FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
---
ACT OF 1934 For the quarterly period ended June 10, 2000 (24-weeks)
------------------------
OR
--- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from to
Commission file number
BOTTLING GROUP, LLC
-------------------
(Exact name of registrant as specified in its charter)
Delaware 13-4042452
-------- ----------
(State or other jurisdiction of (I.R.S.
Employer incorporate or organization) Identification No.)
One Pepsi Way, Somers, New York 10589
(Address of principal executive offices) (Zip Code)
914-767-6000
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
Bottling Group, LLC
Index
-----
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of Operations -
12 and 24-weeks ended June 10, 2000 and June 12, 1999 2
Condensed Consolidated Statements of Cash Flows -
24-weeks ended June 10, 2000 and June 12, 1999 3
Condensed Consolidated Balance Sheets -
June 10, 2000 and December 25, 1999 4
Notes to Condensed Consolidated Financial Statements 5-8
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 9-12
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 13
Independent Accountants' Review Report 14
Part II Other Information and Signatures
Item 6. Exhibits 15
</TABLE>
-1-
PART I - FINANCIAL INFORMATION
Item 1.
Bottling Group, LLC
Condensed Consolidated Statements of Operations
in millions, unaudited
<TABLE>
<CAPTION>
12-weeks Ended 24-weeks Ended
-------------- --------------
June 10, June 12, June 10, June 12,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Revenues................................................ $1,913 $1,831 $3,458 $3,283
Cost of sales............................................... 1,033 1,046 1,878 1,881
------ ------ ------ ------
Gross Profit................................................ 880 785 1,580 1,402
Selling, delivery and administrative expenses............... 689 648 1,314 1,223
Non-cash compensation charge................................ - 45 - 45
------ ------ ------ ------
Operating Income............................................ 191 92 266 134
Interest expense, net....................................... 21 35 45 65
Foreign currency gain....................................... - (1) - -
Minority interest........................................... 3 2 3 1
------ ------ ------ ------
Income before income taxes.................................. 167 56 218 68
Income tax expense.......................................... 9 1 9 1
------ ------ ------ ------
Net Income.................................................. $ 158 $ 55 $ 209 $ 67
====== ====== ====== ======
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
-2-
Bottling Group, LLC
Condensed Consolidated Statements of Cash Flows
in millions, unaudited
<TABLE>
<CAPTION>
24-weeks Ended
--------------
June 10, June 12,
2000 1999
---- ----
Cash Flows - Operations
<S> <C> <C>
Net income...................................................................... $ 209 $ 67
Adjustments to reconcile net income to net cash provided by operations:
Depreciation.............................................................. 153 164
Amortization.............................................................. 61 59
Non-cash compensation charge.............................................. - 45
Other non-cash charges and credits, net................................... 72 50
Changes in operating working capital, excluding effects of
Acquisitions;
Trade accounts receivable............................................... (177) (182)
Inventories............................................................. (49) (44)
Prepaid expenses, deferred income taxes and other current assets........ (10) (17)
Accounts payable and other current liabilities.......................... 77 51
------ ------
Net change in operating working capital .................................. (159) (192)
------ ------
Net Cash Provided by Operations................................................... 336 193
------ ------
Cash Flows - Investments
Capital expenditures........................................................... (224) (232)
Acquisitions of bottlers....................................................... (2) (165)
Notes receivable from PBG, Inc................................................. (152) -
Other, net..................................................................... (4) 16
------ ------
Net Cash Used by Investments...................................................... (382) (381)
------ ------
Cash Flows - Financing
Short-term borrowings - three months or less................................... 7 (66)
Proceeds from third-party debt................................................. - 2,276
Replacement of PepsiCo allocated debt.......................................... - (2,300)
Payments of third-party debt................................................... (8) (41)
Increase in owners' net investment............................................. - 341
------ ------
Net Cash (Used) Provided by Financing............................................. (1) 210
------ ------
Effect of Exchange Rate Changes on Cash and Cash Equivalents...................... (3) (1)
------ ------
Net (Decrease) Increase in Cash and Cash Equivalents.............................. (50) 21
Cash and Cash Equivalents - Beginning of Period................................... 190 36
------ ------
Cash and Cash Equivalents - End of Period......................................... $ 140 $ 57
====== ======
Supplemental Cash Flow Information
Third-party interest and income taxes paid........................................ $ 90 $ 2
====== ======
See accompanying notes to Condensed Consolidated Financial Statements.
