Exhibit 99.1
The Pepsi Bottling Group Reports First Quarter 2007 Results
-- Diluted Earnings per Share of $0.12
-- Strong Worldwide Net Revenue per Case Growth of 4%
-- Company Confirms Full-Year Guidance
Business Editors/Food/Beverage Writers
SOMERS, N.Y.--(BUSINESS WIRE)--April 23, 2007--The Pepsi Bottling
Group, Inc. (NYSE: PBG) today reported first quarter 2007 revenue of
$2.5 billion, a four-percent increase over prior year. Net income was
$29 million, or diluted earnings per share (EPS) of $0.12. First
quarter EPS includes a $4 million or $0.02 non-cash expense from the
2007 adoption of FIN 48, Accounting for Uncertainty in Income Taxes.
This compares to net income of $34 million, or $0.14 per diluted
share, that the Company reported in the first quarter of 2006.
Eric J. Foss, President and Chief Executive Officer of PBG, said,
"We are very pleased with our performance for the quarter. Each of our
geographic segments did an excellent job of managing through a very
challenging input cost environment. We successfully executed our
revenue and margin management strategy which improved our gross profit
per case. We also realized our planned productivity initiatives.
Although the key summer selling season is before us, our strong start
to the year coupled with our consistent track record gives us
confidence in our full-year outlook."
-- PBG reported net revenue per case growth of four percent. In
the U.S., net revenue per case was also up four percent driven
by strong rate gains. This extended the Company's track record
of outstanding net revenue per case results in the U.S.
-- The Company's worldwide revenue increased four percent in the
quarter driven by positive growth across each of the Company's
geographic segments. The U.S. and Canada segment reported a
three-percent revenue increase.
-- Total worldwide physical case volume was flat as the Company
lapped six percent growth in the prior year. Volume in the
U.S. declined one percent. European volume grew an impressive
eight percent driven by a more than 20 percent improvement in
Russia. In Mexico, volume declined three percent. All volume
results are on a constant territory basis. (See Editor's
Note.)
-- Reported worldwide operating income for the first quarter was
flat versus the first quarter of 2006.
-- The Company repurchased approximately 4.5 million shares of
its stock in the first quarter. In March, the Company approved
its fourth consecutive annual dividend increase, an annualized
increase of 27 percent over 2006.
In the U.S., physical case volume declined one percent, lapping
six percent growth in both the take-home and cold drink channels.
Take-home volume was flat and cold drink was down two percent.
Canada's positive take-home performance drove total volume growth of
one percent. In Mexico, volume was down three percent with a decline
in CSD volume mitigated by strong non-carbonated beverage growth. In
Europe, volume grew eight percent for the quarter led by Russia which
delivered double-digit growth in both CSDs and non-carbonated
beverages.
Reported cost of goods sold (COGS) per case was up five percent in
the first quarter. COGS performance was impacted by increases in
concentrate and sweetener costs. Gross profit per case grew two
percent as pricing gains more than offset the COGS increase.
PBG's reported selling, delivery and administrative expenses grew
three percent in the first quarter, below recent trends, reflecting
the Company's continued focus on cost and productivity initiatives.
2007 Guidance
Worldwide physical case volume in 2007 is expected to grow about
one to two percent on a constant territory basis, while the U.S. and
Canada segment volume should be flat to up one percent. PBG expects
continued reported net revenue per case improvements, up three to four
percent on a worldwide basis.
The Company affirmed its full year reported diluted earnings per
share guidance range of $1.90 to $1.98, including the previously
announced $0.02 reduction from the adoption of FIN 48, Accounting for
Uncertainty in Income Taxes. PBG expects its operating free cash flow
to be in the range of $530 to $550 million.
In 2007, PBG announced the formation of PR Beverages Limited, a
joint venture comprised of PepsiCo, Inc.'s concentrate and PBG's
bottling businesses in Russia. As a result of consolidating the joint
venture, PBG's reported operating profit is now expected to grow five
to seven percent, up three percentage points from the Company's
previous guidance of two to four percent. The increased operating
profit will be offset by PepsiCo's minority interest in the joint
venture. The joint venture has no impact on reported EPS or cash flow
guidance.
