|UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

Form 10-Q

/x/   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 2, 2005


/ /   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 001-15019


PEPSIAMERICAS, INC.(Exact name of registrant as specified in its charter)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Delaware                                                                       |  | 13-6167838                                             
|------------------------------------------------------------------------------ |  | -------------------------------------------------------
|(State or other jurisdiction of
                incorporation or organization) |  | (I.R.S. Employer
                Identification Number)

|4000 Dain Rauscher Plaza,
                60 South Sixth Street
                Minneapolis, Minnesota |  | 55402     
|------------------------------------------------------------------------------------------------------ |  | ----------
|(Address of principal executive offices)                                                               |  | (Zip Code)

|Registrant's telephone number, including area code (612) 661-4000


Indicate by check mark
whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|YES | /x/ | NO | / / | 
|--- | --- | -- | --- | 

|Indicate by check mark whether the registrant
is an accelerated filer (as defined in Exchange Act Rule 12b-2).
|--------------------------------------------------------------------------------------------------------------

|YES | /x/ | NO | / / | 
|--- | --- | -- | --- | 

|As of April 29, 2005, the Registrant
had 137,207,969 outstanding  shares
of common  stock,  par value  $0.01 per  share,  the
Registrant's only class of common stock.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Contents
|--------

|PEPSIAMERICAS, INC.FORM 10-QFIRST QUARTER 2004
|----------------------------------------------

|TABLE OF CONTENTS
|-----------------

|              |  |                       |                                                                                            |     
|------------- |  | --------------------- | ------------------------------------------------------------------------------------------ | ----
|              |  |                       |                                                                                            | Page
|              |  |                       |                                                                                            |     
|PART I        |  | FINANCIAL INFORMATION
|             
|              |  | Item 1.               | Financial Statements                                                                       |     
|              |  |                       | Condensed Consolidated Statements of Income                                                | 2   
|              |  |                       | Condensed Consolidated Balance Sheets                                                      | 3   
|              |  |                       | Condensed Consolidated Statements of Cash Flows                                            | 4   
|              |  |                       | Notes to Condensed Consolidated Financial Statements                                       | 5   
|             
|              |  | Item 2.               | Managements Discussion and Analysis of Financial Condition
     and Results of Operations | 15  
|             
|              |  | Item 3.               | Quantitative and Qualitative Disclosures About Market Risk                                 | 24  
|             
|              |  | Item 4.               | Controls and Procedures                                                                    | 24  
|             
|PART II       |  | OTHER INFORMATION    
|             
|              |  | Item 1.               | Legal Proceedings                                                                          | 26  
|             
|              |  | Item 2.               | Unregistered Sales of Equity Securities and Use of Proceeds                                | 26  
|             
|              |  | Item 6.               | Exhibits                                                                                   | 26  
|             
|SIGNATURE     |  |                       |                                                                                            | 27  
|             
|EXHIBIT INDEX |  |                       |                                                                                            | 28  

|1
|-

|Contents
|--------

|PART I - FINANCIAL INFORMATION
|------------------------------

|Item 1.    Financial Statements
|-------------------------------

|PEPSIAMERICAS, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                  (unaudited and in millions, except per share data)
|---------------------------------------------------------------------------------------------------------------------------------------------------

|                                                               | First Quarter |       
|-------------------------------------------------------------- | ------------- | ------
|                                                               |               |       
|                                                               |               | 2005  
|                                                               |               |       
|Net sales                                                      | $             | 829.4 
|Cost of goods sold                                             |               | 479.1 
|                                                               |               |       
|Gross profit                                                   |               | 350.3 
|Selling, delivery and administrative
                expenses  |               | 292.7 
|Special charges, net                                           |               | 2.5   
|                                                               |               |       
|Operating income                                               |               | 55.1  
|Interest expense, net                                          |               | ( 19.1
|Other expense, net                                             |               | ( 2.7 
|                                                               |               |       
|Income before income
                taxes                     |               | 33.3  
|Income taxes                                                   |               | 12.5  
|                                                               |               |       
|Net income                                                     | $             | 20.8  
|                                                               |               |       
|Weighted average common shares:                                |               |       
|Basic                                                          |               | 137.2 
|Incremental effect
                of stock options and awards |               | 2.3   
|                                                               |               |       
|Diluted                                                        |               | 139.5 
|                                                               |               |       
|                                                               |               |       
|Net income per share:                                          |               |       
|Basic                                                          | $             | 0.15  
|Diluted                                                        |               | 0.15  
|                                                               |               |       
|Cash dividends per share                                       | $             | 0.085 

|See accompanying notes to the condensed
consolidated financial statements.
|--------------------------------------------------------------------------

|2
|-

|Contents
|--------

|PEPSIAMERICAS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS
            (unaudited and in millions, except per share data)
|-----------------------------------------------------------------------------------------------------------------------

|                                                                                                                              |   | End ofFirst Quarter2005 |   |   | End ofFiscal Year2004 |  
|----------------------------------------------------------------------------------------------------------------------------- | - | ----------------------- | - | - | --------------------- | -
|                                                                                                                              |   |                         |   |  
|ASSETS:                                                                                                                       |   |                         |   |   |                       |  
|Current assets:                                                                                                               |   |                         |   |   |                       |  
|Cash and equivalents                                                                                                          | $ | 87.7                    |   | $ | 74.9                  |  
|Receivables, net                                                                                                              |   | 233.8                   |   |   | 190.5                 |  
|Inventories                                                                                                                   |   | 199.3                   |   |   | 177.8                 |  
|Other current assets                                                                                                          |   | 89.7                    |   |   | 86.3                  |  
|                                                                                                                              |   |                         |   |  
|Total current assets                                                                                                          |   | 610.5                   |   |   | 529.5                 |  
|Property (at cost)                                                                                                            |   | 2,262.4                 |   |   | 2,225.5               |  
|Accumulated depreciation                                                                                                      |   | ( 1,149.5               | ) |   | ( 1,125.5             | )
|                                                                                                                              |   |                         |   |  
|Net property                                                                                                                  |   | 1,112.9                 |   |   | 1,100.0               |  
|Goodwill and intangible assets, net                                                                                           |   | 2,066.9                 |   |   | 1,769.4               |  
|Other assets                                                                                                                  |   | 116.3                   |   |   | 130.9                 |  
|                                                                                                                              |   |                         |   |  
|Total assets                                                                                                                  | $ | 3,906.6                 |   | $ | 3,529.8               |  
|                                                                                                                              |   |                         |   |  
|                                                                                                                              |   |                         |   |   |                       |  
|LIABILITIES AND SHAREHOLDERS'
                EQUITY:                                                                         |   |                         |   |   |                       |  
|Current liabilities:                                                                                                          |   |                         |   |   |                       |  
|Short-term debt, including current maturities of long-term debt                                                               | $ | 544.6                   |   | $ | 142.0                 |  
|Payables                                                                                                                      |   | 207.1                   |   |   | 181.8                 |  
|Other current liabilities                                                                                                     |   | 183.2                   |   |   | 197.3                 |  
|                                                                                                                              |   |                         |   |  
|Total current liabilities                                                                                                     |   | 934.9                   |   |   | 521.1                 |  
|Long-term debt                                                                                                                |   | 1,008.2                 |   |   | 1,006.6               |  
|Deferred income taxes                                                                                                         |   | 150.8                   |   |   | 149.6                 |  
|Other liabilities                                                                                                             |   | 228.5                   |   |   | 229.3                 |  
|                                                                                                                              |   |                         |   |  
|Total liabilities                                                                                                             |   | 2,322.4                 |   |   | 1,906.6               |  
|                                                                                                                              |   |                         |   |  
|Shareholders' equity:                                                                                                         |   |                         |   |   |                       |  
|Preferred stock ($0.01 par value, 12.5 million shares authorizedno shares issues)                                             |   |                        |   |   |                      |  
|Common stock ($0.01 par value, 350 million shares authorized;   
                167.6 million shares issued - 2005 and 2004) |   | 1,540.6                 |   |   | 1,535.3               |  
|Retained income                                                                                                               |   | 588.6                   |   |   | 579.6                 |  
|Unearned stock-based compensation                                                                                             |   | ( 24.8                  | ) |   | ( 8.7                 | )
|Accumulated other comprehensive income (loss):                                                                                |   |                         |   |   |                       |  
|Cumulative translation adjustment                                                                                             |   | 25.8                    |   |   | 35.8                  |  
|Net unrealized investment and hedging gains                                                                                   |   | 6.5                     |   |   | 14.0                  |  
|Minimum pension liability                                                                                                     |   | ( 33.8                  | ) |   | ( 33.8                | )
|                                                                                                                              |   |                         |   |  
|Accumulated other comprehensive income (loss)                                                                                 |   | ( 1.5                   | ) |   | 16.0                  |  
|Treasury stock, at cost (29.5 million shares - 2005 and 29.0 million   
                shares - 2004)                        |   | ( 518.7                 | ) |   | ( 499.0               | )
|                                                                                                                              |   |                         |   |  
|Total shareholders' equity                                                                                                    |   | 1,584.2                 |   |   | 1,623.2               |  
|                                                                                                                              |   |                         |   |  
|Total liabilities and shareholders' equity                                                                                    | $ | 3,906.6                 |   | $ | 3,529.8               |  
|                                                                                                                              |   |                         |   |  

|See accompanying notes to the condensed
consolidated financial statements.
|--------------------------------------------------------------------------

|3
|-

|Contents
|--------

|PEPSIAMERICAS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
|----------------------------------------------------------------------------------------------

|                                                                              | First Quarter |        
|----------------------------------------------------------------------------- | ------------- | -------
|                                                                              |               |        
|                                                                              |               | 2005   
|                                                                              |               |        
|                                                                              |               |        
|CASH FLOW FROM OPERATING
                ACTIVITIES:                          |               |        
|Income from continuing operations                                             | $             | 20.8   
|Adjustments to reconcile to net cash provided by operating activities:        |               |        
|Depreciation and amortization                                                 |               | 47.0   
|Deferred income taxes                                                         |               | ( 2.0  
|Special charges, net                                                          |               | 2.5    
|Cash outlays related to special charges                                       |               | ( 0.6  
|Other                                                                         |               | 8.7    
|Changes in assets and liabilities,
                exclusive of acquisitions: |               |        
|(Decrease) increase in securitized receivables                                |               | ( 14.0 
|(Increase) decrease in remaining receivables                                  |               | ( 10.4 
|Increase in inventories                                                       |               | ( 11.0 
|Increase in payables                                                          |               | 8.0    
|Net change in other assets and liabilities                                    |               | ( 14.2 
|                                                                              |               |        
|Net cash provided by operating activities of continuing operations            |               | 34.8   
|                                                                              |               |        
|                                                                              |               |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                         |               |        
|Capital investments                                                           |               | ( 25.3 
|Acquisitions, net
                of cash acquired                            |               | ( 350.0
|Proceeds from sales of property                                               |               | 0.6    
|                                                                              |               |        
|Net cash used in investing activities                                         |               | ( 374.7
|                                                                              |               |        
|                                                                              |               |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                         |               |        
|Net borrowings (repayments) of
                short-term debt                |               | 103.4  
|Proceeds from issuance of long-term debt                                      |               | 297.0  
|Repayment of long-term debt                                                   |               | ( 0.2  
|Treasury stock purchases                                                      |               | (56.5  
|Issuance of common stock                                                      |               | 22.5   
|Cash dividends                                                                |               | ( 11.7 
|                                                                              |               |        
|Net cash provided by financing activities                                     |               | 354.5  
|                                                                              |               |        
|                                                                              |               |        
|Net cash used in
                discontinued operations                      |               | ( 2.4  
|Effects of exchange rate changes
                on cash and equivalents      |               | 0.6    
|                                                                              |               |        
|Change in cash and equivalents                                                |               | 12.8   
|Cash and equivalents at
                beginning of year                     |               | 74.9   
|                                                                              |               |        
|Cash and equivalents at end
                of first quarter                  | $             | 87.7   
|                                                                              |               |        