</TABLE>
-3-
Bottling Group, LLC
Condensed Consolidated Balance Sheets
in millions
<TABLE>
<CAPTION>
(Unaudited)
June December
10, 2000 25, 1999
-------- --------
Assets
Current Assets
<S> <C> <C>
Cash and cash equivalents................................................ $ 140 $ 190
Trade accounts receivable, less allowance of $48 at
June 10, 2000 and December 25, 1999, respectively.................. 977 827
Inventories.............................................................. 340 293
Prepaid expenses, deferred income taxes and other current assets......... 82 100
------ ------
Total Current Assets............................................. 1,539 1,410
Property, plant and equipment, net......................................... 2,270 2,218
Intangible assets, net..................................................... 3,758 3,819
Notes receivable from PBG, Inc............................................. 411 259
Other assets............................................................... 80 89
------ ------
Total Assets.................................................... $8,058 $7,795
====== ======
Liabilities and Owners' Equity
Current Liabilities
Accounts payable and other current liabilities........................... $ 970 $ 904
Short-term borrowings.................................................... 22 23
------ ------
Total Current Liabilities........................................ 992 927
Long-term debt............................................................. 2,285 2,284
Other liabilities.......................................................... 327 315
Deferred income taxes...................................................... 192 200
Minority interest.......................................................... 144 141
------ ------
Total Liabilities................................................ 3,940 3,867
Owners' Equity
Owners' net investment.................................................. 4,363 4,150
Accumulated other comprehensive loss.................................... (245) (222)
------ ------
Total Owners' Equity............................................. 4,118 3,928
------ ------
Total Liabilities and Owners' Equity............................ $8,058 $7,795
====== ======
See accompanying notes to Condensed Consolidated Financial Statements.
</TABLE>
-4-
Bottling Group, LLC
Notes to Condensed Consolidated Financial Statements (unaudited)
Tabular dollars in millions
--------------------------------------------------------------------------------
Note 1 - Basis of Presentation
Bottling Group, LLC (collectively referred to as "Bottling LLC," "we,"
"our" and "us") is the principal operating subsidiary of The Pepsi Bottling
Group, Inc. ("PBG") and consists of substantially all of the operations and
assets of PBG. Bottling LLC, which is consolidated by PBG, consists of bottling
operations located in the United States, Canada, Spain, Greece and Russia. For
the periods presented prior to our formation, we were an operating unit of
PepsiCo, Inc. ("PepsiCo").
PBG was incorporated in Delaware in January 1999 and, prior to its
formation, PBG was an operating unit of PepsiCo. PBG's initial public offering
consisted of 100,000,000 shares of common stock sold to the public on March 31,
1999, equivalent to 65% of its outstanding common stock, leaving PepsiCo the
owner of the remaining 35% of outstanding common stock. PepsiCo's ownership has
increased to 37.4% at June 10, 2000, as a result of net repurchases of 8.1
million shares under PBG's share repurchase program.
In addition, in conjunction with its initial public offering, PBG and
PepsiCo contributed bottling businesses and assets used in the bottling
businesses to Bottling LLC. As a result of the contribution of these assets, PBG
owns 92.9% of Bottling LLC and PepsiCo owns the remaining 7.1%, giving PepsiCo
economic ownership of 41.9% of PBG's combined operations.
The accompanying Condensed Consolidated Financial Statements include
information that has been presented on a "carve-out" basis for the periods prior
to PBG's initial public offering and our formation. This information includes
the historical results of operations and assets and liabilities directly related
to Bottling LLC, and has been prepared from PepsiCo's historical accounting
records. Certain estimates, assumptions and allocations were made in determining
such financial statement information. Therefore, these Condensed Consolidated
Financial Statements may not necessarily be indicative of the results of
operations, financial position or cash flows that would have existed had we been
a separate, independent company from the first day of all periods presented.
On March 8, 1999, PBG issued $1 billion of 7% senior notes due 2029, which
are guaranteed by us. We also guarantee that to the extent there is available
cash, we will distribute pro rata to all owners sufficient cash such that
aggregate cash distributed to PBG will enable PBG to pay its taxes and make
interest payments on the $1 billion 7% senior notes due 2029.
