Exhibit 99.1
Earnings Per Share Increased 11 Percent at the Pepsi Bottling Group in 2nd
Quarter; Company Raises Full-Year Earnings Guidance
SOMERS, N.Y.--(BUSINESS WIRE)--July 7, 2005--The Pepsi Bottling Group, Inc.
(NYSE: PBG) today reported second quarter 2005 net income of $148 million, or
diluted earnings per share (EPS) of $0.59. This compares to reported net income
in second quarter 2004 of $142 million, or $0.53 per diluted share.
-- PBG grew its worldwide physical case volume by three percent in the
second quarter on a constant territory basis. The Company's U.S. and
Canada operations each delivered a one-percent volume improvement and
its European business generated nine-percent volume growth. In Mexico,
physical case volume improved significantly, up eight percent on a
year-over-year basis.
-- The Company continued its solid performance in the area of net revenue
per case growth. Reported net revenue per case was up three percent
for the quarter, both worldwide and in the U.S.
-- Reported operating income increased six percent in the second quarter,
with strong performances from PBG's businesses in the U.S., Canada and
Mexico. Foreign currency translation accounted for one point of that
growth.
-- Based on the Company's strong performance during the first half of the
year, PBG is raising its full year pro forma operating income growth
expectations to a range of three to five percent. Correspondingly, PBG
expects pro forma diluted EPS for the year to be $1.82 to $1.88,
excluding the impact of the 53rd week. (See Editor's Note.)
"During the second quarter, we continued to deliver on our objective of
solid topline growth across our businesses," said John T. Cahill, PBG Chairman
and Chief Executive Officer. "We are pleased with our performance in the U.S.
While our overall carbonated soft drink business was soft, new products boosted
our volume performance. The launch of Pepsi Lime and Tropicana Twister as well
as the continued rollout of Aquafina FlavorSplash, Aquafina Sparkling and Lipton
Iced Tea lifted our volume for the quarter. We also delivered net revenue per
case improvement in the U.S. and worldwide."
Cahill continued, "Mexico delivered strong results in the second quarter
with profits nearly doubling year-over-year. Despite continuing challenges in
the Mexico City area, our overall business performed well and we're realizing
the benefits from the productivity initiatives we executed over the past two
years, which fueled our profit growth. We have a robust calendar of activities
in place to drive consumer excitement for the balance of the year, including new
in-and-out product and package innovation."
"In Europe, we posted another consecutive quarter of strong volume growth.
Double-digit growth in Russia was led by strong sales of Pepsi, AquaMinerale,
Tropicana and Lipton Iced Tea. Strong topline growth in Turkey continued with a
double-digit volume increase in Pepsi and excellent growth in Lipton Iced Tea
and Aquafina. In Spain, volume improved as the quarter came to a close,
finishing up two percent. Our innovation calendar in Europe is quite strong for
the balance of year with new products and packages planned for each of our
territories."
PBG's physical case volume in the U.S. grew one percent in the second
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.) Growth in the Company's
foodservice business helped to drive cold drink volume, which was up one percent
for the quarter. Volume in the take-home segment was slightly positive. PBG's
non-carbonated portfolio continued to perform well, with Aquafina returning to
double-digit growth.
The volume trends in Canada were similar to those in the U.S. Cold drink
volume improved two percent and take-home volume was flat. Volume in PBG's
Europe territories grew nine percent, led again by Russia. In Mexico, physical
case volume grew eight percent for the quarter with water sales up
significantly. Bottled water volume increased 20 percent and jug water volume
grew 15 percent. Volume of carbonated soft drinks (CSDs) in Mexico was up one
percent.
The Company's reported net revenue per case growth in the U.S. was three
percent in the second quarter. Rate increases contributed roughly 75 percent of
this growth while mix added the remaining quarter. PBG's Canada business also
turned in solid net revenue per case improvement.
Reported operating income in the second quarter grew six percent on a
worldwide basis. Cost of goods sold (COGS) per case was up five percent in the
second quarter, with foreign currency translation accounting for about one point
of that growth.
During the second quarter, PBG repurchased 4.5 million shares of common
stock. Since the inception of the Company's share repurchase program in October
1999, 92.4 million shares have been repurchased.
PBG is increasing its financial guidance for the full year. In fiscal 2005,
PBG now expects to achieve pro forma diluted EPS of $1.82 to $1.88, which
excludes the impact of the 53rd week. (See Editor's Note.) The Company's
worldwide constant territory volume expectations are unchanged with anticipated
growth of two to three percent for the year. Pro forma operating income will
likely be up three to five percent for the year. 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.