|See accompanying notes
to the condensed consolidated financial statements.
|--------------------------------------------------------------------------

|4
|-

|Contents
|--------

|PEPSIAMERICAS, INC.NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS(unaudited)
|--------------------------------------------------------------------------------------

|1. | Significant
Accounting Policies
|-- | -------------------------------

| | Quarterly
reporting  The Condensed Consolidated Financial Statements included herein have
been prepared by PepsiAmericas, Inc. (referred to herein as PepsiAmericas,
we, our and us) without audit. Certain information and
disclosures normally included in financial statements prepared in accordance with United
States generally accepted accounting principles have been condensed or omitted pursuant to
the rules and regulations of the Securities and Exchange Commission, although we believe
that the disclosures are adequate to make the information presented not misleading. These
Condensed Consolidated Financial Statements should be read in conjunction with the
financial statements and notes thereto included in our Annual Report on Form 10-K for the
fiscal year 2004. In the opinion of management, the information furnished herein reflects
all adjustments (consisting only of normal, recurring adjustments) necessary for a fair
statement of results for the interim periods presented.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our
fiscal year consists of 52 or 53 weeks ending on the Saturday closest to December
31st. Our 2004 fiscal year contained 52 weeks and ended January 1, 2005. Our
first quarters of 2005 and 2004 were based on the thirteen weeks ended April 2, 2005 and
April 3, 2004, respectively. Our business is highly seasonal; accordingly, the operating
results of any individual quarter may not be indicative of a full years operating
results.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Net
income per share  Basic net income per share is based upon the weighted-average
number of common shares outstanding. Diluted net income per share assumes the exercise of
all options and includes the grant of restricted stock awards, which are both dilutive
whether exercisable or not. The dilutive effects of stock options and restricted stock
awards are measured under the treasury stock method.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Options
to purchase the following shares were not included in the computation of diluted net
income per share because the exercise price was greater than the average market price of
the common shares during the related period:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                           |  |  | First Quarter | 
| | ----------------------------------------- |  |  | ------------- | 
| |                                           |  |  |               | 
| |                                           |  |  |               | 
| |                                           |  |  |               | 
| |                                           |  |  |               | 
| | Shares under options outstanding          |  |  |               | 
| | Weighted-average exercise price per share |  |  |               | 

| | Stock-based
compensation We use the intrinsic value method of accounting for our
stock-based compensation under APB Opinion No. 25, Accounting for Stock Issued to
Employees. No stock-based employee compensation cost for options is reflected in net
income, as all options granted had an exercise price equal to the market value of the
underlying common stock on the date of grant. Compensation expense for restricted stock
awards is reflected in net income, and this expense is recognized ratably over the
awards vesting period. The following table illustrates the effect on net income and
net income per share if we had applied the fair value recognition provisions of SFAS No.
123, Accounting for Stock-Based Compensation, to stock-based employee
compensation.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
table (in millions, except per share data) is presented pursuant to amended disclosure
requirements of SFAS No. 148, Accounting for Stock-Based Compensation 
Transition and Disclosure.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5
|-

|Contents
|--------

| |                                                                                                                                                  |  |  | First Quarter | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | ------------- | 
| |                                                                                                                                                  |  |  |               | 
| |                                                                                                                                                  |  |  |               | 
| |                                                                                                                                                  |  |  |               | 
| |                                                                                                                                                  |  |  |               | 
| | Net income, as reported                                                                                                                          |  |  |               | 
| | Add:     
Total stockbased compensation expense included in net income as reported, net of tax                                                  |  |  |               | 
| | Deduct:  Total stockbased
compensation expense determined under fair value based method for all options and restricted stock awards, net of tax |  |  |               | 
| |                                                                                                                                                  |  |  |               | 
| | Pro forma net income                                                                                                                             |  |  |               | 
| |                                                                                                                                                  |  |  |               | 
| | Basic:     As reported                                                                                                                           |  |  |               | 
| |                                                                                                                                                  |  |  |               | 
| | Pro forma                                                                                                                                        |  |  |               | 
| |                                                                                                                                                  |  |  |               | 
| | Diluted:  As reported                                                                                                                            |  |  |               | 
| |                                                                                                                                                  |  |  |               | 
| | Pro forma                                                                                                                                        |  |  |               | 
| |                                                                                                                                                  |  |  |               | 

| | The
Black-Scholes model and the assumptions presented in the following table were used to
estimate the fair values of the options granted for the first quarter of 2004. The
weighted-average estimated fair value, at the dates of grant, of options in the first
quarter of 2004 was $4.66. Due to only restricted shares being issued under the 2000 Stock
Incentive Plan in fiscal year 2005, no options were granted in the first quarter of 2005. The above
proforma compensation costs measured for options and restricted stock awards are
recognized ratably over the vesting period, which is typically three years.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 2004 |  |  | 
| |  | ---- |  |  | 

| | Risk-free interest rate               |  | 3.1%  |  |  |  | 
| | ------------------------------------- |  | ----- |  |  |  | 
| | Expected dividend yield               |  | 1.6%  |  |  |  | 
| | Expected volatility                   |  | 27.0% |  |  |  | 
| | Estimated lives of options (in years) |  | 5.0   |  |  |  | 

| | Recently
issued accounting pronouncements In December 2004, the Financial Accounting
Standards Board (FASB) issued a revised SFAS No. 123, Share-Based
Payment. Among its provisions, SFAS 123R will require us to measure the cost of
employee services in exchange for an award of equity instruments based on the grant-date
fair value of the award and to recognize the cost over the requisite service period. As
issued, SFAS 123R becomes effective for us beginning in the third quarter of 2005.
However, on April 14, 2005, the Securities and Exchange Commission adopted a rule that
deferred the effective date to fiscal years beginning after June 15, 2005. As described
above, we currently use the intrinsic value method to account for stock-based employee
compensation. As a result, the adoption of SFAS 123R is expected to reduce our net income in
interim and annual periods after adoption. We believe the best indication of the
approximate impact on net income of adopting the provisions of this revised Statement may
be determined by reviewing the table above under the heading Stock-based
compensation, which shows that net income would have decreased by $0.8 million and
$0.9 million for the first quarters of 2005 and 2004, respectively, and $0.01 per diluted
share for each respective period. Also, upon adoption, we will be allowed to restate prior
interim periods or prior years in accordance with a prescribed modified retrospective
method. The modified retrospective treatment is not required and we have not yet
determined whether we will restate prior periods. In addition, we have not determined the
valuation method we will use to value options.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Special Charges
|-- | ---------------

| | In
the first quarter of 2005, we recorded special charges of $2.5 million ($1.6 million after
tax) in Central Europe, primarily for the realignment of our Central European headquarters
and the consolidation of certain production facilities as we continue to rationalize our
cost structure. These special charges were primarily for severance costs and related
benefits and asset write-downs.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the first quarter of 2004, we recorded special charges of $0.2 million ($0.1 million after
tax) in Central Europe. These special charges were primarily for severance costs and
related benefits.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6
|-

|Contents
|--------

|The
following table summarizes activity associated with the special charges (in millions):
|------------------------------------------------------------------------------------------

| |                                                                                                                                             | 2005Charge |       | 2004Charge |   | 2002Charge |   | Total |    
| | ------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | ----- | ---------- | - | ---------- | - | ----- | ---
| |                                                                                                                                             |            |       |            |   |            |   |       |    
| |                                                                                                                                             |            |       |            |   |            |   |       |    
| | Accrued liabilities as of
                fiscal year end 2004    (employee-related, lease cancellation and
                   other costs) | $          |      |            | $ | 0.1        |   | $     | 0.1
| | Central Europe special charges                                                                                                              |            | 2.5   |            |   |           |   |       |   
| | Expenditures for
                employee-related and other costs                                                                           |            | ( 0.5 | )          |   | ( 0.1      | ) |       |   
| | Asset write downs                                                                                                                           |            | ( 1.1 | )          |   |           |   |       |   
| |                                                                                                                                             |            |       |            |   |            |   |       |    
| | Accrued liabilities at the
                end of the first quarter of 2005                                                                 | $          | 0.9   |            | $ |           |   | $     | 0.1
| |                                                                                                                                             |            |       |            |   |            |   |       |    

| | All
of the special charges we recorded during 2003 were utilized by the end of fiscal year
2003 and thus are not reflected in the table above. The total accrued liabilities
remaining as of the end of the first quarter of 2005 are comprised of deferred severance
payments and certain employee benefits and other costs. We expect to pay a significant
portion of the special charge liability of $1.0 million using cash from operations during
the next twelve months; accordingly, such amounts are classified as Other current
liabilities in the Condensed Consolidated Balance Sheet.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Interest Expense, Net
|-- | ---------------------

| | Interest
expense, net, is comprised of the following (in millions):
| | -------------------------------------------------------------------

| |                       |  |  | First Quarter | 
| | --------------------- |  |  | ------------- | 
| |                       |  |  |               | 
| |                       |  |  |               | 
| |                       |  |  |               | 
| |                       |  |  |               | 
| | Interest expense      |  |  |               | 
| | Interest income       |  |  |               | 
| |                       |  |  |               | 
| | Interest expense, net |  |  |               | 
| |                       |  |  |               | 

|4. | Income Taxes
|-- | ------------

| | During
the first quarter of 2005, our effective income tax rate was 37.7 percent. Our effective
tax rate increased in 2005 due mainly to an increase in our effective state tax rate. This
represents a modest increase from the previous year, as the effective income tax rate in
the first quarter of 2004 was 37.5 percent.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | Comprehensive Income
|-- | --------------------

| | Our
comprehensive income was as follows (in millions):
| | ------------------------------------------------------

| |                                                                      |  |  | First Quarter | 
| | -------------------------------------------------------------------- |  |  | ------------- | 
| |                                                                      |  |  |               | 
| |                                                                      |  |  |               | 
| |                                                                      |  |  |               | 
| |                                                                      |  |  |               | 
| | Net income                                                           |  |  |               | 
| | Minimum pension liability adjustment                                 |  |  |               | 
| | Foreign currency translation adjustment                              |  |  |               | 
| | Net unrealized investment and hedging
                gains (losses) |  |  |               | 
| |                                                                      |  |  |               | 
| | Comprehensive income                                                 |  |  |               | 
| |                                                                      |  |  |               | 

| | Net
unrealized investment and hedging gains (losses) are presented net of income tax benefit
of $4.5 million in the first quarter of 2005 and net of income tax expense of $5.9 million
in the first quarter of 2004. The minimum pension liability adjustment is shown net of
income tax benefit of $1.3 million in the first quarter of 2004.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7
|-

|Contents
|--------

|6. | Inventory
|-- | ---------

| | As
of the end of the first quarter of 2005, our inventory was comprised of approximately 44
percent raw materials and supplies and 56 percent finished goods. This mix is relatively
consistent with the mix of inventory at the end of fiscal year 2004.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | Intangible Assets and Goodwill
|-- | ------------------------------