The accompanying Condensed Consolidated Balance Sheet at June 10, 2000,
the Condensed Consolidated Statements of Operations for the 12 and 24-weeks
ended June 10, 2000 and June 12, 1999 and the Condensed Consolidated Statements
of Cash Flows for the 24-weeks ended June 10, 2000 and June 12, 1999 have not
been audited, but have been prepared in conformity with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. These Condensed
Consolidated Financial Statements should be read in conjunction with the audited
consolidated financial statements for the year ended December 25, 1999 as
presented in our Annual Report on Form 10-K. In the opinion of management, this
interim information includes all material adjustments, which are of a normal and
recurring nature, necessary for a fair presentation.
-5-
Note 2 - Seasonality of Business
The results for the second quarter and first 24-weeks are not necessarily
indicative of the results that may be expected for the full year because of
business seasonality. The seasonality of our operating results arises from
higher sales in the second and third quarters versus the first and fourth
quarters of the year, combined with the impact of fixed costs, such as
depreciation, amortization and interest, which are not significantly impacted by
business seasonality.
Note 3 - Inventories
June December
10, 2000 25, 1999
-------- --------
Raw materials and supplies.......................... $ 125 $ 110
Finished goods...................................... 215 183
------ ------
$ 340 $ 293
====== ======
Note 4 - Property, Plant and Equipment, net
June December
10, 2000 25, 1999
-------- --------
Land................................................. $ 144 $ 145
Buildings and improvements........................... 862 852
Production and distribution equipment................ 2,148 2,112
Marketing equipment.................................. 1,667 1,596
Other................................................ 86 84
------ ------
4,907 4,789
Accumulated depreciation............................. (2,637) (2,571)
------ ------
$2,270 $2,218
====== ======
Note 5 - Comprehensive Income
<TABLE>
<CAPTION>
12-weeks Ended 24-weeks Ended
-------------- --------------
June June June June
10, 2000 12, 1999 10, 2000 12, 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income............................................ $ 158 $ 55 $ 209 $ 67
Currency translation adjustment....................... (9) (7) (23) 4
Minimum pension liability adjustment.................. - 19 - 19
------ ------ ------ ------
Comprehensive Income.................................. $ 149 $ 67 $ 186 $ 90
====== ====== ====== ======
</TABLE>
-6-
Note 6 - Comparability of Results
Asset Lives
At the beginning of fiscal year 2000, we changed the estimated useful lives
of certain categories of assets primarily to reflect the success of our
preventive maintenance programs in extending the useful lives of these assets.
The changes, which are detailed in the table below, lowered total depreciation
cost by $18 million and $32 million for the 12 and 24-weeks ended June 10, 2000,
respectively.
Estimated Useful Lives
2000 1999
---- ----
Manufacturing equipment................................. 15 10
Heavy fleet............................................. 10 8
Fountain dispensing equipment........................... 7 5
Small specialty coolers and marketing equipment......... 3 5 to 7
Initial Public Offering
The 1999 financial information for the period prior to PBG's initial public
offering and our formation has been carved out from the financial statements of
PepsiCo using the historical results of operations and assets and liabilities of
our business. The Condensed Consolidated Financial Statements reflect certain
costs that may not necessarily be indicative of the costs we would have incurred
had we operated as an independent, stand-alone entity from the beginning of
1999. These costs include an allocation of PepsiCo corporate overhead and
interest expense:
o We included corporate overhead related to PepsiCo's corporate
administrative functions based on a specific identification of
PepsiCo's administrative costs relating to the bottling operations
and, to the extent that such identification was not practicable, based
upon the percentage of our revenues to PepsiCo's consolidated net
revenues. These costs are included in selling, delivery and
administrative expenses in our Condensed Consolidated Statements of
Operations.
o We allocated $2.3 billion of PepsiCo debt to our business. We charged
interest expense on this debt using PepsiCo's weighted-average
interest rate. Once we issued $2.3 billion of third-party debt in the
first quarter of 1999, our actual interest rates were used to
determine interest expense for the remainder of the year. Allocated
interest expense was deemed to have been paid to PepsiCo, in cash, in
the period in which the cost was incurred.
