##### 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 June 28, 2008
 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
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)4000 Dain Rauscher Plaza, 60 South Sixth StreetMinneapolis, Minnesota
    
    55402(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
  þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




---



##### 



PEPSIAMERICAS, INC.
FORM 10-Q
SECOND QUARTER 2008
 TABLE OF CONTENTS
 PagePART I FINANCIAL INFORMATIONItem 1.Financial StatementsCondensed Consolidated Statements of Income
    
    2Condensed Consolidated Balance Sheets
    
    3Condensed Consolidated Statements of Cash Flows
    
    4Notes to Condensed Consolidated Financial Statements
    
    5Item 2.Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    17Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    33Item 4.Controls and Procedures
    
    34PART II OTHER INFORMATIONItem 1.Legal Proceedings
    
    35Item 1A.Risk Factors
    
    35Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    35Item 4.Submission of Matters to a Vote of Security Holders
    
    36Item 6.Exhibits
    
    36SIGNATURES
    
    37EXHIBIT INDEX
    
    38EX-31.1EX-31.2EX-32.1EX-32.2




---



##### 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 Half2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    1,340.8
    
    
    $
    1,198.9
    
    
    $
    2,439.5
    
    
    $
    2,159.1Cost of goods sold
    
    
    794.0
    
    
    
    701.8
    
    
    
    1,468.9
    
    
    
    1,277.8Gross profit
    
    
    546.8
    
    
    
    497.1
    
    
    
    970.6
    
    
    
    881.3Selling, delivery and administrative expenses
    
    
    381.2
    
    
    
    351.5
    
    
    
    734.2
    
    
    
    674.9Special charges
    
    
    0.1
    
    
    
    1.4
    
    
    
    0.6
    
    
    
    2.8Operating income
    
    
    165.5
    
    
    
    144.2
    
    
    
    235.8
    
    
    
    203.6Interest expense, net
    
    
    28.5
    
    
    
    26.1
    
    
    
    58.1
    
    
    
    51.8Other income (expense), net
    
    
    1.1
    
    
    
    4.3
    
    
    
    (0.2
    )
    
    
    2.9Income from continuing operations before income taxes,
minority
interest, and equity in net loss of nonconsolidated companies
    
    
    138.1
    
    
    
    122.4
    
    
    
    177.5
    
    
    
    154.7Income taxes
    
    
    42.3
    
    
    
    42.5
    
    
    
    55.7
    
    
    
    54.4Minority interest
    
    
    (4.8
    )
    
    
    0.2
    
    
    
    (5.7
    )
    
    
    0.4Equity in net loss of nonconsolidated companies
    
    
    (0.2
    )
    
    
    
    
    
    
    (0.6
    )
    
    
    Income from continuing operations
    
    
    90.8
    
    
    
    80.1
    
    
    
    115.5
    
    
    
    100.7Loss from discontinued operations, net of tax
    
    
    
    
    
    
    2.1
    
    
    
    
    
    
    
    2.1Net income
    
    $
    90.8
    
    
    $
    78.0
    
    
    $
    115.5
    
    
    $
    98.6Weighted average common shares:Basic
    
    
    124.9
    
    
    
    125.7
    
    
    
    126.0
    
    
    
    126.0Incremental effect of stock options and awards
    
    
    1.5
    
    
    
    1.9
    
    
    
    1.7
    
    
    
    1.8Diluted
    
    
    126.4
    
    
    
    127.6
    
    
    
    127.7
    
    
    
    127.8Earnings per share:Basic:Income from continuing operations
    
    $
    0.73
    
    
    $
    0.64
    
    
    $
    0.92
    
    
    $
    0.80Loss from discontinued operations
    
    
    
    
    
    
    (0.02
    )
    
    
    
    
    
    
    (0.02
    )Total
    
    $
    0.73
    
    
    $
    0.62
    
    
    $
    0.92
    
    
    $
    0.78Diluted:Income from continuing operations
    
    $
    0.72
    
    
    $
    0.63
    
    
    $
    0.90
    
    
    $
    0.79Loss from discontinued operations
    
    
    
    
    
    
    (0.02
    )
    
    
    
    
    
    
    (0.02
    )Total
    
    $
    0.72
    
    
    $
    0.61
    
    
    $
    0.90
    
    
    $
    0.77Cash dividends declared per share
    
    $
    0.135
    
    
    $
    0.13
    
    
    $
    0.27
    
    
    $
    0.26
  2




---



##### Table of Contents



PEPSIAMERICAS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (unaudited and in millions, except per share data)
 End of First
    
    
    End ofHalf
    
    
    Fiscal Year2008
    
    
    2007ASSETS:Current assets:Cash and cash equivalents
    
    $
    190.4
    
    
    $
    189.7Receivables, net
    
    
    448.3
    
    
    
    330.6Inventories:Raw materials and supplies
    
    
    143.4
    
    
    
    144.5Finished goods
    
    
    187.9
    
    
    
    143.2Total inventories
    
    
    331.3
    
    
    
    287.7Other current assets
    
    
    124.8
    
    
    
    114.1Total current assets
    
    
    1,094.8
    
    
    
    922.1Property and equipment
    
    
    3,057.8
    
    
    
    2,850.5Accumulated depreciation
    
    
    (1,624.8
    )
    
    
    (1,520.9
    )Net property and equipment
    
    
    1,433.0
    
    
    
    1,329.6Goodwill
    
    
    2,393.1
    
    
    
