Jugos Del Valle Transaction Transaction Summary
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Coca-Cola FEMSA January 2007 Cautionary Statement FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended. These forward-looking statements relate to Coca-Cola FEMSA, S.A. de C.V. and subsidiaries (“KOF”) and their businesses, and are based on KOF management’s current expectations regarding KOF and its businesses. Recipients are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside KOF’s control, that could cause actual results of KOF and its businesses to differ materially from such statements. KOF is under no obligation, and expressly disclaims any intention or obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. The proposed transaction, the financial condition and results of the combined company will be subject to numerous risks and contingencies, including the receipt of financing and regulatory approvals, the ability to realize synergies and successfully integrate operations. This document does not represent an offer of any securities for sale. This presentation also includes, and representatives of Coca-Cola FEMSA from time to time may refer to, unaudited pro forma financial information giving effect to the proposed business combination. However, this information is preliminary, not in accordance with generally accepted accounting principles, and not necessarily indicative of historical financial position or results if the proposed business combination had occurred or of any future financial data. ADDITIONAL INFORMATION AND WHERE TO FIND IT Documents filed by KOF are available at the Securities and Exchange Commission’s public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20594. Investors and security holders may call the Commission at 1-800-SEC-0330 for further information on the public reference room. Free copies of all of KOF’s filings with the Commission may also be obtained by directing a request to: COCA-COLA FEMSA Guillermo González Camarena No. 600, Col. Centro de Ciudad Santa Fé 01210, México D.F., México Investor Relations Alfredo Fernandez / (52) 55 5081 51 20 / [email protected] Julieta Naranjo / (52) 55 5081 51 48 / [email protected] 2 FEMSA’s Structure & Contribution by Business Public Float 14.7% 31.6% 53.7% 100% 100% LTM 2006 Revenues(1) LTM 2006 EBITDA(1) US$ 10,786 mm US$ 2,208 mm 9% 28% 46% 51% 40% 26% (1) LTM information as of September 30, 2006. Converted into dollars with ending exchange rate of each of 4 quarters. See reconciliation table on page 28 3 KOF – LTM September 2006(1) Volume (1,968 MM UC) Revenues (US$ 4,936 MM) EBITDA (US$ 1,087 MM) 6% 5% 8% 10% 13% 13% 4% 7% 11% 9% 54% 54% 7% 9% 67% 9% 6% 7% Mexico Central AmericaColombia Venezuela Brazil Argentina LTM 06 - Average Unit Price (USD/UC) 2.99 3.06 2.55 2.44 2.49 2.29 EBITDA Mexico Central America Colombia Venezuela Brazil Argentina Margin 27.2% 20.0% 17.8% 7.6% 17.0% 18.4% (1) LTM information as of September 30, 2006. Converted into dollars with ending exchange rate of each of 4 quarters. See reconciliation table on page 29 4 KOF in the beverage world KOF is the third largest Coca-Cola bottler in the world in terms of revenues, and the second one in terms of EBITDA generation(1). 18,706 17,253 2005 Revenues (US MM) 16,174 2005 EBITDA (US MM) 13,753 11,885 9,564 6,567 5,657 5,531 4,657 4,577 3,939 1,368 4,098 988 3,107 2,596 909 2,522 1,653 2,043 1,487 734 964 1, 0 14 318 194 201 CCE A-B SAB InBev PBG FEMSA AmBev TAP Hellenic Modelo KOF Arca Contal Andina (1) Source: Analysts Reports and Companies files. EBITDA calculation method may differ among companies. 5 Strong EBITDA and FCF growth A clear sign of our superior track record is our EBITDA growth and strong cash flow generation during the last 10 years….. EBITDA Free Cash Flow (US$ Million) (US$ Million) 118 (1) 1,087 415 1,029 394 899 323 742 307 293 537 223 518 206 438 37 330 31 128 243 244 (2) 1997 1998 1999 2000 2001 2002 2003 2004 2005 LTM06 1997 1998 1999 2000 2001 2002 2003 2004 2005 LTM06 CAGR 97- LTM06 18% CAGR 97- LTM06 31% Financial information in nominal terms translated into US Dollars using the end of period exchange rate of each year. 1997 1998 1999 2000 2001 2002 2003 2004 2005 4Q05 1Q06 2Q06 3Q06 FX Rate 8.05 9.88 9.50 9.61 9.18 10.46 11.24 11.15 10.71 10.71 10.95 11.40 10.97 (1) Tax Reimbursement (2) Last Twelve Months information as of September 30, 2006. Converted into U.S. dollars with ending exchange rate of each of 4 quarters. See reconciliation table on page 29. 