Exhibit 99.1
Contact: Michael Goodwin Mary Winn Settino
Public Relations Investor Relations
(914) 767-6960 (914) 767-7216
FOR IMMEDIATE RELEASE
THE PEPSI BOTTLING GROUP REPORTS THIRD QUARTER 2003 RESULTS
SOMERS, N.Y., September 30, 2003 - The Pepsi Bottling Group, Inc. (NYSE:
PBG) today reported third quarter 2003 net income of $183 million, or diluted
earnings per share (EPS) of $0.67. These results compare to reported third
quarter 2002 net income of $178 million, or EPS of $0.61.
o Physical case volume worldwide and in the U.S. was flat for the
quarter on a constant territory basis. Volume growth in PBG's European
territories was strong, up seven percent for the quarter, while volume
in Mexico was down five percent.
o Pricing in the U.S. marketplace grew two percent during the third
quarter. This growth was offset by negative mix and the Company's
adoption of FASB's Emerging Issues Task Force (EITF) Issue No. 02-16,
which resulted in a reported U.S. net revenue per case decline of two
percent.
o Reported operating income for the Company grew six percent in the
third quarter.
"During the third quarter, our U.S. business improved substantially over
the first half of 2003," said John T. Cahill, Chairman and Chief Executive
Officer of PBG. "Volume performance was led by the strength of Mountain Dew
LiveWire and the launch of Pepsi Vanilla late in the quarter. Sierra Mist
continued on a positive trend, with total lemon-lime growth up five percent in
the quarter. Despite continued softness in the cold drink channel, our diet soft
drink portfolio continued to generate low single-digit growth. In the take-home
channel, Aquafina continued its very strong performance, growing more than 50
percent year over year. The pricing environment in the U.S. remained positive
and, after the Labor Day holiday, we began to initiate targeted price increases
in select markets."
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PBG REPORTS THIRD QUARTER 2003 RESULTS / 2 of 3
Cahill continued, "Our European businesses delivered solid volume and
operating profit results. Innovation fueled strong growth in Russia, while our
results in Spain were up double digits in terms of volume and profits. In
Mexico, we faced increased competitive activity, which placed downward pressure
on our overall performance. However, our initiatives in the first half of the
year there have led to an improving trend in share performance."
On a constant territory basis, physical case volume in the U.S. during the
third quarter was flat. (Constant territory calculations assume all significant
acquisitions made in 2002 were made at the beginning of 2002 and exclude all
significant acquisitions made in 2003.) PBG's cold drink volume improved over
the first half of the year, though it remained negative for the quarter. In
Mexico, sales of water and carbonated soft drinks were soft during the third
quarter reflecting a very competitive retail environment.
PBG achieved rate increases in its U.S. markets of two percent for the
quarter. Soft cold drink performance had a negative impact on the Company's
reported net revenue per case results. This mix effect, as well as PBG's
adoption of FASB's EITF Issue No. 02-16 (an accounting principle that
reclassifies the majority of the bottler incentives PBG receives from PepsiCo
and other brand owners from net revenues and selling, delivery and
administrative expenses to cost of sales), lowered the Company's reported U.S.
net revenue per case results by four percentage points. Worldwide reported net
revenue per case declined six percent.
Year to date, as of Friday, September 26th, PBG had repurchased 20.0
million shares of common stock. Since the inception of the Company's share
repurchase program in October 1999, 60.4 million shares have been repurchased.
The Company stated that in fiscal 2003 it expects to achieve EPS of $1.55
to $1.57, before the cumulative effect of the adoption of EITF Issue No. 02-16.
The Company also stated that it expects worldwide constant territory volume for
the full year to be about flat and reported operating income to grow about seven
percent. The Company reiterated its expectation for solid cash flow performance,
with cash from operations of more than $1.0 billion and capital expenditures of
$675 million.
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PBG REPORTS THIRD QUARTER 2003 RESULTS / 3 of 3
The Pepsi Bottling Group, Inc. (www.pbg.com) is the world's largest
manufacturer, seller and distributor of Pepsi-Cola beverages with operations in
the U.S., Canada, Greece, Mexico, Russia, Spain and Turkey. To receive company
news releases by e-mail, please visit www.pbg.com.
Listen in live to PBG's third quarter 2003 earnings discussion with
financial analysts on September 30th at 11 a.m. (EDT) at http://www.pbg.com.
# # #
Statements made in this press release that relate to future performance or
financial results of the Company are forward-looking statements which involve
uncertainties that could cause actual performance or results to materially
differ. PBG undertakes no obligation to update any of these statements. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as to the date hereof. Accordingly, any forward-looking
statement should be read in conjunction with the additional information about
risks and uncertainties set forth in PBG's Securities and Exchange Commission
reports, including its annual report on Form 10-K for the year ended December
28, 2002.