The amounts of the historical allocations described above are as follows:
1999
----
Corporate overhead expense.................................. $ 3
Interest expense............................................ $ 16
PepsiCo weighted-average interest rate...................... 5.8%
-7-
Note 7 - Non-cash Compensation Charge
In connection with the consummation of PBG's initial public offering and
our formation, substantially all non-vested PepsiCo stock options held by our
employees vested. As a result, we incurred a $45 million non-cash compensation
charge in the second quarter of 1999, equal to the difference between the market
price of the PepsiCo capital stock and the exercise price of these options at
the vesting date.
Note 8 - Subsequent Events
On June 12, 2000, union employees at our Burnsville, Minnesota plant went
on strike over employment contract disputes. At this time we are not able to
determine how long the strike will last. We do not believe the strike will have
a significant financial impact on our overall results.
-8-
Item 2.
Management's Discussion and Analysis of Results of Operations and Financial
Condition
Overview
Bottling Group, LLC (collectively referred to as "Bottling LLC," "we,"
"our" and "us") is the principal operating subsidiary of The Pepsi Bottling
Group, Inc. ("PBG") and consists of substantially all of the operations and
assets of PBG. Bottling LLC, which is 92.9% owned by PBG and is fully
consolidated, consists of bottling operations located in the United States,
Canada, Spain, Greece and Russia. Prior to our formation, we were an operating
unit of PepsiCo, Inc ("PepsiCo").
The following management's discussion and analysis should be read in
conjunction with our Condensed Consolidated Financial Statements and
accompanying footnotes along with the cautionary statements at the end of this
section.
Constant Territory
We believe that constant territory performance results are the most
appropriate indicators of operating trends and performance, particularly in
light of our stated intention of acquiring additional bottling territories, and
are consistent with industry practice. Constant territory operating results are
achieved by adjusting current year results to exclude significant current year
acquisitions and adjusting prior year results to include the results of
significant prior year acquisitions as if they had occurred on the first day of
the prior fiscal year. Constant territory results also exclude any unusual
impairment and other charges and credits.
Use of EBITDA
EBITDA, which is computed as operating income plus the sum of depreciation,
amortization and any unusual non-cash charges and credits, is a key indicator
management and the industry use to evaluate operating performance. It is not,
however, required under generally accepted accounting principles and should not
be considered an alternative to measurements required by GAAP such as net income
or cash flows.
Comparability of Results
Asset Lives
-----------
At the beginning of fiscal year 2000, we changed the estimated useful lives
of certain categories of assets primarily to reflect the success of our
preventive maintenance programs in extending the useful lives of these assets.
The changes, which are detailed in Note 6 to the Condensed Consolidated
Financial Statements, lowered total depreciation cost by $18 million and $32
million for the 12 and 24-weeks ended June 10, 2000, respectively.
PBG's Initial Public Offering
-----------------------------
The 1999 financial information for the period prior to PBG's initial public
offering and our formation has been carved out from the financial statements of
PepsiCo using the historical results of operations and assets and liabilities of
our business. The Condensed Consolidated Financial Statements reflect certain
costs that may not necessarily be indicative of the costs we would have incurred
had we operated as an independent, stand-alone entity from the beginning of
1999. These costs include an allocation of PepsiCo corporate overhead and
interest expense, as follows:
-9-
1999
----
Corporate overhead expense.................................. $ 3
Interest expense............................................ $ 16
PepsiCo weighted-average interest rate...................... 5.8%
<TABLE>
<CAPTION>
Results of Operations
---------------------
Reported Change Constant Territory Change
June 10, 2000 June 10, 2000
------------- -------------
12-weeks 24-weeks 12-weeks 24-weeks
-------- -------- -------- --------
<S> <C> <C> <C> <C>
EBITDA................................. 18% 19% 18% 19%
Volume................................. 0% 0% 0% 0%
Net Revenue per Case................... 4% 5% 4% 5%
</TABLE>
EBITDA
Reported EBITDA was $299 million and $480 million in the second quarter and
first 24-weeks of 2000, respectively, representing an 18% and 19% increase over
the same periods of 1999. On a constant territory basis, EBITDA growth was also
18% and 19% over the same periods reflecting strong pricing in U.S. foodstores,
an increased mix of higher margin cold drink volume and continued growth in our
operations outside the U.S.