| | The
changes in the carrying value of goodwill by geographic segment for the first quarter of
2005 were as follows (in millions):
| | --------------------------------------------------------------------------------------------------------------------------------

| |                                                         | U.S. |         | CentralEurope |   | Caribbean |   | Total |      
| | ------------------------------------------------------- | ---- | ------- | ------------- | - | --------- | - | ----- | -----
| |                                                         |      |         |               |   |           |   |       |      
| |                                                         |      |         |               |   |           |   |       |      
| | Balance at end of year
                2004             | $    | 1,688.6 |               | $ | 37.5      |   | $     | 20.1 
| | Acquisitions                                            |      | 298.3   |               |   |          |   |       |     
| | Purchase accounting adjustments                         |      |        |               |   |          |   |       | ( 2.4
| | Cumulative translation adjustment                       |      |        |               |   | ( 1.3     | ) |       |     
| |                                                         |      |         |               |   |           |   |       |      
| | Balance at end of first
                quarter of 2005 | $    | 1,986.9 |               | $ | 36.2      |   | $     | 17.7 
| |                                                         |      |         |               |   |           |   |       |      

| |                                                 | As of End of First Quarter 2005      |      | As of End of Fiscal Year 2004            |  
| | ----------------------------------------------- | ------------------------------------ | ---- | ---------------------------------------- | -
| |                                                 |                                      |      |                                          |  
| |                                                 | GrossCarrying
                Amount |      | Accumulated
                Amortization |  
| |                                                 |                                      |      |                                          |  
| | Amortized intangible
                assets:    |                                      |      |                                          |  
| | Non-compete agreements                          | $                                    | 0.5  |                                          | $
| | Franchise and distribution agreements           |                                      | 3.6  |                                          |  
| |                                                 |                                      |      |                                          |  
| | Total                                           | $                                    | 4.1  |                                          | $
| |                                                 |                                      |      |                                          |  
| | Unamortized intangible
                assets:  |                                      |      |                                          |  
| | Franchise and distribution agreements           | $                                    | 20.5 |                                          |  
| | Pension intangible asset                        | $                                    | 2.6  |                                          |  
| |                                                 |                                      |      |                                          |  
| | Total                                           | $                                    | 27.2 |                                          |  
| |                                                 |                                      |      |                                          |  
| | Aggregate
                amortization expense: |                                      |      |                                          |  
| | For first quarter
        ended 2005 and 2004   | $                                    | 0.1  |                                          |  

|8
|-

|Contents
|--------

| | In
the first quarter of 2005, we acquired Central Investment Corporation (CIC)
and FM Vending resulting in an increase to goodwill of $298.3 million. See Note 8 for
further discussion.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the first quarter of 2005, we recorded certain adjustments and completed the intangible
asset valuation associated with the Bahamas purchase completed in the first quarter of
2004. This resulted in an increase in acquired goodwill of $0.5 million and a
reclassification of $2.9 million from goodwill to franchise and distribution agreements,
an unamortized intangible asset. The $0.5 million adjustment related to the final valuation of
accounts receivable and fixed assets. See Note 8 for further discussion.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
decrease in the gross carrying amount of non-compete agreements and related accumulated
amortization reflected the expiration of certain non-compete agreements related to
previous acquisitions.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8. | Acquisitions
|-- | ------------

| | On
January 10, 2005, we completed the acquisition of CIC. CIC has bottling operations in
Southeast Florida and Central Ohio. We agreed to acquire the capital stock of CIC, the
seventh largest Pepsi bottler in the U.S., for a purchase price of $339.3 million plus
$13.1 million related to an adjustment for working capital and $0.5 million for
acquisition-related costs. At the date of closing, $8.4 million of the working capital
adjustment was paid to the seller and $4.7 million is included in Other current
liabilities on the Condensed Consolidated Balance Sheet at the end of the first
quarter of 2005. Our cost to acquire CIC has been preliminarily allocated to the assets
acquired and liabilities assumed according to estimated fair values. This allocation is
subject to adjustment when additional information concerning asset and liability
valuations is finalized. We have preliminarily allocated $296.2 million to acquired
goodwill, representing the excess of the purchase price over the estimated fair value of
net assets acquired, and we assigned this goodwill to the U.S. geographic segment. We are
in the process of valuing the intangibles acquired in connection with the CIC transaction
and expect to complete that valuation in the third quarter of 2005. It is expected that a
majority of the acquired goodwill will be reclassified to franchise rights, which are not
amortized since they are granted in perpetuity. The assets acquired and liabilities
assumed consisted primarily of cash, working capital, fixed assets and capital lease
obligations. CICs results of operations since the date of the acquisition are
included in the Condensed Consolidated Statement of Income.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 31, 2005, we completed the acquisition of FM Vending. We agreed to acquire the
capital stock of FM Vending for a purchase price of $2.2 million, net of cash acquired.
Our cost to acquire FM Vending has been preliminarily allocated to assets acquired and
liabilities assumed according to estimated fair values. This allocation is subject to
adjustment when additional information concerning asset and liability valuations is
finalized. The preliminary allocation has resulted in acquired goodwill of approximately
$2.1 million, which we have assigned to the U.S. geographic segment. The assets acquired
and liabilities assumed consisted primarily of cash, working capital and fixed assets.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
addition, in March 2004 we acquired 2,000 additional shares of Pepsi-Cola Bahamas for $3.3
million, which increased our ownership interest in the Bahamas from 30 percent to 70
percent. As a result, we began consolidating the Bahamas in the first quarter of 2004, as
the investment was accounted for under the equity method prior to this transaction. Our
cost to acquire the Bahamas was allocated to the assets acquired and liabilities assumed
according to estimated fair values. The allocation resulted in intangible assets of $2.9
million related to franchise and distribution agreements. We assigned the intangible
assets to the Caribbean geographic segment. The assets acquired and liabilities assumed
consisted primarily of inventory, fixed assets, and long-term debt. Minority interest
associated with this investment is recorded in Other expense, net in the
Condensed Consolidated Statements of Income and in Other liabilities in the
Condensed Consolidated Balance Sheets.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
acquisitions described above are not material to our consolidated results of operations;
therefore, proforma financial information is not included in this note.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9. | Debt
|-- | ----

| | In
January 2005, we issued $300 million of notes with a coupon rate of 4.875 percent due
January 2015. Net proceeds from the transaction were $297.0 million, which reflected the
reduction for the discount of $0.8 million and debt issuance costs of $2.2 million. The
proceeds from the issuance were used to fund the acquisition of CIC. The notes were issued
from our shelf registration statement that became effective September 4, 2003. Under the
shelf registration statement, up to $1 billion of debt securities may be offered. The debt
securities are unsecured, senior debt obligations and rank equally with all other
unsecured and subordinated indebtedness. After the issuance of the $300 million of notes
in January 2005, there was $700 million in debt securities available for issuance under
the shelf registration statement.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10. | Financial Instruments
|--- | ---------------------

| | We
use derivative financial instruments to reduce our exposure to adverse fluctuations in
commodity prices and interest rates. These financial instruments are
over-the-counter instruments and were designated at their inception as hedges
of underlying exposures. We do not use derivative financial instruments for speculative or
trading purposes.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Cash
Flow Hedges  We enter into derivative financial instruments to hedge against
volatility in future cash flows on anticipated aluminum can purchases, the prices of which
are indexed to aluminum market prices. We consider these hedges to be highly effective,
because of the high correlation between aluminum commodity prices and our contractual cost
of aluminum cans. We have hedged a portion of our U.S. aluminum requirements for the
balance of fiscal year 2005. As of the end of the first quarter of 2005 and fiscal year
end 2004, we had deferred $2.5 million (net of $1.5 million in deferred income taxes) and
$2.5 million (net of $1.5 million in deferred income taxes) of aluminum hedging gains,
respectively, in Accumulated other comprehensive income (loss). We expect to
reclassify a majority of the deferred aluminum hedging gains as of the end of the first
quarter of 2005 into cost of goods sold during the next 12 months.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9
|-

|Contents
|--------

| | Beginning
in fiscal year 2004, we entered into derivative financial instruments to hedge against
volatility in future cash flows on anticipated natural gas purchases, the prices of which
are indexed to natural gas market prices. Due to the high correlation between natural gas
commodity prices and our contractual cost of natural gas, we consider these hedges to be
highly effective. We have hedged a portion of our anticipated natural gas purchases
through November 2005. As of the end of the first quarter of 2005 and fiscal year end
2004, we had deferred $0.1 million (net of $0.1 million in deferred income taxes) of
natural gas hedging gains and $0.1 million (net of $0.1 million in deferred income taxes)
of natural gas hedging losses, respectively, in Accumulated other comprehensive
income (loss).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Beginning
in fiscal year 2004, we entered into derivative financial instruments to hedge against the
volatility in future cash flows on anticipated diesel fuel purchases, the prices of which
are indexed to heating oil market prices. Due to the high correlation between heating oil
commodity prices and our cost of diesel fuel, we consider these hedges to be highly
effective. We have hedged a portion of our anticipated diesel fuel purchases through
December 2005. As of the end of the first quarter of 2005 and fiscal year end 2004, we had
deferred $1.0 million (net of $0.6 million in deferred income taxes) of heating oil
hedging gains and $0.5 million (net of $0.3 million in deferred income taxes) of heating
oil hedging losses in Accumulated other comprehensive income (loss).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
anticipation of a long-term debt issuance in January 2005 (see Note 9 for further
discussion), we had entered into treasury rate lock instruments with an aggregate notional
amount of $300.0 million. We accounted for these treasury rate lock instruments as cash
flow hedges, as the treasury rate lock instruments hedged against the variability of
interest payments on the forecasted issuance of fixed-rate debt attributable to changes in
interest rates. These treasury rate locks are considered highly effective in eliminating
the interest rate risk on the forecasted debt issuance. The treasury rate locks were
settled for $2.7 million, concurrent with the debt issuance in the first quarter of 2005.
As of the end of the first quarter of 2005 and fiscal year end 2004, we had deferred
approximately $1.6 million (net of $1.0 in deferred income taxes) of treasury rate gains
for each respective period included in Accumulated other comprehensive income
(loss). Amounts included in Accumulated other comprehensive income
(loss)" will be reclassified into earnings commensurate with the recognition of
interest expense related to the debt issued in January 2005.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
anticipation of a long-term debt issuance in February 2006, we entered into a forward
starting swap agreement with an aggregate notional amount of $300.0 million in fiscal year
2004. We accounted for this forward starting swap as a cash flow hedge, as the swap hedges
against the variability of interest payments on the forecasted issuance of fixed-rate debt
attributable to changes in interest rates. As of the end of the first quarter of 2005 and
fiscal year end 2004, we had deferred $0.8 million (net of $0.5 million in deferred income
taxes) of forward starting swap gains and $0.9 million (net of $0.6 million in deferred
income taxes) of forward starting swap losses, respectively, in Accumulated other
comprehensive income (loss), as this forward starting swap agreement is considered
highly effective in eliminating the interest rate risk on the forecasted fixed-rate debt
issuance. The amount included in Accumulated other comprehensive income (loss)
will be reclassified into earnings commensurate with the recognition of interest expense
related to the anticipated debt issuance.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
anticipation of the long-term debt issuance in the first quarter of 2003, we entered into
a treasury rate lock agreement with an aggregate notional amount of $150.0 million. We
accounted for this treasury rate lock as a cash flow hedge, as the treasury rate lock
hedged against the variability of interest payments on the forecasted issuance of
fixed-rate debt attributable to changes in interest rates. We settled the treasury rate
lock for $1.2 million concurrent with our debt issuance in the first quarter of 2003. At
the end of the first quarter of 2005 and fiscal year 2004, we had deferred approximately
$1.3 million (net of $0.8 million in deferred income taxes) and $1.4 million (net of $0.9
million in deferred income taxes) of losses, respectively, in Accumulated other
comprehensive income (loss) in the Condensed Consolidated Balance Sheets, as the
treasury rate locks were considered highly effective in eliminating the interest rate risk
on the forecasted debt issuance. These amounts also include the deferred losses of the
treasury rate lock settled in fiscal year 2002. Amounts included in Accumulated
other comprehensive income (loss) are reclassified into earnings commensurate with
the recognition of the interest expense on the issued debt.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10
|--