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, Mexico, Russia, Spain, Turkey and
Greece. To receive company news releases by e-mail, please visit
www.pbg.com.
Listen in live to PBG's first quarter 2007 earnings discussion
with financial analysts on April 24th at 10 a.m. (EDT) at www.pbg.com.
Editor's Note:
Constant territory calculations assume a 52-week year and all
significant acquisitions made in the prior year were made at the
beginning of that year. These calculations exclude all significant
acquisitions made in the current year.
Forward-Looking Statement:
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 PBG's annual
report on Form 10-K for the year ended December 30, 2006.
Non-GAAP Measures
We prepare our consolidated financial statements in conformity
with accounting principles generally accepted in the United States of
America (U.S. GAAP). In an effort to provide investors with additional
information regarding the Company's results and to provide a
meaningful year-over-year comparison of the Company's financial
performance, we sometimes use non-GAAP financial measures as defined
by the Securities and Exchange Commission. The differences between the
U.S. GAAP and non-GAAP financial measures are reconciled in the text
of the press release or in the attachments. In presenting comparable
results, the Company discloses non-GAAP financial measures when it
believes such measures will be useful to investors in evaluating the
Company's underlying business performance. Management uses the
non-GAAP financial measures to evaluate the Company's financial
performance against internal budgets and targets (including under the
Company's incentive compensation plans). In addition, management
internally reviews the results of the Company excluding the impact of
certain items as it believes that these non-GAAP financial measures
are useful for evaluating the Company's core operating results and
facilitating comparison across reporting periods. Importantly, the
Company believes non-GAAP financial measures should be considered in
addition to, and not in lieu of U.S. GAAP financial measures. The
Company's non-GAAP financial measures may be different from non-GAAP
financial measures used by other companies.
Operating Free Cash Flow
The Company defines Operating Free Cash Flow (OFCF) as Cash
Provided by Operations, less capital expenditures, plus excess tax
benefits from the exercise of stock options.
The Company uses OFCF to evaluate the performance of its business
and management considers OFCF an important indicator of the Company's
liquidity, including its ability to satisfy debt obligations, fund
future acquisitions, pay dividends to common shareholders and
repurchase Company stock.
OFCF is a non-GAAP financial measure and should be considered in
addition to, not as a substitute for Cash Provided by Operations as
well as other measures of financial performance and liquidity reported
in accordance with U.S. GAAP. The Company's OFCF may not be comparable
to similarly titled measures reported by other companies.
PBG expects its full-year 2007 OFCF to be in the range of $530 to
$550 million. We anticipate capital expenditures of approximately $780
million and Cash Provided by Operations plus the excess tax benefits
from the exercise of stock options to be over $1.3 billion. We are
unable to separately estimate the excess tax benefits from the
exercise of stock options.
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
in millions, except per share amounts, unaudited
12 Weeks Ended
-------------------
March 24, March 25,
2007 2006
--------- ---------
Net revenues $ 2,466 $ 2,367
Cost of sales 1,343 1,271
--------- ---------
Gross profit 1,123 1,096
Selling, delivery and administrative expenses 1,003 975
--------- ---------
Operating income 120 121
Interest expense, net 66 61
Other non-operating expenses, net 1 -
Minority interest 8 6
--------- ---------
Income before income taxes 45 54
Income tax expense 16 20
--------- ---------
Net income $ 29 $ 34
========= =========
Basic earnings per share $ 0.13 $ 0.14
========= =========
Weighted-average shares outstanding 227 237
Diluted earnings per share $ 0.12 $ 0.14
========= =========
Weighted-average shares outstanding 233 243
Note: Certain reclassifications were made to our 2006 Condensed
Consolidated Statement of Operations to conform to the 2007
presentation.