Volume
Our worldwide physical case volume was flat on both a reported and constant
territory basis in the second quarter and first 24-weeks of 2000. For both the
second quarter and first 24-weeks of 2000, U.S. constant territory volume
decreased 1% driven by declines in the take-home segment resulting from price
increases and the lapping of a very successful Star Wars promotional program in
the second quarter of 1999. While take-home volume was lower, we were able to
make up some of the lost volume in our cold drink segment as we continued to be
successful in placing cold drink equipment and in growing our small format
channels.
Outside the U.S., our constant territory volumes increased 7% in the
quarter and 6% year-to-date reflecting continued improvements in Russia and
solid growth in Spain. Russia volumes continued to rebound from the August 1998
devaluation of the ruble as we have aggressively reestablished brand Pepsi,
introduced our own line of value brand beverage products (Fiesta) and continued
to increase distribution of our water products. Partially offsetting the growth
in Russia and Spain were volume declines in Canada resulting from significant
price increases in foodstores in that country.
Net Revenues
Net revenues for the quarter were $1,913 million, a more than 4% increase
over the prior year, raising year-to-date net revenues by 5% to $3,458 million.
On a constant territory basis, worldwide net revenues and net revenue per case
grew 4% and 5% in the quarter and for the first 24-weeks, respectively. These
increases were driven by strong pricing, particularly in U.S. foodstores, and an
increased mix of higher-revenue cold drink volume. Reported net revenues and net
revenue per case were lowered by approximately 1% due to currency translation in
both the quarter and 24-weeks ended June 10, 2000.
-10-
Cost of Sales
Cost of sales decreased $13 million, or 1%, in the second quarter and $3
million, or essentially flat, in the first half of 2000. Current year costs
include a $9 million and $17 million favorable impact from the change in our
estimated useful lives of manufacturing assets in the second quarter and first
24-weeks of 2000, respectively. Currency translations also had an approximately
1% favorable impact on the second quarter and year-to-date results. Excluding
the effects of the change in depreciation lives and currency translations, cost
of sales were 1% higher in the quarter and year-to-date, as higher U.S.
concentrate costs were partially offset by favorable packaging and sweetener
costs.
Selling, delivery and administrative expenses
Selling, delivery and administrative expenses grew $41 million, or 6%, in
the second quarter, bringing year-to-date growth to $91 million, or 7%, over the
comparable periods in 1999. This increase primarily reflects higher selling and
delivery costs as we continued to aggressively place cold drink equipment and
invest in this high margin segment of our business. In addition, higher
performance based compensation costs and costs associated with our previously
announced 401(k) plan contributed approximately 4 points of the cost growth in
the quarter and 3 points of the cost growth year-to-date. Currency translation
and the depreciation accounting change partially offset these cost increases.
Currency translations had an approximately 1% favorable impact in both the
quarter and 24-weeks ended June 10, 2000. Current year costs include a $9
million and $15 million favorable impact from the change in our estimated useful
lives of certain selling and delivery assets in the second quarter and first
24-weeks of 2000, respectively.
Interest expense, net
Net interest expense decreased by $14 million in the second quarter and $20
million in the first half of 2000 driven by higher interest income from notes
receivable from PBG and lower external debt outside North America.
Non-cash Compensation Charge
In connection with the consummation of PBG's initial public offering and
our formation, substantially all non-vested PepsiCo stock options held by our
employees vested. As a result, we incurred a $45 million non-cash compensation
charge in the second quarter of 1999, equal to the difference between the market
price of the PepsiCo capital stock and the exercise price of these options at
the vesting date.
Minority Interest
PBG has direct minority ownership in one of our subsidiaries. Accordingly,
our Consolidated Financial Statements reflect PBG's share of consolidated income
and assets and liabilities in the subsidiary as minority interest.
Provision for Income Taxes
Bottling LLC is a limited liability company, taxable as a partnership for
U.S. tax purposes and, as such, generally pays no U.S. federal or state income
taxes. The federal and state distributable share of income, deductions and
credits of Bottling LLC are allocated to Bottling LLC's owners based on
percentage ownership. However, certain domestic and foreign affiliates pay taxes
in their respective jurisdictions. The current year increase in income tax
expense reflects higher pre-tax income in those jurisdictions.
-11-
Liquidity and Capital Resources
-------------------------------
Cash Flows
Net cash provided by operating activities increased $143 million to $336
million in the first 24-weeks of 2000 as strong EBITDA growth combined with
improved working capital cash flows driven by the timing of cash payments on
current liabilities.
