Exhibit 99.1
The Pepsi Bottling Group Announces First Quarter 2005 Results;
Company Delivers Worldwide Topline Growth of Four Percent
SOMERS, N.Y.--(BUSINESS WIRE)--April 12, 2005--The Pepsi Bottling
Group, Inc. (NYSE: PBG) today reported first quarter 2005 net income
of $39 million, or diluted earnings per share (EPS) of $0.15. This
compares to reported net income in first quarter 2004 of $50 million,
or $0.19 per diluted share.
-- Worldwide physical case volume was flat year-over-year on a
constant territory basis as the Company lapped very strong
volume growth in the first quarter of 2004. In the U.S., PBG's
volume was down one percent for the quarter, while the
Company's territories in Europe generated three-percent volume
growth. Volume was flat in PBG's Mexican business.
-- PBG reported strong net revenue per case performance in the
U.S., up four percent for the quarter. This growth reflects
both rate increases and mix improvement. Worldwide, net
revenue per case grew three percent.
"We're pleased with our performance in the first quarter, which
positions us well to deliver on our commitments for the full year,"
said John T. Cahill, Chairman and Chief Executive Officer of PBG. "We
expected soft volume in the U.S. this past quarter as we lapped last
year's strong innovation in the form of Tropicana juice drinks and
Pepsi Vanilla. Our non-carbonated portfolio, however, continued to
grow with Aquafina delivering a high single-digit increase. The U.S.
pricing environment was favorable, and the rate increases we
implemented in the fourth quarter of 2004 have held in the
marketplace. As we enter the second quarter, we have terrific product
and package innovation planned, including the introduction of Pepsi
Lime and Tropicana Twister as well as a new Fridgemate of 12-ounce
plastic bottles for Aquafina and soft drinks. This innovation will be
supported by a great line- up of in-store promotions, all designed to
drive consumer excitement as we enter the summer-selling season."
Cahill continued, "Our European businesses delivered solid revenue
and volume results in the first quarter - which comprises only the
months of January and February for our Europe and Mexico territories -
with Turkey and Russia leading the way. In Turkey, we were able to
capture our share of the overall category growth while, in Russia, our
non-carbonated products fueled the volume increase. In Mexico, we
experienced softer volume, primarily driven by our results in the
metro Mexico City region. Recently, we've seen improvement in the
pricing environment in several territories and the productivity
initiatives we executed last year have begun to yield measurable
results. As in the U.S., we have a solid innovation and promotion
calendar planned for the second quarter, which should give a lift to
our volume in Mexico."
PBG's physical case volume in the U.S. declined one percent in the
first quarter on a constant territory basis. (Constant territory
calculations assume all significant acquisitions made in 2004 were
made at the beginning of 2004 and exclude all significant acquisitions
made in 2005.) Cold drink volume grew one percent, but the take-home
business was down one percent. Volume trends in Canada were similar to
those in the U.S., with cold drink in positive territory. In Mexico,
physical case volume was essentially flat for the quarter, with
carbonated soft drinks (CSDs) and bottled water volume each down four
percent and jug water up seven percent. PBG's territories in Europe
delivered volume growth of three percent. In Turkey, volume growth was
in solid double-digit territory with brand Pepsi up more than 30
percent year-over-year.
The Company's reported net revenue per case growth in the U.S. was
four percent in the first quarter. Rate increases contributed about
two-thirds of this growth while mix added one-third. PBG also
generated solid net revenue per case growth in Canada, where the
Company's pricing actions have held in the marketplace.
Reported operating income in the first quarter was down 12 percent
on a worldwide basis. These results were expected due to the lapping
of a particularly strong first quarter in 2004 and ongoing raw
materials cost pressures. Cost of goods sold per case was up six
percent in the first quarter, with foreign currency translations
accounting for about one point of that growth.
During the first quarter, PBG repurchased 4.3 million shares of
common stock. Since the inception of the Company's share repurchase
program in October 1999, 88 million shares have been repurchased.
The Company reaffirmed its full-year operational guidance and
modified slightly its profit and earnings guidance. In fiscal 2005,
PBG now expects to achieve pro forma diluted EPS of $1.78 to $1.84,
which excludes the impact of the 53rd week. (See Editor's Note.)
Worldwide constant territory volume is expected to grow two to three
percent for the year and pro forma operating income will likely be up
one to three percent. These projections also exclude the impact of the
53rd week. PBG expects net cash provided by operations less capital
expenditures to be approximately $500 million, with capital
expenditures in the range of $675 to $725 million. This guidance does
not reflect the impact to earnings from the expensing of stock
options, which PBG is required to adopt by the fourth quarter of 2005.
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 2005 earnings discussion
with financial analysts on April 12th at 12 p.m. (EDT) at
http://www.pbg.com.
Editor's Note: PBG's fiscal year ends on the last Saturday in
December and, as a result, a 53rd week will be added to the fiscal
year 2005. Fiscal 2004 had 52 weeks.
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.
