PEP ---> PEPSICO DELIVERS FIFTH QUARTER OF DOUBLE-DIGIT EARNINGS GROWTH CAPPING STRONG YEAR 2000; EXPRESSES CONFIDENCE IN 2001 OUTLOOK
* EPS grows 15% in the 16-week quarter to 38 cents, and 17% for the
52-week year to $1.45
* Each division boosts Q4 volume, and gains market share for the year
* Net sales advance 8% to over $6 billion for the quarter, annual sales
grow 8% and exceed $20 billion
* Every division posts double-digit operating profit growth in the
quarter, annual operating profits advance 13% to $3.5 billion
* Operating cash flow grows 33% to $2.7 billion
* Return on invested capital (ROIC) improves to 23% -- a 250 basis point
increase
* 2001 outlook for continued double-digit earnings growth
PURCHASE, N.Y., Feb. 5 /PRNewswire/ -- PepsiCo reported its fifth
consecutive quarter of solid, double-digit earnings growth, with
earnings per share for the fourth quarter of 2000 up 15% to 38 cents,
excluding the impact of the extra week in the quarter.
Net sales grew 8% to $6.1 billion for the quarter, while division
operating profit rose 12% to $984 million and net income grew 15% to
$567 million. For the full year, net income grew 16% to over $2.1
billion, net sales advanced 8% to $20.1 billion and total division
operating profits grew 13% to $3.5 billion.
When included, the 53rd week increased net sales by $294 million,
operating profits by $62 million and net income by $44 million for an
additional 3 cents in earnings per share. Information in the balance
of this release will be presented on a comparable basis, comparing
2000 to 1999 on a 16-week to 16-week and 52-week to 52-week basis, and
ignoring the upside impact of the 53rd week. (See the note on
presentation at the end of this release.)
Chairman and Chief Executive Officer Roger Enrico said: "PepsiCo
delivered another solid quarter and capped an outstanding year. By
every measure -- EPS, revenue, profits, return on capital and cash
flow -- 2000 was an outstanding year with a performance unmatched by
virtually any other consumer product company.
Enrico added: "Our strength was broad-based with solid earnings
growth across every business, domestic and international. Our sharp
focus on convenient food and beverages is paying off and we expect
consistently healthy results to continue throughout 2001."
FRITO-LAY NORTH AMERICA (FLNA)
(in millions)
Sixteen Weeks Fifty-Two Weeks
2000 1999 % change 2000 1999 % change
Net Sales $ 2,484 $ 2,333 6.5% $ 8,398 $ 7,865 7%
Operating Profit $ 539 $ 490 10% $ 1,811 $ 1,645 10%
4th Quarter 2000
FLNA's performance in the fourth quarter of 2000 continued to be
excellent, with robust growth consistent with the rest of the year.
Pound growth advanced 4%, led by strong growth in Tostitos and Lay's.
Revenues grew 6.5% to $2.5 billion and, combined with productivity
based margin enhancements, delivered a 10% increase in operating
profits. This was FLNA's eighth consecutive quarter of double-digit
operating profit growth.
Full Year 2000
FLNA's fourth quarter results added to a strong year that saw pound
growth move up 4%, driven by growth across core brands. Frito-Lay
gained nearly 2 share points, bringing its share of the measured U.S.
retail salty snack market to over 58%. Revenues grew 7% to $8.4
billion and operating profit for the year rose 10% to $1.8 billion.
Profit margins improved by over half a point, reflecting higher
volume, higher effective net pricing and reduced commodity costs.
2001 Outlook
FLNA's strong performance is expected to continue in 2001, and early
results in the first quarter are solidly on track. Topline momentum
will be driven by:
* Continued growth in core products, driven by new flavors and forms such
as reformulated Nacho Cheesier Doritos and Four Cheese Doritos, Ruffles
Flavor Rush Ultimate Cheddar and Salsa, Rold Gold Nuggets and Cheetos
Whirlz;
* Aggressive new product innovation, such as Lay's Bistro, Fritos Flavor
Twists, Cheddar Snack Mix and Obertos Beef Steak; and
* A strong marketing calendar, with promotions tied to big events like
the Super Bowl and the Daytona 500, and ESPN College Basketball.
In 2001, FLNA revenues are expected to continue to grow in the 5-7%
range, consistent with 2000 and prior years. The gap between revenue
growth and pound growth, which has been between 2-3%, is expected to
widen to a difference of 3-4% as a result of a weight-out action
implemented at the end of 2000. In 2001, solid unit growth, strong
productivity and weight related pricing are expected to continue
FLNA's 10% profit growth rate.
