This excerpt taken from the PBG 8-K filed Jul 8, 2008.
The Pepsi Bottling Group Reports Second Quarter 2008 Results
SOMERS, N.Y.--(BUSINESS WIRE)--The Pepsi Bottling Group, Inc. (NYSE: PBG) today reported second quarter 2008 revenue of $3.5 billion, a five percent increase over prior year. Net income was $174 million, or reported diluted earnings per share (EPS) of $0.78, up 12 percent over the prior year. This compares to net income of $162 million, or $0.70 per diluted share, that the Company reported in the second quarter of 2007.
“PBG continues to meet its financial objectives, as a combination of superior operating capabilities and strong international growth offset widespread macroeconomic softness in the U.S.” said Eric Foss, PBG President and Chief Executive Officer. “These results have been led by our efforts to reposition our geographic portfolio as well as our never-ending commitment to revenue and margin management, cost productivity, and point-of-sale execution. We have simultaneously continued to return cash to shareholders, and we have confidence that the flexibility and diversity of our business will enable us to achieve our full-year earnings objectives.
“Our focus for the balance of 2008 is to execute our strategy in each of our three geographic segments. This means taking appropriate actions to improve profitability in the U.S. and Canada, building on our recent improvements in Mexico, and maximizing the potential of our European growth markets,” Foss continued. “We believe we have the right plans, people and track record to successfully navigate the marketplace challenges while driving growth and creating value for shareholders.”
In the U.S. and Canada segment, physical case volume decreased four percent as a combination of the shift of the Easter holiday from the second quarter of last year to the first quarter of this year and macroeconomic factors negatively impacted the liquid refreshment beverage category. Volume growth in Europe was led by solid mid-single-digit growth in Russia and Turkey, offset by declines in Spain. Russia delivered six percent volume growth, as it successfully cycled 22 percent growth in the prior year. Overall, volume grew one percent for the quarter in Europe. In Mexico, volume declined three percent, in part by the Company’s pricing actions to drive improved margins across its portfolio.
Foreign currency translation contributed about three percentage points of growth to net revenue, cost of goods sold (COGS) and selling, delivery and administrative (SD&A) expenses. The net effect was an increase of two percentage points on operating income.
Reported COGS per case was up eight percent in the second quarter. COGS performance was impacted by expected increases in input costs, as well as foreign currency translation.
PBG’s reported SD&A expenses grew five percent in the second quarter, with the U.S. flat due to the continued success of cost and productivity initiatives as well as volume declines.
In 2008, PBG expects to achieve top-line growth of about five to six percent. PBG’s comparable operating profit is expected to grow in the low-single digits for the year. Comparable diluted EPS are forecasted to be $2.30 to $2.38. Operating free cash flow is expected to be at least $620 million.
PBG will host a conference call at 11:00 a.m. EDT today to discuss its second quarter financial results. The live call and replay can be accessed by visiting the Investor Relations section of the Company's website at http://www.pbg.com.
The Pepsi Bottling Group, Inc. is the world’s largest manufacturer, seller and distributor of Pepsi-Cola beverages. With approximately 70,000 employees and annual sales of nearly $14 billion, PBG has operations in the U.S., Canada, Greece, Mexico, Russia, Spain and Turkey. For more information, please visit 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 PBG’s annual report on Form 10-K for the year ended December 29, 2007.
The Company prepares its 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, the Company sometimes uses 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 this attachment. 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.
Items Affecting Comparability in 2008 Results