Attachments (3 pages)
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
in millions except per share amounts, unaudited
12-Weeks Ended 36-Weeks Ended
-------------------------- --------------------------
September September September September
6, 2003 7, 2002 6, 2003 7, 2002
----------- ----------- ----------- -----------
Net revenues.................................................... $ 2,810 $ 2,455 $ 7,216 $ 6,436
Cost of sales................................................... 1,438 1,337 3,655 3,464
--------- --------- --------- ---------
Gross profit.................................................... 1,372 1,118 3,561 2,972
Selling, delivery and administrative expenses................... 1,014 780 2,812 2,228
--------- --------- --------- ---------
Operating income................................................ 358 338 749 744
Interest expense, net........................................... 56 45 166 136
Other non-operating expenses, net............................... 2 3 5 3
Minority interest............................................... 21 21 41 45
--------- --------- --------- ---------
Income before income taxes...................................... 279 269 537 560
Income tax expense.............................................. 96 91 184 189
--------- --------- --------- ---------
Income before cumulative effect of change in accounting
principle....................................................... 183 178 353 371
Cumulative effect of change in accounting principle, net of tax
and minority interest........................................... - - 6 -
--------- --------- --------- ---------
Net income...................................................... $ 183 $ 178 $ 347 $ 371
========= ========= ========= =========
Basic earnings per share before cumulative effect of change in
accounting principle............................................ $ 0.68 $ 0.63 $ 1.29 $ 1.31
Cumulative effect of change in accounting principle............. - - (0.02) -
--------- --------- --------- ---------
Basic earnings per share........................................ $ 0.68 $ 0.63 $ 1.27 $ 1.31
========= ========= ========= =========
Weighted-average shares outstanding............................. 268 283 273 282
Diluted earnings per share before cumulative effect of change in
accounting principle............................................ $ 0.67 $ 0.61 $ 1.26 $ 1.26
Cumulative effect of change in accounting principle............. - - (0.02) -
--------- --------- --------- ---------
Diluted earnings per share...................................... $ 0.67 $ 0.61 $ 1.24 $ 1.26
========= ========= ========= =========
Weighted-average shares outstanding............................. 274 294 280 294
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
in millions, unaudited
36-Weeks Ended
---------------------------
September September
6, 2003 7, 2002
----------- -----------
Cash Flows - Operations
Net income................................................................. $ 347 $ 371
Adjustments to reconcile net income to net cash provided
by operations:.............................................................
Depreciation........................................................... 380 291
Amortization........................................................... 6 5
Changes in working capital and other non-cash charges.................. (52) (16)
Pension contributions...................................................... (15) -
Other, net................................................................. (34) (44)
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Net Cash Provided by Operations................................................. 632 607
------ ------
Cash Flows - Investments
Capital expenditures....................................................... (428) (437)
Acquisitions of bottlers................................................... (97) (34)
Sale of property, plant and equipment...................................... 5 4
------ ------
Net Cash Used for Investments................................................... (520) (467)
------ ------
Cash Flows - Financing
Borrowing activities, net.................................................. 264 (42)
Dividends paid............................................................. (8) (8)
Treasury stock transactions................................................ (335) (81)
------ ------
Net Cash Used for Financing..................................................... (79) (131)
------ ------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents..................................................................... 1 1
------ ------
Net Increase in Cash and Cash Equivalents....................................... 34 10
Cash and Cash Equivalents - Beginning of Period................................. 222 277
------ ------
Cash and Cash Equivalents - End of Period....................................... $ 256 $ 287
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Certain reclassifications were made in our Condensed Consolidated Financial
Statements to 2002 amounts to conform to the 2003 presentation.
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
in millions, except per share amounts
(Unaudited)
September December
6, 2003 28, 2002
--------- ----------
Assets
Current Assets
Cash and cash equivalents................................................... $ 256 $ 222
Accounts receivable, net.................................................... 1,264 922
Inventories................................................................. 428 378
Prepaid expenses and other current assets................................... 199 203
Investment in debt defeasance trust......................................... 175 12
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Total Current Assets.................................................... 2,322 1,737
Property, plant and equipment, net............................................... 3,371 3,308
Other intangible assets, net..................................................... 3,593 3,495
Goodwill......................................................................... 1,227 1,192
Investment in debt defeasance trust.............................................. - 170
Other assets..................................................................... 148 141
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Total Assets............................................................ $10,661 $10,043
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Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and other current liabilities.............................. $ 1,295 $ 1,179
Short-term borrowings....................................................... 83 51
Current maturities of long-term debt........................................ 1,193 18
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Total Current Liabilities............................................... 2,571 1,248
Long-term debt................................................................... 3,603 4,539
Other liabilities................................................................ 883 819
Deferred income taxes............................................................ 1,333 1,265
Minority interest................................................................ 392 348
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Total Liabilities....................................................... 8,782 8,219
Shareholders' Equity
Common stock, par value $0.01 per share:
Authorized 900 shares, issued 310 shares................................ 3 3
Additional paid-in capital.................................................. 1,743 1,750
Retained earnings........................................................... 1,404 1,066
Accumulated other comprehensive loss........................................ (428) (468)
Treasury stock: 45 shares and 30 shares at September 6, 2003
and December 28, 2002, respectively..................................... (843) (527)
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Total Shareholders' Equity.............................................. 1,879 1,824
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Total Liabilities and Shareholders' Equity............................ $10,661 $10,043
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Certain reclassifications were made in our Condensed Consolidated Financial
Statements to 2002 amounts to conform to the 2003 presentation.