##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended July 4, 2009
 o
    
    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.
  Delaware
    
    13-6167838(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)4000 RBC Plaza, 60 South Sixth Street 
Minneapolis, Minnesota
    
    55402(Address of principal executive offices)
    
    (Zip Code)
 
  þ o
  o o
  Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o
 o þ




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##### 



PEPSIAMERICAS, INC.
FORM 10-Q
SECOND QUARTER 2009
 TABLE OF CONTENTS
  
 PagePART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsCondensed Consolidated Statements of Income
    
    2Condensed Consolidated Balance Sheets
    
    3Condensed Consolidated Statements of Cash Flows
    
    4Condensed Consolidated Statements of Equity
    
    5Condensed Consolidated Statements of Comprehensive Income (Loss)
    
    6Notes to Condensed Consolidated Financial Statements
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of  Operations
    
    26Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    46Item 4.
    
    Controls and Procedures
    
    47PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    48Item 1A.
    
    Risk Factors
    
    48Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    49Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    49Item 5.
    
    Other Information
    
    50Item 6.
    
    Exhibits
    
    50SIGNATURES
    
    
    
    51EXHIBIT
INDEX
    
    
    
    52EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 PEPSIAMERICAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited and in millions, except per share data)
 
 Item 1. Financial Statements
 Second Quarter
    
    
    First Half2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    1,261.9
    
    
    $
    1,340.8
    
    
    $
    2,319.4
    
    
    $
    2,439.5Cost of goods sold
    
    
    742.4
    
    
    
    794.0
    
    
    
    1,386.5
    
    
    
    1,468.9Gross profit
    
    
    519.5
    
    
    
    546.8
    
    
    
    932.9
    
    
    
    970.6Selling, delivery and administrative expenses
    
    
    352.6
    
    
    
    381.2
    
    
    
    701.6
    
    
    
    734.2Special charges
    
    
    8.1
    
    
    
    0.1
    
    
    
    8.3
    
    
    
    0.6Operating income
    
    
    158.8
    
    
    
    165.5
    
    
    
    223.0
    
    
    
    235.8Interest expense, net
    
    
    26.8
    
    
    
    28.5
    
    
    
    52.8
    
    
    
    58.1Loss from deconsolidation of business
    
    
    25.8
    
    
    
    
    
    
    
    25.8
    
    
    
    Other (expense) income, net
    
    
    (3.5
    )
    
    
    1.1
    
    
    
    (6.1
    )
    
    
    (0.2
    )Income before income taxes and equity in net loss of 
nonconsolidated companies
    
    
    102.7
    
    
    
    138.1
    
    
    
    138.3
    
    
    
    177.5Income taxes
    
    
    40.2
    
    
    
    42.3
    
    
    
    52.5
    
    
    
    55.7Equity in net loss of nonconsolidated companies
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.7
    
    
    
    0.6Net income
    
    
    62.4
    
    
    
    95.6
    
    
    
    85.1
    
    
    
    121.2Less: Net income attributable to noncontrolling interests
    
    
    1.0
    
    
    
    4.8
    
    
    
    2.0
    
    
    
    5.7Net income attributable to PepsiAmericas, Inc.
    
    $
    61.4
    
    
    $
    90.8
    
    
    $
    83.1
    
    
    $
    115.5Weighted average common shares:Basic
    
    
    121.2
    
    
    
    124.9
    
    
    
    121.9
    
    
    
    126.0Incremental effect of stock options and awards
    
    
    1.8
    
    
    
    1.5
    
    
    
    2.0
    
    
    
    1.7Diluted
    
    
    123.0
    
    
    
    126.4
    
    
    
    123.9
    
    
    
    127.7Earnings
per share attributable to PepsiAmericas, Inc. common shareholders:Basic
    
    $
    0.51
    
    
    $
    0.73
    
    
    $
    0.68
    
    
    $
    0.92Diluted
    
    
    0.50
    
    
    
    0.72
    
    
    
    0.67
    
    
    
    0.90Cash dividends declared per share
    
    $
    0.14
    
    
    $
    0.135
    
    
    $
    0.28
    
    
    $
    0.27
  2




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PEPSIAMERICAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in millions, except per share data)
 End of First
    
    
    End of FiscalHalf
    
    
    Year2009
    
    
    2008ASSETS:Current assets:Cash and cash equivalents
    
    $
    191.2
    
    
    $
    242.4Receivables, net
    
    
    551.6
    
    
    
    305.5Inventories
    
    
    273.8
    
    
    
    238.5Other current assets
    
    
    122.7
    
    
    
    119.7Total current assets
    
    
    1,139.3
    
    
    
    906.1Property and equipment, net
    
    
    1,270.0
    
    
    
    1,355.7Goodwill
    
    
    2,191.6
    
    
    
    2,244.6Intangible assets, net
    
    
    499.0
    
    
    
    498.6Other assets
    
    
    214.9
    
    
    
    49.1Total assets
    
    $
    5,314.8
    
    
    $
    5,054.1LIABILITIES AND EQUITY:Current liabilities:Short-term debt, including current maturities of long-term debt
    
    $
    421.4
    
    
    $
    525.0Payables and other current liabilities
    
    
    566.2
    
    
    
    523.2Total current liabilities
    
    
    987.6
    
    
    
    1,048.2Long-term debt
    
    
    1,988.4
    
    
    
    1,642.3Deferred income taxes
    
    
    249.1
    
    
    
    237.6Other liabilities
    
    
    252.9
    
    
    
    295.0Total liabilities
    
    
    3,478.0
    
    
    
    3,223.1Equity:PepsiAmericas, Inc. shareholders equity:Preferred stock ($0.01 par value, 12.5 million shares
authorized, no shares issued)
    
    
    
    
    
    
    Common stock ($0.01 par value, 350 million shares
authorized, 137.6 million shares
issued  2009 and 2008)
    
    
    1,286.3
    
    
    
    1,296.9Retained income
    
    
    876.6
    
    
    
    828.2Accumulated other comprehensive loss
    
    
    (190.6
    )
    
    
    (200.8
    )Treasury stock, at cost (16.3 million shares and 14.5
million shares, respectively)
    
    
    (348.9
    )
    
    
    (324.3
    )Total PepsiAmericas, Inc. shareholders equity
    
    
    1,623.4
    
    
    
    1,600.0Noncontrolling interests
    
    
    213.4
    
    
    
    231.0Total equity
    
    
    1,836.8
    
    
    
    1,831.0Total liabilities and equity
    
    $
    5,314.8
    
    
    $
    5,054.1
  3




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PEPSIAMERICAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
 First Half2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    85.1
    
    
    $
    121.2Adjustments to reconcile to net cash (used in) provided
by operating activities of continuing operations:Depreciation and amortization
    
    
    96.9
    
    
    
    104.5Deferred income taxes
    
    
    3.8
    
    
    
    4.7Special charges
    
    
    8.3
    
    
    
    0.6Cash outlays related to special charges
    
    
    (3.7
    )
    
    
    (0.9
    )Pension contributions
    
    
    (11.1
    )
    
    
    Equity in net loss of nonconsolidated companies
    
    
    0.7
    
    
    
    0.6Excess tax benefits from share-based payment arrangements
    
    
    (1.0
    )
    
    
    (0.9
    )Marketable securities impairment
    
    
    2.1
    
    
    
    Loss on deconsolidation of business, net of tax
    
    
    23.0
    
    
    
    Share-based compensation
    
    
    11.7
    
    
    
    10.7Other
    
    
    4.2
    
    
    
    1.4Changes in assets and liabilities:Decrease in securitization receivables
    
    
    (150.0
    )
    
    
    Increase in remaining receivables
    
    
    (136.8
    )
    
    
    (103.7
    )Increase in inventories
    
    
    (65.6
    )
    
