost ............................................................................................................
MCIT ............................................................................................................................
Marketing equipment and bottles and cases ................................................................
September 30
2007
June 30
2007
=
P67,556
P
=64,096
58,996
18,079
6,740
41,979
22,799
151,371
(226,740)
128,874
(88,430)
=(75,369)
P
=
P40,444
The Companys current income tax expense for the three months ended September 30, 2007 consists
primarily of MCIT. As of September 30, 2007, the Company has excess MCIT over regular corporate
income tax (RCIT) amounting to P
=7 million which can be credited against the quarterly or annual income
tax liability, whether MCIT or RCIT, for the taxable year ending June 30, 2008.
As of September 30, 2007 and June 30, 2007, the Company has no unrecognized deferred income tax
assets.
F-68
The reconciliation of the provision for income tax computed at the statutory income tax rate to the
provision for income tax shown in the interim statements of income is as follows:
September 30
Company
Group
2007
2006
(See Note 2)
(See Note 2)
Income before income tax ............................................................................................
=
P195,145
P
=161,653
Expected tax at 35% ....................................................................................................

Additions to (reductions in) income tax resulting from the tax effects of:
Nondeductible expenses ............................................................................................
Change in tax rate ....................................................................................................
Interest income subjected to final tax .......................................................................
Share in net earnings of associates ...........................................................................
Others .......................................................................................................................
=
P68,301
P
=56,579
397
(18,357)
(945)
(326)
(425)
=48,645
P
447
(21)
(1,064)
(6)
P
=55,935
On October 10, 2007, the BIR issued Revenue Regulations No. 12-2007, which amended the timing of the
calculation and payment of MCIT from an annual basis to a quarterly basis, i.e. excess MCIT from a
previous quarter during the current taxable year may be applied against subsequent quarterly or current
annual income tax due, whether MCIT or RCIT. However, excess MCIT from the previous taxable year/s
are not creditable against MCIT due for a subsequent quarter and are only creditable against quarterly and
annual RCIT.
On May 24, 2005, Republic Act No. 9337 entitled An Act Amending the National Internal Revenue
Code, as Amended, with Salient Features (Act), was passed into a law initially effective July 1, 2005. On
the same date, a Temporary Restraining Order (TRO) was issued by the Supreme Court (SC) for the
deferment of the implementation of the Act until such time the TRO is subsequently lifted by the SC. On
November 1, 2005, the TRO was lifted by the SC.
The Act includes the following significant revisions to the rules of taxation, among others:
16.
a.
Increase in the corporate income tax rate from 32% to 35% with a reduction thereof to 30% starting
January 1, 2009 and onwards;
b.
Increase in unallowable interest rate from 38% to 42% with a reduction thereof to 33% beginning
January 1, 2009;
c.
Increase in VAT rate from 10% to 12% effective February 1, 2006 as authorized by the Philippine
President pursuant to the recommendation of the Secretary of Finance; and
d.
Expanded scope of transactions subject to VAT.

