SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of November, 1999
PANAMERICAN BEVERAGES, INC.
(Translation of registrant's name into English)
Tiburcio Montiel No. 15, Col. San Miguel Chapultepec,
C.P. 11850 Mexico, D.F., Mexico
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F x Form 40-F
--- -----
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.)
Yes No x
---- ---
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Table of Contents
Page
Press Release dated November 1, 1999: Panamco
Reports Third Quarter 1999 Financial Results......................... 3
Signatures.............................................................. 13
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FOR IMMEDIATE RELEASE
Contact: Christian Philco
Panamerican Beverages, Inc.
305/856-7100
David Reno/Christina Johnson
Sard Verbinnen & Co.
212/687-8080
PANAMCO REPORTS THIRD QUARTER 1999 FINANCIAL RESULTS
o Cash Operating Profit of $105.9 million reaches 17.5% of net sales;
margin increases 40 bps
o Continued strong focus on controllable expenses; Cash Operating Expenses
down 5.8%.
o Total volume up 2.7%
o Reports net loss of $11.0 million, or $0.08 per share (basic and diluted),
including foreign exchange losses of $10.1 million, mainly related to
devaluations in Brazil, Colombia and Guatemala
o Market share increases in all countries, except Venezuela where we
maintained our leadership position.
MEXICO CITY, November 1, 1999 - Panamerican Beverages, Inc. (NYSE: PB),
the largest soft drink bottler in Latin America and one of the world's largest
Coca-Cola bottlers with operations in Mexico, Brazil, Colombia, Venezuela,
Costa Rica, Nicaragua and Guatemala, today reported 1999 third quarter
results. For the third quarter of 1999, Panamco recorded Cash Operating Profit
(COP) of $105.9 million, a 6.7% decrease from $113.5 million in the 1998 third
quarter. Excluding the effect of the Brazilian, Colombian and Guatemalan
devaluations, third quarter 1999 COP was $117.3 million. Third quarter 1999
COP was 17.5% of net sales compared with 17.1% of net sales in the 1998
period, a 40 basis point improvement, reflecting strong expense control
programs. Net sales for the 1999 third quarter were $605.1 million, down 8.8%
from $663.5 million in the 1998 third quarter. Operating income was $42.8
million compared with $50.6 million in the 1998 third quarter.
The net loss for the 1999 third quarter was $11.0 million, or $0.08 per
share (basic and diluted), including $10.1 million or $0.07 per share of
foreign exchange losses. This compares to
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net income of $17.0 million, or $0.13 per share in the comparable 1998 period.
Per share data is based on 129.7 million basic and 130.0 million diluted
weighted average shares outstanding for the third quarter of 1999, compared to
129.5 million and 130.3 million, respectively, in the 1998 period.
Francisco Sanchez-Loaeza, chairman and chief executive officer of
Panamco, said, "While Panamco's third quarter results were impacted by
continued macro-economic weakness in Colombia, Venezuela, Brazil and
Guatemala, they also reflect our focus on cost reduction efforts in all our
territories. During the period, Cash Operating Expenses decreased by 5.8% and
our Cash Operating Profit margin improved by 40 basis points."
Sanchez-Loaeza added: "Our innovative marketing and merchandising
activities propelled volume growth in Brazil, Mexico and Central America, and
increased our soft drink market share in most of our territories, most notably
in Colombia where, with a gain of 4.7 points, we achieved an all-time high. In
Brazil, our new marketing strategy boosted soft drink volume by more than 15%
on a comparable basis (excluding R.O.S.A.) and restored operating profitability.
"I am proud of our management team which has performed extremely well
under adverse circumstances and enabled Panamco to sustain operating
profitability despite major currency adjustments in three of our markets. We
are confident that as economies improve, our continued focus on the
controllables, paired with a disciplined capital expenditure program, will
make us stronger than ever before," concluded Sanchez-Loaeza.
Total consolidated unit case sales volume in the 1999 third quarter grew
2.7% to 294.6 million, from 286.8 million in the 1998 third quarter, and, on a
comparable basis (excluding the new Brazil franchise acquired in September
1998) increased 1.2%. Consolidated soft drink sales volume for the period was
flat at (0.4)%, reflecting declines of 14.0% in Colombia and 22.2% in
Venezuela, mostly offset by increases of 5.5% in Mexico, 22.5% in Brazil and
4.8% in the Central American region. Consolidated unit case sales volume of
bottled water increased 14.2% to 53.4 million, and unit case sales volume of
beer sold in Brazil and, as of February 1999, in Venezuela, increased 8.5% to
15.9 million unit cases.