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
in millions, unaudited
12 Weeks Ended
-------------------
March 24, March 25,
2007 2006
--------- ---------
Cash Flows - Operations
Net income $ 29 $ 34
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization 144 139
Changes in working capital and other non-cash
charges (117) (62)
Casualty insurance payments (15) (14)
Pension contributions (1) -
Other, net (19) (16)
--------- ---------
Net Cash Provided by Operations 21 81
--------- ---------
Cash Flows - Investments
Capital expenditures (174) (175)
Acquisitions, net of cash acquired (49) -
Proceeds from sale of property, plant and
equipment 4 3
Other investing activities, net 6 4
--------- ---------
Net Cash Used for Investments (213) (168)
--------- ---------
Cash Flows - Financing
Borrowing activities, net 257 45
Dividends paid (26) (19)
Excess tax benefit from exercise of stock options 1 3
Treasury stock transactions (125) (110)
--------- ---------
Net Cash Provided by (Used for) Financing 107 (81)
--------- ---------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents (4) 2
--------- ---------
Net Decrease in Cash and Cash Equivalents (89) (166)
Cash and Cash Equivalents - Beginning of Period 629 502
--------- ---------
Cash and Cash Equivalents - End of Period $ 540 $ 336
========= =========
Supplemental Information
- --------------------------------------------------
Capital expenditures incurred (144) (140)
Change in accounts payable and other accrued
liabilities related to capital expenditures (30) (35)
--------- ---------
Cash paid for capital expenditures (174) (175)
Note: Certain reclassifications were made to our 2006 Condensed
Consolidated Statement of Cash Flows to conform to the 2007
presentation.
THE PEPSI BOTTLING GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
in millions, except per share amounts
March 24, December 30,
2007 2006
------------ ------------
Assets (unaudited)
Current Assets
Cash and cash equivalents $ 540 $ 629
Accounts receivable, net 1,353 1,332
Inventories 657 533
Prepaid expenses and other current assets 299 255
------------ ------------
Total Current Assets 2,849 2,749
Property, plant and equipment, net 3,768 3,785
Other intangible assets, net 3,793 3,768
Goodwill 1,485 1,490
Other assets 171 135
------------ ------------
Total Assets $ 12,066 $ 11,927
============ ============
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and other current
liabilities $ 1,637 $ 1,677
Short-term borrowings 623 357
Current maturities of long-term debt 11 17
------------ ------------
Total Current Liabilities 2,271 2,051
Long-term debt 4,757 4,754
Other liabilities 1,296 1,205
Deferred income taxes 1,234 1,293
Minority interest 544 540
------------ ------------
Total Liabilities 10,102 9,843
------------ ------------
Shareholders' Equity
Common stock, par value $0.01 per share:
Authorized 900 shares, issued 310 shares 3 3
Additional paid-in capital 1,764 1,751
Retained earnings including $5 from the
impact of FIN 48 in 2007 2,717 2,708
Accumulated other comprehensive loss (381) (361)
Treasury stock: 84 shares and 80 shares at
March 24, 2007 and December 30, 2006,
respectively (2,139) (2,017)
------------ ------------
Total Shareholders' Equity 1,964 2,084
------------ ------------
Total Liabilities and Shareholders'
Equity $ 12,066 $ 11,927
============ ============
THE PEPSI BOTTLING GROUP, INC.
First Quarter 2007 Earnings Release
Segment Data by Quarter (unaudited)
(in millions)
12 Weeks Ended
-------------------
March 24, March 25,
2007 2006
--------- ---------
Net Revenues
- --------------------------------------------------
U.S. & Canada $ 2,102 $ 2,036
Europe 176 148
Mexico 188 183
--------- ---------
Worldwide net revenues $ 2,466 $ 2,367
========= =========
Operating Income
- --------------------------------------------------
U.S.& Canada $ 143 $ 141
Europe (25) (22)
Mexico 2 2
--------- ---------
Worldwide operating income 120 121
Interest expense, net 66 61
Other non-operating expenses, net 1 -
Minority interest 8 6
--------- ---------
Income before income taxes $ 45 $ 54
========= =========
CONTACT: The Pepsi Bottling Group, Inc.
Mary Winn Settino, 914-767-7216