    
    (33.8
    )Increase in payables
    
    
    42.5
    
    
    
    29.7Net change in other assets and liabilities
    
    
    23.1
    
    
    
    (22.2
    )Net cash (used in) provided by operating activities of continuing operations
    
    
    (66.8
    )
    
    
    111.9CASH FLOWS FROM INVESTING ACTIVITIES:Capital investments
    
    
    (133.7
    )
    
    
    (103.3
    )Franchises and companies acquired, net of cash acquired
    
    
    
    
    
    
    (1.0
    )Distribution rights acquired
    
    
    (12.6
    )
    
    
    Cash divested from deconsolidation of business
    
    
    (7.1
    )
    
    
    Proceeds from sales of property and equipment
    
    
    3.2
    
    
    
    3.4Net cash used in investing activities
    
    
    (150.2
    )
    
    
    (100.9
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net borrowings of short-term debt
    
    
    51.2
    
    
    
    146.2Proceeds from issuance of long-term debt
    
    
    345.4
    
    
    
    Repayment of long-term debt
    
    
    (155.0
    )
    
    
    (47.5
    )Contribution from noncontrolling interests
    
    
    6.4
    
    
    
    26.0Excess tax benefits from share-based payment arrangements
    
    
    1.0
    
    
    
    0.9Issuance of common stock
    
    
    3.5
    
    
    
    2.1Treasury stock purchases
    
    
    (45.2
    )
    
    
    (105.2
    )Cash dividends
    
    
    (35.2
    )
    
    
    (34.6
    )Net cash provided by (used in) financing activities
    
    
    172.1
    
    
    
    (12.1
    )Net operating cash flows used in discontinued operations
    
    
    (1.6
    )
    
    
    (6.0
    )Effects of exchange rate changes on cash and cash equivalents
    
    
    (4.7
    )
    
    
    7.8Change in cash and cash equivalents
    
    
    (51.2
    )
    
    
    0.7Cash and cash equivalents as of beginning of fiscal year
    
    
    242.4
    
    
    
    189.7Cash and cash equivalents as of end of first half of fiscal year
    
    $
    191.2
    
    
    $
    190.4
  4




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PEPSIAMERICAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited and in millions)
 AccumulatedOtherComprehensive
    
    
    
    
    
    
    TotalShares
    
    
    Common
    
    
    Retained
    
    
    Income
    
    
    Treasury
    
    
    Shareholders
    
    
    Noncontrolling
    
    
    TotalCommon
    
    
    Treasury
    
    
    Stock
    
    
    Income
    
    
    (Loss)
    
    
    Stock
    
    
    Equity
    
    
    Interests
    
    
    EquityAs of Fiscal Year End 2007
    
    
    137.6
    
    
    
    (9.5
    )
    
    $
    1,292.7
    
    
    $
    670.9
    
    
    $
    98.8
    
    
    $
    (204.1
    )
    
    $
    1,858.3
    
    
    $
    273.4
    
    
    $
    2,131.7Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115.5
    
    
    
    
    
    
    
    
    
    
    
    115.5
    
    
    
    5.7
    
    
    
    121.2Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72.6
    
    
    
    
    
    
    
    72.6
    
    
    
    11.4
    
    
    
    84.0Unrealized losses on securities, net of
income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.3
    )
    
    
    
    
    
    
    (0.3
    )
    
    
    
    
    
    
    (0.3
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    187.8
    
    
    
    17.1
    
    
    
    204.9Adoption of SFAS No. 158 adjustment,
net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    0.1
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    )Treasury stock purchases
    
    
    
    
    
    
    (4.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105.2
    )
    
    
    (105.2
    )
    
    
    
    
    
    
    (105.2
    )Stock compensation plans
    
    
    
    
    
    
    0.7
    
    
    
    (5.2
    )
    
    
    
    
    
    
    
    
    
    
    13.3
    
    
    
    8.1
    
    
    
    
    
    
    
    8.1Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34.6
    )
    
    
    
    
    
    
    
    
    
    
    (34.6
    )
    
    
    
    
    
    
    (34.6
    )Contributions from noncontrolling
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26.0
    
    
    
    26.0Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.9
    )
    
    
    (1.9
    )As of End of First Half of 2008
    
    
    137.6
    
    
    
    (12.9
    )
    
    $
    1,287.5
    
    
    $
    751.6
    
    
    $
    171.2
    
    
    $
    (296.0
    )
    
    $
    1,914.3
    
    
    $
    314.6
    
    
    $
    2,228.9As of Fiscal Year End 2008
    
    
    137.6
    
    
    
    (14.5
    )
    
    $
    1,296.9
    
    
    $
    828.2
    
    
    $
    (200.8
    )
    
    $
    (324.3
    )
    
    $
    1,600.0
    
    
    $
    231.0
    
    
    $
    1,831.0Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83.1
    
    
    
    
    
    
    
    
    
    
    
    83.1
    
    
    
    2.0
    
    
    
    85.1Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57.6
    )
    
    
    
    
    
    
    (57.6
    )
    
    
    (26.0
    )
    
    
    (83.6
    )Unrealized gains on securities, net of
income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.2Cash flow hedge adjustment, net of
income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41.9
    
    
    
    
    
    
    
    41.9
    
    
    
    
    
    
    
    41.9Recognition from deconsolidation of
business
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25.7
    
    
    
    
    
    
    
    25.7
    
    
    
    
    
    
    
    25.7Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93.3
    
    
    
    (24.0
    )
    
    
    69.3Treasury stock purchases
    
    
    
    
    
    
    (2.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45.2
    )
    
    
    (45.2
    )
    
    
    
    
    
    
    (45.2
    )Stock compensation plans
    
    
    
    
    
    
    0.9
    
    
    
    (10.6
    )
    
    
    
    
    
    
    
    
    
    
    20.6
    
    
    
    10.0
    
    
    
    
    
    
    
    10.0Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34.7
    )
    
    
    
    
    
    
    
    
    
    
    (34.7
    )
    
    
    
    
    
    
    (34.7
    )Contributions from noncontrolling
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.4
    
    
    
    6.4As of End of First Half of 2009
    
    
    137.6
    
    
    
    (16.3
    )
    
    $
    1,286.3
    
    
    $
    876.6
    
    
    $
    (190.6
    )
    
    $
    (348.9
    )
    
    $
    1,623.4
    
    
    $
    213.4
    
    
    $
    1,836.8
  5




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PEPSIAMERICAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited and in millions)
 Second Quarter
    
    
    First Half2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    62.4
    
    
    $
    95.6
    
    
    $
    85.1
    
    
    $
    121.2Foreign currency translation adjustment
    
    
    69.7
    
    
    
    60.7
    
    
    
    (83.6
    )
    
    
    84.0Unrealized gains (losses) on securities, net of income taxes
    
    
    0.9
    
    
    
    (0.2
    )
    
    
    0.2
    
    
    
    (0.3
    )Cash flow hedge adjustment, net of income taxes
    
    
    24.5
    
    
    
    (0.1
    )
    
    
    41.9
    
    
    
    Recognition from deconsolidation of business
    
    
    25.7
    
    
    
    
    
    
    
    25.7
    
    
    
    Comprehensive income
    
    
    183.2
    
    
    
    156.0
    
    
    
    69.3
    
    
    
    204.9Less: Comprehensive income (loss) attributable to
noncontrolling interests
    
    
    3.2
    
    
    
    16.2
    
    
    
    (24.0
    )
    
    
    17.1Comprehensive income attributable to PepsiAmericas, Inc.
    
