Annual Report 2001

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Annual Report 2001 1 Pepsi Way Somers, NY 10589 www.pbg.com Annual Report 2001 OUR MISSION $ in millions, except per share data 2001(1)2000(1) 1999 (1) We have absolute clarity Net Revenues $8,443 $ 7,982 $ 7,505 Operating Income (2) $ 590 $ 396 around what we do: $676 EBITDA(2) $1,190 $ 1,061 $ 901 We Sell Soda. EPS(2)(3) (4)(6) $1.03 $0.77$0.35 Operating Free Cash Flow(5) $295 $ 273 $ 161 We commit ourselves to (1) Fiscal years 2001 and 1999 consisted of 52 weeks while fiscal year 2000 consisted of 53 weeks. these operating principles: (2) Excludes the impact of unusual impairment and other charges and credits. (3) Fiscal year 1999 reflects the impact of our initial public offering of 100 million shares of common stock on March 31, 1999 as if the shares were outstanding during the entire period presented. (4) Fiscal years 2000 and 1999 EPS have been restated to reflect our 2001 two-for-one stock split. Rules of the Road (5) Operating Free Cash Flow is defined as net cash provided by operations less net cash used for investments, excluding cash used for acquisitions. 1. Drive Local Market Success. (6) Fiscal year 2001 includes Canada tax law change benefits of $0.08 per share. 2. Act Now. Do It Today. Get Results. 3. Set Targets. Keep Score. Win. 4. Respect Each Other. 1 1.2 0 Our success will ensure: 0 2 1.1 Customers Build Their Business. f o Employees Build Their Futures. t r 1.0 Shareholders Build Their Wealth. a ON THE COVER t s o 0.9 t This glowing sign, which d e contains more than 14,000 x 0.8 e individual light fibers d n connected by 20 miles of I 0.7 1 1 1 1 1 1 1 1 1 1 1 1 1 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 fiber length, lights up /1 1 8 0 0 1 9 1 1 8 1 0 1 1 /3 /2 /3 /3 /3 /2 /3 /3 /2 /3 /3 /3 1 2 3 4 5 6 7 8 9 0 1 2 the side of SAFECO Field 1 1 1 PBG Stock Price S&P 500 Index S&P Beverage Index (Non-alcoholic) in Seattle, Washington. The Coca-Cola Company, PepsiCo, Inc., Coca-Cola Enterprises Inc. It was a “partnership gift” from the Seattle Mariners to The Pepsi Bottling Group, in recognition of our sponsorship of the team. TABLEOF CONTENTS Financial Highlights1 Letter to Shareholders 2 Review of Operations 4 Directors & Officers 22 Glossary of Terms24 Financial Review 25 Shareholder Information IBC 1998 1999 2000 2001 1998 1999 2000 2001 (1) Fiscal years 2001, 1999 and 1998 consisted of 52 weeks while fiscal year 2000 consisted of 53 weeks. (2) Excludes the impact of unusual impairment and other charges and credits. (3) Fiscal years 1999 and 1998 reflect our initial public offering of 100 million shares of common stock on March 31, 1999 as if the shares were outstanding during the entire periods presented. (4) Fiscal years 2000, 1999 and 1998 have been adjusted to reflect our 2001 two-for-one stock split. (5) Fiscal year 2001 includes Canada tax law change benefits of $0.08 per share. 1 ear Fellow Shareholders, cold vault. Total cold drink growth results In 2001, our stock split two-for-one, to be the most customer-focused, best Customers and PBG Employees, for both grocery and convenience and gas reflecting our confidence in the future sales company in our industry. We know D were also up double digits. and the tremendous growth in our stock that goal is within our reach. The reason For the people of The Pepsi Bottling price since our IPO. We also repurchased is the people of PBG. They are talented, Group, 2001 was another banner year. Our international operations continued to 11.8 million shares of our common stock, dedicated and committed to this business. We stood out with an exceptional brand post gains. In Canada, we had significant bringing the total number of shares Although our employees are diverse in portfolio, a powerful focus on execution, a increases in both volume and profit, repurchased to more than 31 million since many ways, they have a few things in clear go-to-market strategy, and a unique and we applied great discipline to cost, we began our stock buy back program common. The first is the clarity we all business model. resulting in a very balanced performance. in October 1999. have about why we are in business. Our business in Russia is essentially We sell soda. We help our customers As we approach our third anniversary, breaking even, years ahead of what we Beyond their execution in the market- sell soda. And we are all linked to those we are very pleased to add a new list of initially forecasted. We are very pleased place, our people also stood out in 2001 selling efforts, no matter what our job outstanding accomplishments to the with the