|
Pepsi shutting plants
|
 |
January 25, 1999: 7:25 p.m. ET
Soft drink maker to cut up to 450 jobs, reshuffle bottling operations
|
NEW YORK (CNNfn) - Pepsico Inc. said Monday it plans to shut four plants, cutting up to 450 jobs in its Frito-Lay snack food unit, and reshuffle its bottling operations in a bid to better compete with archrival Coca-Cola Co.
The No. 2 U.S. soft drink maker also said it expected to report fourth-quarter earnings next week of about 24 cents a share, which would be in line with Wall Street forecasts.
Pepsico (PEP), based in Purchase, N.Y., said it would close four of Frito-Lay's oldest plants in North America, and expand five other plants, leading to a net reduction of 400 to 450 jobs, Pepsico chief spokesman Richard Detwiler said.
The job cuts would equal about 1 percent of Frito-Lay's domestic work force, Detwiler said.
Pepsi also said it would consolidate its bottling operations with those of Whitman Corp., the largest independent Pepsi bottler, in a bid to create a bigger, more efficient bottler.
"We want a smaller number of larger bottlers," Detwiler said. The company said the deal creating the new bottler would result in net proceeds of about $300 million to Pepsi.
Under the deal, Pepsi will transfer its current 20 percent stake in Whitman's Pepsi bottling operations to the new company, which initially will be about 35 percent-owned by Pepsico.
Pepsico said in a statement that the bottling transaction will not delay a planned public offering of a majority stake in Pepsi's bottling operations.
Pepsico also said it expects to record a charge of $218 million, or 14 cents a share, in the fourth quarter to reflect the impact of Russia's economic crisis on its business there.
It also expects to record a $294 million tax benefit in the quarter, on top of a $200 million gain recorded in the third quarter, as part of a tax settlement related to its operations in Puerto Rico.
In addition, Pepsico announced charges of $120 million related to the changes at Frito-Lay, $54 million to be taken in the fourth quarter and $65 million in the first quarter of 1999.
The expected fourth-quarter earnings of 24 cents a share are net of the charges and the tax benefit from settling the IRS case, Detwiler said.
Pepsi shares closed up 1-5/16 at 40-1/4 in trading on Monday.
|
|
|
|
|
|
Pepsi home page
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