|Contents
|--------

| | Fair
Value Hedges  Periodically, we enter into interest rate swap contracts to
convert a portion of our fixed rate debt to floating rate debt, with the objective of
reducing overall borrowing costs. We account for these swaps as fair value hedges, since
they hedge against the change in fair value of fixed rate debt resulting from fluctuations
in interest rates. In the third quarter of 2004, we terminated all outstanding interest
rate swap contracts and received $14.4 million for the fair value of the interest rate
swap contracts. Amounts included in the cumulative fair value adjustment to long-term debt
will be reclassified into earnings commensurate with the recognition of the related
interest expense. At the end of the first quarter of 2005 and fiscal year end 2004, the
cumulative fair value adjustments to long-term debt were $11.2 million and $12.0 million,
respectively.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11. | Pension and Other Postretirement
Benefit Plans
|--- | ----------------------------------------------

| |                                    | First Quarter |      
| | ---------------------------------- | ------------- | -----
| |                                    |               |      
| |                                    | 2005          |      
| |                                    |               |      
| |                                    |               |      
| | Service cost                       | $             | 0.8  
| | Interest cost                      |               | 2.4  
| | Expected return on plan assets     |               | ( 2.9
| | Amortization of prior service cost |               |     
| | Amortization of net loss           |               | 0.6  
| |                                    |               |      
| | Net periodic pension cost          | $             | 0.9  
| |                                    |               |      

| | We
previously disclosed in our financial statements for fiscal year 2004 that we expected to
contribute an amount similar to the contribution made to our plans in fiscal year 2004 to
our pension plans in 2005. As of the end of the first quarter of 2005, we have contributed
$2.0 million to the plans. We will continue to evaluate the plans funding
requirements throughout the balance of fiscal year 2005 and will fund to levels deemed
necessary for each plan.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12. | Stock Options and Awards
|--- | ------------------------

| | In
February 2005, we granted 881,432 restricted shares at a weighted-average fair value (at
the date of grant) of $22.52 to key members of management and members of our Board of
Directors under our 2000 Stock Incentive Plan (the Plan). We recognized
compensation expense of $2.7 million and $1.8 million in the first quarter of 2005 and
2004, respectively, related to grants made in 2005 and previous years. At the end of the
first quarter 2005, there were 1,691,122 unvested restricted shares outstanding under the
Plan.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13. | Supplemental Cash Flow Information
|--- | ----------------------------------

| | Net
cash provided by operating activities reflected cash payments and receipts for interest
and income taxes as follows (in millions):
| | --------------------------------------------------------------------------------------------------------------------------------------

| |                                                             | First Quarter |       
| | ----------------------------------------------------------- | ------------- | ------
| |                                                             |               |       
| |                                                             | 2005          |       
| |                                                             |               |       
| |                                                             |               |       
| | Interest paid                                               | $             | 26.5  
| | Interest received                                           |               | 0.8   
| | Income taxes (received) paid, inclusive of refunds received |               | (  5.1

|14. | Environmental and Other Commitments
and Contingencies
|--- | -----------------------------------------------------

| | Current
Operations.We maintain a program to facilitate compliance with federal,
state and local laws and regulations relating to management of materials used in
production and to the discharge or emission of wastes, and such other laws and regulations
relating to the protection of the environment. The capital costs of such management and
compliance, including the modification of existing plants and the installation of new
manufacturing processes, are not material to our continuing operations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
are defendants in lawsuits that arise in the ordinary course of business, none of which is
expected to have a material adverse effect on our financial condition, although amounts
recorded in any given period could be material to the result of operations or cash flows
for that period.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11
|--

|Contents
|--------

| | Discontinued
OperationsRemediation.Under the agreement pursuant to which we sold
our subsidiaries Abex Corporation and Pneumo Abex Corporation (collectively, Pneumo
Abex) in 1988 and a subsequent settlement agreement entered into in September 1991,
we have assumed indemnification obligations for certain environmental liabilities of
Pneumo Abex, after any insurance recoveries. Pneumo Abex has been and is subject to a
number of environmental cleanup proceedings, including proceedings under the Comprehensive
Environmental Response, Compensation and Liability Act regarding release or disposal of
wastes at on-site and off-site locations. In some proceedings, federal, state and local
government agencies are involved and other major corporations have been named as
potentially responsible parties. Pneumo Abex also is subject to private claims and
lawsuits for remediation of properties previously owned by Pneumo Abex and its
subsidiaries.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | There
is an inherent uncertainty in assessing the total cost of investigating and remediating a
given site. This is because of the evolving and varying nature of the remediation and
allocation process. Any assessment of expenses is more speculative in the early stage of
remediation and is dependent upon a number of variables beyond the control of any party.
Furthermore, there are often timing considerations in that a portion of the expense
incurred by Pneumo Abex, and any resulting obligation of ours to indemnify Pneumo Abex,
may not occur for a number of years.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the latter part of 2001, we investigated the use of insurance products to mitigate risks
related to indemnification obligations under the 1988 agreement, as amended. The insurance
carriers required that we employ an outside consultant to perform a comprehensive review
of the facilities formerly operated or impacted by Pneumo Abex. Advances in retrospective
risk evaluation and increased experience (and therefore available data) at our former
facilities, made this comprehensive review possible. The consultants review was
completed in the fourth quarter of 2001. It provided a contingent indemnification
liability for all known sites operated or impacted by Pneumo Abex and resulted in the
$111.0 million charge, or $71.2 million net of tax, recorded in the fourth quarter of
2001.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At
the end of the first quarter of 2005, we had $102.4 million accrued to cover potential
indemnification obligations, compared to $106.8 million recorded at the end of fiscal year
2004. Of the total amount accrued, $20.0 million was classified as a current liability at
the end of the first quarter of 2005 and at the end of fiscal year 2004. The amounts
exclude possible insurance recoveries and are determined on an undiscounted cash flow
basis. The estimated indemnification liabilities include expenses for the investigation
and remediation of identified sites, payments to third parties for claims and expenses
(including product liability and toxic tort claims), administrative expenses, and the
expenses of on-going evaluations and litigation. We expect a significant portion of the
accrued liabilities will be disbursed during the next 10 years. All estimated costs for
the sites discussed below are included in the $102.4 million accrued as of the end of the
first quarter of 2005.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Although
we have certain indemnification obligations for environmental liabilities at a number of
other sites, including Superfund sites, it is not anticipated that additional expense at
any specific site will have a material effect on us. In the case of some of the sites, the
volumetric contribution for which we have an obligation has in most cases been estimated
and other large, financially viable parties are responsible for substantial portions of
the remainder. In our opinion, based upon information currently available, the ultimate
resolution of these claims and litigation, including potential environmental exposures,
and considering amounts already accrued, should not have a material effect on our
financial condition, although amounts recorded in a given period could be material to the
results of operations or cash flows for that period.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Discontinued
OperationsInsurance. During the second quarter of 2002, as part of a
comprehensive program concerning environmental liabilities related to the former Whitman
Corporation subsidiaries, we purchased new insurance coverage related to the sites
previously owned and operated or impacted by Pneumo Abex and its subsidiaries. In
addition, a trust, which was established in 2000 with the proceeds from an insurance
settlement (the Trust), purchased insurance coverage and funded coverage for
remedial and other costs (Finite Funding) related to the sites previously
owned and operated or impacted by Pneumo Abex and its subsidiaries. In conjunction with
the purchase of the insurance policies, we recorded a charge to discontinued operations of
$9.8 million, or $6.0 million after tax. This charge represented amounts expended by us as
well as a reduction of funds in the Trust available to pay expenses related to sites for
which we have indemnification obligations.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12
|--

|Contents
|--------

| | Essentially
all of the assets of the Trust were expended by the Trust in connection with the purchase
of the insurance coverage, the Finite Funding and related expenses. These actions have
been taken to fund remediation and related costs associated with the sites previously
owned and operated or impacted by Pneumo Abex and its subsidiaries and to protect against
additional future costs in excess of our self-insured retention. The original amount of
self-insured retention (the amount we must pay before the insurance carrier is obligated
to begin payments) was $114.0 million of which $26.9 million has been eroded, leaving a
remaining self-insured retention of $87.1 million at the end of the first quarter of 2005.
The estimated range of aggregate exposure related only to the remediation costs of such
environmental liabilities is approximately $45 million to $85 million. We had accrued
$65.5 million at the end of the first quarter of 2005 for remediation costs, which is our
best estimate of the contingent liabilities related to these environmental matters. The
Finite Funding may be used to pay a portion of the $65.5 million and thus reduces our
future cash obligations. The Finite Funding amounts recorded were $21.3 million and $21.9
million at the end of the first quarter of 2005 and the end of fiscal year 2004,
respectively, and are recorded in Other assets, net of $1.5 million recorded
in Other current assets in each respective period.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
addition, we had recorded other receivables of $12.3 million at the end of the first
quarter of 2005 and at the end of fiscal year 2004 for future probable amounts to be
received from insurance companies and other responsible parties. These amounts were
recorded in Other assets in the Condensed Consolidated Balance Sheets as of
the end of each respective period.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Discontinued
OperationsProduct Liability and Toxic Tort Claims.We also have certain indemnification obligations
related to product liability and toxic tort claims that might emanate out of the 1988 agreement with Pneumo Abex.
Other companies not owned by or associated with us also are responsible to Pneumo Abex for the financial burden
of all asbestos product liability claims filed against Pneumo Abex after a certain date in 1998, except for
certain claims indemnified by us. The sites and product liability and toxic tort claims included in the aggregate
accrued liabilities we have recorded are described more fully in our Annual Report on Form 10-K for the fiscal
year 2004. No significant changes in the status of those sites or claims occurred and we were not notified of any
significant new sites or claims during the first quarter of 2005.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|15. | Segment Reporting
|--- | -----------------

| | We
operate in three geographic areas  the U.S., Central Europe and the Caribbean. We
operate in 19 states in the U.S., and, outside the U.S., we operate in Poland, Hungary,
the Czech Republic, Republic of Slovakia, Puerto Rico, Jamaica, Barbados, the Bahamas and
Trinidad and Tobago.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following tables present net sales and operating income (loss) of our geographic segments
for the first quarter of 2005 and 2004 (in millions):
| | ---------------------------------------------------------------------------------------------------------------------------------------------------

| |                | First Quarter
| | -------------- | -------------
| |                |              
| |                | Net Sales    
| |                |              
| |                | 2005         
| |                |              
| |                |              
| | U.S.           | $            
| | Central Europe |              
| | Caribbean      |              
| |                |              
| | Total          | $            
| |                |              