In the regular course of business, transactions with related parties consisted primarily of the following:
a.
The Companys appointment as a franchised bottler of PepsiCo, Inc. (PepsiCo), which has 32.87%
beneficial interest in the Company, was renewed on April 11, 2007 under the principal Exclusive
Bottling Appointment (EBA). The EBA authorizes the Company to bottle, sell and distribute
PepsiCos beverage products in the Philippines, which include various CSD and NCB brands. PepsiCo
supplies the Company with the main raw materials (concentrates) in the production of these beverage
products and shares in the funding of certain marketing programs. The EBA is effective for 10 years
F-69
and may be renewed by mutual agreement between PepsiCo and the Company. Total net purchases
from PepsiCo amounted to P
=482 million for the three months ended September 30, 2007 and P
=420
million for the three months ended September 30, 2006.
On April 11, 2007, the Company also entered into an exclusive EBA with Pepsi Lipton International
Limited (Pepsi Lipton), a joint venture of PepsiCo. This EBA authorizes the Company to
manufacture, market, sell and distribute Lipton beverages in the Philippines. Pepsi Lipton supplies the
Company with the main raw materials (concentrates) in the production of these beverage products
and shares in the funding of certain marketing programs. The EBA is effective for 5 years and may
be renewed by mutual agreement between Pepsi Lipton and the Company. Total purchases from Pepsi
Lipton for the three months ended September 30, 2007 amounted to P
=44 million.
The Company has a cooperative advertising and marketing program with PepsiCo and Pepsi Lipton
that sets forth the agreed advertising and marketing activities and participation arrangement during
the years covered by the EBAs. The marketing expenses incurred by PepsiCo in relation to the said
program are not reflected as expenses in the accounts of the Company. In certain instances, the
Company pays for the said expenses and claims reimbursement from PepsiCo.
For the three months ended September 30, 2007 and 2006, the Company incurred marketing
expenses amounting to P
=177 million and P
F-70
b.
PepsiCo has the right to terminate the Companys EBAs under certain conditions, including failure to
comply with terms and conditions of the appointment subject to written notice and thirty day period
to rectify failure, change of 10% or more of ownership control of the Company, change of more than
20% of ownership control of an entity which controls the Company and which results indirectly in
a change of more than 20% of ownership control of the Company, discontinuance of bottling
beverages for 30 consecutive days, occurrence of certain events leading to the Companys insolvency
or bankruptcy, change in management and control of the business by virtue of law, decree, order, rule,
regulation, ordinance or any other similar cause, or termination of any of the EBAs other than the
Lipton EBA. In addition, if in the reasonable opinion of PepsiCo, the Company should at any time
fail to vigorously market the sale of the beverages in, or secure full coverage for, any part of the
Philippines, PepsiCo may, after notifying the Company of the failure and allowing the Company three
months to correct the failure, remove that area from the Companys appointment.
c.
On April 11, 2007, the Company entered into a Performance Agreement with PepsiCo, Orion Brands
International (Orion Brands), Guoco Assets (Phils.), Inc. and Hong Way Holdings, Inc. to meet
certain marketing and investment levels, as required by the EBA. The agreement requires the
Company to: (1) spend an amount equal to a specified percentage of the sales cost of each 8-oz case
with a sales floor for carbonated soda drinks, Tropicana, Gatorade and Propel from 2007 to 2017;
(2) make certain investments from 2007 to 2017 based on a minimum percentage of the Companys
sales to expand the Companys manufacturing capacity for both carbonated and non-carbonated
beverages; (3) invest in a minimum number of coolers per year to support distribution expansion from
2007 to 2017; (4) expand the Companys distribution capabilities in terms of the number of active
routes, the number of new routes and the number of trucks used for distribution support; and (5)
observe financial guidelines as set by the Companys Board.
d.
Certain real estate properties of NRC were mortgaged to secure the Companys outstanding
long-term debt and a portion of its notes payable (see Notes 10, 12 and 14).
e.
The Company leases certain parcels of land where some of its bottling plants are located from NRC.
Lease expense for the three months ended September 30, 2007 amounted to P
=2.6 million. There were
no lease expenses recognized for the three months ended September 30, 2006 resulting from
elimination in consolidation (see Notes 8 and 30).
f.
Working capital advances to NRC.

The effects of the foregoing transactions are shown under the appropriate accounts in the interim
financial statements.
Related Parties
Due from related parties:

NRC .......................................................................................
PepsiCo (included under Receivables account) ..................
September 30
June 30
2007
2007
=
P134,860
15,462
P
=133,286
11,669
=150,322
P
P
=144,955
=
P52,154
P
=53,453
Note
Due to a related party:

NRC .......................................................................................
In addition to their salaries, the Company also provides non-cash benefits to directors and executive
officers and contributes to a defined benefit retirement plan on their behalf.
The compensation and benefits of key management personnel are as follows:
September 30
Short-term employee benefits ..............................................................................

Post-employment benefits ...................................................................................
17.
Company
2007
Group
2006
(See Note 2)
(See Note 2)
=
P16,831
916
P
=17,118
874
=17,747
P
P
=17,992
Net Sales
September 30
Gross sales ....................................................................................................................

Less sales returns and discounts ...................................................................................
Company
2007
Group
2006
(See Note 2)
(See Note 2)
=
P3,767,723
568,873
=
P3,209,731
456,731
=3,198,850
P
=
P2,753,000
F-71
18.
Cost of Goods Sold

September 30
Materials and supplies used .................................................................

