PepsiAmericas Reports Fourth Quarter and Full-Year 2007 Results

Business Wire, Jan 30, 2008

* Reported EPS from continuing operations up 36% to $1.66; Adjusted EPS up 26%.

* Company provides 2008 EPS outlook of $1.77 to $1.83.

MINNEAPOLIS -- PepsiAmericas, Inc. (NYSE:PAS) today reported net income of $212.1 million for the full year 2007, with revenue up 13 percent including acquisitions. Diluted earnings per share (EPS) was $1.64 for the full year 2007, including a $0.02 reduction related to discontinued operations. These results compare to full year reported net income in 2006 of $158.3 million, or EPS of $1.22, which included a $0.10 reduction related to special charges and an impairment charge.

In the fourth quarter of 2007, PepsiAmericas reported net income of $42 million, or EPS of $0.32, which included a $0.01 reduction related to special charges. These reported results compare to net income of $26.1 million in the fourth quarter of 2006, or EPS of $0.20, which included a $0.09 reduction related to special charges and an impairment charge.

Chairman and Chief Executive Officer Robert C. Pohlad said, "Consistent execution on all parts of our strategy drove our strong performance in 2007.

"Central Europe continues to be our strongest contributor as we capture the topline growth opportunities in our increasingly diverse portfolio of markets. Investments in selling resources, brand building, and an expanding product portfolio drove volume growth ahead of the overall category, led by double digit volume gains for the year in our major markets, Romania and Poland. Along with acquisitions and foreign currency benefits, our Central European business delivered operating profits over $100 million, over four times that of the prior year.

"In the U.S., pricing, innovation and single serve execution offset higher costs. We grew our noncarbonated portfolio 10 percent for the year, partially offsetting the expected declines in carbonated soft drinks. Our U.S. business delivered operating profits of over $330 million, and while down modestly from last year, it continues to generate strong cash flow. The combination of these markets, the stability in the U.S. and the growth in Europe, drove our strong results, with adjusted earnings per share from continuing operations up 26 percent from last year."

Mr. Pohlad continued, "The significant progress we made in building our capabilities, expanding our global product portfolio, and diversifying our markets, along with a strong and agile organization, provide confidence in our 2008 outlook of adjusted earnings per share growth of 7 to 10 percent."

Full-Year 2007 Worldwide Financial Highlights

* Revenue increased to $4.5 billion, up 13 percent, with 5.6 percentage points contributed by acquisitions, 2 percentage points driven by foreign currency translation and the remainder driven by worldwide net pricing gains and strong volume growth in Central Europe.

* Volume improved 7.8 percent for the year, driven mainly by acquisitions. Constant territory volume was essentially flat, as 7.9 percent organic volume growth in Central Europe was offset by a domestic decline of 1.4 percent.

* Average net selling price increased 4.8 percent, including a nearly 2 percentage point reduction related to country mix, reflective of the company's acquisitions. The increase was led by a strong U.S. net selling price increase of over 5 percent.

* Cost of goods sold per unit increased 3.9 percent, driven by higher input costs across all geographies. Country mix lowered cost of goods sold per unit by almost one and a half percentage points.

* Gross profit grew over 13 percent to more than $1.8 billion, with approximately 5 percentage points of growth from acquisitions. The remainder was driven by worldwide pricing improvements in all geographic segments, which offset the higher cost of goods sold.

* Operating income increased 23 percent to $436.1 million, including acquisitions. These results included special charges totaling $6.3 million, compared to special charges of $13.7 million included in prior year operating income of $356 million. Foreign currency translation contributed 7 percentage points to the overall growth.

Fourth Quarter Worldwide Financial Highlights

* Revenue increased 14 percent to $1.1 billion, with nearly 8 percentage points contributed by acquisitions.

* Volume improved 11 percent in the quarter, driven mainly by acquisitions as volume growth in Central Europe was offset, in part, by U.S. volume declines. Constant territory volume was up 0.6 percent.

* Average net selling price increased 3.7 percent, including a 2 percentage point reduction related to country mix.

* Cost of goods sold per unit increased 2.6 percent in the quarter with U.S. costs moderating from previous quarters and with minimal impact from acquisitions.

* Operating income increased 22 percent to $92.5 million, including acquisitions. These results included special charges totaling $2.2 million, compared to special charges of $11.5 million included in prior year operating income of $75.8 million. Foreign currency translation contributed 10 percentage points to the overall growth.