FRITO-LAY INTERNATIONAL (FLI)
(in millions)
Sixteen Weeks Fifty-Two Weeks
2000 1999 % change 2000 1999 % change
Net Sales $ 1,348 $ 1,227 10% $ 4,258 $ 3,750 14%
Operating Profit $ 155 $ 138 11% $ 483 $ 406 19%
4th Quarter 2000
FLI also continued to show excellent results in the fourth quarter,
with salty kilos growing 12%. Volume growth was broad based, coming
from Sabritas, Walkers and our joint ventures in Latin America and
Europe. FLI gained share in virtually every market where it operates.
Revenues advanced 10%, reflecting strong marketing such as the highly
successful Pokemon promotion, and higher pricing at Sabritas and
Gamesa in Mexico. Despite foreign currency pressures, particularly in
Europe, FLI's operating profits grew a robust 11% to $155 million.
Full Year 2000
The fourth quarter's contribution to full year results saw FLI
ending 2000 with salty kilo growth of 13%. Revenues accelerated a
solid 14% to $4.3 billion, led by double-digit increases at Sabritas
and Gamesa. Full year operating profits grew an impressive 19% to
$483 million, despite a 2 percentage point squeeze on net sales and
operating profits due to weaker foreign currencies.
2001 Outlook
FLI is one of PepsiCo's key growth engines and is expected to
deliver mid-teen profit growth in 2001. Strong marketing calendars
are planned at Sabritas and Walkers, and Gamesa will continue to
aggressively introduce innovative new products. In addition, FLI
continues to find opportunities around the world to improve scale and
increase market share, like the acquisitions in India and Taiwan that
closed at the end of 2000 and the transactions in Egypt and Saudi
Arabia that are expected to close in the first quarter of 2001.
PEPSI-COLA NORTH AMERICA
(in millions)
Sixteen Weeks Fifty-Two Weeks
2000 1999 % change 2000 1999 % change
Net Sales $ 995 $ 867 15% $ 3,253 $ 3,005 8%
Operating Profit $ 227 $ 200 13% $ 820 $ 751 9%
4th Quarter 2000
The fourth quarter marked PCNA's return to improved levels of
profitability as the division continued to pursue its strategy that
began in 1999 to generate balanced growth. Net sales increased a
strong 15% due to healthy volume gains and higher concentrate pricing.
Operating profits were also up in the quarter, rising 13% even as
investments were made behind Sierra Mist, our new lemon-lime
carbonated soft drink, and the roll out of the new Dole juice drinks.
Concentrate shipments were up 2.7%, driven by growth across most
brands and the Sierra Mist introduction. Bottler case sales increased
over 1% for the quarter, less than expected due to severe competitive
pricing actions. BCS growth is expected to return to a 3% level in
2001, driven by aggressive innovation and marketing.
Full Year 2000
As a result of the year's steady and profitable finish, PCNA net
sales grew more than 8% and profits climbed a strong 9%. BCS were up
1% for the year, in spite of significant price increases at retail,
and concentrate shipments were in line.
2001 Outlook
PCNA's outlook in 2001 is excellent. Strong new product innovation,
the addition of SoBe Beverages, an aggressive marketing plan and
strong retail support will create an unparalleled marketing calendar.
New product launches will include Pepsi Lemon Twist, Code Red (the
first flavor extension ever behind Mountain Dew), and the Dole juices.
The acquisition of SoBe Beverages, concluded in January, represents
PepsiCo's latest step to build leadership in non-carbonated beverages,
a strategy started in the early 1990's. Investment will also be made
behind high growth brands such as Aquafina and Wild Cherry Pepsi,
expansion of the "Pepsi Challenge" and "Pepsi Stuff" programs,
continued cold bottle development, and promotional activity tied to
big events (including first quarter events around the Superbowl,
Daytona 500 and March Madness).
PEPSI-COLA INTERNATIONAL
(in millions)
Sixteen Weeks Fifty-Two Weeks
2000 1999 % change 2000 1999 % change
Net Sales $ 528 $ 549 (4%) $ 1,842 $ 1,793 3%
Operating Profit -- $ (7) nm* $ 148 $ 108 37%
(*not meaningful)
4th Quarter 2000
Pepsi-Cola International posted a solid fourth quarter performance
with bottler case sales rising 4%, led by a doubling of volume in
Russia, and double-digit growth in China, India, Brazil, Thailand,
Egypt and Pakistan. Net sales, however, decreased 4% in the quarter,
reflecting a 5 percentage point impact from adverse foreign currency
exchange rates. Quarterly operating profit was breakeven, which is a
$7 million improvement over 1999 -- a strong finish in this seasonally
low quarter, especially given the adverse currency impact.