Delivery and freight .............................................................................
Depreciation and amortization ............................................................
Rental and utilities ...............................................................................
Personnel expenses ...............................................................................
Repairs and maintenance .....................................................................
Outside services ....................................................................................
Taxes and licenses ................................................................................
Insurance ..............................................................................................
Miscellaneous .......................................................................................
19.
Company
Group
2007
2006
Note
(See Note 2)
(See Note 2)
16
=
P1,639,589
165,596
153,014
69,437
63,682
47,051
29,701
5,539
527
19,748
=
P1,463,308
127,623
134,224
60,198
53,106
41,746
28,527
5,107
593
18,609
=2,193,884
P
=
P1,933,041
21
30
16, 22, 27
Selling and Distribution Expenses

September 30
Note
Distribution ..........................................................................................
Delivery and freight .............................................................................
Sales commissions ................................................................................
Bad debts expense ................................................................................
Travel and transportation ....................................................................
Insurance ..............................................................................................
Miscellaneous .......................................................................................
F-72
16, 22, 27
21
30
Company
2007
Group
2006
(See Note 2)
(See Note 2)
=
P136,584
65,847
57,883
48,571
28,122
24,683
22,674
15,956
14,834
12,241
5,064
2,465
11,752
P
=119,832
54,845
50,336
42,935
21,887
22,115
11,517
9,449
12,324
9,602
4,308
1,715
13,699
=446,676
P
P
=374,564
20.
General and Administrative Expenses

September 30
Note

Travel and transportation ....................................................................
Insurance ..............................................................................................
Miscellaneous .......................................................................................
21.
16, 22, 27
16, 30
21
Company
Group
2007
2006
(See Note 2)
(See Note 2)
=
P119,589
16,919
16,790
10,465
10,169
2,925
466
759
13,031
P
=83,931
14,465
13,993
9,385
9,817
2,420
613
747
6,108
=191,113
P
P
=141,479
Depreciation and Amortization

Depreciation and amortization are distributed as follows:
September 30
Cost of sales:
Property, plant and equipment ......................................................................................
Bottles and cases ...........................................................................................................
Selling and distribution expenses:
General and administrative expenses:
22.
Company
2007
Group
2006
(See Note 2)
(See Note 2)
=
P58,716
94,298
P
=56,873
77,351
153,014
134,224
57,883
50,336
10,465
9,385
=221,362
P
P
=193,945
Personnel Expenses
September 30
Note
Salaries and wages ...............................................................................

Retirement cost ....................................................................................
18, 19, 20
27
Company
2007
Group
2006
(See Note 2)
(See Note 2)
=
P236,664
12,454
P
=175,063
16,819
=249,118
P
P
=191,882
F-73
The above amounts are distributed as follows:

September 30
Note
Cost of sales .........................................................................................

Selling expenses ....................................................................................
General and administrative expenses ...................................................
23.
18
19
20
Company
Group
2007
2006
(See Note 2)
(See Note 2)
=
P63,682
65,847
119,589
P
=53,106
54,845
83,931
=249,118
P
P
=191,882
Net Finance and Other Income (Expense)

September 30
Note
Foreign exchange gain (loss) - net ........................................................

Interest income .....................................................................................
Share in net earnings of associates .......................................................
Interest expense ....................................................................................
Other income - net ...............................................................................
16
8
12, 14, 16
Company
Group
2007
2006
(See Note 2)
(See Note 2)
=
P4,047
3,656
932
(6,147)
2,069
=
P(3,194)
3,040
(13,895)
6,283
=4,557
P
=
P(7,766)
Finance income and expense are as follows:

September 30
Company
2007
Group
2006
(See Note 2)
(See Note 2)
=
P4,047
2,699
957
P
=
3,040
7,703
3,040
6,147
13,134
761
3,194
Finance expense ...................................................................................
6,147
17,089
Net finance income (expense) ..............................................................
=
P1,556
P
=(14,049)
Note
Foreign exchange gain - net .................................................................

Interest income on cash and cash equivalents .....................................
Interest income on due from a related party .......................................
16
Finance income ....................................................................................

Interest expense on notes payable and long-term debt ........................
Interest expense on due to a related party ...........................................
Foreign exchange loss - net ..................................................................
F-74
12, 14
16
The above finance income and expense consist of the following:

September 30
Note
24.
Company
Group
2007
2006
(See Note 2)
(See Note 2)
Total interest income on financial assets ..............................................
16
=
P3,656
P
=3,040
Total interest expense on financial liabilities .......................................
12, 14, 16
=
P(6,147)
=
P(13,895)
Basic Earnings Per Share (EPS)

Basic EPS is computed as follows:
September 30
Company
Group
2007
2006
(See Note 2)
(See Note 2)
Net income (a) ..............................................................................................................