Net cash used by investments remained relatively unchanged at $382 million
in 2000 as lower acquisition spending was offset by loans to PBG, which were
used by PBG to pay for interest, taxes, dividends and share repurchases. In
addition, capital expenditures decreased by $8 million, or 3%, as increases in
the U.S. associated with our cold drink strategy were offset by decreases
outside the U.S. Our 2000 net marketing equipment placements through the end of
the second quarter were made at a rate which should allow us to meet our 2000
North American target of 150,000 net placements compared to 142,000 in 1999.
Net cash (used) provided by financing decreased from a source of $210
million to a use of $1 million in 2000 reflecting owner contributions of $341
million in 1999, which were used to fund acquisitions and pay down debt.
Euro
On January 1, 1999, eleven member countries of the European Union
established fixed conversion rates between existing currencies and one common
currency, the Euro. Beginning in January 2002, new Euro-denominated bills and
coins will be issued, and existing currencies will be withdrawn from
circulation. Spain is one of the member countries that instituted the Euro and
we have established plans to address the issues raised by the Euro currency
conversion. These issues include, among others, the need to adapt computer and
financial systems, business processes and equipment, such as vending machines,
to accommodate Euro-denominated transactions and the impact of one common
currency on cross-border pricing. Since financial systems and processes
currently accommodate multiple currencies, we do not expect the system and
equipment conversion costs to be material. Due to numerous uncertainties, we
cannot reasonably estimate the long-term effects one common currency may have on
pricing, costs and the resulting impact, if any, on the financial condition or
results of operations.
Cautionary Statements
Except for the historical information and discussions contained herein,
statements contained in this Form 10-Q may constitute forward-looking statements
as defined by the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on currently available competitive,
financial and economic data and our operating plans. These statements involve a
number of risks, uncertainties and other factors that could cause actual results
to be materially different. Among the events and uncertainties that could
adversely affect future periods are lower-than-expected net pricing resulting
from marketplace competition, material changes from expectations in the cost of
raw materials and ingredients, an inability to achieve the expected timing for
returns on cold drink equipment and employee infrastructure expenditures,
material changes in expected levels of marketing support payments from PepsiCo,
Inc., an inability to meet projections for performance in newly acquired
territories, unexpected costs associated with conversion to the common European
currency and unfavorable interest rate and currency fluctuations.
-12-
Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have no material changes to the disclosures made on this matter in our
1999 Annual Report on Form 10-K.
-13-
Independent Accountants' Review Report
--------------------------------------
Owners of
Bottling Group, LLC
We have reviewed the accompanying Condensed Consolidated Balance Sheet of
Bottling Group, LLC as of June 10, 2000, the related Condensed Consolidated
Statements of Operations for the twelve and twenty-four weeks ended June 10,
2000 and June 12, 1999 and the Condensed Consolidated Statements of Cash Flows
for the twenty-four weeks ended June 10, 2000 and June 12, 1999. These Condensed
Consolidated Financial Statements are the responsibility of Bottling Group,
LLC's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the Condensed Consolidated Financial Statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the Consolidated Balance Sheets of Bottling Group, LLC as of December
25, 1999, and the related Consolidated Statements of Operations, Cash Flows and
Changes in Owners' Equity for the fifty-two week period then ended not presented
herein; and in our report dated January 25, 2000, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying Condensed Consolidated Balance Sheet
as of December 25, 1999, is fairly presented, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ KPMG LLP
New York, New York
July 13, 2000
-14-
PART II - OTHER INFORMATION AND SIGNATAURES
Item 6. Exhibits and Reports on Form 8-K
------- --------------------------------
(a) Exhibits
See Index to Exhibits on page 16.
-15-
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned.
BOTTLING GROUP, LLC
-------------------
(Registrant)
Date: July 24, 2000 Peter A. Bridgman
----- ------------- -----------------
Controller and Principal
Accounting Officer
Date: July 24, 2000 John T. Cahill
----- ------------- --------------
Principal Financial Officer
and Managing Director
-16-
INDEX TO EXHIBITS
ITEM 6 (a)
----------
EXHIBITS
Exhibit 27.1 Financial Data Schedule 24-weeks ended June 10, 2000