Gross profit as a percentage of net sales increased to 51.0% during the
1999 third quarter from 49.6% in the 1998 period, primarily driven by cost
savings in raw materials in several countries.
Cash Operating Expenses (operating expenses minus depreciation and
amortization) decreased 5.8% mainly due to tight expense controls and the
effect of the Brazilian Real,
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Colombian Peso and Guatemalan Quetzal devaluations, which were partially
offset by the revaluation of the Mexican Peso during the third quarter 1999.
REGIONAL RESULTS
Mexico
Panamco Mexico, which operates throughout central Mexico, excluding
Mexico City, reported net sales of $212.6 million during the third quarter of
1999, an increase of 32.7% compared to the same quarter in 1998. Soft drink
net sales grew 30.1% on volume growth of 5.5% to 70.0 million unit cases, and
a price increase of 23.4% in dollar terms. Water volume grew 21.8% to 35.3
million unit cases, mainly due to increased coverage in franchise territories.
During the quarter, Panamco Mexico increased its already strong soft drink
market share by 0.3 points to 79.6%.
COP increased 39.8% to $51.5 million, and as a percentage of net sales
was 24.2% compared to 23.0% during the 1998 third quarter, mainly as a result
of the factors noted above, as well as lower raw material costs.
Brazil
Panamco Brasil, which operates in the Sao Paulo, Campinas, Santos and -
as of September 1998 - Mato Grosso do Sul (R.O.S.A.) regions of Brazil,
reported 1999 third quarter net sales of $117.0 million, a decrease of 42.2%
from the 1998 quarter, due mainly to a 63.4% devaluation of the Real in 1999.
Despite current economic conditions, unit case sales volume of soft drinks
grew 22.5%, to 61.4 million, or 15.5% excluding the 3.1 million unit cases
contributed by R.O.S.A., primarily as a result of Panamco's promotional
pricing strategy. Beer volume grew 7.6% to 15.7 million unit cases, and
bottled water volume increased 16.6% to 2.9 million unit cases. Panamco Brasil
continued increasing its market leadership, with total soft drink market share
reaching 58.6% in its territories, an increase of 4.4 share points over the
same period of 1998 and an increase of 8.5 share points since our promotional
pricing strategy was launched.
COP decreased 54.9% to $9.0 million, or 7.7% of net sales, from 9.9% of
net sales in the third quarter of 1998. This decrease was mainly due to the
devaluation of the Brazilian Real.
During the quarter, Panamco Brasil recorded an equity loss in earnings of
Cervejarias Kaiser of $1.4 million, and an exchange loss of $7.0 million.
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Colombia
Panamco Colombia, which operates throughout Colombia, reported net sales
of $90.5 million for the 1999 third quarter, down 25.9% from the year-ago
quarter. The revenue decline was mainly due to a 32.2% devaluation of the
Colombian Peso over a 12-month period and to decreases in soft drink and water
volumes of 14.0% and 8.0%, respectively, to 38.0 million and 9.6 million unit
cases, partially offset by price increases of 13.7% in local currency. Volume
decreases were attributable to the economic recession, currency devaluation
and to political turmoil in the country. Despite these conditions, Panamco
Colombia continued strengthening its position in the market, achieving a
record high market share of 65.4% in the month of September 1999, up 4.7 share
points versus the comparable period last year.
COP decreased 34.2% to $18.2 million, or 20.1% of net sales, compared to
22.6% of net sales in the same period in 1998, mainly due to the devaluation
of the Colombian peso and to lower sales volume.
Venezuela
For the third quarter of 1999, Panamco Venezuela, which operates
throughout Venezuela, reported net sales of $134.3 million, up 3.6% from the
1998 third quarter. Price increases totaling 26.0% in dollar terms were
largely offset by a 17.8% decrease in total sales volume to 43.2 million unit
cases, mainly as a result of difficult economic conditions in the country.