=
P146,500
P
=105,718
Number of shares outstanding (b) ................................................................................ 3,312,389,386 3,312,389,386
Basic EPS (a/b) ..............................................................................................................
=
P0.04
P
=0.03
As of September 30, 2007 and 2006, the Company has no dilutive debt or equity instruments.
25.
Segment Information
As discussed in Note 1, the Company is engaged in the manufacture, sales and distribution of CSD and
NCB. Since its start of commercial operations in 1989, the Companys main products are CSD which
include brands like Pepsi-Cola, 7Up, Mountain Dew and Mirinda.
In fiscal year 2005, the Company began its distribution of NCB products to its consumers following the
installation of NCB production lines in the Muntinlupa Plant in December 2004. The NCB brand category
includes Gatorade, Tropicana/Twister, Lipton and the recently introduced Sting energy drink and Propel
fitness water.
Accordingly, the Company operates in two (2) reportable business segments, which include the CSD and
NCB categories, and only (1) reportable geographical segment which is the Philippines. Thus, a secondary
geographic reporting format is not applicable.
F-75
Analysis of financial information by business segment is as follows:

For the Three Months Ended September 30
Company
Group
Carbonated Soft Drinks

(In 000,000s)
Net Sales
External sales .............
Sales discounts and
returns ...................
Net sales ....................
Result
Segment result ...........
Unallocated expenses .
Interest and financing
expenses .................
Interest income ..........
Foreign exchange loss
- net .......................
Equity in net earnings
of associates ...........
Other income
(expenses) - net ......
Provision for income
tax .........................
Net income ................
Group
Noncarbonated Beverages
Company
Group
Combined
2007
2006
2007
2006
2007
2006
=
P3,079
=2,700
P
=
P689
P
=510
P
=3,768
P
=3,210
(505)
(416)
(64)
(41)
(569)
(457)
=
P2,574
=2,284
P
=
P625
P
=469
P
=3,199
P
=2,753
=
P798
=692
P
P
=207
P
=128
P
=1,005
(814)
=
P820
(651)
(6)
4
(14)
3
(3)
(49)
(56)
=
P146
P
=105
=
P5,788
P
=5,511
641
182
69
189
Combined total assets
=6,611
P
P
=5,769
Segment liabilities ......

Notes payable ............
Long-term debt ..........
Income and other
taxes payable .........
Dividends payable
and others ..............
Deferred tax liabilities
=
P2,328
429
104
P
=1,990
149
450
204
244
75
118
=3,140
P
P
=2,951
=
P428
P
=355
221
194
26
37
Other Information
Segment assets ...........
Investments in and
advances to
associates ...............
Other assets ...............
Deferred tax assets ....
Combined total
liabilities ................
Capital expenditures ..
Depreciation and
amortization and
impairment of
property, plant and
equipment ..............
Noncash items other
than depreciation ...
and amortization .......
F-76
Company
There were no intersegment sales recognized between the two reportable segments.
Assets and liabilities of the Company are not specifically identifiable or allocated to each particular
segment.
26.
Financial Instruments
Credit Risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure
to credit risk at the reporting date is as follows:
Receivables - net ...........................................................................................................

Cash in bank and cash equivalents ...............................................................................
September 30
June 30
2007
2007
=
P771,665
85,000
P
=828,277
440,145
=856,665
P
=
P1,268,422
The maximum exposure to credit risk for net trade receivables as of September 30, 2007 and June 30, 2007
by geographic region is as follows:
Metro Operations .........................................................................................................

Luzon, excluding Metro Operations .............................................................................
Visayas ..........................................................................................................................
Mindanao ......................................................................................................................
September 30
2007
June 30
2007
=
P413,074
96,006
125,620
98,279
P
=472,453
121,235
95,178
93,933
=732,979
P
P
=782,799
The maximum exposure to credit risk for net trade receivables as of September 30, 2007 and June 30, 2007
by type of customer is as follows:
September 30
2007
June 30
2007
Regular credit accounts (wholesalers and others) .........................................................