    $
    180.0
    
    
    $
    139.8
    
    
    $
    93.3
    
    
    $
    187.8
  6




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PEPSIAMERICAS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 1. Significant Accounting Policies
 Quarterly Reporting.
 Use of Accounting Estimates.
 Fiscal Year.
  Earnings Per Share.
 Reclassifications.
 Recently Adopted Accounting Pronouncements.
 7




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Recently Issued Accounting Pronouncements to be Adopted in the Future.
  TM
 8




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##### Table of Contents



2. Investment and Divestiture
   3. Special Charges
    Special charge liability, end of fiscal year 2008
    
    $
    2.5Special charges
    
    
    8.3Cash outlays related to special charges
    
    
    (3.7
    )Non-cash charges
    
    
    (4.3
    )Special charge liability, end of first half of 2009
    
    $
    2.8
  9




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4. Statement of Income Details
  Second Quarter
    
    
    First Half2009
    
    
    2008
    
    
    2009
    
    
    2008Cost of goods sold:Cost of goods sold
    
    $
    747.4
    
    
    $
    794.0
    
    
    $
    1,387.5
    
    
    $
    1,469.0Unrealized gains on derivative instruments
    
    
    (5.0
    )
    
    
    
    
    
    
    (1.0
    )
    
    
    (0.1
    )Total cost of goods sold
    
    $
    742.4
    
    
    $
    794.0
    
    
    $
    1,386.5
    
    
    $
    1,468.9Selling, delivery and administrative
(SD&A) expenses:SD&A expenses
    
    $
    355.1
    
    
    $
    381.2
    
    
    $
    702.5
    
    
    $
    734.2Unrealized gains on derivative instruments
    
    
    (2.5
    )
    
    
    
    
    
    
    (0.9
    )
    
    
    Total SD&A expenses
    
    $
    352.6
    
    
    $
    381.2
    
    
    $
    701.6
    
    
    $
    734.2Interest expense, net:Interest expense
    
    $
    28.4
    
    
    $
    29.4
    
    
    $
    56.5
    
    
    $
    60.0Interest income
    
    
    (1.6
    )
    
    
    (0.9
    )
    
    
    (3.7
    )
    
    
    (1.9
    )Interest expense, net
    
    $
    26.8
    
    
    $
    28.5
    
    
    $
    52.8
    
    
    $
    58.1
  5. Income Taxes
   .
  6. Goodwill and Intangible Assets
  U.S.
    
    
    CEE
    
    
    Caribbean
    
    
    TotalBalance, fiscal year end 2008
    
    $
    1,824.3
    
    
    $
    404.6
    
    
    $
    15.7
    
    
    $
    2,244.6Foreign currency translation adjustment
    
    
    
    
    
    
    (37.3
    )
    
    
    (0.1
    )
    
    
    (37.4
    )Deconsolidation of Caribbean business
    
    
    
    
    
    
    
    
    
    
    (15.6
    )
    
    
    (15.6
    )Balance, end of the first half of 2009
    
    $
    1,824.3
    
    
    $
    367.3
    
    
    $
    
    
    
    $
    2,191.6
 10




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##### Table of Contents



End of First
    
    
    End of FiscalHalf 2009
    
    
    Year 2008Intangible assets subject to amortization:Gross carrying amount:Customer relationships and lists
    
    $
    53.0
    
    
    $
    57.3Franchise and distribution agreements
    
    
    11.1
    
    
    
    3.3Other
    
    
    2.5
    
    
    
    2.5Total
    
    $
    66.6
    
    
    $
    63.1Accumulated amortization:Customer relationships and lists
    
    $
    (14.2
    )
    
    $
    (11.9
    )Franchise and distribution agreements
    
    
    (1.6
    )
    
    
    (1.2
    )Other
    
    
    (0.7
    )
    
    
    (0.6
    )Total
    
    $
    (16.5
    )
    
    $
    (13.7
    )Intangible assets subject to amortization, net
    
    $
    50.1
    
    
    $
    49.4Intangible assets not subject to amortization:Franchise and distribution agreements
    
    $
    372.0
    
    
    $
    362.3Trademarks and tradenames
    
    
    76.9
    
    
    
    86.9Total
    
    $
    448.9
    
    
    $
    449.2Total intangible assets, net
    
    $
    499.0
    
    
    $
    498.6
 Rockstar Muscle Milk Crush
  7. Sale of Receivables
  11




---



##### Table of Contents



8. Balance Sheet Details
  End of First
    
    
    End of FiscalHalf 2009
    
    
    Year 2008Receivables, net:Trade receivables
    
    $
    479.2
    
    
    $
    418.0Securitization receivables
    
    
    
    
    
    
    (150.0
    )Funding and purchasing rebates receivables
    
    
    75.1
    
    
    
    39.7Other receivables
    
    
    11.0
    
    
    
    11.3Allowance for doubtful accounts
    
    
    (13.7
    )
    
    
    (13.5
    )Receivables, net
    
    $
    551.6
    
    
    $
    305.5Inventories:Raw materials and supplies
    
    $
    110.8
    
    
    $
    117.2Finished goods
    
    
    163.0
    
    
    
    121.3Inventories
    
    $
    273.8
    
    
    $
    238.5Other current assets:Prepaid expenses
    
    $
    58.7
    
    
    $
    56.7Prepaid customer incentives
    
    
    22.5
    
    
    
    23.5Other
    
    
    41.5
    
    
    
    39.5Other current assets
    
    $
    122.7
    
    
    $
    119.7Property and equipment, net:Land
    
    $
    71.8
    
    
    $
    84.1Building and improvements
    
    
    491.7
    
    
    
    524.9Machinery and equipment
    
    
    2,250.2
    
    
    
    2,301.1Total property and equipment
    
    
    2,813.7
    
    
    
    2,910.1Accumulated depreciation
    
    
    (1,543.7
    )
    
    
    (1,554.4
    )Property and equipment, net
    
    $
    1,270.0
    
    
    $
    1,355.7Payables and other current liabilities:Trade payables
    
    $
    211.5
    
    
    $
    186.9Income tax and other payables
    
    
    39.7
    
    
    
    16.8Accrued salaries and wages
    
    
    59.3
    
    
    
    71.3Accrued customer incentives
    
    
    88.8
    
    
    
    86.9Accrued interest
    
    
    29.0
    
    
    
    25.3Other current liabilities
    
    
    137.9
    
    
    
    136.0Payables and other current liabilities
    
    $
    566.2
    
    
    $
    523.2
 9. Debt
  12




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##### Table of Contents



10. Financial Instruments
     Commodity Prices.
  Foreign Currency Exchange.
 Interest Rates.
 13




---



##### Table of Contents



Asset DerivativesDerivatives designated as
    
    End of First Half 2009
    
    
    End of Fiscal Year 2008hedging instruments
    
    Balance Sheet
    
    Fair
    
    
    Balance Sheet
    
    Fairunder SFAS No. 133
    
    Location
    
    Value
    
    
    Location
    
    ValueInterest rate contracts
    
    Other assets
    
    $
    28.2
    
    
    Other assets
    
    $
    Commodity contracts
    
    Other current assets
    
    
    7.5
    
    
    Other current assets
    
    
    Foreign exchange contracts
    
    Other current assets
    
    
    3.0
    
    
    Other current assets
    
    
    8.9$
    38.7
    
    
    
    
    $
    8.9Derivatives not designated
as 
hedging instruments 

under SFAS No. 133Commodity contracts
    
    Other current assets
    
    
    2.0
    
    
    Other current assets
    
    
    Total asset derivatives
    
    
    
    $
    40.7
    
    
    
    
    $
    8.9Liability DerivativesDerivatives designated as
    
    End of First Half 2009
    
    
    End of Fiscal Year 2008hedging instruments
    
    Balance Sheet
    
    Fair
    
    
    Balance Sheet
    
    Fairunder SFAS No. 133
    
    Location
    
    Value
    
    
    Location
    
    ValueInterest rate contracts
    
    Other liabilities
    
    $
    
    
    