Panamco Venezuela's soft drink market share continued to be strong at 69.5%.
COP was $20.3 million, or 15.1% of net sales, compared with 17.0% of net
sales in the third quarter of 1998. The lower COP margin was due mainly to a
17% salary increase in late May 1999, whose impact was fully felt in the third
quarter.
Central America
Panamco's Central American region, which includes franchises covering all
of Costa Rica and Nicaragua, and half of Guatemala, including Guatemala City,
reported net sales of $50.8 million for the third quarter of 1999, an increase
of 3.1% from $49.3 million in the 1998 quarter. The increase was attributable
to volume growth of 6.6% to 17.8 million unit cases, partially offset by a
20.3% devaluation of the Guatemalan Quetzal. Soft drink volume grew 4.8% to
16.8 million unit cases and water volume was up 62.9% to 0.9 million unit
cases. Panamco's market share in the region increased to 91.0% in Costa Rica,
42.7% in Guatemala and 81.9% in Nicaragua.
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COP in the 1999 third quarter increased 9.7% to $10.4 million, or 20.5%
of net sales compared to 19.3% of net sales in the third quarter of 1998, due
mainly to lower raw material costs and other cost savings in all countries.
This was partially offset by higher selling and administrative expenses in
Costa Rica and Guatemala.
NINE MONTHS RESULTS
For the nine months ended September 30, 1999, consolidated net sales were
$1.8 billion, a decrease of 13.7% from $2.1 billion in the same period in
1998. COP declined 22.0% during the first nine months of 1999 to $285.6
million. The Company reported a net loss for the first nine months of 1999 of
$51.5 million, or $0.40 per share (basic and diluted), compared to net income
of $97.0 million, or $0.75 per share basic and $0.74 per share diluted for the
same period in 1998. Basic and diluted earnings per share for the first nine
months of 1999 are based on 129.7 million and 130.5 million weighted average
shares outstanding, respectively, compared to 129.5 million and 130.6 million
in the first nine months of 1998.
Panamco is the largest soft drink bottler in Latin America and one of the
world's largest bottlers of the soft drink products of The Coca-Cola Company.
The Company produces and distributes substantially all Coca-Cola soft drink
products in its franchise territories in Mexico, Brazil, Colombia, Venezuela,
Costa Rica, Nicaragua and Guatemala, along with bottled water, beer and other
beverages. Panamco is an anchor bottler of The Coca-Cola Company.
Statements made in this press release that are not historical in nature may
include "forward-looking statements" within the meaning of U.S. federal
securities laws. It is important to note that these statements involve a
number of risks, uncertainties and other factors that could cause Panamco's
actual results to differ materially from those included in such
forward-looking statements. Information concerning such factors is contained
in Panamco's Annual Report on Form 20-F for the year ended December 31, 1998,
and other documents subsequently filed by Panamco with the U.S. Securities and
Exchange Commission (the "SEC"), all of which are available from the SEC.
###
[tables to follow]
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<TABLE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
( unaudited )
( Stated in thousands of U.S. dollars, except per share amounts )
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30,
------------------------------- ----------------------------
1999 1998 1999 1998
-------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
Net sales $605,118 $663,477 $1,780,472 $2,064,122
Cost of sales, excluding depreciation 296,239 334,338 881,911 1,053,956
and amortization -------------- -------------- -------------- -------------
Gross profit 308,879 329,139 898,561 1,010,166
Operating expenses:
Selling, general and administrative 203,029 215,634 612,920 644,141
Depreciation and amortization, excluding goodwill 53,951 53,997 161,606 156,549
Amortization of goodwill 9,066 8,871 27,243 26,307
-------------- -------------- -------------- -------------
266,046 278,502 801,769 826,997
-------------- -------------- -------------- -------------
Operating income 42,833 50,637 96,792 183,169
Interest income ( expense ), net (23,089) (19,076) (69,905) (56,280)