Entrepreneurial distribution system & distributors ......................................................
Modern trade channel ...................................................................................................
=
P353,788
42,665
404,806
P
=332,778
44,214
463,372
Less allowance for impairment losses on trade receivables ..........................................
801,259
68,280
840,364
57,565
=732,979
P
P
=782,799
The Companys most significant type of customer pertains to modern trade channel, which accounts for
P
=405 million and P
=463 million of the gross trade receivables amount as of September 30, 2007 and June
30, 2007, respectively.
F-77
The aging of trade receivables as of September 30, 2007 and June 30, 2007 is as follows:
September 30 2007
Gross Amount
Current ........................................................................
Past due 0-30 days ......................................................
Past due 31-60 days ....................................................
More than 60 days ......................................................
June 30 2007
Impairment Gross Amount
Impairment
=
P471,875
186,285
41,094
102,005
P
=
68,280
P506,199
=
200,492
36,097
97,576
P
=
57,565
=801,259
P
P
=68,280
P
=840,364
P
=57,565
Various collateral securities such as bank guarantees, time deposits, surety bonds, real estate and chattel
mortgages are held by the Company for trade receivables exceeding P
=250 thousand. For trade receivables
amounting to at least P
=1 million, bank guarantees, time deposits and surety bonds are the only acceptable
collaterals.
The movements in the allowance for impairment in respect of trade receivables during the period are as
follows:
Amount
Balance at July 1, 2006 .........................................................................................................................

Impairment loss recognized during the period ......................................................................................
Trade receivables written-off during the period ....................................................................................
Reversals during the period ...................................................................................................................
=
P82,403
92,069
(19,590)
(97,317)
Balance at June 30, 2007 .......................................................................................................................

Impairment loss recognized during the period ......................................................................................
Reversals during the period ...................................................................................................................
57,565
10,900
(185)
P
=68,280
The allowance for impairment loss on trade receivables as at September 30, 2007 and June 30, 2007 of P
=68
million and P
=58 million, respectively, relates to outstanding accounts of customers that are more than 60
days past due.
Liquidity Risk
The following are the contractual maturities of financial liabilities, including estimated interest payments
and excluding the impact of netting agreements:
As of September 30, 2007
Non-derivative financial liabilities

Notes payable .....................................
Long-term ...........................................
Accounts payable and accrued
expenses ..........................................
F-78
Carrying
Amount
Contractual
Cash Flow
6 Months
or less
6-12
Months
1-2
Years
=
P428,600
104,167
P
=440,225
109,747
P
=440,225
66,968
P
=
21,572
=
P
21,207
2,065,736
2,065,736
2,065,736
=2,598,503
P
=
P2,615,708
=
P2,572,929
=
P21,572
P
=21,207
As of June 30, 2007
Non-derivative financial liabilities ......

Notes payable .....................................
Long-term ...........................................
Accounts payable and accrued
expenses ..........................................
Carrying
Amount
Contractual
Cash Flow
6 Months
or less
6-12
Months
1-2
Years
=
P48,600
283,333
P
=49,806
294,000
P
=49,806
251,221
P
=
21,572
=
P
21,207
2,201,248
2,201,248
2,201,248
=2,533,181
P
=
P2,545,054
=
P2,502,275
=
P21,572
P
=21,207
Currency Risk
The Companys exposure to foreign currency risk based on notional amounts are as follows:
September 30
June 30
2007
2007
USD
USD
Trade payables ..............................................................................................................

Forecasted purchases* ...................................................................................................
4,448
21,086
5,510
28,114
Gross exposure ..............................................................................................................
25,534
33,624
Forecasted purchases for the September 30, 2007 column pertain to purchases for the period from October 1, 2007 to June
30, 2008 (nine months) while forecasted purchases for the June 30, 2007 column pertain to purchases for the fiscal year 2008.
Average exchange rates for the three months ended September 30, 2007 and 2006 are USD1 = P
=45.64 and
USD1 = P
=50.83, respectively. The exchange rates applicable as of September 30, 2007 and June 30, 2007
are USD1 = P
=45.04 and USD 1 = P
=46.24, respectively.
Sensitivity Analysis
A 10% strengthening of the Philippine Peso against USD as of September 30, 2007 and June 30, 2007
would have increased equity and profit or loss by P
=20 million and P
A 10% weakening of the Philippine Peso against the above currencies as of September 30, 2007 and June
30, 2007 would have had the equal but opposite effect, on the basis that all other variables remain constant.
Interest Rate Risk
As of September 30, 2007 and June 30, 2007, the interest rate profile of the Companys interest-bearing
financial instruments is as follows:
September 30
2007
Fixed rate
Financial assets .........................................................................................................
Financial liabilities ....................................................................................................
Variable rate
Financial liabilities ....................................................................................................
June 30
2007
=
P104,544
(428,600)
P
=468,490
(48,600)
(324,056)
517,090
(104,167)
(283,333)
F-79
Sensitivity Analysis
A 2% increase in interest rates would have decreased equity and profits for the three months ended
September 30, 2007 and 2006 by P
=3 million and P
A 2% decrease in interest rates for the three months ended September 30, 2007 and 2006 would have had
the equal but opposite effect, on the basis that all other variables remain constant.
Fair Values
The fair values together with the carrying amounts of the financial assets and liabilities shown in the interim
balance sheet are as follows:
September 30 2007
Cash and cash equivalents ..........................................

