Attached files
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| 8-K - FORM 8-K - PEPSICO INC | dp15809_8k.htm |
Exhibit
99.1
Purchase,
New
York Telephone: 914-253-2000 www.pepsico.com
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Dave
DeCecco
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Lynn
A. Tyson
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Director,
Media Bureau
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SVP,
Investor Relations
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914-253-2655
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914-253-3035
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david.dececco@pepsi.com
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lynn.tyson@pepsi.com
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PEPSICO
REACHES AGREEMENT TO DISTRIBUTE CERTAIN DR PEPPER SNAPPLE GROUP
BRANDS
Company
updates guidance for 2009 and reaffirms guidance for 2010
PURCHASE, N.Y. –
Dec. 8, 2009 – PepsiCo (NYSE:PEP) said today that it has reached an agreement
with Dr Pepper Snapple Group, Inc. (DPS) to manufacture and distribute certain
DPS products following completion of PepsiCo’s acquisition of its two anchor
bottlers, The Pepsi Bottling Group, Inc. (PBG) and PepsiAmericas, Inc.
(PAS).
Under the terms of
the agreement, DPS will receive an upfront payment of $900 million payable upon
closing of the acquisitions. In exchange, PepsiCo will be entitled to
manufacture and distribute Dr Pepper and certain other DPS products in the
territories where they are currently distributed by PBG and PAS. The
agreement between PepsiCo and DPS, which will replace existing agreements PBG
and PAS have with DPS, will have an initial term of 20 years, with automatic 20
year renewals thereafter.
“We are delighted
that we have reached a mutually beneficial agreement with Dr Pepper Snapple
Group to continue to distribute their products,” said Indra K. Nooyi, PepsiCo’s
Chairman and Chief Executive Officer. “PepsiCo is fully committed to vigorously
expand, flawlessly distribute and grow Dr Pepper Snapple’s brands in its
appointed territories.”
Under the new
agreement, PepsiCo will distribute: Dr Pepper, Crush and Schweppes brands in the
United States; Dr Pepper, Crush, Schweppes, Vernors and Sussex brands in Canada;
and Squirt and Canada Dry brands in Mexico.
The agreement was
anticipated after PepsiCo and its bottlers earlier this year reached an
agreement under which PepsiCo would acquire the two anchor bottlers. PepsiCo is
on track to complete the acquisitions, subject to regulatory and stockholder
approval. The company filed its Form S-4 Registration Statements in preliminary
form on October 1, 2009 and expects to close on the proposed transactions by the
end of the first quarter of 2010.
Concurrent with the
announcement, PepsiCo has filed with the SEC amendments to its preliminary
registration statements on Form S-4 relating to the acquisitions to disclose
updated financial and other information.
Fiscal
2009 and 2010 Guidance
In
its fiscal 2009 fourth quarter, PepsiCo has begun to step-up investments in
targeted areas that will support improved growth and profitability in 2010 and
beyond. For example, PepsiCo is making infrastructure investments in
developing markets, such as China, to drive increased penetration and
distribution of both carbonated and non-carbonated beverages. It has
also increased investments in differentiated science-based R&D to accelerate
the company’s health and wellness transformation.
For fiscal 2009
PepsiCo expects constant currency net revenue to be up about five
percent. The company also expects division operating profit to
increase about six to seven percent and EPS to increase about five to six
percent, each in core constant currency, off of its fiscal 2008 core EPS of
$3.68. Based on current spot rates, foreign exchange translation
would represent about a five percentage point adverse impact to PepsiCo’s
full-year, core constant currency EPS.
For fiscal 2010 the
company reaffirms its target of 11 to 13 percent growth for core constant
currency EPS off of expected fiscal 2009 core EPS. This target excludes one-time
costs to achieve the synergies associated with its acquisitions of PBG and PAS
and assumes the company completes the acquisitions by the end of the first
quarter of 2010. Please refer to the glossary for more information
about the items excluded from the company’s fiscal 2009 and 2010 constant
currency core EPS guidance.