Full Year 2000
8675 02/05/2001 08:01 EST
--------------------
TAL News Server History:
ADD : 01/02/05 08:06
--------------------------------------------------
PEPSICO DELIVERS FIFTH QUARTER OF DOUBLE-DIGIT EARNINGS -2-
For the full year, PCI's 2000 results were consistently healthy.
Bottler case sales were up 5% and the division grew market share in
most of its top 25 markets. Net sales rose 3% to $1.8 billion on
volume gains and higher pricing. Operating profits for the year
increased 37% to $148 million, driven by the increased volume and
pricing. The PCI bottler network continues to strengthen, reflecting
consolidation in Mexico and Argentina and the re-franchising of
bottlers in Australia and New Zealand.
2001 Outlook
Continued growth across PCI's key markets is expected in 2001 with
profits growing in the mid-teens. Volume trends in Russia, China and
India remain strong. More importantly, PCI has the infrastructure in
place to drive improving margins as incremental revenues leverage
fixed costs.
TROPICANA
(in millions)
Sixteen Weeks Fifty-Two Weeks
2000 1999 % change 2000 1999 % change
Net Sales $ 761 $ 704 8% $ 2,393 $ 2,253 6%
Operating Profit $ 63 $ 54 16% $ 220 $ 170 30%
4th Quarter 2000
Tropicana continued its powerful momentum, posting another quarter
of strong volume growth and finishing a very successful 2000.
Equivalent case volume grew 11%, led by ongoing double-digit growth in
Pure Premium nutritionals and blends and the new 128-ounce Pure
Premium package. Consumer awareness of Pure Premium improved when
clinical trials allowed Tropicana to make its heart health claims
based on the potassium naturally found in fresh squeezed orange juice.
Net sales increased 8% to $761 million, and operating profit
accelerated more than 16%.
Full Year 2000
For the full year, Tropicana grew volume a robust 8%, more than
double the growth rate of the prior year, and U.S. market share rose
to 35%. Net sales increased 6% and operating profit rose a dramatic
30% due to the large volume gains, favorable fruit costs, supply chain
productivity and accelerated profit growth outside the U.S. For the
full year, operating profits would have been 4 points higher, but were
impacted by unfavorable foreign currency exchange rates. Combined
with operating profit growth of over 55% in 1999, Tropicana operating
profits have doubled in the two years since the PepsiCo acquisition.
2001 Outlook
As with PepsiCo's other divisions, the outlook for Tropicana remains
strong. Continued focus on Pure Premium nutritionals, including
continued marketing support for the heart healthy benefits of
potassium, the introduction of new sizes, and improvements to the
Homestyle and Grovestand pulp products, will drive the brand's
momentum. Growth in the balance of the portfolio will be supported by
new plastic packaging for the Season's Best single serve line, Twister
line extensions, and the regional introduction of Tropicana Smoothies.
Tropicana is also focused on continuing to expand penetration outside
its core markets. These initiatives are expected to grow profits in
the mid-teens.
Corporate Items
EQUITY INCOME. For the 52-week year, equity income grew 52% to $125
million, contributing to the strong growth in earnings per share.
This growth was driven in particular by the outstanding performance
delivered by The Pepsi Bottling Group. The merger of Whitman
Corporation into Pepsi Americas, a combination of Pepsi-Cola's second
and third largest bottlers, is expected to further improve the
effectiveness of Pepsi's domestic bottler network.
NET INTEREST. Net interest expense for the 52-week 2000, declined
12% over the pro forma prior year to $142 million, reflecting
significantly lower average debt levels, partially offset by higher
average interest rates.
OPERATING CASH FLOW. Operating cash flow, defined as net income
plus depreciation and amortization, plus changes in working capital,
less capital spending and other balance sheet changes, grew 33% to
$2.7 billion for the 53-week year ended December 30, 2000.
ROIC. For the 52-week year, PepsiCo's return on invested capital
(ROIC) reached 23% -- a 250 basis point increase.
SHARE REPURCHASES. In early December, we rescinded our share
repurchase program in connection with our acquisition of The Quaker
Oats Company. During 2000, the company purchased just over 38 million
shares at a total cost of approximately $1.4 billion, bringing our
weighted average shares outstanding at year end to 1,475 million.