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 second quarter 2005 earnings discussion with
financial analysts on July 7th at 11 a.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 53rd Versus 2004
Growth Week Growth
Worldwide Constant
Territory Volume 2% to 3% 1% 3% to 4%
Worldwide Operating
Income 3% to 5% 1% 4% to 6%
Pro Forma Full- Full-Year
Year Forecasted Impact of 53rd Forecasted 2005
2005 Results Week Results
Diluted Earnings Per
Share $1.82 to $1.88 $0.02 to $0.03 $1.84 to $1.91
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
in millions, except per share amounts, unaudited
12 Weeks Ended 24 Weeks Ended
----------------- -----------------
June 11, June 12, June 11, June 12,
2005 2004 2005 2004
-------- -------- -------- --------
Net revenues $ 2,862 $ 2,675 $ 5,009 $ 4,742
Cost of sales 1,495 1,378 2,611 2,429
-------- -------- -------- --------
Gross profit 1,367 1,297 2,398 2,313
Selling, delivery and
administrative expenses 1,064 1,011 1,975 1,890
-------- -------- -------- --------
Operating income 303 286 423 423
Interest expense, net 58 53 113 108
Other non-operating expense, net 1 2 1 2
Minority interest 17 15 23 21
-------- -------- -------- --------
Income before income taxes 227 216 286 292
Income tax expense 79 74 99 100
-------- -------- -------- --------
Net income $ 148 $ 142 $ 187 $ 192
======== ======== ======== ========
Basic earnings per share $ 0.61 $ 0.55 $ 0.76 $ 0.74
======== ======== ======== ========
Weighted-average shares
outstanding 245 258 246 259
Diluted earnings per share $ 0.59 $ 0.53 $ 0.74 $ 0.72
======== ======== ======== ========
Weighted-average shares
outstanding 252 267 253 268
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
in millions, unaudited
24 Weeks Ended
-----------------
June 11, June 12,
2005 2004
-------- --------
Cash Flows - Operations
Net income $ 187 $ 192
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation 274 258
Amortization 7 6
Changes in working capital and other non-cash
charges (230) (72)
Pension contributions (20) (51)
Other, net (32) (20)
-------- --------
Net Cash Provided by Operations 186 313
-------- --------
Cash Flows - Investments
Capital expenditures (271) (270)
Sale of investment in a non-controlled
entity/(Acquisitions of bottlers) 5 (7)
Proceeds from sale of property, plant and
equipment 12 5
-------- --------
Net Cash Used for Investments (254) (272)
-------- --------
Cash Flows - Financing
Borrowing activities, net 209 (791)
Dividends paid (25) (5)
Treasury stock transactions (214) (233)
-------- --------
Net Cash Used for Financing (30) (1,029)
-------- --------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents 1 (2)
-------- --------
Net Decrease in Cash and Cash Equivalents (97) (990)
Cash and Cash Equivalents - Beginning of Period 305 1,235
-------- --------
Cash and Cash Equivalents - End of Period $ 208 $ 245
======== ========
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
in millions, except per share amounts
June 11, December 25,
2005 2004
------------ ------------
Assets (unaudited)
Current Assets
Cash and cash equivalents $ 208 $ 305
Accounts receivable, net 1,323 1,054
Inventories, net 515 427
Prepaid expenses and other current assets 313 253
------------ ------------
Total Current Assets 2,359 2,039
Property, plant and equipment, net 3,550 3,581
Other intangible assets, net 3,637 3,639
Goodwill 1,424 1,416
Other assets 109 118
------------ ------------
Total Assets $ 11,079 $ 10,793
============ ============
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and other current
liabilities $ 1,457 $ 1,373
Short-term borrowings 328 155
Current maturities of long-term debt 90 53
------------ ------------
Total Current Liabilities 1,875 1,581
Long-term debt 4,479 4,489
Other liabilities 960 914
Deferred income taxes 1,401 1,415
Minority interest 468 445
------------ ------------
Total Liabilities 9,183 8,844
------------ ------------
Shareholders' Equity
Common stock, par value $0.01 per share:
Authorized 900 shares, issued 310
shares 3 3
Additional paid-in capital 1,714 1,719
Retained earnings 2,043 1,887
Accumulated other comprehensive loss (320) (315)
Deferred compensation - (1)
Treasury stock: 67 shares and 61 shares at
June 11, 2005 and December 25, 2004,
respectively, at cost (1,544) (1,344)
------------ ------------
Total Shareholders' Equity 1,896 1,949
------------ ------------
Total Liabilities and Shareholders'
Equity $ 11,079 $ 10,793
============ ============
CONTACT: The Pepsi Bottling Group, Inc.
Public Relations:
Kelly McAndrew, 914-767-7690
or
Investor Relations:
Mary Winn Settino, 914-767-7216