| | Except for the impact of the acquisition of CIC, which is more fully described in Notes 7 and 8, there
       were no material changes in total assets by geographic segment since the end of fiscal year 2004.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|16. | Related Party Transactions
|--- | --------------------------

| | We
are a licensed producer and distributor of Pepsi carbonated and non-carbonated soft drinks
and other non-alcoholic beverages in the U.S., Central Europe and the Caribbean. We
operate under exclusive franchise agreements with soft drink concentrate producers,
including master bottling and fountain syrup agreements with PepsiCo, Inc.
(PepsiCo) for the manufacture, packaging, sale and distribution of PepsiCo
branded products. The franchise agreements exist in perpetuity and contain operating and
marketing commitments and conditions for termination. As of the end of the first quarter
of 2005, PepsiCo beneficially owned 41.5 percent of PepsiAmericas common stock.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13
|--

|Contents
|--------

| | We
purchase concentrate from PepsiCo to be used in the production of Pepsi carbonated soft
drinks and other non-alcoholic beverages. PepsiCo also provides us with various forms of
bottler incentives to promote Pepsis brands. These bottler incentives cover a
variety of initiatives, including direct marketplace, shared media and advertising
support, to support volume and market share growth. There are no conditions or
requirements that could result in the repayment of any support payments we have received.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
manufacture and distribute fountain products and provide fountain equipment service to
PepsiCo customers in certain territories in accordance with various agreements. There are
other products that we produce and/or distribute through various arrangements with PepsiCo
or partners of PepsiCo. We also purchase finished beverage products from PepsiCo and
certain of its affiliates including tea, concentrate and finished beverage products from a
Pepsi/Lipton partnership, as well as finished beverage products from a Pepsi/Starbucks
partnership.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | PepsiCo
provides various procurement services under a shared services agreement. Under such
agreement, PepsiCo negotiates with various suppliers the cost of certain raw materials by
entering into raw material contracts on our behalf. PepsiCo also collects and remits to us
certain rebates from the various suppliers related to our procurement volume. In addition,
PepsiCo acts as our agent for the execution of derivative contracts associated with
certain anticipated raw material purchases.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
have an existing arrangement with a subsidiary of Pohlad Companies related to the joint
ownership of an aircraft. This transaction is not material to our Condensed Consolidated
Financial Statements. Robert C. Pohlad, our Chairman and Chief Executive Officer, is the
President and owner of approximately 33 percent of the capital stock of Pohlad Companies
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | See
additional discussion of our related party transactions in our Annual Report on Form 10-K
for the fiscal year 2004.
| | -----------------------------------------------------------------------------------------------------------------------

|14
|--

|Contents
|--------

|Item 2. 
   Management's
Discussion and Analysis of Financial Condition and Results of Operations
|-------------------------------------------------------------------------------------------------

|CRITICAL ACCOUNTING POLICIES
|----------------------------

|The
preparation of the Condensed Consolidated Financial Statements in conformity with United
States generally accepted accounting principles requires management to use estimates.
These estimates are made using managements best judgment and the information
available at the time these estimates are made, including the advice of outside experts.
For a better understanding of our significant accounting policies used in preparation of
the Condensed Consolidated Financial Statements, please refer to our Annual Report on Form
10-K for the fiscal year 2004. We focus your attention on the following critical
accounting policies:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Goodwill
Impairment. Goodwill is tested for impairment at least annually, using a two-step
approach at the reporting unit level: U.S., Central Europe and the Caribbean. First, we
estimate the fair value of the reporting units primarily using discounted estimated future
cash flows. If the carrying value exceeds the fair value of the reporting unit, the second
step of the goodwill impairment test is performed to measure the amount of the potential
loss. Goodwill impairment is measured by comparing the implied fair value of
goodwill with its carrying amount. The impairment evaluation requires the use of
considerable management judgment to determine the fair value of the reporting units using
discounted future cash flows, including estimates and assumptions regarding the amount and
timing of cash flows, cost of capital and growth rates.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Environmental
Liabilities. We continue to be subject to certain indemnification obligations under
agreements related to previously sold subsidiaries, including potential environmental
liabilities (see Note 14 to the Condensed Consolidated Financial Statements). We have
recorded our best estimate of our probable liability under those indemnification
obligations, with the assistance of outside consultants and other professionals. Such
estimates and the recorded liabilities are subject to various factors, including possible
insurance recoveries, the allocation of liabilities among other potentially responsible
parties, the advancement of technology for means of remediation, possible changes in the
scope of work at the contaminated sites, as well as possible changes in related laws,
regulations, and agency requirements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Income
Taxes. Our effective income tax rate is based on income, statutory tax rates and tax
planning opportunities available to us in the various jurisdictions in which we operate.
The tax bases of our assets and liabilities reflect managements best estimate of the
outcome of future tax audits. We have established valuation allowances against
substantially all of the nonU.S. net operating losses to reflect the uncertainty of
our ability to fully utilize these benefits given the limited carryforward periods
permitted by the various jurisdictions. The evaluation of the realizability of our net
operating losses requires the use of considerable management judgment to estimate the
future taxable income for the various jurisdictions, for which the ultimate amounts and
timing of such estimates may differ. The valuation allowance can also be impacted by
changes in the tax regulations.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Significant
judgment is required in determining our contingent tax liabilities. We have established
contingent tax liabilities using managements best judgment and adjust these
liabilities as warranted by changing facts and circumstances. A change in our tax
liabilities in any given period could have a significant impact on our results of
operations and cash flows for that period.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Casualty
Insurance Costs. Due to the nature of our business, we require insurance coverage for
certain casualty risks. We are self-insured for workers compensation, product and
general liability up to $1 million per occurrence and automobile liability up to $2
million per occurrence. The casualty insurance costs for our self-insurance program
represent the ultimate net cost of all reported and estimated unreported losses incurred
during the fiscal year. We do not discount insurance liabilities.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|15
|--

|Contents
|--------

| | Our
liability for casualty costs is estimated using individual case-based valuations and
statistical analyses and is based upon historical experience, actuarial assumptions and
professional judgment. These estimates are subject to the effects of trends in loss
severity and frequency and are based on the best data available to us. These estimates,
however, are also subject to a significant degree of inherent variability, including the
relatively recent increases in medical costs. We evaluate these estimates with our
actuarial advisors on an annual basis and we believe that they are appropriate and within
acceptable industry ranges, although an increase or decrease in the estimates or economic
events outside our control could have a material impact on our results of operations and
cash flows. Accordingly, the ultimate settlement of these costs may vary significantly
from the estimates included in our Condensed Consolidated Financial Statements.
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|RESULTS OF OPERATIONS2005
FIRST QUARTER COMPARED WITH 2004 FIRST QUARTER


In
the discussions of our results of operations below, the number of cases sold is referred
to as volume. Constant territory refers to the results of operations excluding the acquisition
of CIC and is used only in the discussion of volume.  Net pricing is net sales divided by the number of cases and gallons
sold for our core businesses, which include bottles and cans (including bottle and can
volume from vending equipment sales) as well as food service. Changes in net pricing
include the impact of sales price (or rate) changes, as well as the impact of brand,
package and geographic mix. Net pricing and reported volume amounts exclude contract,
commissary, private label, concentrate, and vending (other than bottles and cans) revenue
and volume. Contract sales represent sales of manufactured product to other franchise
bottlers and typically decline as excess manufacturing capacity is utilized. Cost of
goods sold per unit is the cost of goods sold for our core business divided by the
related number of cases and gallons sold.


Our
business is highly seasonal; accordingly, the operating results of any individual quarter
may not be indicative of a full years operating results.


Volume


Sales
volume growth (declines) for the first quarter of 2005 and 2004 were as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                |  |  | 2005 |  | 2004  |   | 
| | -------------- |  |  | ---- |  | ----- | - | 
| |                |  |  |      |  |       |   | 
| | U.S.           |  |  |      |  | 8.2%  |   | 
| | Central Europe |  |  |      |  | (8.2% | ) | 
| | Caribbean      |  |  |      |  | 12.5% |   | 
| |                |  |  |      |  |       |   | 
| | Worldwide      |  |  |      |  | 6.1%  |   | 

|First quarter
2005 worldwide volume increased 6.1 percent compared to the prior year first quarter. The
growth in worldwide volume was attributed to volume growth in the U.S. and Caribbean of
8.2 percent and 12.5 percent, respectively. This volume growth was offset by a volume
decline of 8.2 percent in Central Europe. We anticipate worldwide volume growth for the
full year to be approximately nine to ten percent, which includes the incremental growth
attributed to the CIC acquisition. On a constant territory basis, which excludes the
impact of the CIC acquisition, we anticipate worldwide volume growth of approximately two
to three percent in fiscal year 2005.


The
increase in U.S. volume of 8.2 percent in the first quarter of 2005 reflected the
incremental volume generated by the CIC acquisition completed in January 2005. The
addition of the CIC territories increased U.S. volumes by 7.2 percent. The remaining
volume growth in the U.S. reflected contributions from non-carbonated beverages, which
grew at a double-digit rate in the first quarter of 2005. This growth was driven by growth
in Aquafina volume, which included the introduction of Aquafina Flavor Splash and Aquafina
Sparkling in the first quarter of 2005. Aquafina volume growth was also driven by
increased promotional efforts in our large format channel. Volume growth in the U.S. was
also benefited by the early timing of the Easter holiday, which fell in the first quarter.
In the previous year, volume associated with the Easter holiday was reflected in the
second quarter results. The growth in non-carbonated beverages was partially offset by the
decline in our carbonated soft drink portfolio. We experienced mid single-digit growth in
our diet category, offset by volume declines in brand Pepsi, while Trademark Mountain Dew
was flat. Our single-serve category grew at a single-digit rate in the first quarter of
2005. This growth was driven, in part, by the reformulation of Wild Cherry Pepsi, Cherry
Vanilla Dr Pepper, and Pepsi One. We believe that product innovation, including the
introduction of Pepsi Lime in the second quarter of 2005 and further expansion of the
non-carbonated beverage category, will continue to contribute to volume growth for the
balance of fiscal year 2005.


Total
volume in Central Europe decreased 8.2 percent in the first quarter of 2005. The decline
is consistent with prior quarters as the markets in which we operate continue to adjust to
the impact of the May 2004 accession into the European Union (EU). In
addition, we are lapping the successful results of the first quarter of 2004 water
promotion in our markets. We have experienced sequential improvement in our volume
performance since the EU accession. We continue to operate in a very competitive pricing
environment, and we have responded by introducing the Slice brand in Central Europe to
compete with private label products. The decrease in volume was driven by double-digit
declines in the water category, reflecting the previous years water promotion,
offset by single-digit growth in carbonated soft drinks. We anticipate that the volume
trend will improve during the balance of the year as we begin to lap soft results during
the last three quarters of fiscal year 2004.
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|Volumes
in the Caribbean increased 12.5 percent in the first quarter of 2005 compared to the same
period last year. Volume growth was driven by the incremental volume provided by the
Bahamas due to the lapping of the consolidation of the Bahamas starting in March 2004 and
strong volume growth in Puerto Rico and Jamaica. Volume growth was primarily driven by
contributions from carbonated soft drinks with volume growth in single-serve and take-home
can packaging. Mid single-digit growth in Trademark Pepsi, double-digit growth in
Trademark Mountain Dew and double-digit growth in flavored carbonated soft drinks also
drove the volume increase. Trademark Pepsi accounts for almost 60 percent of our business
in the Caribbean, while the remainder of our business is mainly comprised of flavored
carbonated soft drinks and Trademark Seven Up.