CASH EPS. Cash earnings per share, computed on a 16-week basis
using net income before amortization of intangibles and shares
outstanding assuming dilution, grew 13% in the fourth quarter to $.41,
compared to $.37 in the year-earlier quarter.
Miscellaneous
Note on Presentation
PepsiCo's fiscal year ends on the last Saturday in December. Every
5 or 6 years, our fiscal year contains 53 instead of 52 weeks and our
4th quarter contains 17 instead of 16 weeks. In order to help
investors compare our performance in 2000 to our performance in 1999,
the information in this release was presented on a "comparable" basis.
Specifically, we have:
* Compared fourth quarter 2000 to 1999 on a 16-week to 16-week and full
year 2000 to 1999 on a 52-week to 52-week basis, ignoring the benefit
of the extra week in 2000; and
* Presented results for 1999 on a pro forma basis assuming the
transactions involving The Pepsi Bottling Group, PepsiAmericas and
PepCom occurred on the first day of fiscal 1998 and excluding unusual
items reported in 1999.
Conference Call
At 11:00 a.m. (Eastern time) today, management will host a
conference call with investors to discuss fourth quarter results. For
details, visit our site on the internet at www.pepsico.com .
Cautionary Statement
This release may discuss expectations regarding PepsiCo's future
performance. Any forward-looking statements based on current
expectations and projections about future events are subject to risks,
uncertainties and assumptions. As a result, forward-looking
statements discussed in this release could turn out to be
significantly different from expectations or may not occur. In
addition, the pro forma condensed consolidated information does not
purport to represent what PepsiCo's results would have been had the
transactions referred to in this release been completed as of the
beginning of 1998, nor does it give effect to any other events.
PepsiCo, Inc. and Subsidiaries
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION (a)
($ in millions except per share amounts, unaudited)
16 Weeks Ended 52 Weeks Ended
12/30/00(b) 12/25/99 12/30/00(b) 12/25/99(c)
NET SALES
Frito-Lay
-North America $ 2,484 $ 2,333 $ 8,398 $ 7,865
-International 1,348 1,227 4,258 3,750
3,832 3,560 12,656 11,615
Pepsi-Cola
-North America 995 867 3,253 3,005
-International 528 549 1,842 1,793
1,523 1,416 5,095 4,798
Tropicana 761 704 2,393 2,253
Total Net Sales $ 6,116 $ 5,680 $ 20,144 $ 18,666
OPERATING PROFIT
Frito-Lay
-North America $ 539 $ 490 $ 1,811 $ 1,645
-International 155 138 483 406
694 628 2,294 2,051
Pepsi-Cola
-North America 227 200 820 751
-International -- (7) 148 108
227 193 968 859
Tropicana 63 54 220 170
Combined Segments 984 875 3,482 3,080
Corporate Unallocated (111) (111) (319) (278)
Pro Forma Operating
Profit 873 764 3,163 2,802
Bottling equity
income(d) (10) -- 125 82
Interest expense, net (29) (37) (142) (163)
Income Before Income
Taxes 834 727 3,146 2,721
Provision for Income
Taxes 267 233 1,007 871
Net Income $ 567 $ 494 $ 2,139 $ 1,850
Income Per Share -
Assuming Dilution $ 0.38 $ 0.33 $ 1.45 $ 1.24
Average Shares
Outstanding 1,480 1,481 1,475 1,496
See accompanying notes.
Notes to the pro forma information for the 16 and 52 weeks ended
December 30, 2000 and December 25, 1999:
(a) Percentage changes in text are based on unrounded amounts.
(b) PepsiCo's fiscal year ends on the last Saturday in December and, as a
result, a fifty-third week is added every 5 or 6 years. The fiscal
year ended December 30, 2000 consisted of fifty-three weeks. For
comparative purposes, the proforma condensed consolidated financial
information for 2000 excludes the impact of the fifty-third week.
(c) The pro forma condensed consolidated financial information for 1999
also gives effect to the initial public offering of The Pepsi Bottling
Group (PBG), the merger of PepsiCo Bottling Operations with the
Whitman Corporation and the contribution of PepsiCo bottling
franchises to a business venture with PepCom Industries, Inc. (PepCom)
as if the transactions occurred at the beginning of PepsiCo's 1998
fiscal year. In addition, the pro forma results exclude the Frito-Lay
first quarter 1999 impairment and restructuring charge, the first
quarter 1999 gain on the sale of a chocolate business in Poland, the
second quarter 1999 net gain on the PBG and Whitman
8675 02/05/2001 08:01 EST
--------------------
TAL News Server History:
ADD : 01/02/05 08:06
--------------------------------------------------
PEPSICO DELIVERS FIFTH QUARTER OF DOUBLE-DIGIT EARNINGS -3-
bottling
transactions and the third quarter 1999 income tax provision related
to the PepCom transaction. The pro forma condensed consolidated
financial information does not purport to represent what PepsiCo's
results of operations would have been had such transactions been
completed as of the date indicated nor does it give effect to any
other events.