    Other liabilities
    
    $
    34.3Commodity contracts
    
    Payables and other
    
    
    
    
    
    Payables and othercurrent liabilities
    
    
    1.2
    
    
    current liabilities
    
    
    4.9$
    1.2
    
    
    
    
    $
    39.2Derivatives not designated
as 
hedging instruments
under SFAS No. 133Commodity contracts
    
    Payables and other
    
    
    
    
    
    Payables and othercurrent liabilities
    
    
    0.1
    
    
    current liabilities
    
    
    1.7Total liability derivatives
    
    
    
    $
    1.3
    
    
    
    
    $
    40.9
 14




---



##### Table of Contents



Amount of Gain (Loss) Recognized inOther Comprehensive Income (Loss)
    
    
    
    
    
    
    Amount of Gain (Loss) ReclassifiedDerivatives in Statement
    
    on Derivatives(a)
    
    
    Location of Gain (Loss)
    

    from AOCL into Income(a)133 Cash Flow Hedging
    
    Second Quarter
    
    
    First Half
    
    
    Reclassified from

    
    Second Quarter
    
    
    First HalfRelationships
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    AOCL into Income

    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Interest rate contracts
    
    $
    36.9
    
    
    $
    
    
    
    $
    62.5
    
    
    $
    
    
    
    Interest expense, net
    
    $
    (0.1
    )
    
    $
    (0.2
    )
    
    $
    (0.2
    )
    
    $
    (0.3
    )Foreign exchange contracts
    
    
    (1.4
    )
    
    
    0.1
    
    
    
    2.3
    
    
    
    0.1
    
    
    Cost of goods sold
    
    
    3.0
    
    
    
    
    
    
    
    8.2
    
    
    
    Commodity contracts
    
    
    7.0
    
    
    
    
    
    
    
    10.2
    
    
    
    
    
    
    Cost of goods sold
    
    
    (0.4
    )
    
    
    
    
    
    
    (1.0
    )
    
    
    (0.1
    )Total
    
    $
    42.5
    
    
    $
    0.1
    
    
    $
    75.0
    
    
    $
    0.1
    
    

    Total
    

    $
    2.5
    
    
    $
    (0.2
    )
    
    $
    7.0
    
    
    $
    (0.4
    )
 
 (a)
    
    The amount of ineffectiveness was not material to the Condensed Consolidated Statements of
Income. Amount of Gain Recognized inDerivatives in Statement
    
    Location of Gain
    
    Income on Derivatives133 Fair Value Hedging
    
    Recognized in Income
    
    Second Quarter
    
    
    First HalfRelationships
    
    on Derivatives
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Interest rate contracts
    
    Interest expense, net
    
    $
    0.2
    
    
    $
    0.6
    
    
    $
    0.9
    
    
    $
    1.3
 Derivatives Not
    
    
    
    Amount of Gain (Loss) Recognized inDesignated as Hedging
    
    Location of Gain (Loss)
    
    Income on Derivatives (b)Instruments under
    
    Recognized in Income
    
    Second Quarter
    
    
    First HalfStatement 133
    
    on Derivatives
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Commodity contracts
    
    Cost of goods sold
    
    $
    1.9
    
    
    $
    
    
    
    $
    (4.5
    )
    
    $
    Commodity contracts
    
    SD&A expenses
    
    
    2.1
    
    
    
    
    
    
    
    (0.4
    )
    
    
    Investment contracts
    
    SD&A expenses
    
    
    2.8
    
    
    
    1.2
    
    
    
    1.2
    
    
    
    (0.8
    )Total
    
    $
    6.8
    
    
    $
    1.2
    
    
    $
    (3.7
    )
    
    $
    (0.8
    )
 
 (b)
    
    Includes both realized and unrealized gains and losses. Other Financial Instruments.
  11. Fair Value Measurements
  15




---



##### Table of Contents



Level 1
 Level 2
 
    
    Quoted prices for similar assets or liabilities in active markets;
    
    Quoted prices for identical or similar assets or liabilities in non-active markets
(examples include corporate and municipal bonds which trade infrequently);
    
    Inputs other than quoted prices that are observable for substantially the full term of
the asset or liability (examples include interest rate and currency swaps); and
    
    Inputs that are derived principally from or corroborated by observable market data for
substantially the full term of the asset or liability (examples include certain
securities and derivatives).
 Level 3
  Quoted Pricesin Active
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantEnd of
    
    
    Identical
    
    
    Observable
    
    
    UnobservableFirst Half
    
    
    Assets
    
    
    Inputs
    
    
    Inputs2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Available-for-sale equity securities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Deferred compensation plan assets
    
    
    1.5
    
    
    
    1.5
    
    
    
    
    
    
    
    Derivative assets
    
    
    40.7
    
    
    
    
    
    
    
    40.7
    
    
    
    Total assets
    
    $
    42.2
    
    
    $
    1.5
    
    
    $
    40.7
    
    
    $
    Deferred compensation plan
liabilities
    
    $
    38.4
    
    
    $
    
    
    
    $
    38.4
    
    
    $
    Derivative liabilities
    
    
    1.3
    
    
    
    
    
    
    
    1.3
    
    
    
    Total liabilities
    
    $
    39.7
    
    
    $
    
    
    
    $
    39.7
    
    
    $
    
 Available-for-sale equity securities.
 Deferred compensation plan assets and liabilities.
 16




---



##### Table of Contents



Derivative assets and liabilities.
  Quoted Pricesin Active
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantEnd of
    
    
    Identical
    
    
    Observable
    
    
    UnobservableFirst Half
    
    
    Assets
    
    
    Inputs
    
    
    Inputs2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Equity investments
    
    $
    143.0
    
    
    $
    
    
    
    $
    
    
    
    $
    143.0Property and equipment
    
    
    15.5
    
    
    
    
    
    
    
    15.5
    
    
    
    Total assets
    
    $
    158.5
    
    
    $
    
    
    
    $
    15.5
    
    
    $
    143.0
 Equity investments.
 Property and equipment.
 17




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##### Table of Contents



12. Pension and Other Postretirement Benefit Plans
  Second QuarterPension
    
    
    Other PostretirementBenefit Costs
    
    
    Benefit Costs2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    1.0
    
    
    $
    0.8
    
    
    $
    
    
    
    $
    Interest cost
    
    
    3.0
    
    
    
    2.8
    
    
    
    0.3
    
    
    
    0.2Expected return on plan assets
    
    
    (3.9
    )
    
    
    (3.8
    )
    
    
    
    
    
    
    Amortization of net loss (gain)
    
    
    1.1
    
    
    
    0.5
    
    
    
    (0.2
    )
    
    
    (0.2
    )Amortization of prior service cost
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    Net periodic cost
    
    $
    1.3
    
    
    $
    0.4
    
    
    $
    0.1
    
    
    $
    
 First HalfPension
    
    
    Other PostretirementBenefit Costs
    
    
    Benefit Costs2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    2.0
    
    
    $
    1.6
    
    
    $
    
    
    
    $
    Interest cost
    
    
    6.0
    
    
    
    5.6
    
    
    
    0.6
    
    
    
    0.5Expected return on plan assets
    
    
    (7.8
    )
    
    
    (7.6
    )
    
    
    
    
    
    
    Amortization of net loss (gain)
    
    
    2.2
    
    
    
    1.0
    
    
    
    (0.4
    )
    
    
    (0.4
    )Amortization of prior service cost
    
    
    0.2
    
    
    
    0.1
    
    
    
    
    
    
    
    Net periodic cost
    
    $
    2.6
    
    
    $
    0.7
    
    
    $
    0.2
    
    
    $
    0.1
   13. Share-Based Compensation
   18




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##### Table of Contents



14. Supplemental Statement of Cash Flows Detail
  First Half2009
    
    
    2008Interest paid
    
    $
    51.6
    
    
    $
    60.9Interest received
    
    
    3.7
    
    
    