Net Sales


Net
sales and net pricing statistics for the first quarter of 2005 and 2004 were as follows
(dollar amounts in millions):
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Net Sales          | 2005 |       | 2004 |   | Change |  | 
| | ------------------ | ---- | ----- | ---- | - | ------ |  | 
| |                    |      |       |      |   |        |  | 
| | U.S.               | $    | 712.0 |      | $ | 636.3  |  | 
| | Central Europe     |      | 70.1  |      |   | 60.4   |  | 
| | Caribbean          |      | 47.3  |      |   | 40.9   |  | 
| |                    |      |       |      |   |        |  | 
| | Worldwide          | $    | 829.4 |      | $ | 737.6  |  | 
| |                    |      |       |      |   |        |  | 
| |                    |      |       |      |   |        |  | 
| | Net Pricing Growth | 2005 |       | 2004 |   |        |  | 
| |                    |      |       |      |   |        |  | 
| | U.S.               |      | 3.0%  |      |   | 5.0%   |  | 
| | Central Europe     |      | 18.9% |      |   | 4.8%   |  | 
| | Caribbean          |      | 3.5%  |      |   | 6.9%   |  | 
| |                    |      |       |      |   |        |  | 
| | Worldwide          |      | 5.1%  |      |   | 4.6%   |  | 

|Net
sales increased $91.8 million, or 12.4 percent, to $829.4 million in the first quarter of
2005 compared to $737.6 million the first quarter of 2004. The increase was driven
primarily by increased worldwide net pricing of 5.1 percent and volume growth in the U.S.
and Caribbean, offset by volume declines in Central Europe. We anticipate that worldwide
net pricing will grow three to four percent in fiscal year 2005 compared to fiscal year
2004.


Net
sales in the U.S. for the first quarter of 2005 increased $75.7 million, or 11.9 percent,
to $712.0 million from $636.3 million in the prior year first quarter. The increase was
primarily the result of the incremental net sales contributed by CIC, which represented
more than half of the increase in net sales in the U.S. The remainder of the increase in
net sales was primarily due to the 3.0 percent increase in net pricing along with a 1.0
percent increase in volume on a constant territory basis. The improvement in net pricing
was driven by price increases of 2.6 percent and a package mix contribution of 0.4
percent. The increase in pricing reflected our initiative to grow the single-serve
category. Also driving net sales during the first quarter of 2005 was the timing of the
Easter holiday, which fell during the first quarter of 2005 versus falling in the second
quarter of 2004. Additionally, successful promotional efforts early in the quarter
associated with the Superbowl and continued innovation with the reformulation of Wild
Cherry Pepsi, Cherry Vanilla Dr Pepper, Pepsi One, and the Aquafina product extension
drove the net sales increase.


Net
sales in Central Europe for the first quarter of 2005 increased $9.7 million, or 16.1
percent, to $70.1 million from $60.4 million in the prior year first quarter. The increase
was primarily due to the impact of foreign currency translation, which contributed $10.3
million to net sales. Net sales were also impacted by an increase in net pricing of 18.9
percent, partly offset by a volume decline of 8.2 percent. The increase in net pricing was partly
due to the lapping of the first quarter of 2004 water promotion that drove significant
volume growth. In addition, we increased our pricing in anticipation of raw material cost
increases, primarily sugar costs, commensurate with the accession into the EU in May 2004.


Net
sales in the Caribbean increased 15.6 percent in the first quarter of 2005 to $47.3
million from $40.9 million in the prior year first quarter. The increase was a result of
both volume growth of 12.5 percent and an increase in net pricing of 3.5 percent. The
increase in net pricing was mainly due to an increase in pricing in the single-serve
category and a favorable shift in mix to the non-carbonated beverage category.
Approximately one-third of the increase in revenue was due to the acquisition of a
majority interest in the Bahamas in March 2004, which resulted in the Bahamas being fully
consolidated into our operating results beginning in March 2004.
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|Cost of Goods Sold


Cost
of goods sold for the first quarter of 2005 and 2004 was as follows (dollar amounts in
millions):
|---------------------------------------------------------------------------------------------------------------------------

| |                | 2005 |       | 2004 |   | Change |  | 
| | -------------- | ---- | ----- | ---- | - | ------ |  | 
| |                |      |       |      |   |        |  | 
| | U.S.           | $    | 398.8 |      | $ | 359.3  |  | 
| | Central Europe |      | 44.9  |      |   | 34.4   |  | 
| | Caribbean      |      | 35.4  |      |   | 30.8   |  | 
| |                |      |       |      |   |        |  | 
| | Worldwide      | $    | 479.1 |      | $ | 424.5  |  | 
| |                |      |       |      |   |        |  | 

|Cost
of goods sold increased $54.6 million, or 12.9 percent, to $479.1 million in the first
quarter of 2005 from $424.5 million in the prior year first quarter. This increase was
driven primarily by higher volume and higher costs for raw materials, including aluminum,
resin and fuel worldwide and sugar in Central Europe. Cost of goods sold per
unit increased 4.9 percent in the first quarter 2005 compared to the same period in 2004.
Overall, we expect that cost of goods sold per unit will grow four to five percent during
fiscal year 2005 as compared to the prior fiscal year.


In
the U.S., cost of goods sold increased $39.5 million, or 11.0 percent, to $398.8 million
in the first quarter of 2005 from $359.3 million in the prior year first quarter. This
increase was primarily driven by the incremental cost of goods sold contributed by CIC,
increased volumes on a constant territory basis of 1.0 percent and a higher cost of goods
sold per unit. Cost of goods sold per unit increased 1.8 percent in the U.S., primarily
driven by price increases in aluminum, resin and fuel.


In
Central Europe, cost of goods sold increased $10.5 million, or 30.5 percent, to $44.9
million in the first quarter of 2005, compared to $34.4 million in the prior year first
quarter. Cost of goods sold increased mainly due to increased sugar and resin prices and
the unfavorable impact of foreign currency translation of $3.8 million, offset partially
by a volume decline of 8.2 percent.


In
the Caribbean, cost of goods sold increased $4.6 million, or 14.9 percent, to $35.4
million in the first quarter of 2005, compared to $30.8 million in the first quarter of
2004. The increase was mainly driven by volume growth of 12.5 percent and a modest
increase in cost of goods sold per unit. The cost of goods sold per unit increased due to
increases in the prices for aluminum, resin, fuel, and utilities.


Selling, Delivery and
Administrative Expenses


Selling,
delivery and administrative expenses for the first quarter of 2005 and 2004 were as
follows (dollar amounts in millions):
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                | 2005 |       | 2004 |   | Change |  | 
| | -------------- | ---- | ----- | ---- | - | ------ |  | 
| |                |      |       |      |   |        |  | 
| | U.S.           | $    | 246.1 |      | $ | 217.8  |  | 
| | Central Europe |      | 33.0  |      |   | 32.9   |  | 
| | Caribbean      |      | 13.6  |      |   | 12.1   |  | 
| |                |      |       |      |   |        |  | 
| | Worldwide      | $    | 292.7 |      | $ | 262.8  |  | 
| |                |      |       |      |   |        |  | 

|In
the first quarter of 2005, selling, delivery and administrative (SD&A)
expenses increased $29.9 million, or 11.4 percent, to $292.7 million from $262.8 million
in the comparable period of the previous year. As a percentage of net sales, SD&A
expenses decreased to 35.3 percent in the first quarter of 2005, compared to 35.6 percent
in the prior year first quarter. The decline in SD&A expenses as a percentage of net
sales was primarily attributed to lower operating costs achieved in Central Europe
associated with cost reduction programs implemented during fiscal year 2004 and the first
quarter of 2005. We expect increases of eleven to twelve percent in SD&A expenses for
fiscal year 2005 compared to fiscal year 2004. The CIC acquisition is expected to
contribute approximately seven percent of the increase.


In
the U.S., SD&A expenses increased $28.3 million, or 13.0 percent, to $246.1 million in
the first quarter of 2005, compared to $217.8 million in the prior year first quarter. The
increase in SD&A expenses in the first quarter of 2005 was due, in part, to the impact
of the CIC acquisition, which represented approximately 60 percent of the increase. The
remainder of the increase was due to increases in insurance, employee benefits and fuel
costs. SD&A expenses as a percentage of net sales increased to 34.6 percent compared
to 34.2 percent in the prior year first quarter, reflecting these increased costs.
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In
Central Europe, SD&A expenses increased $0.1 million, or 0.3 percent, to $33.0 million
in the first quarter of 2005 from $32.9 million in the prior year first quarter. The
increase in SD&A expenses was driven by unfavorable foreign currency translation,
which contributed $3.7 million, offset by the decrease in operating costs associated with
our cost reduction programs implemented in fiscal year 2004 and the first quarter of 2005.


In
the Caribbean, SD&A expenses increased $1.5 million, or 12.4 percent, to $13.6 million
in the first quarter of 2005 from $12.1 million in the prior year first quarter due mainly
to higher volumes and the impact of acquiring a majority interest in the Bahamas and fully
consolidating their results beginning in March 2004. During the first quarter of 2005, we
also renegotiated our collective bargaining agreement in Puerto Rico, which will be in
effect until 2009.


Special Charges


In
the first quarter of 2005, we recorded special charges of $2.5 million ($1.6 million after
tax) in Central Europe primarily for a reduction in workforce and the consolidation of
certain production facilities as we continue to rationalize our cost structure. These
special charges were primarily for severance costs and related benefits and asset
write-downs. We anticipate that the programs that gave rise to these charges and charges
incurred in the fourth quarter of 2004 will result in annual savings in Central Europe in
the range of $3.5 million to $4.0 million once the programs are completed. Special charges
of $0.2 million ($0.1 million after tax) were recorded in the first quarter of 2004 in
Central Europe primarily for severance costs and other related benefits.


Operating Income (Loss)


Operating
income (loss) for the first quarter of 2005 and 2004 was as follows (dollar amounts in
millions):
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                | 2005 |        | 2004 |   | Change |   | 
| | -------------- | ---- | ------ | ---- | - | ------ | - | 
| |                |      |        |      |   |        |   | 
| | U.S.           | $    | 67.1   |      | $ | 59.2   |   | 
| | Central Europe |      | ( 10.3 | )    |   | ( 7.1  | ) | 
| | Caribbean      |      | ( 1.7  | )    |   | ( 2.0  | ) | 
| |                |      |        |      |   |        |   | 
| | Worldwide      | $    | 55.1   |      | $ | 50.1   |   | 
| |                |      |        |      |   |        |   | 

|Operating
income increased $5.0 million, or 10.0 percent, to $55.1 million in the first quarter of
2005, compared to $50.1 million in the prior year first quarter, driven by a $7.9 million
increase in operating income in the U.S., offset in part by the increase of operating
losses in Central Europe of $3.2 million. The increase in operating income in the U.S.
benefited from the operating income contributed by the CIC acquisition, which accounted
for approximately 60 percent of the operating income increase in the U.S. The remaining
increase in operating income in the U.S. was attributed to increased volume, up 1.0
percent on a constant territory basis, and improved pricing, up 3.0 percent. Operating
income, including the contribution provided by CIC, is expected to increase eleven to
thirteen percent for fiscal year 2005.