consistency of growth in all our by giving back to the communities where is. The second is we are very competitive. impressive results we achieved during our international businesses and with their we live and work. These volunteer and We love to win. But we hate to lose first two years of operation. In 2001, we: contributions to our overall results. contribution efforts took place not even more. only in the aftermath of September 11, • Capitalized on innovation after Our outstanding operating performance but throughout the year wherever our Finally, our partnership with PepsiCo innovation, including Mountain Dew led to significant investments in our employees saw an opportunity to make grows stronger each year. They are com- Code Red, SoBe brands, Pepsi Twist and business – in cold drink equipment, new a difference to people and organizations mitted to lead the industry in innovation, Diet Sierra Mist, and new packaging capacity for our plants and warehouses, that needed help. We are proud to be and, for our part, we’re committed to for Aquafina. new fleet assets, and recruiting and hiring associated with such caring colleagues. deliver the best results of any bottler in to ensure we’re developing tomorrow’s the industry. There is tremendous power • Continued to excel through execution, leaders today. After making these invest- The Next Horizon in the synergy of our relationship, which Craig Weatherup and John Cahill day in and day out, customer by customer, ments, our operating free cash flow was Our vision for the future is centered on helps to fuel our continuing success and account by account. $295 million dollars in 2001, up $22 mil- driving growth for our customers. We and results in positive benefits for the Our performance has been consistent for non-carbs and flavors is growing lion from 2000. This strong cash position start by providing the products, both old shareholders of both companies. and sustained. We are very proud of our rapidly, and PBG is growing with it. Our • Posted double-digit earnings growth enabled us to invest in share repurchases favorites and new offerings, to satisfy every continuing success. broad product offering offers something each quarter, bringing the total to 12 and territory acquisitions. consumer taste and to meet the needs of Our goal is to continue to stand out – as for every taste, and leaves no question that consecutive quarters we have done so. today’s “on-the-go” lifestyles through an industry leader, as a business partner, The Year in Review we are definitely in the “sweet spot” for We acquire other bottlers when we deter- more package choices. Providing what our as an employer, as a good neighbor, and as In 2001, our new product and package continuing growth. • Grew net revenue per case by 5% in mine we can add value by leveraging our consumers want drives our customers’ an excellent choice for investors. We look introductions contributed significantly to the U.S. Earnings per share were $0.95, capability, our systems, and our infrastruc- businesses. We also focus on finding forward to continued growth and the our results. Those innovations, coupled Selling soda is all about location, location, excluding a one-time tax benefit of $0.08. ture. In 2001, we added two bottlers to balance between consumer value and the bright future we see ahead – for The with the power of our direct store location and we did a superb job in 2001 our operations – in Redding, California right price, market by market. We will Pepsi Bottling Group and for all of you delivery system, were an unbeatable of adding new “real estate” for all our • Recorded significant increases in our and Elmira, New York; and we announced continue to bring strategic insights who own a piece of this exciting business. combination. We have the ability to move products in our customer accounts. In food stock price, which has climbed more than our intent to purchase the Pepsi bottler in about the power of the category to our products virtually overnight and virtually stores, we added lobby space, expanded 100% since our Initial Public Offering. Macon, Georgia. As we integrate these customers, design account-specific everywhere – something that very few our end-cap presence, and penetrated the operations with our existing ones, we can programs for them, and ensure they companies can do. In a year where we perimeter of stores, where many of our con- • Made our debut on the Standard and serve our customers more effectively and benefit from all the advantages of our rolled out more innovations across our sumers do all their shopping.
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