Pepsi 2005 Annual Report Download - page 68

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Such amounts are settled on terms
consistent with other trade receivables and
payables. See Note 9 regarding our guaran-
tee of certain PBG debt.
In addition, we coordinate, on an aggre-
gate basis, the negotiation and purchase of
sweeteners and other raw materials
requirements for certain of our bottlers
with suppliers. Once we have negotiated
the contracts, the bottlers order and take
delivery directly from the supplier and pay
the suppliers directly. Consequently, these
transactions are not reflected in our
consolidated financial statements. As the
contracting party, we could be liable to
these suppliers in the event of any nonpay-
ment by our bottlers, but we consider this
exposure to be remote.
2005 2004 2003
Net revenue $4,633 $ 4,170 $3,699
Selling, general and administrative expenses $143 $114 $128
Accounts and notes receivable $178 $157
Accounts payable and other current liabilities $117 $95
Our investment in PBG, which includes
the related goodwill, was $400 million and
$321 million higher than our ownership
interest in their net assets at year-end
2005 and 2004, respectively. Based upon
the quoted closing price of PBG shares at
year-end 2005 and 2004, the calculated
market value of our shares in PBG, exclud-
ing our investment in Bottling Group, LLC,
exceeded our investment balance by
approximately $1.5 billion and $1.7
billion, respectively.
PepsiAmericas
At year-end 2005 and 2004, we owned approximately 43% and 41% of PepsiAmericas,
respectively, and their summarized financial information is as follows:
2005 2004 2003
Current assets $ 598 $ 530
Noncurrent assets 3,456 3,000
Total assets $4,054 $3,530
Current liabilities $ 722 $ 521
Noncurrent liabilities 1,763 1,386
Total liabilities $2,485 $1,907
Our investment $968 $924
Net revenue $3,726 $3,345 $3,237
Gross profit $1,562 $1,423 $1,360
Operating profit $393 $340 $316
Net income $195 $182 $158
PBG’s summarized financial information is as follows:
2005 2004 2003
Current assets $ 2,412 $ 2,183
Noncurrent assets 9,112 8,754
Total assets $11,524 $10,937
Current liabilities $2,598 $1,725
Noncurrent liabilities 6,387 6,818
Minority interest 496 445
Total liabilities $9,481 $8,988
Our investment $1,738 $1,594
Net revenue $11,885 $10,906 $10,265
Gross profit $5,632 $5,250 $5,050
Operating profit $1,023 $976 $956
Net income $466 $457 $416
Related Party Transactions
Our significant related party transactions
involve our noncontrolled bottling affiliates.
We sell concentrate to these affiliates,
which is used in the production of carbon-
ated soft drinks and non-carbonated bever-
ages. We also sell certain finished goods
to these affiliates and we receive royalties
for the use of our trademarks for certain
products. Sales of concentrate and
finished goods are reported net of bottler
funding. For further unaudited information
on these bottlers, see “Our Customers” in
Management’s Discussion and Analysis.
These transactions with our bottling
affiliates are reflected in our consolidated
financial statements as follows:
Our investment in PAS, which includes
the related goodwill, was $292 million
and $253 million higher than our owner-
ship interest in their net assets at year-end
2005 and 2004, respectively. Based upon
the quoted closing price of PAS shares at
year-end 2005 and 2004, the calculated
market value of our shares in PepsiAmericas
exceeded our investment balance by
approximately $364 million and
$277 million, respectively.
In January 2005, PAS acquired a
regional bottler, Central Investment
Corporation. The table above includes the
results of Central Investment Corporation
from the transaction date forward.