    1.9Income taxes paid
    
    
    37.2
    
    
    
    27.8Income tax refunds
    
    
    0.2
    
    
    
    14.8
 15. Environmental and Other Contingencies
 Current Operations .
   Discontinued Operations  Remediation.
   19




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##### Table of Contents



People of the
State of California and the City of Willits, California v. Remco Hydraulics, Inc.
  Discontinued Operations  Insurance.
  Discontinued Operations  Product Liability and Toxic Tort Claims.
 20




---



##### Table of Contents



Avila
 Class Action Lawsuits relating to PepsiCo, Inc. (PepsiCo) Proposal.
  Delaware See In
re PepsiAmericas, Inc. Shareholders Litigation
 New York Electrical
Workers Pension Fund, Local 103, I.B.E.W. v. PepsiAmericas, Inc. et al.
 Minnesota See Alan R. Kahn v. Robert C. Pohlad, Herbert M. Baum, Richard G. Cline, Michael J.
Corliss, Pierre S. Du Pont, Archie R. Dykes, Jarobin Gilbert, Jr., James R. Kackley, Matthew M.
McKenna, Deborah E. Powell, PepsiAmericas, Inc. and PepsiCo, Inc Joseph Leone v. PepsiAmericas, Inc., Robert C.
Pohlad, Herbert M. Baum, Richard G. Cline, Michael J. Corliss, Pierre S. Du Pont, Archie B. Dykes,
Jarobin Gilbert, Jr., James R. Kackley, Matthew M. McKenna, Deborah E. Powell, and PepsiCo, Inc. Shirley Simon v.
PepsiAmericas, Inc., Robert C. Pohlad, Herbert M. Baum, Richard G. Cline, Michael J. Corliss,
Pierre S. Du Pont, Archie B. Dykes, Jarobin Gilbert, Jr., James R. Kackley, Matthew M. McKenna,
Deborah E. Powell, and PepsiCo, Inc
  21




---



##### Table of Contents



16. Segment Reporting
     Second QuarterNet Sales
    
    
    Operating Income2009
    
    
    2008
    
    
    2009
    
    
    2008U.S.
    
    $
    963.1
    
    
    $
    917.2
    
    
    $
    141.3
    
    
    $
    114.3CEE
    
    
    246.0
    
    
    
    359.0
    
    
    
    17.4
    
    
    
    50.0Caribbean
    
    
    52.8
    
    
    
    64.6
    
    
    
    0.1
    
    
    
    1.2Total
    
    $
    1,261.9
    
    
    $
    1,340.8
    
    
    $
    158.8
    
    
    $
    165.5
 First HalfNet Sales
    
    
    Operating Income (Loss)2009
    
    
    2008
    
    
    2009
    
    
    2008U.S.
    
    $
    1,789.7
    
    
    $
    1,698.0
    
    
    $
    207.7
    
    
    $
    172.5CEE
    
    
    428.8
    
    
    
    622.0
    
    
    
    16.7
    
    
    
    64.1Caribbean
    
    
    100.9
    
    
    
    119.5
    
    
    
    (1.4
    )
    
    
    (0.8
    )Total
    
    $
    2,319.4
    
    
    $
    2,439.5
    
    
    $
    223.0
    
    
    $
    235.8
  17. Related Party Transactions
 Transactions with PepsiCo
  22




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##### Table of Contents



Bottling Agreements and Purchases of Concentrate and Finished Product.
 Bottler Incentives and Other Support Arrangements.
   Manufacturing and National Account Services.
 Sandora Joint Venture.
 Other Transactions.
 23




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##### Table of Contents



Second Quarter
    
    
    First Half2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales:Bottler incentives
    
    $
    11.7
    
    
    $
    8.1
    
    
    $
    18.5
    
    
    $
    16.6Manufacturing and national account services
    
    
    2.7
    
    
    
    4.0
    
    
    
    5.3
    
    
    
    8.5Total
    
    $
    14.4
    
    
    $
    12.1
    
    
    $
    23.8
    
    
    $
    25.1Cost of goods sold:Bottler incentives
    
    $
    49.2
    
    
    $
    47.1
    
    
    $
    88.2
    
    
    $
    85.3Purchase of concentrate
    
    
    (255.5
    )
    
    
    (253.2
    )
    
    
    (502.6
    )
    
    
    (453.2
    )Purchases of finished beverage products
    
    
    (68.3
    )
    
    
    (72.5
    )
    
    
    (115.1
    )
    
    
    (129.9
    )Purchases of finished snack food products
    
    
    (6.4
    )
    
    
    (7.2
    )
    
    
    (11.5
    )
    
    
    (13.3
    )Aquafina royalty fee
    
    
    (11.4
    )
    
    
    (14.1
    )
    
    
    (21.9
    )
    
    
    (25.7
    )Procurement services
    
    
    (1.0
    )
    
    
    (1.0
    )
    
    
    (2.0
    )
    
    
    (2.0
    )Total
    
    $
    (293.4
    )
    
    $
    (300.9
    )
    
    $
    (564.9
    )
    
    $
    (538.8
    )SD&A expenses:Bottler incentives
    
    $
    6.1
    
    
    $
    5.8
    
    
    $
    9.6
    
    
    $
    12.1Purchases of advertising materials
    
    
    (0.4
    )
    
    
    (0.9
    )
    
    
    (0.9
    )
    
    
    (1.6
    )Total
    
    $
    5.7
    
    
    $
    4.9
    
    
    $
    8.7
    
    
    $
    10.5
 Transactions with Bottlers in Which PepsiCo Holds an Equity Interest.
 Agreements and Relationships with Dakota Holdings, LLC, Starquest Securities, LLC and Mr.
Pohlad
   24




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##### Table of Contents



Transactions with Pohlad Companies
  18. Subsequent Event
      25




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 FORWARD-LOOKING STATEMENTS
   CRITICAL ACCOUNTING POLICIES
  Recoverability of Goodwill and Intangible Assets with Indefinite Lives.
     26




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##### Table of Contents



Environmental Liabilities.
 Income Taxes.
   Casualty Insurance Costs.
  Pension and Postretirement Benefits .
  27




---



##### Table of Contents



RESULTS OF OPERATIONS
 BUSINESS OVERVIEW
   volume Net pricing Cost of goods
sold per unit
 Financial Results
   Seasonality
  28




---



##### Table of Contents



Items Impacting Comparability
 Special Charges
   Loss from Deconsolidation of Business
   Unrealized Gains on Derivatives
   Acquisition Proposal Fees
   29




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##### Table of Contents



Marketable Securities Impairment
  Non-operating Assets Impairment
  RESULTS OF OPERATIONS
2009 SECOND QUARTER COMPARED WITH 2008 SECOND QUARTER
  Volume
  2009
    
    2008U.S.
    
    
    0.2
    %
    
    
    (5.4
    %)CEE
    
    
    (13.0
    %)
    
    
    51.7
    %Caribbean
    
    
    (17.6
    %)
    
    
    1.3
    %Worldwide
    
    
    (5.0
    %)
    
    
    8.4
    %
     30




---



##### Table of Contents



Net Sales
  Net Sales
    
    2009
    
    
    2008
    
    
    ChangeU.S.
    
    $
    963.1
    
    
    $
    917.2
    
    
    
    5.0
    %CEE
    
    
    246.0
    
    
    
    359.0
    
    
    
    (31.5
    %)Caribbean
    
    
    52.8
    
    
    
    64.6
    
    
    
    (18.3
    %)Worldwide
    
    $
    1,261.9
    
    
    $
    1,340.8
    
    
    
    (5.9
    %)
 2009 compared to 2008Net Sales Change
    
    U.S.
    