(d) Represents PepsiCo's interest in the pro forma income of PBG, Whitman
and PepCom as well as the equity income or loss of other
unconsolidated bottling affiliates and other adjustments related to
these investments.
PepsiCo, Inc. and Subsidiaries
Consolidated Statement of Income
($ in millions except per share amounts, unaudited)
17 Weeks 16 Weeks 53 Weeks 52 Weeks
Ended Ended Ended Ended
12/30/00 (a) 12/25/99 12/30/00 (a) 12/25/99
NET SALES
New PepsiCo $ 6,410 $ 5,680 $ 20,438 $ 18,244
Bottling
operations (b) -- -- -- 2,123
Total Net Sales 6,410 5,680 20,438 20,367
Cost and Expenses
Cost of sales 2,510 2,253 7,943 8,198
Selling, general and
administrative
expenses 2,923 2,620 9,132 9,103
Amortization of
intangible assets 42 43 138 183
Impairment and
restructuring
charge (c) -- -- -- 65
Total Costs and
Expenses 5,475 4,916 17,213 17,549
OPERATING PROFIT
New PepsiCo 935 764 3,225 2,765
Bottling operations and
equity investments (b) -- -- -- 53
Total Operating Profit 935 764 3,225 2,818
Bottling equity income,
net (d) (5) -- 130 83
Gain on bottling
transactions (e) -- -- -- 1,000
Interest expense (65) (63) (221) (363)
Interest income 33 22 76 118
Income Before
Income Taxes 898 723 3,210 3,656
Provision for Income
Taxes(e) (f) 287 233 1,027 1,606
Net Income $ 611 $ 490 $ 2,183 $ 2,050
Income Per Share
- Basic $ 0.42 $ 0.34 $ 1.51 $ 1.40
Average Shares
Outstanding -
Basic 1,446 1,456 1,446 1,466
Income Per Share
- Assuming
Dilution $ 0.41 $ 0.33 $ 1.48 $ 1.37
Average Shares
Outstanding -
Assuming Dilution 1,480 1,481 1,475 1,496
See accompanying notes.
Notes to the 17 and 53 weeks ended December 30, 2000 and 16 and 52 weeks
ended December 25, 1999:
(a) PepsiCo's fiscal year ends on the last Saturday in December and, as a
result, a week is added every 5 or 6 years. The fiscal year ended
December 30, 2000, consisted of fifty-three weeks. The fifty-third
week increased the 2000 fourth quarter and full year net sales by an
estimated $294 million, operating profit by an estimated $62 million
and net income by an estimated $44 million or $0.03 per share assuming
dilution.
(b) Through the applicable transaction closing dates in 1999, includes the
results of those previously wholly-owned bottling operations in which
we now own an equity interest. In addition, the equity income or loss
of unconsolidated bottling affiliates for the first quarter of 1999 is
presented in operating profit.
(c) For the 52 weeks in 1999, includes an asset impairment and
restructuring charge of $65 million ($40 million after-tax or $0.03
per share assuming dilution) for Frito-Lay North America related to
the consolidation of U.S. production in our most modern and efficient
plants and streamlining logistics and transportation systems.
(d) From the applicable transaction closing dates in 1999, includes the
equity income of those previously wholly-owned bottling operations in
which we now own an equity interest. Also includes equity income or
loss of other unconsolidated bottling affiliates for 2000 and the
second, third and fourth quarters of 1999.
(e) In 1999, reflects the gain of $1.0 billion ($270 million after-tax or
$0.18 per share assuming dilution) on the second quarter PBG and
Whitman bottling transactions. There was no gain or loss resulting
from the third quarter PepCom transaction which was treated as a
nonmonetary exchange for book purposes. A portion of the transaction
was taxable which resulted in income tax expense of $25 million or
$0.02 per share.
(f) For the fourth quarter and full year in 2000, the effective tax rate
is 32.0%. In 1999, effective tax rate for the fourth quarter is 32.2%
and for the full year is 43.9%. For the full year in 1999, excluding
the effects of the bottling transactions and the asset impairment and
restructuring charge, the effective tax rate is 32.2%. |
