Exhibit 99.1
Contact: Kelly McAndrew Mary Winn Settino
Public Relations Investor Relations
(914) 767-7690 (914) 767-7216
FOR IMMEDIATE RELEASE
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THE PEPSI BOTTLING GROUP REPORTS STRONG TOPLINE AND
EARNINGS GROWTH IN FIRST QUARTER 2004
SOMERS, N.Y., April 13, 2004 - The Pepsi Bottling Group, Inc. (NYSE: PBG)
today reported first quarter 2004 net income of $50 million, or diluted earnings
per share (EPS) of $0.19. This compares to reported first quarter 2003 income of
$39 million, or $0.14 per diluted share, before accounting for the cumulative
effect of the adoption of a new accounting principle, which reduced EPS by
$0.02.
o PBG's strong worldwide topline growth was driven by a five percent
increase in physical case volume on a constant territory basis. In the
U.S., volume grew six percent for the first quarter and PBG's European
territories delivered 15 percent volume growth. In Mexico, volume on
an eight-ounce case basis rose two percent, though on a physical case
basis, volume declined two percent during the quarter.
o PBG delivered solid reported net revenue per case growth in the U.S.,
up more than two percent for the quarter. Worldwide reported net
revenue per case increased five percent, including a two-percentage
point foreign currency benefit.
o Reported operating income grew 14 percent during the first quarter,
reflecting the Company's balanced topline growth.
"We're very pleased with our progress during the first quarter,
particularly with solid topline performance in the U.S., Canada and Europe,"
said John T. Cahill, Chairman and Chief Executive Officer of PBG. "Our volume
trends in the U.S. were strong across channels and brands. The increased focus
by PBG and PepsiCo on Trademark Pepsi enabled our cola volume to grow for the
first time in several quarters. Our entire diet soft drink portfolio
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PBG REPORTS STRONG TOPLINE AND EARNINGS GROWTH IN FIRST QUARTER 2004/ 2 of 3
generated a double-digit volume increase, continuing its positive growth trend.
The pricing environment in the U.S. remained favorable as the increases we took
during the fourth quarter of last year held in the marketplace. With a solid
innovation and marketing calendar ahead of us, we believe we're building
momentum as we gear up for the summer-selling season."
Cahill continued, "Our European and Canadian businesses delivered solid
quarters. In Europe, each of our businesses generated strong volume growth, led
by increases of more than 20 percent in both Russia and Turkey. Innovation
played a key role in Russia, which benefited from the launch of Tropicana juices
in February. Our team in Turkey made substantial progress in marketplace
execution, leading to an improvement in results. And in Canada, volume growth
improved notably in the take-home channel.
"In Mexico, we made progress in a number of areas. Our eight-ounce volume
performance improved, as we grew our customer base and improved our customer
service capabilities. Innovation also contributed to that improvement with the
introduction of two new diet soft drinks and strong results from our 5.25-liter
Electropura bottle. We also are continuing to fine-tune our pricing
architecture, taking some pricing up in Mexico City, while bringing pricing down
in select other areas."
On a constant territory basis, PBG's worldwide volume grew five percent
during the first quarter. In the U.S., PBG's take-home and cold drink businesses
both grew six percent. Volume growth improved sequentially in Mexico, up two
percent on an eight-ounce case basis reflecting the impact of the upsizing
initiatives PBG executed mid-2003. Volume of carbonated soft drinks was up six
percent on an eight-ounce case basis.
PBG's U.S. reported net revenue per case grew more than two percent during
the first quarter. This growth was driven by both rate and mix benefits.
Worldwide, PBG's reported net revenue per case increased five percent, including
a two-percentage point foreign currency benefit.
During the first quarter of 2004, PBG repurchased 3.1 million shares of
common stock. Since the inception of the Company's share repurchase program in
October 1999, more than 67 million shares have been repurchased to date.
PBG stated that it expects worldwide volume in the second quarter to grow
two to three percent and net revenue per case to be up two percent. The
Company's operating income outlook for the second quarter is for mid-single
digit growth. PBG expects earnings per share for the second
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PBG REPORTS STRONG TOPLINE AND EARNINGS GROWTH IN FIRST QUARTER 2004/ 3 of 3
quarter to be $0.49 to $0.51.
The Company affirmed that in fiscal 2004 it expects to achieve EPS of $1.62
to $1.70. PBG also stated that it expects worldwide constant territory volume
for the full year to be up two to three percent, worldwide net revenue per case
to increase two percent and reported operating income to grow mid-single digits.