THE PEPSI BOTTLING GROUP, INC.
RECONCILIATION OF NON-GAAP MEASURES
Impact of 53rd Week
- -------------------
In 2005, our fiscal year will include a 53rd week, while fiscal
year 2004 consisted of 52 weeks. Our U.S. and Canadian operations
report on a fiscal year that consists of 52 weeks, ending on the last
Saturday in December. Every five or six years a 53rd week is added.
Our other countries report on a calendar-year basis. In order to
provide comparable guidance for 2005, we have excluded the impact of
the 53rd week from our outlook. The table below provides pro forma
disclosure by excluding the projected impact of the 53rd week in 2005:
Pro Forma
Forecasted 2005 Forecasted 2005
Versus 2004 Impact of Versus 2004
Growth 53rd Week Growth
Worldwide Constant
Territory Volume 2% to 3% 1% 3% to 4%
Worldwide Operating 1% to 3% 2% to 4%
Income 1%
Pro Forma Full- Full-Year
Year Forecasted Impact of Forecasted 2005
2005 Results 53rd Week Results
Diluted Earnings Per $0.02 to
Share $1.78 to $1.84 $0.03 $1.80 to $1.87
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
in millions, except per share amounts, unaudited
12 Weeks Ended
---------------------
March 19, March 20,
2005 2004
---------- ----------
Net revenues $ 2,147 $ 2,067
Cost of sales 1,116 1,051
--------- ---------
Gross profit 1,031 1,016
Selling, delivery and administrative expenses 911 879
--------- ---------
Operating income 120 137
Interest expense, net 55 55
Minority interest 6 6
--------- ---------
Income before income taxes 59 76
Income tax expense 20 26
--------- ---------
Net income $ 39 $ 50
========= =========
Basic earnings per share $ 0.16 $ 0.19
========= =========
Weighted-average shares outstanding 248 260
Diluted earnings per share $ 0.15 $ 0.19
========= =========
Weighted-average shares outstanding 254 269
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
in millions, unaudited
12 Weeks Ended
-------------------
March 19, March 20,
2005 2004
--------- ---------
Cash Flows - Operations
Net income $ 39 $ 50
Adjustments to reconcile net income to net cash
(used for) provided by operations:
Depreciation 130 124
Amortization 3 3
Changes in working capital and other non-cash
charges (147) (36)
Pension contributions (20) (20)
Other, net (15) (10)
-------- --------
Net Cash (Used for) Provided by Operations (10) 111
-------- --------
Cash Flows - Investments
Capital expenditures (93) (102)
Acquisitions of bottlers (1) -
Sale of property, plant and equipment 1 1
-------- --------
Net Cash Used for Investments (93) (101)
-------- --------
Cash Flows - Financing
Borrowing activities, net 166 (898)
Dividends paid (13) (3)
Treasury stock transactions (105) (73)
-------- --------
Net Cash Provided by (Used for) Financing 48 (974)
-------- --------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents - (2)
-------- --------
Net Decrease in Cash and Cash Equivalents (55) (966)
Cash and Cash Equivalents - Beginning of Period 305 1,235
-------- --------
Cash and Cash Equivalents - End of Period $ 250 $ 269
======== ========
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
in millions, except per share amounts
March 19, December 25,
2005 2004
------------ ------------
Assets (unaudited)
Current Assets
Cash and cash equivalents $ 250 $ 305
Accounts receivable, net 1,054 1,054
Inventories 476 427
Prepaid expenses and other current assets 293 253
----------- -----------
Total Current Assets 2,073 2,039
Property, plant and equipment, net 3,543 3,581
Other intangible assets, net 3,645 3,639
Goodwill 1,422 1,416
Other assets 113 118
----------- -----------
Total Assets $ 10,796 $ 10,793
=========== ===========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and other current
liabilities $ 1,255 $ 1,373
Short-term borrowings 301 155
Current maturities of long-term debt 77 53
----------- -----------
Total Current Liabilities 1,633 1,581
Long-term debt 4,470 4,489
Other liabilities 937 914
Deferred income taxes 1,417 1,415
Minority interest 452 445
----------- -----------
Total Liabilities 8,909 8,844
----------- -----------
Shareholders' Equity
Common stock, par value $0.01 per share:
Authorized 900 shares, issued 310 shares 3 3
Additional paid-in capital 1,716 1,719
Retained earnings 1,914 1,887
Accumulated other comprehensive loss (303) (315)
Deferred compensation (1) (1)
Treasury stock: 64 shares and 61 shares at
March 19, 2005 and December 25, 2004,
respectively (1,442) (1,344)
----------- -----------
Total Shareholders' Equity 1,887 1,949
----------- -----------
Total Liabilities and Shareholders'
Equity $ 10,796 $ 10,793
=========== ===========
CONTACT: The Pepsi Bottling Group, Inc.
Public Relations:
Kelly McAndrew, 914-767-7690
or
Investor Relations:
Mary Winn Settino, 914-767-7216