Operating
losses in Central Europe increased $3.2 million to $10.3 million in the first quarter of
2005, compared to an operating loss of $7.1 million in the prior year first quarter, due
primarily to the special charges of $2.5 million recorded in the first quarter of 2005.
The remaining decline was due to the decline in volume and higher raw material costs. The
impact of foreign currency translation benefited operating results in Central Europe by
approximately $2.8 million.


The
operating performance in the Caribbean improved, as operating losses in the Caribbean of
$1.7 million in the first quarter of 2005 were $0.3 million lower than the operating
losses of $2.0 million in the prior year. Volume growth and increases in net pricing
contributed to this improvement.


Interest and Other
Expenses


Net
interest expense increased $3.2 million in the first quarter of 2005 to $19.1 million,
compared to $15.9 million in the first quarter of 2004, due primarily to the issuance of
$300 million of fixed-rate debt in January 2005 to fund the acquisition of CIC and higher
average balances on our variable-rate debt. We anticipate total interest expense for
fiscal year 2005 will be approximately $85 million.
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We
recorded other expense, net, of $2.7 million in the first quarter of 2005 compared to
other expense, net, of $1.4 million reported in the first quarter of 2004. The increase in
other expense, net, was due primarily to foreign currency transaction losses of $1.3
million in the current quarter compared to foreign currency transaction gains of $0.4
million in the previous years first quarter.


Income Taxes


The
effective income tax rate, which is income tax expense expressed as a percentage of income
before income taxes, was 37.7 percent for the first quarter of 2005, compared to 37.5
percent in the first quarter of 2004. The effective income tax rate changed primarily due
to the impact of a higher effective state income tax rate in the current year.


Net Income


Net
income increased $0.3 million to $20.8 million in the first quarter of 2005, compared to
$20.5 million in the first quarter of 2004. The discussion of our operating results,
included above, explains the increase in net income.


LIQUIDITY AND CAPITAL
RESOURCES


Operating
Activities. Net cash provided by operating activities decreased by $2.5 million to
$34.8 million in the first quarter of 2005, compared to $37.3 million in the first quarter
of 2004. This decrease can mainly be attributed to a reduction in accounts receivable sold
under our accounts receivable securitization program of $14.0 million compared to a
benefit from the securitization program in the previous years first quarter of $25.0
million. In addition, the decline was caused by a lower benefit from changes in primary
working capital due to increases in accounts receivable and inventory, reflecting the
timing of the Easter holiday. These decreases were offset by a greater benefit provided by
other assets and liabilities, which included the receipt of a federal tax refund of
approximately $13.3 million in the first quarter of 2005. Primary working capital is
comprised of inventory, accounts payable and accounts receivable, excluding securitized
receivables. The changes in primary working capital are expected to reverse in the second
quarter of 2005 and benefit our cash flow from operating activities.


Investing
Activities. Investing activities in the first quarter of 2005 included capital
investments of $25.3 million, compared to $19.8 million in the first quarter of 2004. The
increase in capital expenditures was in line with our expectations, as we anticipate our
capital spending to return to normalized levels in the range of $160 million to $170
million in fiscal year 2005, compared to capital investments of $121.8 million for
fiscal year 2004.


In
January 2005, we completed the acquisition of CIC. We agreed to acquire the capital stock
of CIC for a purchase price of $339.3 million plus $13.1 million related to an adjustment
for working capital and $0.5 million for acquisition-related costs. At the date of
closing, $8.4 million of the working capital adjustment was paid to seller and $4.7
million is included in Other current liabilities on the Condensed Consolidated
Balance Sheet at the end of the first quarter of 2005. We expect to pay the remaining
working capital adjustment in the second quarter of 2005. We also acquired the capital
stock of FM Vending for $2.2 million, net of cash acquired.


Financing
Activities. Our total debt increased $404.2 million to $1,552.8 million at the end of
the first quarter of 2005, from $1,148.6 million at the end of fiscal year 2004. In the
first quarter of 2005, we issued $300 million of notes due January 2015 with a coupon rate
of 4.875 percent. Net proceeds from the transaction were $297.0 million, which reflected
the reduction for discount and issuance costs. The proceeds from this issuance and
borrowings from our commercial paper program funded the acquisition of CIC.


We
have a revolving credit facility under which we can borrow up to an aggregate of $500
million. This credit facility serves as a back up for our commercial paper program, and it
is required by our credit rating agencies. Accordingly, we have a total of $500 million
available under the commercial paper program and revolving credit facility combined. We
had $162.0 million of commercial paper borrowings at the end of the first quarter of 2005,
compared to $59.5 million at the end of fiscal year 2004. The increase in commercial paper
borrowings was partly due to the funding of the CIC acquisition.


During
the first quarter of 2005, we repurchased 2.7 million shares of our common stock. In the
same period in the prior year, we did not repurchase any shares of our common stock. The
issuance of common stock, including treasury shares, for the exercise of stock options
resulted in cash inflows of $22.5 million in the first quarter of 2005, compared to $43.9
million in the first quarter of 2004.
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On
February 24, 2005, we announced that our Board of Directors declared a quarterly dividend
of $0.085 per share on PepsiAmericas common stock for the first quarter of 2005. The
dividend was payable April 1, 2005 to shareholders of record on March 15, 2005. We paid
cash dividends of $11.7 million in the first quarter 2005 based on this quarterly cash
dividend rate. In the first quarter of 2004, we paid cash dividends of $11.0 million based
on a dividend rate of $0.075 per share.


See
the Annual Report on Form 10-K for fiscal year 2004 for a summary of our contractual
obligations as of the end of fiscal year 2004. There were no significant changes to such
contractual obligations in the first quarter of 2005 except as discussed in Note 9 to the
Condensed Consolidated Financial Statements. We believe that our operating cash flows are
sufficient to fund our existing operations for the foreseeable future. In addition, we
believe that with our operating cash flows, available lines of credit, and the potential
for additional debt and equity offerings, we will have sufficient resources to fund our
future growth and expansion opportunities. There are a number of options available to us
and we continue to examine the optimal uses of our cash, including repurchasing our stock,
reinvesting in our business or acquisitions with an appropriate economic return. Our
primary focus is to continue to increase shareholder value through improving our adjusted
return on invested capital.


Discontinued
operations. We continue to be subject to certain indemnification obligations, net of
insurance, under agreements related to previously sold subsidiaries, including
indemnification expenses for potential environmental and tort liabilities of these former
subsidiaries. There is significant uncertainty in assessing our potential expenses for
complying with our indemnification obligations, as the determination of such amounts is
subject to various factors, including possible insurance recoveries and the allocation of
liabilities among other potentially responsible and financially viable parties.
Accordingly, the ultimate settlement and timing of cash requirements related to such
indemnification obligations may vary significantly from the estimates included in our
financial statements. At the end of the first quarter of 2005, we had recorded $102.4
million in liabilities for future remediation and other related costs arising out of our
indemnification obligations. This amount excludes possible insurance recoveries and is
determined on an undiscounted cash flow basis. In addition, we have funded coverage
pursuant to an insurance policy purchased in fiscal year 2002 (see Note 14 to the
Condensed Consolidated Financial Statements), which reduces the cash required to be paid
by us for certain environmental sites pursuant to our indemnification obligations. The
Finite Funding amount recorded was $21.3 million at the end of the first quarter of 2005,
of which $1.5 million is expected to be recovered in 2005 based on our expenditures, and
thus, is included as a current asset.


During
the first quarters of 2005 and 2004, we paid approximately $2.4 million and $0.8 million,
respectively, related to such indemnification obligations, net of insurance settlements of
$0.6 million and $3.1 million, respectively, as well as the benefit of taxes. We expect to
spend approximately $15 million to $25 million in fiscal year 2005 for remediation and
other related costs, excluding possible insurance recoveries and the benefit of income
taxes (see Note 14 to the Condensed Consolidated Financial Statements for further
discussion of discontinued operations and related environmental liabilities).
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RELATED PARTY
TRANSACTIONS


We
are a licensed producer and distributor of Pepsi carbonated and non-carbonated soft drinks
and other non-alcoholic beverages in the U.S., Central Europe and the Caribbean. We
operate under exclusive franchise agreements with soft drink concentrate producers,
including master bottling and fountain syrup agreements with PepsiCo, Inc. for
the manufacture, packaging, sale and distribution of PepsiCo branded products. The
franchise agreements exist in perpetuity and contain operating and marketing commitments
and conditions for termination. As of the end of the first quarter of 2005, PepsiCo
beneficially owned 41.5 of PepsiAmericas common stock.


We
purchase concentrate from PepsiCo to be used in the production of Pepsi carbonated soft
drinks and other non-alcoholic beverages. PepsiCo also provides us with various forms of
bottler incentives (marketing support programs) to promote Pepsis brands. These
bottler incentives cover a variety of initiatives, including marketplace support,
equipment-related programs, and shared media and advertising support. There are no
conditions or requirements that could result in the repayment of any support payments we
have received.


We
manufacture and distribute fountain products and provide fountain equipment service to
PepsiCo customers in certain territories in accordance with various agreements. There are
other products that we produce and/or distribute through various arrangements with PepsiCo
or partners of PepsiCo. We also purchase finished beverage products from PepsiCo and
certain of its affiliates including tea, concentrate and finished beverage products from a
Pepsi/Lipton partnership, as well as finished beverage products from a Pepsi/Starbucks
partnership.


PepsiCo
provides various procurement services under a shared services agreement. Under such
agreement, PepsiCo negotiates with various suppliers the cost of certain raw materials by
entering into raw material contracts on our behalf. PepsiCo also collects and remits to us
certain rebates from the various suppliers related to our procurement volume. In addition,
PepsiCo acts as our agent for the execution of derivative contracts associated with
certain anticipated raw material purchases.


We
have an existing arrangement with a subsidiary of Pohlad Companies related to the joint
ownership of an aircraft. This transaction is not material to our Condensed Consolidated
Financial Statements. Robert C. Pohlad, our Chairman and Chief Executive Officer, is the
President and owner of approximately 33 percent of the capital stock of Pohlad Companies.


See
additional discussion of our related party transactions in our Annual Report on Form 10-K
for the fiscal year 2004.


FORWARD-LOOKING
STATEMENTS


This
quarterly report on Form 10-Q contains certain forward-looking statements of expected
future developments, as defined in the Private Securities Litigation Reform Act of 1995.
The forward-looking statements in this Form 10-Q refer to the expectations regarding
continuing operating improvement and other matters. These forward-looking statements
reflect our expectations and are based on currently available data; however, actual
results are subject to future risks and uncertainties, which could materially affect
actual performance. Risks and uncertainties that could affect such future performance
include, but are not limited to, the following: competition, including product and pricing
pressures; changing trends in consumer tastes; changes in the our relationship and/or
support programs with PepsiCo and other brand owners; market acceptance of new product
offerings; weather conditions; cost and availability of raw materials; availability of
capital; labor and employee benefit costs; unfavorable interest rate and currency
fluctuations; costs of legal proceedings; outcomes of environmental claims and litigation;
changing legislation; and general economic, business and political conditions in the
countries and territories where we operate.


These
events and uncertainties are difficult or impossible to predict accurately and many are
beyond our control. We assume no obligation to publicly release the result of any
revisions that may be made to any forward-looking statements to reflect events or
circumstances after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Item 3.     Quantitative and
Qualitative Disclosures About Market Risk


We
are subject to various market risks, including risks from changes in commodity prices,
interest rates and currency exchange rates, which are addressed below. In addition, please
see Note 10 to the Condensed Consolidated Financial Statements.