The Company affirmed its expectation for continued growth in cash flow, with net
cash provided by operations less capital expenditures growth of about 10
percent.
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 first quarter 2004 earnings discussion with
financial analysts on April 13th 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
27, 2003.
Attachments (3 pages)
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
in millions, except per share amounts, unaudited
12 Weeks Ended
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March March
20, 2004 22, 2003
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Net revenues............................................ $2,067 $1,874
Cost of sales........................................... 1,051 927
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Gross profit............................................ 1,016 947
Selling, delivery and administrative expenses........... 879 827
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Operating income........................................ 137 120
Interest expense, net................................... 55 53
Other non-operating expenses, net....................... - 3
Minority interest....................................... 6 5
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Income before income taxes.............................. 76 59
Income tax expense...................................... 26 20
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Income before cumulative effect of change in accounting
principle .............................................. 50 39
Cumulative effect of change in accounting principle, net
of tax and minority interest............................ - 6
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Net income.............................................. $ 50 $ 33
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Basic earnings per share before cumulative effect of
change in accounting principle ......................... $ 0.19 $ 0.14
Cumulative effect of change in accounting principle .... - (0.02)
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Basic earnings per share................................ $ 0.19 $ 0.12
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Weighted-average shares outstanding..................... 260 279
Diluted earnings per share before cumulative effect of
change in accounting principle ......................... $ 0.19 $ 0.14
Cumulative effect of change in accounting principle .... - (0.02)
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Diluted earnings per share.............................. $ 0.19 $0.12
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Weighted-average shares outstanding..................... 269 287
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
in millions, unaudited
12 Weeks Ended
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March March
20, 2004 22, 2003
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Cash Flows - Operations
Net Income.................................................. $ 50 $ 33
Adjustments to reconcile net income to net cash provided
by operations:
Depreciation............................................ 124 117
Amortization............................................ 3 2
Changes in working capital and other non-cash charges... (36) (82)
Pension contributions....................................... (20) -
Other, net.................................................. (10) (3)
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Net Cash Provided by Operations................................ 111 67
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Cash Flows - Investments
Capital expenditures........................................ (102) (112)
Acquisitions of bottlers.................................... - (82)
Sale of property, plant and equipment....................... 1 1
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Net Cash Used for Investments.................................. (101) (193)
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Cash Flows - Financing
Borrowing activities, net................................... (898) 120
Dividends paid.............................................. (3) (3)
Treasury stock transactions................................. (73) (98)
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Net Cash (Used for) Provided by Financing...................... (974) 19
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Effect of Exchange Rate Changes on Cash and Cash
Equivalents.................................................... (2) (1)
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Net Decrease in Cash and Cash Equivalents...................... (966) (108)
Cash and Cash Equivalents - Beginning of Period................ 1,235 222
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Cash and Cash Equivalents - End of Period...................... $ 269 $ 114
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THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
in millions, except per share amounts
(Unaudited)
March December
20, 2004 27, 2003
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Assets
Current Assets
Cash and cash equivalents................................. $ 269 $ 1,235
Accounts receivable, net.................................. 968 994
Inventories............................................... 441 374
Prepaid expenses and other current assets................. 275 268
Investment in debt defeasance trust....................... 168 168
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Total Current Assets................................... 2,121 3,039
Property, plant and equipment, net........................... 3,399 3,423
Other intangible assets, net................................. 3,558 3,562
Goodwill..................................................... 1,391 1,386
Other assets................................................. 148 134
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Total Assets........................................... $10,617 $11,544
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Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and other current liabilities............ $ 1,175 $ 1,231
Short-term borrowings..................................... 164 67
Current maturities of long-term debt...................... 180 1,180
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Total Current Liabilities.............................. 1,519 2,478
Long-term debt............................................... 4,510 4,493
Other liabilities............................................ 889 875
Deferred income taxes........................................ 1,430 1,421
Minority interest............................................ 402 396
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Total Liabilities...................................... 8,750 9,663
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Shareholders' Equity
Common stock, par value $0.01 per share:
authorized 900 shares, issued 310 shares................ 3 3
Additional paid-in capital................................ 1,742 1,743
Retained earnings......................................... 1,519 1,471
Accumulated other comprehensive loss...................... (377) (380)
Deferred compensation..................................... (5) (4)
Treasury stock: 51 shares and 49 shares at March 20, 2004
and December 27, 2003, respectively..................... (1,015) (952)
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Total Shareholders' Equity.............................. 1,867 1,881
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Total Liabilities and Shareholders' Equity............. $10,617 $11,544
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