PepsiAmericas, Inc. (NYSE: PAS) today reported results for the third quarter ended September 30, 2000. Income from operations before special items was $13.1 million for the third quarter of 2000, up 29.7 percent from $10.1 million for the same period in 1999. Net sales increased 8.9 percent to $168.6 million for the third quarter of 2000, compared with $154.8 million for the third quarter of 1999. EBITDA increased 21.2 percent to $20.0 million for the three months ended September 30, 2000 from $16.5 million for the same period a year ago.

"We are pleased with the operating results for the quarter and year-to- date," noted Robert C. Pohlad, chairman and chief executive officer of PepsiAmericas. "EBITDA for the first nine months of 2000 was $50 million, up 26 percent, and is on target for the year."

On August 18, 2000, PepsiAmericas announced plans to merge with Whitman Corporation, the second largest anchor bottler in the PepsiCola system. Costs in connection with that merger of $1.6 million were expensed in the third quarter which reduced operating income from $13.1 million to the reported $11.5 million. In third quarter 1999, reported income from operations benefited from reversal of unneeded legal and environmental reserves of $490 thousand thus increasing income from operations from $10.1 million to the reported $10.5 million.

"The merger integration process is proceeding as planned with input from senior management and employees from both companies," added Mr. Pohlad. "I am pleased with the progress we are making, and look forward to the deal closing."

Total company physical case volume was up 5.8 percent for the quarter. Without the new business in Jamaica which was acquired in December, 1999, physical case volume would have been down 2.4 percent for the quarter, reflecting a 4.0 percent decrease in mainland U.S. territories. The volume decrease in the mainland U.S. territories occurred as the company increased its wholesale prices. Physical case volume in the Caribbean territories grew 40.4 percent, including the addition of the Jamaican operation, and grew 3.4 percent in Puerto Rico alone due primarily to the July 1999 acquisition of the Puerto Rico license for Seven-Up.

Reported total company net sales grew 8.9 percent. Excluding net sales in Jamaica, revenue increased 2.3 percent over the third quarter of 1999, with net sales per case from all revenue sources excluding Jamaica up 4.8 percent. These revenue increases resulted from improved pricing in the company's mainland U.S. territories while pricing in Puerto Rico was essentially flat to prior year.

Operating expenses, excluding the expense impact of Jamaica and the $1.6 million of costs associated with the merger, increased 5.6 percent due to absorption of the increased costs associated with continued investments in cold bottle equipment and personnel additions to better serve the company's markets. The company began its investment in cold bottle equipment in 1997.

EBITDA grew 21.2 percent for the third quarter of 2000, including the contribution of the Jamaican business. Excluding Jamaica, EBITDA grew 9.2 percent. The company's interest expense for the third quarter of 2000 was $7.9 million compared with $5.3 million in the third quarter of 1999. The higher expense in 2000 is due primarily to loans funding the Jamaican acquisition of the soft drink business of Desnoes & Geddes Limited late in 1999, as well as the acquisition of the exclusive rights for the production and distribution of Seven-Up, Sunkist, Welch's and Schweppes brands in Puerto Rico in July 1999.

PepsiAmericas reported net income of $441 thousand for the third quarter of 2000, or $0.01 per common share, compared to net income of $4.1 million, or $0.05 on a per share basis in the third quarter of 1999. Net income (loss) reflects the tax treatment surrounding the merger of Delta Beverage Group, Dakota Beverage Company and Pepsi-Cola Puerto Rico to form PepsiAmericas, Inc. on October 15, 1999. In 1999, the provision for income taxes reflects the Sub S corporation status of Dakota Beverage before the merger. If income taxes had been provided on Dakota Beverage income, the third quarter 1999 consolidated income tax expense would have been $3.1 million and net income of $2.2 million would have been realized. The unaudited pro forma effect of this adjustment is depicted as supplemental information in the accompanying consolidated statements of income. The company's effective tax rate differs from the U.S. statutory rate primarily due to the effect of non-deductible franchise cost amortization and valuation allowances established for tax benefits from utilization of losses incurred by the company's Puerto Rico operations.

From July 17, 1998, to October 15, 1999, PepsiAmericas (formerly known as Pepsi-Cola Puerto Rico Bottling Company), Delta Beverage Group, Inc. and Dakota Beverage Company, Inc., shared common ownership. Effective October 15, 1999, PepsiAmericas combined with Delta and Dakota in a transaction accounted for as a merger of entities under common control, with the acquisition of certain minority interests in Delta recognized using the "purchase" method of accounting. The results of operations for 1999 in this release have been restated to include the results of operations of PepsiAmericas, Delta and Dakota (recognizing a minority interest in the results of Delta) from the beginning of the 1999 fiscal year.

PepsiAmericas manufactures, distributes and markets PepsiCo soft drinks, Seven-Up and other products in exclusive franchise territories that include Puerto Rico, Jamaica and portions of Arkansas, Iowa, Louisiana, Minnesota, Mississippi, North Dakota, South Dakota, Tennessee and Texas. PepsiCo, Inc. (NYSE: PEP) holds a 24 percent equity interest in PepsiAmericas.

PepsiAmericas will hold an investor conference call today at 10:00 a.m. (EDT). To access the call, please dial 888-218-0204 -- the reservation number is 767337.

This release contains forward-looking statements of expected future developments. We wish to ensure such statements are accompanied by meaningful cautionary statements pursuant to the safe harbor established by the Private Securities Litigation Reform Act of 1995. The forward-looking statements in the release refer to the expectations regarding continuing operating improvement and other matters. These forward-looking statements reflect management's expectation and are based on currently available data; however, actual results are subject to future events and uncertainties, which could materially affect actual performance. Our future performance also involves a number of risks and uncertainties. Accordingly, any forward-looking statements should be read in conjunction with information about risks and uncertainties set forth in the company's Securities and Exchange Commission reports, including its annual report and Form 10K for the year ended December 31, 1999.

(Dollars in thousands, except per share data)

Three Months Ended Nine Months Ended
September 30 September 30
Restated Restated
2000 1999 2000 1999
Net sales $168,631 $154,788 $476,099 $430,320
Cost of sales 111,223 105,289 318,015 291,974

Gross Profit 57,408 49,499 158,084 138,346

Selling, general and
administrative expenses 43,007 38,422 125,449 113,866
Amortization of
franchise rights and
other intangibles 1,285 1,024 3,872 3,066
Merger related costs 1,633 -- 1,633 --
Reversal of legal and
environmental reserves -- (490) -- (490)
Losses on asset
impairments -- -- -- 267

Income from operations 11,483 10,543 27,130 21,637

Interest expense, net (7,850) (5,291) (22,572) (15,776)
Other, net 63 (126) 241 (154)

(7,787) (5,417) (22,331) (15,930)

Net income before income
tax and minority interest 3,696 5,126 4,799 5,707

Minority Interest (483) 188 (1,448) 175
Net income tax expense (2,772) (1,226) (6,271) (971)

Net income (loss) $441 $4,088 $(2,920) $4,911

COMMON SHARE $0.01 $0.05 $(0.03) $0.06


Income before income
taxes and minority
interest 3,696 5,126 4,799 5,707

Minority interest (483) 188 (1,448) 175
Pro forma income
tax expense (2,772) (3,086) (6,271) (5,431)

Pro forma net income (loss) 441 2,228 (2,920) 451

PRO FORMA NET INCOME (LOSS) $0.01 $0.03 $(0.03) $0.01

(IN THOUSANDS) 87,314 86,760 87,314 86,760

EBITDA $20,013 $16,507 $49,979 $39,611