Receivables ..................................................................
Due from a related party ............................................
Accounts payable and accrued expenses .....................
Notes payable ..............................................................
Dividends payable .......................................................
Due to a related party .................................................
Long-term debt, including current portion .................
June 30 2007
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
=
P245,266
771,665
134,860
2,065,736
428,600
52,154
104,167
P
=245,266
771,665
134,860
2,065,736
428,600
52,154
104,167
P
=632,272
828,277
133,286
2,201,248
48,600
400,000
53,453
283,333
P
=632,272
828,277
133,286
2,201,248
48,600
400,000
53,453
283,333
Estimation of Fair Values

The following summarizes the major methods and assumptions used in estimating the fair values of
financial instruments reflected in the table:
The carrying amount approximates the fair value due to the short maturity.
Receivables/due from a Related Party/Accounts Payable and Accrued Expenses/ Dividends Payable/Due
to a Related Party/ Notes Payable
Current receivables are reported at their net realizable values, at total amounts less allowances for estimated
uncollectible accounts. Current liabilities are stated at amounts reasonably expected to be paid within the
next twelve months or within the Companys operating cycle. In case of long-term receivables, the fair value
is based on present value of expected future cash flows using the applicable discount rates.
Long-term Debt
Long-term debt are reported at their present values, which approximate the cash amounts that would fully
satisfy the obligations as of balance sheet date. The carrying amount approximates fair value since the
interest rates are repriced frequently. These are classified as current liabilities when they become payable
within a year.
27.
Retirement Plan
The Company has a funded, non-contributory defined benefit retirement plan covering substantially all of
its regular and full time employees. Annual cost is determined using the projected unit credit method. The
Companys latest actuarial valuation date is June 30, 3007. The actuarial valuation is made on an annual
basis.
F-80
Retirement costs charged to operations amounted to P

=12 million and P
=17 million for the three months
ended September 30, 2007 and 2006.
The reconciliation of the assets and liabilities recognized in the interim balance sheet is shown below:
September 30
June 30
2007
2007
=
P381,412
152,301
P
=366,031
148,454
Present value of obligations ..........................................................................................

Fair value of plan assets ................................................................................................
Unfunded obligations ....................................................................................................
Unrecognized actuarial net losses .................................................................................
229,111
(3,923)
Accrued retirement cost ................................................................................................
217,577
(3,923)
=
P225,188
P
=213,654
September 30
June 30
2007
2007
=
P14,295
210,893
P
=9,745
203,909
=225,188
P
P
=213,654
The accrued retirement costs are classified in the interim balance sheet as follows:
Accounts payable and accrued expenses .......................................................................

Accrued retirement cost (long-term) .............................................................................
The components of retirement cost recognized in the interim statements of income are as follows:
September 30
Company
2007
Group
2006
(See Note 2)
(See Note 2)
Current service cost ......................................................................................................

Interest cost ...................................................................................................................
Expected return on plan assets .....................................................................................
Amortization of unrecognized net actuarial loss ..........................................................
=
P8,175
8,126
(3,847)
P
=9,848
9,613
(3,385)
743
Net retirement cost .......................................................................................................
=
P12,454
P
=16,819
Actual return on plan assets .........................................................................................
=
P3,847
P
=3,385
The changes in the present value of the defined benefit obligation are as follows:
Balance at July 1, 2006 .........................................................................................................................
Current service cost ...............................................................................................................................
Interest cost ............................................................................................................................................
Benefits paid ...........................................................................................................................................
Actuarial loss (gain) ...............................................................................................................................
=
P409,055
39,394
38,452
(16,209)
(104,661)
Balance at June 30, 2007 .......................................................................................................................