Other income ( expense ), net (12,975) (63) (40,054) 18,316
-------------- -------------- -------------- -------------
Income (loss) before income taxes 6,769 31,498 (13,167) 145,205
Income taxes 16,693 13,415 35,872 44,389
-------------- -------------- -------------- -------------
Income (loss) before minority interest (9,924) 18,083 (49,039) 100,816
Minority interest in earnings of subsidiaries 1,054 1,103 2,482 3,819
-------------- -------------- -------------- -------------
Net income (loss) ($10,978) $16,980 ($51,521) $96,997
============== ============== ============== ==============
Cash Operating Profit (Operating income
plus depreciation and amortization) $105,850 $113,505 $285,641 $366,025
============== ============== ============== ==============
Basic earnings per share ($ 0.08) $ 0.13 ($ 0.40) $ 0.75
============== ============== ============== ==============
Weighted basic average shares
outstanding, in thousands 129,705 129,543 129,686 129,516
============== ============== ============== ==============
Diluted earnings per share ($ 0.08) $ 0.13 ($ 0.40) $ 0.74
============== ============== ============== ==============
Weighted diluted average shares
outstanding, in thousands 130,052 130,267 130,524 130,580
============== ============== ============== ==============
</TABLE>
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<TABLE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
( unaudited )
( Stated in thousands of U.S. dollars )
9/30/99 12/31/98 9/30/99 12/31/98
A S S E T S LIABILITIES
<S> <C> <C> <C> <C> <C>
Current assets: Current liabilities:
Cash and equivalents $247,605 $131,152 Bank loans $124,956 $302,063
Accounts receivable, net 113,420 175,008 Current portion of LTD 75,251 55,332
Inventories, net 129,388 149,387 Accounts payable 134,313 207,217
Other 23,035 30,231 Other 120,402 114,076
------------ ------------ ----------- ------------
Total current assets 513,448 485,778 Total current liabilities 454,922 678,688
Long-term liabilities:
Long-term debt 1,190,147 771,267
Other 179,502 193,258
----------- ------------
Investment 177,770 43,990 Total long-term liabilities 1,369,649 964,525
Fixed assets, net 1,534,511 1,645,199
Goodwill, net 1,295,058 1,347,446 Minority interest 29,713 26,243
Other assets, net 116,629 125,277 Shareholders' equity 1,783,132 1,978,234
------------ -----------
Total assets $3,637,416 $3,647,690 Total liabilities/equity $3,637,416 $3,647,690
============ ============ ============ ============
</TABLE>
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<TABLE>
PANAMCO MEXICO
( unaudited )
(Dollars in thousands)
Three months ended Nine months ended
September 30 September 30
------------------------------- ----------------------------
1999 1998 1999 1998
-------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
Income statement data:
Net sales $212,631 $160,289 $586,886 $477,563
Cost of sales, excluding depreciation and 99,079 75,408 278,881 228,141
amortization --------- --------- --------- ---------
Gross profit 113,552 84,881 308,005 249,422
Operating expenses:
Selling, general and administrative 62,096 48,074 180,789 153,175
Depreciation and amortization, excluding goodwill 9,785 8,954 27,421 24,378
Amortization of goodwill 748 711 2,191 2,134
--------- --------- --------- ---------
Operating income $40,923 $27,142 $97,604 $69,735
========== ========== ========== ==========
Net income attributable to Panamco $24,381 $14,980 $60,568 $43,575
========== ========== ========== ==========
Cash Operating Profit $51,456 $36,807 $127,216 $96,247
========== ========== ========== ==========
Unit case sales data (in millions):
Soft drinks 70.0 66.4 203.1 191.6
Water 35.3 29.0 104.6 83.4
Other products 0.6 0.3 1.8 1.0
</TABLE>
<TABLE>
PANAMCO BRASIL
( unaudited )
(Dollars in thousands)
Three months ended Nine months ended
September 30 September 30
------------------------------- ----------------------------
1999 1998 1999 1998
-------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
Income statement data:
Net sales $116,976 $202,379 $368,293 $661,422
Cost of sales, excluding depreciation and 70,173 119,106 226,309 397,839
amortization -------- -------- --------- --------
Gross profit 46,803 83,273 141,984 263,583
Operating expenses:
Selling, general and administrative 37,814 63,330 115,428 190,377