Commodity Prices


The
risk from commodity price changes relates to our ability to recover higher product costs
through price increases to customers, which may be limited due to the competitive pricing
environment that exists in the soft drink business. We use derivative financial
instruments to hedge price fluctuations for a portion of anticipated purchases of certain
commodities used in our operations, including aluminum, natural gas, and diesel fuel.
Because of the high correlation between such commodity prices and our cost of these
products, we consider these hedges to be highly effective. As of the end of the first
quarter of 2005, we have hedged a portion of our anticipated aluminum can and natural gas
purchases through November 2005, and we have hedged a portion of our anticipated diesel
fuel purchases through December 2005.


Interest Rates


In
the first quarter of 2005, the risk from changes in interest rates was not material to our
operations because a significant portion of our debt issues represented fixed rate
obligations. Our floating rate exposure relates to changes in the six-month London
Interbank Offered Rank (LIBOR) rate and the overnight Federal Funds rate.
Assuming consistent levels of floating rate debt with those held at the end of the first
quarter of 2005, a 50 basis-point (0.5 percent) change in each of these rates would not
have had a significant impact on our first quarter of 2005 interest expense. We had cash
equivalents throughout the first quarter of 2005, principally invested in money market
funds, which were most closely tied to overnight Federal Funds rates. Assuming a 50
basis-point change in the rate of interest associated with our cash equivalents at the end
of the first quarter of 2005, interest income for the first quarter of 2005 would not have
changed by a significant amount.


Currency Exchange Rates


Because
we operate in non-U.S. franchise territories, we are subject to risk resulting from
changes in currency exchange rates. Currency exchange rates are influenced by a variety of
economic factors including local inflation, growth, interest rates and governmental
actions, as well as other factors. We currently do not hedge the translation risks of
investments in our non-U.S. operations. Any positive cash flows generated have been
reinvested in the operations, excluding repayments of intercompany loans from the
manufacturing operations in Poland.


Based
on net sales, non-U.S. operations represented approximately 14 percent of our total
operations in the first quarter of 2005. Changes in currency exchange rates impact the
translation of the non-U.S. operations results from their local currencies into U.S.
dollars. If the currency exchange rates had changed by ten percent in the first quarter of
2005, we estimate the impact on reported operating income for those periods would not have
been significant. Our estimate reflects the fact that a portion of the non-U.S. operations
costs are denominated in U.S. dollars, including concentrate purchases. This estimate does
not take into account the possibility that rates can move in opposite directions and that
gains in one category may or may not be offset by losses from another category.


Item 4.     Controls and
Procedures


Disclosure Controls and
Procedures


We
maintain a system of disclosure controls and procedures that is designed to provide
reasonable assurance that information, which is required to be disclosed in our periodic
SEC filings, is accumulated and timely communicated to management. At the end of the
period covered by this report, we carried out an evaluation, under the supervision and
with the participation of our management team, including our Chief Executive Officer and
our Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that
evaluation, at the end of the period covered by this report, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and procedures are
effective.
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Internal Control over
Financial Reporting


During
the first quarter of 2005, there were no significant changes in our internal control over
financial reporting or in other factors that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting. In making our
assessment of changes in internal control over financial reporting as of April 2, 2005,
management has excluded Central Investment Corporation (CIC) because the
capital stock of such company was acquired in a purchase business combination during the
quarter ended April 2, 2005. As of the purchase date of January 10, 2005, we wholly own
CIC. CICs total net sales and assets represented approximately 5.4% and 9.8% of our
consolidated total net sales and assets, respectively, as reflected in our condensed
consolidated financial statements as of and for the period ended April 2, 2005.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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PART II-OTHER
INFORMATION


Item 1.     Legal
Proceedings


No
new legal proceedings and no material changes to previously reported legal proceedings to
be reported for the first quarter of 2005.


Item 2.     Unregistered
Sales of Equity Securities and Use of Proceeds


     (c).    Our share repurchase program activity for each of the three months and the
          quarter ended April 2, 2005 was as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                     | Total
        Number ofSharesPurchased(1) |           | Average
        Price Paidper Share(2) |   | Total Number of Share
        Purchased as Part ofPublicly AnnouncedPlans or Programs (3) |  | Maximum Number
        of Shares that MayYet Be PurchasedUnder the Plans orPrograms (3) |           
| | ----------------------------------- | ----------------------------------------- | --------- | -------------------------------------- | - | ----------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------- | ----------
| |                                     |                                           |           |                                        |   |                                                                                           |  |                                                                                         |           
| |                                     |                                           |           |                                        |   |                                                                                           |  |                                                                                         |           
| | January 2, - January 29, 2005       |                                           |          |                                        | $ |                                                                                          |  |                                                                                         | 13,746,501
| | January 30 - February 26, 2005      |                                           | 890,000   |                                        |   | 22.79                                                                                     |  |                                                                                         | 14,636,501
| | February 27 - April 2, 2005         |                                           | 1,820,000 |                                        |   | 22.59                                                                                     |  |                                                                                         | 16,456,501
| |                                     |                                           |           |                                        |   |                                                                                           |  |                                                                                         |           
| | For the Quarter Ended April 2, 2005 |                                           | 2,710,000 |                                        | $ | 22.66                                                                                     |  |                                                                                         |           
| |                                     |                                           |           |                                        |   |                                                                                           |  |                                                                                         |           

| | (1) | Represents shares purchased in open-market transactions pursuant to our publicly
               announced repurchase program.
| | --- | -----------------------------------------------------------------------------------------------------------------------------

| | (2) | Includes commissions of $0.02 per share.
| | --- | ----------------------------------------

| | (3) | On December 19, 2002, we announced that our Board of Directors authorized the
               repurchase of 20 million shares under a previously authorized repurchase
               program. This repurchase authorization does not have a scheduled expiration
               date.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 6.    
Exhibits
|--------------------

|See "Exhibit Index."
|--------------------

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|--------

|SIGNATURE
|---------

|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.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | PEPSIAMERICAS, INC.
| |  | -------------------

|Dated: | May 9, 2005 | By: | /s/ ALEXANDER H. WARE                                               
|------ | ----------- | --- | --------------------------------------------------------------------
|       |             |     |                                                                     
|       |             |     | Alexander H. Ware                                                   
|       |             |     | Executive Vice President
                and Chief Financial Officer
|       |             |     | (As Chief Accounting
                Officer and Duly               
|       |             |     | Authorized Officer
                of PepsiAmericas, Inc.)          

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|--------

|EXHIBIT INDEX
|-------------

|ExhibitNumber | Description of Exhibit
|------------- | ----------------------

|10.1 | Underwriting Agreement by and among PepsiAmericas, Inc., Banc of America Securities LLC, Citigroup
           Global Markets Inc., J.P. Morgan Securities Inc., Wachovia Capital Markets, LLC, BNP Paribas Securities
           Corp., Wells Fargo Securities, LLC and Loop Capital Markets, LLC, dated January 5, 2005 (incorporated
           by reference to the Company's Current Report on Form 8-K (File No. 001-15019) filed January 11, 2005).
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 | Terms Agreement by and among PepsiAmericas, Inc., Banc of America Securities LLC, Citigroup Global
           Markets Inc., J.P. Morgan Securities Inc., Wachovia Capital Markets, LLC, BNP Paribas Securities Corp.,
           Wells Fargo Securities, LLC and Loop Capital Markets, LLC, dated January 5, 2005 (incorporated by
           reference to the Company's Current Report on Form 8-K (File No. 001-15019) filed January 11, 2005).
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 | Separation Agreement and Release by and between PepsiAmericas, Inc. and James W. Nolan dated February
           18, 2005 (incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-15019)
           filed February 25, 2005).
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 | Amendment No. 3 to the Company's 2000 Stock Incentive Plan (incorporated by reference to the Company's
           Current Report on Form 8-K (File No. 001-15019) filed February 25, 2005).
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 | Form of Restricted Stock Award under the Company's 2000 Stock Incentive Plan (incorporated by reference
           to the Company's Current Report on Form 8-K (File No. 001-15019) filed February 25, 2005).
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 | Form of Restricted Stock Unit Award under the Company's 2000 Stock Incentive Plan (incorporated by
           reference to the Company's Current Report on Form 8-K (File No. 001-15019) filed February 25, 2005).
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 | Form of Nonqualified Stock Option under the Company's 2000 Stock Incentive Plan (incorporated by
           reference to the Company's Registration Statement on Form S-8 (File No. 333-36994) filed May 12, 2000).
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.8 | Form of Incentive Stock Option under the Company's 1999 Stock Option Plan (incorporated by reference to
           the Company's Current Report on Form 8-K (File No. 001-15019) filed February 25, 2005).
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.9 | Form of Restricted Stock Award under the Company's Revised Stock Incentive Plan (incorporated by
           reference to the Company's Current Report on Form 8-K (File No. 001-15019) filed February 25, 2005).
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.10 | Form of Nonqualified Stock Option under the Company's Revised Stock Incentive Plan (incorporated by
           reference to the Company's Quarterly Report on Form 10-Q (File No. 001-15019) filed August 17, 1999).
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.11 | Form of Stock Option Agreement under the Pepsi-Cola Puerto Rico Bottling Company Non-Qualified Stock
           Option Plan (incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-15019)
           filed February 25, 2005).
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.12 | Form of Stock Option Agreement under the Pepsi-Cola Puerto Rico Bottling Company Qualified Stock Option
           Plan (incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-15019) filed
           February 25, 2005).
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.13 | Form of Nonqualified Stock Option under the Company's 1982 Stock Option, Restricted Stock Award and
           Performance Award Plan (incorporated by reference to the Company's Quarterly Report on Form 10-Q (File
           No. 001-15019) filed August 17, 1999).
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.14 | Form of Incentive Stock Option under the Company's 1982 Stock Option, Restricted Stock Award and
           Performance Award Plan (incorporated by reference to the Company's Current Report on Form 8-K (File
           No. 001-15019) filed February 25, 2005).
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.15 | Form of Agreement for Separation and Waiver (incorporated by reference to the Company's Current Report
           on Form 8-K (File No. 001-15019) filed March 3, 2005).
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.16 | Rule 10b5-1 Trading Plan between Kenneth E. Keiser and Fidelity Brokerage Services LLC, acknowledged by
           PepsiAmericas, Inc. dated February 28, 2005 (incorporated by reference to the Company's Current Report
           on Form 8-K (File No. 001-15019) filed March 3, 2005).
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.17 | Rule 10b5-1 Trading Plan between PepsiAmericas, Inc. and J.P. Morgan Securities, Inc., dated March 4,
           2005 (incorporated by reference to the Company's Current Report on Form 8-K (File No. 001-15019) filed
           March 4, 2005).
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|31.1 | Chief Executive Officer Certification pursuant to Exchange Act Rule 13a-14, as adopted pursuant to
           Section 302 of the Sarbanes-Oxley Act of 2002.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|31.2 | Chief Financial Officer Certification pursuant to Exchange Act Rule 13a-14, as adopted pursuant to
           Section 302 of the Sarbanes-Oxley Act of 2002.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|32.1 | Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
           Section 906 of the Sarbanes-Oxley Act of 2002.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|32.2 | Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
           Section 906 of the Sarbanes-Oxley Act of 2002.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

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