Current service cost ...............................................................................................................................
Interest cost ............................................................................................................................................
Benefits paid ...........................................................................................................................................
Actuarial loss (gain) ...............................................................................................................................
366,031
8,175
8,126
(920)
=
P381,412
F-81
The movements in the fair value of plan assets are shown below:
Balance at July 1, 2006 .........................................................................................................................
Contributions .........................................................................................................................................
Benefits paid ...........................................................................................................................................
Expected return ......................................................................................................................................
Net actuarial loss (inclusive of experience adjustment) .........................................................................
=
P111,472
62,000
(13,013)
13,539
(25,544)
Balance at June 30, 2007 .......................................................................................................................

Contributions .........................................................................................................................................
Benefits paid ...........................................................................................................................................
Expected return ......................................................................................................................................
Net actuarial loss (inclusive of experience adjustment) .........................................................................
148,454
3,847
=
P152,301
The expense is recognized in the following accounts in the interim statements of income:
September 30
Note
Cost of goods sold ...............................................................................

Operating expenses ..............................................................................
18
19, 20
Company
2007
Group 2006
(See Note 2)
(See Note 2)
=
P2,051
10,403
P
=1,979
14,840
=12,454
P
P
=16,819
The allocation of the fair value of plan assets of the Company as of September 30, 2007 and June 30, 2007
follows:
September 30
2007
Investment in fixed income securities ...........................................................................

Investment in shares of stocks ......................................................................................
98%
2%
June 30
2007
98%
2%
Principal actuarial assumptions at the balance sheet date (expressed as weighted averages) are as follows:
September 30
2007
Discount rate .................................................................................................................

Expected rate of return on plan assets ..........................................................................
Rate of future salary increase .......................................................................................
F-82
9.00%
9.00%
7.00%
June 30
2007
9.00%
9.00%
7.00%
The historical information of the amounts is as follows:

Company
Company
Group
Group
September 30
2007
June 30
2007
June 30
2006
June 30
2005
(See Note 2)
(See Note 2)
(See Note 2)
(See Note 2)
Present value of the defined benefit obligation ...........

Fair value of plan assets ..............................................
=
P381,412
152,301
P
=366,031
148,454
P
=409,055
111,472
P
=281,872
49,497
Deficit in the plan .......................................................

Experience adjustments on plan liabilities ..................
Experience adjustments on plan assets ........................
(229,111)
(217,577)
(42,167)
(19,246)
(297,583)
(232,375)
The Company expects to contribute P

=55 million to defined benefit plan in fiscal year 2008.
28.
Capital Stock
This account consists of:
September 30, 2007
Shares
Authorized - =
P0.15 par value
5,000,000,000
Issued and outstanding ................................................ 3,312,989,386
June 30, 2007
Amount
Shares
Amount
=
P750,000 5,000,000,000
496,948 3,312,989,386
=
P750,000
496,948
On April 29, 1998, the Companys BOD approved the implementation of an Employees Stock Option Plan
(ESOP) covering 150,000,000 new shares of stock at P
=1 each, subject to such terms and conditions to be
approved by the Chairman and Vice-Chairman of the Company. As of December 7, 2007 (audit report
date), the terms and conditions of the ESOP have not yet been approved.
29.
Retained Earnings
a.
b.
The Companys BOD approved several declarations of cash dividends amounting to P

=400 million in
2007 and P
=397 million in 2006. Details of each declaration are as follows:
Date of Declaration
Payable to Stockholders
of Record as of
Date of Payment
April 17, 2006

June 22, 2006
June 21, 2007
April 17, 2006

June 22, 2006
June 21, 2007
April 28, 2006

July 28, 2006
August 20, 2007
The balance of the revaluation increment was reclassified to retained earnings on February 1, 2007
due to loss of control over NRC (see Note 8).
F-83
30.
Commitments and Contingencies

a.
As of September 30, 2007, the Company leases certain parcels of land where its bottling plants and
warehouses are located from third parties and NRC for a period of one to 25 years and are renewable
for another one to 25 years. None of these leases includes contingent rentals. Rent expense pertaining
to these leased properties for the three months ended September 30 2007 and 2006 amounted to P
=20
million and P
=15 million, respectively (see Notes 16, 18, 19 and 20).
Future rental commitments under such noncancelable operating leases are as follows:
Less than one year ..............................................................................................