6 Significant Debt Reduction …allowing us to reduce US$ 1 billion of net debt since the acquisition of Panamco. Cash Net Debt $2,828 $2,545 330 240 $2,221 307 $1,862 $1,835 $1,854 162 301 356 2,498 2,305 1,914 1,700 1,534 1,498 May 03 Dec-03 Dec 04 Dec-05 Jun 06 Sep 06 FX Rate: 10.30 11.24 11.15 10.71 11.40 11.02 7 How have we achieved this? The Mexican Example Innovating across the value chain Tailoring our multisegmentation strategy to our different markets… Mexico’s Portfolio Segments + PREMIUM + CORE 1.25 L RGB & 2.5L Ref Pet SE LevelSE Level ProfitabilityProfitability - RBs - + Competition - 9 …widening our packaging offering… … adapting our packaging portfolio to market needs. In Mexico alone we have over 13 packaging presentations for brand Coca-Cola CC 2.5 lts N-Ret $16.00 CC 2.5 lts. Ret $12.00 - $14.00 BC 3.3 lts. $12.00 - 13.00 CC 2.0 lts. N-Ret $13.00 CC 1.0 lts. N-Ret CC 1.5 lts.N-Ret PC 2.0 lts. PC 3.0 lts Red Cola $8.50 - $9.00 $11.00 $11.00 $13.00 3.3 lts. $12.00 PC 1.0 lts. $8.50 BC 2.2 lts $8.50 CC 1.25 lts. Ret Jarritos 2.0 lts. Price CC 600 ml. N-Ret $7.50 – $8.00 $8.00 - $10.00 CC can $6.00 - $6.50 Mundet & Fanta BC 1.28 lts. N-Ret $5.00 PC 600ml. MF 2.0 lts $6.50 PC can $5.50 $8.00 - $10.00 $4.50 Red Cola 600 ml $3.50 KOF PC BC KOF Reg Multiflavor Brand Jarritos 0 0.5 1 1.5 2 2.5 3 3.5 Size (Lts) Single-serve Presentations Multi-serve Presentations 10 KOF and The Coca-Cola Company: a new collaborative framework Providing Attractive Growth Opportunities …we foresee several growth opportunities…. • The Coca-Cola Company will provide additional marketing support for the carbonated and non-carbonated beverage portfolio • A new business model in the non- carbonated beverages segment • Potential expansion of our footprint within Latin America and in other markets 12 … in the carbonated beverage segment… with brand Coca-Cola driving the majority of our growth… 1,670 Total Colas Flavors 1,604 79% 1,549 78% 1,493 58% 2003(1) 2004 2005 LTM 06 CSDs Sales Volume (mm UC) CAGR 03- LTM06 3.8% (1) Includes full-year sales volume of our original territories and our new territories acquired from Panamco. 13 …and in the non-carbonated beverage segment… …with a lot of potential growth to capture… As % of 29.7 Total Volume 2.5 1.5% 2.5 0.9% 22.5 18.2 19.0 1.6 8.1 4.6% 2.2 Argentina 0.3 0.8 1.6 1.7 1.7 0.9% Brazil 8.1 Venezuela 8.5 9.4 0.3 4.9 4.2% Colombia 0.3 2.3 1.9 0.5 Central America 1.8 0.9% 8.0 10.0 Mexico 5.6 4.8 2003 2004 2005 LTM 06 Non-carbs Sales Volume (mm UC) (1) CAGR 03- LTM06 17.8% Bottled Water (as % of Total Vol) 5.0% 4.7% 5.0% 4.6% (1) Excludes non-flavored water and water in jug presentations. 14 …customizing our product portfolio to each market 1530 Jugos del Valle Transaction Transaction Summary Coca-Cola FEMSA (“KOF”) and The Coca-Cola Company (“KO”) will offer to acquire up to 100% shares of Jugos del Valle for 100% cash consideration Total transaction value: US$ 470 MM ¾ Equity Value: US$ 380 MM ¾ Net Debt: US$ 90 MM debt The final price to be paid will be based on the actual level of debt, net working capital and other liabilities on the date the tender offer is launched The transaction value implies multiples of: ¾ LTM September 2006 Estimated Volume: US$4.2 per unit case ¾ LTM September 2006 Revenues:1.1 X The acquisition is subject to customary regulatory approvals. 17 Initial Ownership Structure 50% 50% JugosJugos deldel ValleValle Coca-Cola FEMSA and The Coca-Cola Company plan to create a new jointly owned entity to acquire Jugos del Valle shares. Eventually, rest of Coca-Cola system in Mexico and Brazil will be invited to participate under the same basic terms and conditions, in each of joint venture’s territories as shareholders of the JV, reducing KOF’s ownership 18 • Transaction Summary • Transaction Rationale • Jugos del Valle – Industry & Company Overview 19 Transaction Rationale Increases importantly the Coca-Cola system presence in the fast-growing non-carbonated beverage (NCB) segment in Mexico and Brazil; transaction will also allow KOF to consolidate presence as leader in NCB segment across its territories, positioning us above our main competitor Initially the acquisition price will be split between KOF and KO Increase importance of NCB segment as a percentage of KOF’s total volumes to approximately 6% to 10%, from 1% in Mexico and Brazil Leverages Coca-Cola system’s distribution network in Mexico and Brazil Improves distribution coverage, potentially reaching 575,000 and 100,000 points of sale in Mexico and in Brazil, respectively, from 395,000 and 54,000 points of sale today Provides opportunity to increase current volumes by integrating KOF’s product/package portfolio initiatives into joint venture Offers ability to increase top line and capture synergies across value chain 20 Transaction Rationale (cont’d) LTM(1) Sales volume by category 1,968 118 14% (2) 1% Water 79% Non-carbs 85% 21% CSDs KOF JDV NCBs(3) LTM Sales volume by territory KOF (24.5 MM UC) Jugos del Valle (93.2 MM UC) 10% 16% 32% Mexico Brazil 18% Others 66% 58% (1) Source companies filings.