Exhibit 99.1
Contact: Kelly McAndrew Mary Winn Settino
Public Relations Investor Relations
(914) 767-7690 (914) 767-7216
THE PEPSI BOTTLING GROUP REPORTS DOUBLE-DIGIT
EARNINGS GROWTH IN SECOND QUARTER AND INCREASES
FULL-YEAR EARNINGS AND CASH FLOW ESTIMATES
SOMERS, N.Y., July 8, 2004 - The Pepsi Bottling Group, Inc. (NYSE: PBG)
today reported second quarter 2004 net income of $142 million, or diluted
earnings per share (EPS) of $0.53. These results compare to reported second
quarter 2003 net income of $131 million, or EPS of $0.47. Reported year-to-date
net income was $192 million, or EPS of $0.72, which compares to reported
year-to-date 2003 net income of $170 million, or $0.60 per share, before
accounting for the cumulative effect of the adoption of a new accounting
principle, which reduced EPS by $0.02.
o Worldwide physical case volume grew two percent on a constant
territory basis in the second quarter, driven by three-percent growth
in the U.S. PBG's European territories delivered another quarter of
double-digit volume growth, up 10 percent for the quarter. In Mexico,
physical case volume declined seven percent, due primarily to weakness
in the water business.
o PBG delivered another consecutive quarter of solid net revenue per
case growth, up four percent worldwide. In the U.S., net revenue per
case grew more than three percent.
o Reported operating income increased six percent in the second quarter,
driven by double-digit growth in the U.S.
o With two quarters of solid earnings growth and strong cash flow, PBG
increased its full-year earnings expectations to a range of $1.68 to
$1.74. The Company also raised its estimate for cash from operations
less capital expenditures to $530 million for 2004, a 20 percent
increase over prior year.
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PBG REPORTS DOUBLE-DIGIT EARNINGS GROWTH IN 2ND QUARTER / 2 of 3
"We delivered balanced topline growth during the second quarter, which
translated into solid earnings growth for our shareholders," said John T.
Cahill, Chairman and Chief Executive Officer of PBG. "Our U.S. business drove
our strong results this quarter. Volume growth was solid with particular
strength seen in our cold drink business. Trademark Pepsi was positive for the
second consecutive quarter and we saw strong growth in our diet and
non-carbonated beverage portfolios, up eight percent and 17 percent respectively
this past quarter. Tropicana juice drinks continued to perform above our
expectations and Aquafina bottled water delivered double-digit growth. The
pricing environment in the U.S. was favorable - a trend we expect will continue
- - and our ability to capture mix benefit contributed to our net revenue per case
growth."
Cahill continued, "Physical case volume growth in our European territories
was led by strong performances in Russia and Turkey. While Russia continues to
benefit from innovation, our business in Turkey saw solid improvement in
Trademark Pepsi and our local brands of flavored soft drinks and juices. In
Mexico, our results were below our expectations. Despite continued share growth
in soft drinks, our overall volume was down, driven by soft water volume during
the month of May."
On a constant territory basis, physical case volume worldwide grew two
percent in the second quarter. (Constant territory calculations assume all
significant acquisitions made in 2003 were made at the beginning of 2003 and
exclude all significant acquisitions made in 2004.) In the U.S., volume in PBG's
cold drink and take home businesses grew five and two percent respectively.
Volume in the Company's Canadian territories was up two percent for the quarter.
PBG's territories in Europe turned in solid volume performances, up 10 percent
collectively. In Mexico, physical case volume of carbonated soft drinks was down
three percent, though on an eight-ounce basis, volume was up four percent. Sales
of bottled water and jug water on a physical case basis were down eight and 11
percent respectively for the quarter.
During the second quarter of 2004, PBG repurchased more than seven million
shares of common stock. Since the inception of the Company's share repurchase
program in October 1999, more than 73 million shares have been repurchased.
The Company revised upward its estimate for full year 2004 earnings per
share to a range of $1.68 to $1.74. PBG stated that it expects worldwide
physical case volume for the full year 2004 to grow two to three percent with
net revenue per case improvement of two to
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PBG REPORTS DOUBLE-DIGIT EARNINGS GROWTH IN 2ND QUARTER / 3 of 3
three percent. For the full year, the Company's operating income outlook is for
growth in the mid-single digit range. PBG also increased its forecast for cash
flow. It expects cash from operations less capital expenditures to be $530
million, which would be a 20 percent increase over 2003 results. The Company
still expects capital expenditures for the year to be in the range of $675 to
$700 million.
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.