Between one and five years .................................................................................
More than five years ...........................................................................................
b.
F-84
September 30
June 30
2007
2007
=
P64,146
210,741
285,020
P
=62,676
470,329
41,748
=559,907
P
P
=574,753
The Company is a party to a number of lawsuits and claims relating to tax, labor and other issues
arising out of the normal course of its business. Management and its tax and legal counsels believe
that the outcome of these lawsuits and claims will not materially affect the financial position, financial
performance or liquidity of the Company.
REGISTERED HEAD OFFICE AND

PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY
Km. 29 National Road Tunasan
Muntinlupa City
Philippines 1773
SOLE GLOBAL COORDINATOR, BOOKRUNNER AND INTERNATIONAL UNDERWRITER
52/F Two International Finance Centre
8 Finance Street
Central
Hong Kong
JOINT DOMESTIC LEAD UNDERWRITERS
17/F Tower One and Exchange Plaza
Ayala Triangle, Ayala Avenue
Makati City
Philippines

20th Flr. BDO South Tower
Makati Avenue corner H.V. dela Costa St.
Makati City
Philippines
LEGAL ADVISORS
To us as to United States
federal law
To the International Underwriter as to United States

federal law
Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square
New York, New York 10036
United States of America
Allen & Overy

9/F, Three Exchange Square
Central
Hong Kong
To us as to Philippine law
To the International Underwriter and

the Joint Domestic Lead Underwriters as to Philippine law
Romulo Mabanta Buenaventura

Sayoc & De los Angeles
30th Floor, Citibank Tower
8741 Paseo de Roxas
Makati City, Philippines
Picazo Buyco Tan Fider & Santos Law Offices

17th-19th Floor, Liberty Center
104 Dela Costa St., Salcedo Village
Philippines
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

22/F Philamlife Tower
8767 Paseo de Roxas
Makati City
Philippines
Printed by IFN Financial Press Limited

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January 19, 2008

Pepsi-Cola Products Philippines, Inc.

Primary and Secondary Offer of 1,142,348,680 Common Shares

Sole Global Coordinator, Bookrunner and International Underwriter

UBS Investment Bank

ATR KimEng Capital Partners, Inc.

BDO Capital & Investment Corporation

Domestic Participating Underwriters

PEPSI-COLA PRODUCTS PHILIPPINES, INC.

Board of Directors and Senior Management .

Summary of the Offer . . . . . . . . . . . . . . . .

Related Party Transactions . . . . . . . . . . . . .

Summary Financial Information . . . . . . . . .

Dividends and Dividend Policy . . . . . . . . . .

Determination of Offer Price . . . . . . . . . . .

Selected Financial Information . . . . . . . . . .

Principal and Selling Shareholders . . . . . . . . 101

Managements Discussion and Analysis of

Independent Public Accountants . . . . . . . . . 136

Financial Statements and Independent

Legal Matters . . . . . . . . . . . . . . . . . . . . . . 135

An application to subscribe for Offer Shares pursuant to the Firm Offer

ATR KimEng .....................................

ATR KimEng Capital Partners, Inc.

Banking Day ......................................

BDO Capital ......................................

BDO Capital & Investment Corporation

Bureau of Internal Revenue

Our Board of Directors

Bangko Sentral ng Pilipinas, the central bank of the Philippines

BSP Rate ............................................

Company or PCPPI ...........................

Pepsi-Cola Products Philippines, Inc.

Crossing Date ....................................

Domestic Offer ..................................

342,704,000 Offer Shares to be offered by us and Guoco Assets

Domestic Offer Period .......................

Domestic Offer Shares .......................

Domestic Participating Underwriters

ING Bank N.V., Manila Branch, AB Capital and Investment

Domestic Receiving Agent .................

Stock Transfer Service, Inc.

Domestic Receiving Bank ...................

Domestic Selling Agent ......................

Trading Participants of the PSE

Domestic Underwriters ......................

The Joint Domestic Lead Underwriters and the Domestic Participating

Domestic Underwriting Agreement ...

Agreement to be dated on or about January 21, 2008 among us, Guoco

Eight-ounce case equivalents ..............

A standardized measure of beverage volume, being the volume

Firm Offer .........................................

The offer and sale of 1,142,348,680 Shares by us and the Selling

Firm Shares ........................................

The Shares relating to the Firm Offer

First Board .........................................

The First Board of the Philippine Stock Exchange

First Closing Date ..............................

Date of delivery of the Firm Shares, which is expected to occur in

The Philippine Financial Reporting Standards Council

The Gross Domestic Product of the Philippines, which is a measure of

The Government of the Republic of the Philippines