Pepsi Bottling Reorganizes
"The consolidation of our retail customers and consumer demand for more variety are the two primary market forces driving this realignment," said Eric J. Foss, president and chief executive officer of PBG. "By making organizational changes that reflect new market dynamics as well as investing in our supply chain operations, PBG will be better positioned to capture the full growth potential of our product portfolio, while enhancing our selling, service and operational capabilities. We are confident these moves will help us grow long-term shareholder value."
In the second half of 2007, PBG will record a pre-tax charge of approximately $30 million to $40 million, or $0.09 to $0.12 per diluted share after-tax, associated with this realignment, which is primarily for severance and other employee-related costs. The after-tax cash expenditures are expected to be approximately $20 million to $25 million. The organizational realignment is expected to result in annualized, pre-tax savings of approximately $30 million.
As a result of the realignment, the number of business units in the U.S. and Canada will be reduced from eight to six. Approximately 150 management positions will be eliminated. Internationally, there will be a reduction of up to 550 hourly positions.
Additionally, due to changing customer and consumer demands, PBG is evaluating the returns on its full-service vending equipment. This review will potentially result in an additional non-cash charge in the second half of 2007 to retire select equipment. The results will be disclosed at the time of the Company's third quarter 2007 earnings release.
As previously announced, PBG will record a non-cash benefit of approximately $45 million ($0.19 per diluted share after-tax) due to the reversal of net tax contingencies in the third quarter of 2007. Excluding all of the above items, the company continues to forecast 2007 adjusted diluted earnings per share of $2.02 to $2.07. Operating free cash flow guidance for the year is also unchanged at $540 to $550 million.
From the August 13, 2007, Prepared Foods e-Flash