Consumers in the U.S. spend $62 billion a year on carbonated soft drinks (CSDs) - more than they do on any other non-alcoholic beverage - making CSDs the cornerstone of PBG's business and a valuable profit-maker for our customers. At the same time, non-carbonated beverages have become the industry's major growth engine. Our ongoing success depends on growing both categories profitably.

For the already well-developed CSD category, growth is spurred by innovation and reinvigoration, and we've had a healthy dose of both. In the past few years, the PBG system has absorbed an unprecedented stream of new Pepsi-Cola products that have helped keep the category relevant and exciting. Lemon-flavored Pepsi Twist and Pepsi Blue - a cola-berry "fusion" launched in the summer 2002 - have put a fresh spin on colas and captured new consumers. Cherry-flavored Mountain Dew Code Red, going strong in its second year of distribution, has helped re-energize flavor CSDs. And Sierra Mist, now the fastest-growing national lemon-lime soda in the U.S., has begun to do the same for its segment. In non-carbs, our star player, Aquafina, the leading national bottled water brand in the U.S., continued its phenomenal upward trend in 2002.

Aquafina's U.S. volume grew more than 35% overall. In food stores alone, the brand grew more than 70% and gained nearly four share points, driven by PBG's concerted efforts to make Aquafina a household staple. We introduced innovative take-home packaging, designed Aquafina end-cap displays and racks, and placed dedicated, high-visibility coolers and vendors.

It is our powerful direct store delivery system, by which PBG employees deliver and merchandise our products, that enables us to swap displays on a dime, react immediately to marketplace conditions, and launch products virtually overnight and seamlessly. It's a capability that has made the impossible doable.