The company has not
yet received regulatory or PBG or PAS shareholder approval for the acquisitions
or resolved all comments from the Securities and Exchange Commission on its Form
S-4 Registration Statements. In addition, the company is still in the process of
completing its annual planning process and its integration planning. Any of
these factors, as well as the risks described under “Cautionary Statement” later
in this release, the risks described in our most recent annual report on Form
10-K and subsequent reports on Forms 10-Q and 8-K and in the company’s Form S-4
Registration Statements with respect to the acquisitions could materially
adversely impact the company’s ability to achieve these results.
About PepsiCo
PepsiCo offers the
world’s largest portfolio of billion-dollar food and beverage brands, including
18 different product lines that each generate more than $1 billion in
annual retail sales. Our main businesses – Frito-Lay, Quaker, Pepsi-Cola,
Tropicana and Gatorade – also make hundreds of other tasty foods and drinks that
bring joy to our consumers in over 200 countries. With more than
$43 billion in 2008 revenues, PepsiCo employs 198,000 people who are united
by our unique commitment to sustainable growth, called Performance with Purpose.
By dedicating ourselves to offering a broad array of choices for healthy,
convenient and fun nourishment, reducing our environmental impact, and fostering
a diverse and inclusive workplace culture, PepsiCo balances strong financial
returns with giving back to our communities worldwide. For more information,
please visit www.pepsico.com.
Cautionary
Statement
This communication
does not constitute an offer to sell or the solicitation of an offer to buy any
securities or a solicitation of any vote or approval. PepsiCo, Inc. (“PepsiCo”) and The Pepsi
Bottling Group, Inc. (“PBG”) have filed with the
Securities and Exchange Commission (“SEC”) a registration statement
on
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Form S-4 containing
a proxy statement/prospectus and other documents with respect to the proposed
acquisition of PBG. A definitive proxy statement/prospectus will be mailed to
shareholders of PBG after the registration statement is declared effective. The
registration statement has not yet become effective. PepsiCo and PepsiAmericas,
Inc. (“PAS”) have
filed with the SEC a registration statement on Form S-4 containing a proxy
statement/prospectus and other documents with respect to the proposed
acquisition of PAS. A definitive proxy statement/prospectus will be mailed to
shareholders of PAS after the registration statement is declared effective. The
registration statement has not yet become effective. INVESTORS AND SECURITY HOLDERS OF PBG
AND PAS ARE URGED TO READ THE APPLICABLE DEFINITIVE PROXY STATEMENT/PROSPECTUS
AND OTHER DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
Investors and
security holders will be able to obtain free copies of the registration
statements and the proxy statements/prospectuses and other documents filed with
the SEC by PepsiCo, PBG or PAS through the website maintained by the SEC at
www.sec.gov. Copies of the documents filed with the SEC by PepsiCo will be
available free of charge on PepsiCo’s internet website at www.pepsico.com or by
contacting PepsiCo’s Investor Relations Department at 914-253-3035. Copies of
the documents filed with the SEC by PBG will be available free of charge on
PBG’s internet website at www.pbg.com or by contacting PBG’s Investor Relations
Department at 914-767-7216. Copies of the documents filed with the SEC by PAS
will also be available free of charge on PAS’s internet website at
www.pepsiamericas.com or by contacting PAS’s Investor Relations Department at
612-661-3883.
Statements in this
release that are “forward-looking statements”, including PepsiCo’s 2009 and 2010
guidance, are based on currently available information, operating plans and
projections about future events and trends. They inherently involve risks and
uncertainties that could cause actual results to differ materially from those
predicted in such forward-looking statements. Such risks and uncertainties
include, but are not limited to: PepsiCo’s ability to consummate the
acquisitions of PBG and PAS and to achieve the synergies and value creation
contemplated by the proposed acquisitions; PepsiCo’s ability to promptly and
effectively integrate the businesses of PBG, PAS and PepsiCo; the timing to
consummate the proposed acquisitions and any necessary actions to obtain
required regulatory approvals; the diversion of management time on
transaction-related issues; changes in demand for PepsiCo’s products, as a
result of shifts in consumer preferences or otherwise; increased costs,
disruption of supply or shortages of raw materials and other supplies;
unfavorable economic conditions and increased volatility in foreign exchange
rates; PepsiCo’s ability to build and sustain proper information technology
infrastructure, successfully implement its ongoing business process
transformation initiative or outsource certain functions effectively; damage to
PepsiCo’s reputation; trade consolidation, the loss of any key customer, or
failure to maintain good relationships with PepsiCo’s bottling partners,
including as a result of the proposed acquisitions; PepsiCo’s ability to hire or
retain key employees or a highly skilled and diverse workforce; changes in the
legal and regulatory environment; disruption of PepsiCo’s supply chain; unstable
political conditions, civil unrest or other developments and risks in the
countries where PepsiCo operates; and risks that benefits from PepsiCo’s
Productivity for Growth initiative may not be achieved, may take longer to
achieve than expected or may cost more than currently anticipated.