    CEE
    
    Caribbean
    
    WorldwideVolume impact*
    
    
    0.2
    %
    
    
    (12.0
    %)
    
    
    (15.5
    %)
    
    
    (4.3
    %)Net price per case,
excluding impact of
foreign
currency

    
    4.8
    %
    
    
    9.6
    %
    
    
    8.2
    %
    
    
    6.7
    %Impact of foreign currency
    
    
    
    
    
    
    (26.9
    %)
    
    
    (9.4
    %)
    
    
    (7.7
    %)Non-core
    
    
    
    
    
    
    (2.2
    %)
    
    
    (1.6
    %)
    
    
    (0.6
    %)Change in net sales
    
    
    5.0
    %
    
    
    (31.5
    %)
    
    
    (18.3
    %)
    
    
    (5.9
    %)
 
 *
    
    The amounts in this table represent the dollar impact on net sales due to changes in volume and are not
intended to equal the absolute change in volume. Net Pricing Growth (Decline)**
    
    2009
    
    2008U.S.
    
    
    4.8
    %
    
    
    4.2
    %CEE
    
    
    (21.3
    %)
    
    
    18.6
    %Caribbean
    
    
    (3.0
    %)
    
    
    3.7
    %Worldwide
    
    
    (1.4
    %)
    
    
    4.7
    %
 
 **
    
    Includes the impact from foreign currency on core
net sales.     31




---



##### Table of Contents



Cost of Goods Sold
  Cost of Goods Sold
    
    2009
    
    
    2008
    
    
    ChangeU.S.
    
    $
    551.4
    
    
    $
    533.3
    
    
    
    3.4
    %CEE
    
    
    152.3
    
    
    
    212.4
    
    
    
    (28.3
    %)Caribbean
    
    
    38.7
    
    
    
    48.3
    
    
    
    (19.9
    %)Worldwide
    
    $
    742.4
    
    
    $
    794.0
    
    
    
    (6.5
    %)
 2009 compared to 2008Cost of Goods Sold Change
    
    U.S.
    
    CEE
    
    Caribbean
    
    WorldwideVolume impact*

    
    0.2
    %
    
    
    (11.8
    %)
    
    
    (15.5
    %)
    
    
    (4.2
    %)Cost per case, excluding impact of foreign
currency

    
    4.1
    %
    
    
    1.4
    %
    
    
    8.3
    %
    
    
    4.0
    %Impact of foreign currency

    
    
    
    
    
    (16.8
    %)
    
    
    (9.9
    %)
    
    
    (5.1
    %)Unrealized gains on derivatives

    
    (0.9
    %)
    
    
    
    
    
    
    
    
    
    
    (0.6
    %)Non-core

    
    
    
    
    
    (1.1
    %)
    
    
    (2.8
    %)
    
    
    (0.6
    %)Change in cost of goods sold

    
    3.4
    %
    
    
    (28.3
    %)
    
    
    (19.9
    %)
    
    
    (6.5
    %)
 
 *
    
    The amounts in this table represent the dollar impact on cost of goods sold due to changes in volume
and are not intended to equal the absolute change in volume. Cost of Goods Sold per Unit Increase (Decrease)**
    
    2009
    
    2008U.S.
    
    
    4.1
    %
    
    
    3.5
    %CEE
    
    
    (17.4
    %)
    
    
    28.8
    %Caribbean
    
    
    (3.5
    %)
    
    
    3.8
    %Worldwide
    
    
    (1.4
    %)
    
    
    5.8
    %
 
 **
    
    Includes the impact from foreign currency on core cost of goods sold.     32




---



##### Table of Contents



Selling, Delivery and Administrative Expenses
  SD&A Expenses
    
    2009
    
    
    2008
    
    
    ChangeU.S.
    
    $
    270.5
    
    
    $
    269.5
    
    
    
    0.4
    %CEE
    
    
    69.4
    
    
    
    96.6
    
    
    
    (28.2
    %)Caribbean
    
    
    12.7
    
    
    
    15.1
    
    
    
    (15.9
    %)Worldwide
    
    $
    352.6
    
    
    $
    381.2
    
    
    
    (7.5
    %)
 2009 compared to 2008SD&A Expense Change
    
    U.S.
    
    CEE
    
    Caribbean
    
    WorldwideCost impact, excluding items listed below
    
    1.3
    %
    
    
    (10.2
    %)
    
    
    (6.6
    %)
    
    
    (1.9
    %)Impact of foreign currency
    

    

    
    
    (18.0
    %)
    
    
    (9.3
    %)
    
    
    (4.9
   %)Unrealized gains on derivatives
    
    (0.9
    %)
    
    
    
    
    
    
    
    
    
    
    (0.7
    %)Change in SD&A expense
    
    0.4
    %
    
    
    (28.2
    %)
    
    
    (15.9
    %)
    
    
    (7.5
    %)
 SD&A Expenses as a Percent of Net Sales
    
    2009
    
    2008U.S.
    
    
    28.1
    %
    
    
    29.4
    %CEE
    
    
    28.2
    %
    
    
    26.9
    %Caribbean
    
    
    24.1
    %
    
    
    23.4
    %Worldwide
    
    
    27.9
    %
    
    
    28.4
    %
     33




---



##### Table of Contents



Operating Income
  Operating Income
    
    2009
    
    
    2008
    
    
    ChangeU.S.
    
    $
    141.3
    
    
    $
    114.3
    
    
    
    23.6
    %CEE
    
    
    17.4
    
    
    
    50.0
    
    
    
    (65.2
    %)Caribbean
    
    
    0.1
    
    
    
    1.2
    
    
    
    (91.7
    %)Worldwide
    
    $
    158.8
    
    
    $
    165.5
    
    
    
    (4.0
    %)
 2009 compared to 2008Operating Income Change
    
    U.S.
    
    CEE
    
    Caribbean
    
    WorldwideOperating results, excluding items listed below

    
    17.0
    %
    
    
    22.2
    %
    
    
    (108.4
    %)
    
    
    17.8
    %Impact of foreign currency

    
    
    
    
    
    (87.4
    %)
    
    
    16.7
    %
    
    
    (26.3
    %)Unrealized gains on derivatives

    
    6.6
    %
    
    
    
    
    
    
    
    
    
    
    4.5
    %Change in operating income

    
    23.6
    %
    
    
    (65.2
    %)
    
    
    (91.7
    %)
    
    
    (4.0
    %)
     Interest Expense, Net and Other (Expense) Income, Net
   Income Taxes
  34




---



##### Table of Contents



Equity in Net Loss of Nonconsolidated Companies
  Net Income
  Net Income Attributable to Noncontrolling Interests
  Net Income Attributable to PepsiAmericas, Inc.
  RESULTS OF OPERATIONS
2009 FIRST HALF COMPARED WITH 2008 FIRST HALF
  Volume
  2009
    
    2008U.S.
    
    
    (0.4
    %)
    
    
    (3.4
    %)CEE
    
    
    (12.7
    %)
    
    
    55.9
    %Caribbean
    
    
    (15.9
    %)
    
    
    2.9
    %Worldwide
    
    
    (5.1
    %)
    
    
    10.3
    %
     35




---



##### Table of Contents



Net Sales
  Net Sales
    
    2009
    
    
    2008
    
    
    ChangeU.S.
    
    $
    1,789.7
    
    
    $
    1,698.0
    
    
    
    5.4
    %CEE
    
    
    428.8
    
    
    
    622.0
    
    
    
    (31.1
    %)Caribbean
    
    
    100.9
    
    
    
    119.5
    
    
    
    (15.6
    %)Worldwide
    $
    2,319.4
    
    
    $
    2,439.5
    
    
    
    (4.9
    %)
 2009 compared to 2008Net Sales Change
    
    U.S.
    