Depreciation and amortization, excluding goodwill 7,190 10,440 24,039 34,500
Amortization of goodwill 467 304 1,492 932
--------- ---------- ---------- ---------
Operating income $1,332 $9,199 $1,025 $37,774
========== ========== ========== ==========
Net income (loss) attributable to Panamco ($9,043) $4,878 ($36,377) $26,672
========== ========== ========== ==========
Cash Operating Profit $8,989 $19,943 $26,556 $73,206
========== ========== ========== ==========
Unit case sales data (in millions):
Soft drinks 61.4 50.2 168.3 158.5
Water 2.9 2.4 9.2 7.6
Beer 15.7 14.6 43.1 41.9
</TABLE>
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<TABLE>
PANAMCO COLOMBIA
( unaudited )
(Dollars in thousands)
Three months ended Nine months ended
September 30 September 30
------------------------------- ----------------------------
1999 1998 1999 1998
-------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
Income statement data:
Net sales $90,456 $121,991 $295,965 $372,544
Cost of sales, excluding depreciation and 40,996 52,945 131,602 165,269
amortization ---------- ---------- ---------- ----------
Gross profit 49,460 69,046 164,363 207,275
Operating expenses:
Selling, general and administrative 31,287 41,445 108,983 120,987
Depreciation and amortization 14,949 13,791 44,082 40,706
---------- ---------- ---------- ----------
Operating income $3,224 13,810 $11,298 $45,582
========== ========== ========== ==========
Net income attributable to Panamco $2,428 $13,641 $7,715 $40,807
========== ========== ========== ==========
Cash Operating Profit $18,173 27,601 55,380 86,288
========== ========== ========== ==========
Unit case sales data (in millions):
Soft drinks 38.0 44.2 113.3 142.2
Water 9.6 10.4 29.3 34.0
</TABLE>
<TABLE>
PANAMCO VENEZUELA
( unaudited )
(Dollars in thousands)
Three months ended Nine months ended
September 30 September 30
------------------------------- ----------------------------
1999 1998 1999 1998
-------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
Income statement data:
Net sales $134,290 $129,562 $372,213 $412,595
Cost of sales, excluding depreciation and 61,727 62,574 171,553 196,501
amortization ---------- ---------- ---------- ----------
Gross profit 72,563 66,988 200,660 216,094
Operating expenses:
Selling, general and administrative 52,253 44,932 149,876 134,072
Depreciation and amortization 18,028 16,329 54,049 47,329
---------- ---------- ---------- ----------
Operating income (loss) $2,282 $5,727 ($3,265) $34,693
========== ========== ========== ==========
Net income (loss) attributable to Panamco ($6,345) $4,272 ($21,411) $29,224
========== ========== ========== ==========
Cash Operating Profit $20,310 $22,056 $50,784 $82,022
========== ========== ========== ==========
Unit case sales data (in millions):
Soft drinks 36.4 46.8 110.5 147.9
Water 4.8 4.4 13.3 9.5
Other products 1.9 1.4 4.8 4.6
Beer 0.1 - 0.3 -
</TABLE>
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<TABLE>
PANAMCO CENTRAL AMERICA
( unaudited )
(Dollars in thousands)
Three months ended Nine months ended
September 30 September 30
------------------------------- ----------------------------
1999 1998 1999 1998
-------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
Income statement data:
Net sales $50,765 $49,256 $157,115 $139,998
Cost of sales, excluding depreciation and 24,264 24,305 73,566 66,206
amortization ---------- ---------- -------- ----------
Gross profit 26,501 24,951 83,549 73,792
Operating expenses:
Selling, general and administrative 16,071 15,446 50,206 44,508
Depreciation and amortization, excluding goodwill 4,406 4,773 13,332 10,507
Amortization of goodwill 63 71 196 219
---------- ---------- -------- ----------
Operating income $5,961 $4,661 $19,815 $18,558
========== ========== ========= ==========
Net income attributable to Panamco $2,271 $3,094 $9,562 $12,001
========== ========== ========= ==========
Cash Operating Profit $10,430 $9,505 $33,343 $29,284
========== ========== ========== ==========
Unit case sales data (in millions):
Soft drinks 16.8 16.0 51.2 45.8
Water 0.9 0.6 2.7 1.5
Other products 0.1 0.2 0.4 0.4
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PANAMERICAN BEVERAGES INC.,
(Registrant)
by:/s/ Paulo J. Sacchi
-------------------
Name: Paulo J. Sacchi
Title: Senior Vice President -
Finance and Treasurer
Dated: November 3, 1999