For additional
information on these and other factors that could cause PepsiCo’s actual results
to materially differ from those set forth herein, please see PepsiCo’s filings
with the SEC, including its most recent annual report on Form 10-K and
subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place
undue reliance on any such forward-looking statements, which speak only as of
the date they are made. All information in this communication is as of December
8, 2009. PepsiCo
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undertakes no
obligation to update any forward-looking statements, whether as a result of new
information, future events or otherwise.
# # #
Glossary
Core: Core results are
non-GAAP financial measures. Core guidance for full-year 2009 excludes the
commodity mark-to-market net impact included in corporate unallocated expenses,
costs of $36 million ($29 million, after-tax) associated with the
Productivity for Growth initiative and the merger costs. Core EPS guidance for
full-year 2010 excludes the commodity mark-to-market net impact included in
corporate unallocated expenses, estimated one-time costs of approximately
$250 million to achieve synergies, the gain or loss on previously held
equity interests in PBG and PAS, the post-merger one-time impact to earnings of
fair value adjustments to acquired inventory, any additional restructuring or
integration costs and transaction costs related to the proposed acquisitions of
PBG and PAS. For more details and reconciliations of our 2009 and
2010 constant currency core guidance, see “Reconciliation of GAAP and Non-GAAP
Information” below.
Constant currency: Financial
results (historical and projected) assuming constant foreign currency exchange
rates used for translation based on the rates in effect for the comparable
prior-year period. In addition, the impact on EPS growth is computed by
adjusting core EPS growth by the after-tax foreign currency translation impact
on core operating profit growth using PepsiCo’s core effective tax
rate.
Division operating
profit: The aggregation of the operating profit for each of
our reportable segments, which excludes the impact of corporate unallocated
expenses.
Transaction foreign exchange:
The foreign exchange impact on our financial results of transactions, such as
purchases of imported raw materials, commodities, or services, occurring in
currencies other than the local, functional currency.
Reconciliation
of GAAP and Non-GAAP Information
We are not able to reconcile our
full-year projected 2009 constant currency or core constant currency results to
our full-year projected 2009 reported results because we are unable to predict
the 2009 full-year impact of foreign exchange or the mark-to-market net gains or
losses on commodity hedges due to the unpredictability of future changes in
foreign exchange rates and commodity prices. Therefore, we are unable to provide
a reconciliation of these measures. Because the company expects to close on the
proposed acquisitions of PBG and PAS by the end of the first quarter
of 2010, the company's fiscal 2009 guidance does not include the
impact of the proposed acquisitions.
We are not able to reconcile our
full-year projected 2010 core constant currency EPS to our full-year projected
2010 reported results because we are unable to predict the 2010 full-year impact
of foreign exchange or the mark-to-market net gains or losses on commodity
hedges due to the unpredictability of future changes in foreign exchange rates
and commodity prices. Additionally, with respect to our proposed transactions
with PBG and PAS, we are unable to predict the 2010
full-year impact of the gain or loss on previously held equity interests in
PBG and PAS, the post-merger one-time impact to
earnings of fair value adjustments to acquired inventory, any additional
restructuring or integration costs and transaction costs related to the proposed
acquisitions of PBG
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and PAS due to the uncertainty of the amounts
and/or timing of such items. Therefore, we are unable to provide a
reconciliation of these measures.
# # #
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