    CEE
    
    Caribbean
    
    WorldwideVolume impact*
    
    (0.4
    %)
    
    
    (11.7
    %)
    
    
    (13.8
    %)
    
    
    (4.5
    %)Net price per case, excluding impact of foreign
currency
    
    5.3
%
    

    
    8.7

    %

    
    7.0

    %

    
    7.0

    %Impact of foreign currency
    
    
    
    
    
    (26.1
    %)
    
    
    (7.4
    %)
    
    
    (7.0
    %)Non-core
    
    
    0.5
    %
    
    
    (2.0
    %)
    
    
    (1.4
    %)
    
    
    (0.4
    %)Change in net sales
    
    5.4
    %
    
    
    (31.1
    %)
    
    
    (15.6
    %)
    
    
    (4.9
    %)
 *
    
    The amounts in this table represent the dollar impact on net sales due to changes in volume and are not
intended to equal the absolute change in volume. Net Pricing Growth (Decline)**
    
    2009
    
    
    2008U.S.
    
    
    5.3
    %
    
    
    4.1
    %CEE
    
    
    (21.1
    %)
    
    
    18.0
    %Caribbean
    
    
    (1.6
    %)
    
    
    2.6
    %Worldwide
    
    
    (0.6
    %)
    
    
    4.1
    %
 **
    
    Includes the impact from foreign currency on core
net sales.     36




---



##### Table of Contents



Cost of Goods Sold
  Cost of Goods Sold
    
    2009
    
    
    2008
    
    
    ChangeU.S.
    
    $
    1,042.3
    
    
    $
    995.9
    
    
    
    4.7
    %CEE
    
    
    268.8
    
    
    
    382.5
    
    
    
    (29.7
    %)Caribbean
    
    
    75.4
    
    
    
    90.5
    
    
    
    (16.7
    %)Worldwide
    
    $
    1,386.5
    
    
    $
    1,468.9
    
    
    
    (5.6
    %)
 2009 compared to 2008Cost of Goods Sold Change
    
    U.S.
    
    
    CEE
    
    
    Caribbean
    
    
    WorldwideVolume impact*
    
    
    (0.4
    %)
    
    
    (11.5
    %)
    
    
    (13.9
    %)
    
    
    (4.3
    %)Cost per case, excluding impact of foreign
currency

    
    4.5
    %
    
    
    (0.2
    %)
    
    
    6.7
    %
    
    
    3.7
    %Impact of foreign currency

    
    
    
    
    
    (17.0
    %)
    
    
    (7.7
    %)
    
    
    (4.9
    %)Unrealized gains on derivatives

    
    (0.1
    %)
    
    
    
    
    
    
    
    
    
    
    (0.1
    %)Non-core
    
    
    0.7
    %
    
    
    (1.0
    %)
    
    
    (1.8
    %)
    
    
    Change in cost of goods sold

    
    4.7
    %
    
    
    (29.7
    %)
    
    
    (16.7
    %)
    
    
    (5.6
    %)
 *
    
    The amounts in this table represent the dollar impact on cost of goods sold due to changes in volume
and are not intended to equal the absolute change in volume. Cost of Goods Sold per Unit Increase (Decrease)**
    
    2009
    
    2008U.S.
    
    
    4.5
    %
    
    
    4.3
    %CEE
    
    
    (19.6
    %)
    
    
    26.9
    %Caribbean
    
    
    (2.4
    %)
    
    
    3.6
    %Worldwide
    
    
    (1.5
    %)
    
    
    6.1
    %
 **
    
    Includes the impact from foreign currency on core cost of goods sold.     37




---



##### Table of Contents



Selling, Delivery and Administrative Expenses
  SD&A Expenses
    
    2009
    
    
    2008
    
    
    ChangeU.S.
    
    $
    539.8
    
    
    $
    529.0
    
    
    
    2.0
    %CEE
    
    
    136.4
    
    
    
    175.4
    
    
    
    (22.2
    %)Caribbean
    
    
    25.4
    
    
    
    29.8
    
    
    
    (14.8
    %)Worldwide
    
    $
    701.6
    
    
    $
    734.2
    
    
    
    (4.4
    %)
 2009 compared to 2008SD&A Expense Change
    
    U.S.
    
    
    CEE
    
    
    Caribbean
    
    
    WorldwideCost impact, excluding items listed below

    
    2.2
    %
    
    
    (3.0
    %)
    
    
    (6.7
    %)
    
    
    0.6
    %Impact of foreign currency

    
    
    
    
    
    (19.2
    %)
    
    
    (8.1
    %)
    
    
    (4.9
    %)Unrealized gains on derivatives

    
    (0.2
    %)
    
    
    
    
    
    
    
    
    
    
    (0.1
    %)Change in SD&A expense

    
    2.0
    %
    
    
    (22.2
    %)
    
    
    (14.8
    %)
    
    
    (4.4
    %)
 SD&A Expenses as a Percent of Net Sales
    
    2009
    
    
    2008U.S.
    
    
    30.2
    %
    
    
    31.2
    %CEE
    
    
    31.8
    %
    
    
    28.2
    %Caribbean
    
    
    25.2
    %
    
    
    24.9
    %Worldwide
    
    
    30.2
    %
    
    
    30.1
    %
     38




---



##### Table of Contents



Operating Income (Loss)
  Operating Income (Loss)
    
    2009
    
    
    2008
    
    
    ChangeU.S.
    
    $
    207.7
    
    
    $
    172.5
    
    
    
    20.4
    %CEE
    
    
    16.7
    
    
    
    64.1
    
    
    
    (73.9
    %)Caribbean
    
    
    (1.4
    )
    
    
    (0.8
    )
    
    
    (75.0
    %)Worldwide
    
    $
    223.0
    
    
    $
    235.8
    
    
    
    (5.4
    %)
 2009 compared to 2008Operating Income (Loss) Change
    
    U.S.
    
    
    CEE
    
    
    Caribbean
    
    
    WorldwideOperating results, excluding items listed below

    
    19.2
    %
    
    
    25.2
    %
    
    
    (150.0
    %)
    
    
    20.5
    %Impact of foreign currency

    
    
    
    
    
    (99.1
    %)
    
    
    75.0
    %
    
    
    (26.7
    %)Unrealized gains on derivatives

    
    1.2
    %
    
    
    
    
    
    
    
    
    
    
    0.8
    %Change in operating income (loss)

    
    20.4
    %
    
    
    (73.9
    %)
    
    
    (75.0
    %)
    
    
    (5.4
    %)
     Interest Expense, Net and Other Expense, Net
   Income Taxes
  39




---



##### Table of Contents



Equity in Net Loss of Nonconsolidated Companies
  Net Income
  Net Income Attributable to Noncontrolling Interests
  Net Income Attributable to PepsiAmericas, Inc.
  40




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Operating Activities .
 Investing Activities. Crush Rockstar Muscle Milk
  Financing Activities.
      41




---



##### Table of Contents



Discontinued Operations.
  RELATED PARTY TRANSACTIONS
 Transactions with PepsiCo
   Bottling Agreements and Purchases of Concentrate and Finished Product.
 42




---



##### Table of Contents



Bottler Incentives and Other Support Arrangements.
   Manufacturing and National Account Services.
 Sandora Joint Venture.
 Other Transactions.
 43




---



##### Table of Contents



Second Quarter
    
    
    First Half2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales:Bottler incentives
    
    $
    11.7
    
    
    $
    8.1
    
    
    $
    18.5
    
    
    $
    16.6Manufacturing and national account
services
    
    
    2.7
    
    
    
    4.0
    
    
    
    5.3
    
    
    
    8.5Total
    
    $
    14.4
    
    
    $
    12.1
    
    
    $
    23.8
    
    
    $
    25.1Cost of goods sold:Bottler incentives
    
    $
    49.2
    
    
    $
    47.1
    
    
    $
    88.2
    
    
    $
    85.3Purchase of concentrate
    
    
    (255.5
    )
    