Listen in live to PBG's second quarter 2004 earnings discussion with
financial analysts on July 8th 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 24 Weeks Ended
-------------------- ----------------------
June 12, June 14, June 12, June 14,
2004 2003 2004 2003
-------- -------- -------- --------
Net revenues......................................................... $ 2,675 $ 2,532 $ 4,742 $ 4,406
Cost of sales........................................................ 1,378 1,290 2,429 2,217
-------- -------- -------- --------
Gross profit......................................................... 1,297 1,242 2,313 2,189
Selling, delivery and administrative expenses........................ 1,011 971 1,890 1,798
-------- -------- -------- --------
Operating income..................................................... 286 271 423 391
Interest expense, net................................................ 53 57 108 110
Other non-operating expenses, net.................................... 2 - 2 3
Minority interest.................................................... 15 15 21 20
-------- -------- -------- --------
Income before income taxes........................................... 216 199 292 258
Income tax expense................................................... 74 68 100 88
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Income before cumulative effect of change in accounting
principle............................................................ 142 131 192 170
Cumulative effect of change in accounting principle, net of tax
and minority interest................................................ - - - 6
-------- -------- -------- --------
Net income........................................................... $ 142 $ 131 $ 192 $ 164
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Basic earnings per share before cumulative effect of
change in accounting principle....................................... $ 0.55 $ 0.48 $ 0.74 $ 0.61
Cumulative effect of change in accounting principle.................. - - - (0.02)
-------- -------- -------- --------
Basic earnings per share............................................. $ 0.55 $ 0.48 $ 0.74 $ 0.59
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Weighted-average shares outstanding.................................. 258 273 259 276
Diluted earnings per share before cumulative effect of
change in accounting principle....................................... $ 0.53 $ 0.47 $ 0.72 $ 0.60
Cumulative effect of change in accounting principle.................. - - - (0.02)
-------- -------- -------- --------
Diluted earnings per share........................................... $ 0.53 $ 0.47 $ 0.72 $ 0.58
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Weighted-average shares outstanding.................................. 267 279 268 283
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
in millions, unaudited
24 Weeks Ended
---------------------
June 12, June 14,
2004 2003
-------- --------
Cash Flows - Operations
Net Income................................................................... $ 192 $ 164
Adjustments to reconcile net income to net cash provided by operations:
Depreciation.............................................................. 258 244
Amortization.............................................................. 6 4
Changes in working capital and other non-cash charges..................... (72) (181)
Pension contributions......................................................... (51) -
Other, net.................................................................... (20) (16)
-------- --------
Net Cash Provided by Operations................................................. 313 215
-------- --------
Cash Flows - Investments
Capital expenditures.......................................................... (270) (282)
Acquisitions of bottlers...................................................... (7) (83)
Sale of property, plant and equipment......................................... 5 2
-------- --------
Net Cash Used for Investments................................................... (272) (363)
-------- --------
Cash Flows - Financing
Borrowing activities, net..................................................... (791) 329
Dividends paid................................................................ (5) (6)
Treasury stock transactions................................................... (233) (207)
-------- --------
Net Cash (Used for) Provided by Financing....................................... (1,029) 116
-------- --------
Effect of Exchange Rate Changes on Cash and Cash Equivalents.................... (2) 3
-------- --------
Net Decrease in Cash and Cash Equivalents....................................... (990) (29)
Cash and Cash Equivalents - Beginning of Period................................. 1,235 222
-------- --------
Cash and Cash Equivalents - End of Period....................................... $ 245 $ 193
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THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
in millions, except per share amounts
(Unaudited)
June 12, December 27,
2004 2003
-------- --------
Assets
Current Assets
Cash and cash equivalents.................................................. $ 245 $ 1,235
Accounts receivable, net................................................... 1,202 994
Inventories................................................................ 497 374
Prepaid expenses and other current assets.................................. 254 268
Investment in debt defeasance trust........................................ - 168
-------- --------
Total Current Assets................................................... 2,198 3,039
Property, plant and equipment, net........................................... 3,399 3,423
Other intangible assets, net................................................. 3,525 3,562
Goodwill .................................................................... 1,389 1,386
Other assets................................................................. 130 134
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Total Assets........................................................... $ 10,641 $ 11,544
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Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and other current liabilities............................. $ 1,346 $ 1,231
Short-term borrowings...................................................... 265 67
Current maturities of long-term debt....................................... 28 1,180
-------- --------
Total Current Liabilities.............................................. 1,639 2,478
Long-term debt............................................................... 4,467 4,493
Other liabilities............................................................ 906 875
Deferred income taxes........................................................ 1,420 1,421
Minority interest............................................................ 413 396
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Total Liabilities...................................................... 8,845 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................................................. 1,735 1,743
Retained earnings.......................................................... 1,648 1,471
Accumulated other comprehensive loss....................................... (440) (380)
Deferred compensation...................................................... (4) (4)
Treasury stock: 55 shares and 49 shares at June 12, 2004
and December 27, 2003, respectively.................................... (1,146) (952)
-------- --------
Total Shareholders' Equity............................................. 1,796 1,881
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Total Liabilities and Shareholders' Equity............................ $ 10,641 $ 11,544
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