    
    (253.2
    )
    
    
    (502.6
    )
    
    
    (453.2
    )Purchases of finished beverage products
    
    
    (68.3
    )
    
    
    (72.5
    )
    
    
    (115.1
    )
    
    
    (129.9
    )Purchases of finished snack food products
    
    
    (6.4
    )
    
    
    (7.2
    )
    
    
    (11.5
    )
    
    
    (13.3
    )Aquafina royalty fee
    
    
    (11.4
    )
    
    
    (14.1
    )
    
    
    (21.9
    )
    
    
    (25.7
    )Procurement services
    
    
    (1.0
    )
    
    
    (1.0
    )
    
    
    (2.0
    )
    
    
    (2.0
    )Total
    
    $
    (293.4
    )
    
    $
    (300.9
    )
    
    $
    (564.9
    )
    
    $
    (538.8
    )SD&A expenses:Bottler incentives
    
    $
    6.1
    
    
    $
    5.8
    
    
    $
    9.6
    
    
    $
    12.1Purchases of advertising materials
    
    
    (0.4
    )
    
    
    (0.9
    )
    
    
    (0.9
    )
    
    
    (1.6
    )Total
    
    $
    5.7
    
    
    $
    4.9
    
    
    $
    8.7
    
    
    $
    10.5
 Transactions with Bottlers in Which PepsiCo Holds an Equity Interest.
 Agreements and Relationships with Dakota Holdings, LLC, Starquest Securities, LLC and Mr.
Pohlad
   44




---



##### Table of Contents



Transactions with Pohlad Companies
  SUBSEQUENT EVENT
      45




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  Commodity Prices
   Foreign Currency Exchange Rates
   Interest Rates
  46




---



##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
  47




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
 Donna M. Avila, et al. v. Willits
Environmental Remediation Trust, Remco Hydraulics, Inc., M-C Industries, Inc., Pneumo Abex
Corporation and Whitman Corporation, Pamela Jo
Alrich, et al. v. Willits Environmental Remediation Trust, et al. Nickerman v. Remco Hydraulics Avila Whitlock, et al. v.
PepsiAmericas, et al.
  
 Item 1A. Risk Factors
  Uncertainty relating to the consummation of our merger with PepsiCo could adversely affect our
business and financial results.
    48




---



##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (c)
    
    We did not repurchase shares of PepsiAmericas common stock in the second quarter of
2009. Our share repurchase program activity for each of the three months and the quarter
ended July 4, 2009 was as follows:
 Total Number of
    
    Maximum Number ofShares Purchased as
    
    Shares that May YetTotal Number
    
    Average
    
    Part of Publicly
    
    Be Purchased Underof Shares
    
    Price Paid
    
    Announced Plans or
    
    the Plans or ProgramsPeriod
    
    Purchased (1)
    
    per Share
    
    Programs (2)
    
    (3)April 5,
2009   May 2, 2009
    
    
    
    
    
    $
    
    
    
    
    56,201,081
    
    
    
    8,798,919May 3, 2009  May 30, 2009
    
    
    
    
    
    
    
    
    
    
    56,201,081
    
    
    
    8,798,919May 31, 2009   July 4, 2009
    
    
    
    
    
    
    
    
    
    
    56,201,081
    
    
    
    8,798,919For the Quarter Ended July
4, 2009
    
    
    
    
    
    $
    
 
 (1)
    
    Represents shares purchased in open-market transactions pursuant to our publicly announced
repurchase program.(2)
    
    Represents cumulative shares purchased under previously announced share repurchase
authorizations by the Board of Directors. Share repurchases began in 1999 under an
authorization for 15 million shares announced on November 19, 1999. On December 19, 2002, the
Board of Directors authorized the repurchase of 20 million additional shares. The Board of
Directors later authorized the repurchase of 20 million additional shares as announced on July
21, 2005. On July 24, 2008, the Board of Directors authorized the repurchase of 10 million
additional shares.(3)
    
    The repurchase authorization does not have a scheduled expiration date. 
 Item 4. Submission of Matters to a Vote of Security Holders
 
   
 
    49




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##### Table of Contents



Votes For
    
    Votes Against
    
    AbstentionsHerbert M. Baum
    
    
    115,220,143
    
    
    
    2,117,415
    
    
    
    86,802Richard G. Cline
    
    
    115,204,115
    
    
    
    2,133,252
    
    
    
    86,993Michael J. Corliss
    
    
    115,513,339
    
    
    
    1,826,713
    
    
    
    84,308Pierre S. du Pont
    
    
    116,256,712
    
    
    
    1,071,403
    
    
    
    96,245Archie R. Dykes
    
    
    115,171,989
    
    
    
    2,158,332
    
    
    
    94,037Jarobin Gilbert, Jr.
    
    
    116,169,749
    
    
    
    1,161,194
    
    
    
    93,416James R. Kackley
    
    
    115,492,238
    
    
    
    1,835,507
    
    
    
    96,614Matthew M. McKenna
    
    
    115,771,497
    
    
    
    1,548,422
    
    
    
    104,441Robert C. Pohlad
    
    
    115,485,720
    
    
    
    1,836,161
    
    
    
    102,479Deborah E. Powell
    
    
    115,499,573
    
    
    
    1,860,688
    
    
    
    64,099
   Votes for
    
    
    98,909,588Votes against
    
    
    12,674,313Abstentions
    
    
    148,962Broker non-votes
    
    
    5,691,497
   Votes for
    
    
    117,157,145Votes against
    
    
    174,342Abstentions
    
    
    92,873Broker non-votes
    
    
    
 
 Item 5. Other Information
  
 Item 6. Exhibits
  50




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##### Table of Contents



SIGNATURES
  PEPSIAMERICAS, INC.Dated: August 6, 2009
    By:
    /s/ ALEXANDER H. WAREAlexander H. WareExecutive Vice President and Chief Financial Officer
(As Principal Financial Officer and Duly Authorized
Officer of PepsiAmericas, Inc.)Dated: August 6, 2009
    By:
    /s/ TIMOTHY W. GORMANTimothy W. GormanSenior Vice President and
Controller
(As Chief Accounting Officer) 51




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##### Table of Contents



EXHIBIT INDEX
 3.1
    
    Restated Certificate of Incorporation (incorporated by reference to
the Companys Registration Statement on Form S-8 (File No. 333-64292)
filed on June 29, 2001).3.2
    
    By-Laws, as amended and restated on May 7, 2009 (incorporated by
reference to the Companys Quarterly Report on Form 10-Q (File No.
001-15019) filed on May 8, 2009).4.1
    
    Amendment No. 2 to Rights Agreement between PepsiAmericas, Inc. and
Wells Fargo Bank, N.A., as Rights Agent, dated May 7, 2009
(incorporated by reference to the Companys Current Report on Form
8-K (File No. 001-15019) filed on May 8, 2009).10.1
    
    PepsiAmericas, Inc. 2009 Long Term Incentive Plan (incorporated by
reference to the Companys Definitive Schedule 14A (Proxy Statement)
(File No. 001-15019) filed on March 18, 2009).10.2
    
    Subscription and Share Exchange Agreement between PepsiAmericas, Inc.
and The Central America Bottling Corporation, dated May 16, 2009
(incorporated by reference to the Companys Current Report on Form
8-K (File No. 001-15019) filed on May 18, 2009).10.3
    
    Change in Control Severance Plan for Senior Executive Employees
(incorporated by reference to the Companys Current Report on Form
8-K (File No. 001-15019) filed June 19, 2009).31.1
    
    Chief Executive Officer Certification pursuant to Exchange Act Rule
13a-14(a), 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(a), 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.
 52