    2,432.7Intangible assets, net
    
    
    573.8
    
    
    
    545.6Other assets
    
    
    76.1
    
    
    
    78.0Total assets
    
    $
    5,570.8
    
    
    $
    5,308.0LIABILITIES AND SHAREHOLDERS EQUITY:Current liabilities:Short-term debt, including current maturities of long-term debt
    
    $
    592.3
    
    
    $
    337.6Payables
    
    
    269.0
    
    
    
    224.0Other current liabilities
    
    
    326.1
    
    
    
    341.0Total current liabilities
    
    
    1,187.4
    
    
    
    902.6Long-term debt
    
    
    1,651.8
    
    
    
    1,803.5Deferred income taxes
    
    
    314.6
    
    
    
    282.5Minority interest
    
    
    303.2
    
    
    
    273.4Other liabilities
    
    
    188.1
    
    
    
    187.7Total liabilities
    
    
    3,645.1
    
    
    
    3,449.7Shareholders 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 - 2008 and 2007)
    
    
    1,287.5
    
    
    
    1,292.7Retained income
    
    
    751.6
    
    
    
    670.9Accumulated other comprehensive income
    
    
    182.6
    
    
    
    98.8Treasury stock, at cost (12.9 million shares and 9.5 million shares, respectively)
    
    
    (296.0
    )
    
    
    (204.1
    )Total shareholders equity
    
    
    1,925.7
    
    
    
    1,858.3Total liabilities and shareholders equity
    
    $
    5,570.8
    
    
    $
    5,308.0
  3




---



##### Table of Contents



PEPSIAMERICAS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited and in millions)
 First Half2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    115.5
    
    
    $
    98.6Loss from discontinued operations
    
    
    -
    
    
    
    2.1Income from continuing operations
    
    
    115.5
    
    
    
    100.7Adjustments to reconcile to net cash provided 

by operating activities of continuing operations:Depreciation and amortization
    
    
    104.5
    
    
    
    97.9Deferred income taxes
    
    
    4.7
    
    
    
    0.9Special charges
    
    
    0.6
    
    
    
    2.8Cash outlays related to special charges
    
    
    (0.9
    )
    
    
    (11.2
    )Equity in net loss of nonconsolidated companies
    
    
    0.6
    
    
    
    -Excess tax benefits from share-based payment arrangements
    
    
    (0.9
    )
    
    
    (3.0
    )Gain on sale of non-core property
    
    
    -
    
    
    
    (10.2
    )Marketable securities impairment
    
    
    -
    
    
    
    4.0Minority interest
    
    
    5.7
    
    
    
    (0.4
    )Other
    
    
    12.1
    
    
    
    11.1Changes in assets and liabilities:Increase in receivables
    
    
    (103.7
    )
    
    
    (85.5
    )Increase in inventories
    
    
    (33.8
    )
    
    
    (31.9
    )Increase in payables
    
    
    29.7
    
    
    
    52.8Net change in other assets and liabilities
    
    
    (22.2
    )
    
    
    30.0Net cash provided by operating activities of continuing operations
    
    
    111.9
    
    
    
    158.0CASH FLOWS FROM INVESTING ACTIVITIES:Capital investments
    
    
    (103.3
    )
    
    
    (109.4
    )Proceeds from sales of property
    
    
    3.4
    
    
    
    23.5Franchises and companies acquired
    
    
    (1.0
    )
    
    
    -Net cash used in investing activities
    
    
    (100.9
    )
    
    
    (85.9
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net borrowings of short-term debt
    
    
    146.2
    
    
    
    46.4Repayment of long-term debt
    
    
    (47.5
    )
    
    
    (11.6
    )Treasury stock purchases
    
    
    (105.2
    )
    
    
    (59.4
    )Excess tax benefits from share-based payment arrangements
    
    
    0.9
    
    
    
    3.0Contribution from joint venture minority shareholder
    
    
    26.0
    
    
    
    -Issuance of common stock
    
    
    2.1
    
    
    
    17.6Cash dividends
    
    
    (34.6
    )
    
    
    (32.2
    )Net cash used in financing activities
    
    
    (12.1
    )
    
    
    (36.2
    )Net operating cash flows used in discontinued operations
    
    
    (6.0
    )
    
    
    (4.3
    )Effects of exchange rate changes on cash and cash equivalents
    
    
    7.8
    
    
    
    (1.2
    )Change in cash and cash equivalents
    
    
    0.7
    
    
    
    30.4Cash and cash equivalents at beginning of fiscal year
    
    
    189.7
    
    
    
    93.1Cash and cash equivalents at end of second quarter
    
    $
    190.4
    
    
    $
    123.5
  4




---



##### Table of Contents



PEPSIAMERICAS, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
 1. Significant Accounting Policies
 Quarterly Reporting.
 Use of Accounting Estimates.
 Fiscal Year. st st
  Earnings Per Share.
  Second Quarter
    
    First Half2008
    
    2007
    
    2008
    
    2007Shares under nonvested restricted stock awards
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    953,111Weighted-average grant date fair value per share
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    22.11
 Reclassifications.
 Recently Adopted Accounting Pronouncements.
 5




---



##### Table of Contents



Recently Issued Accounting Pronouncements to be Adopted in the Future.
   2. Special Charges
  6




---



##### Table of Contents



2008 ChargesBalance at end of fiscal year 2007
    
    $
    1.1Special charges
    
    
    0.6Application of special charges
    
    
    (0.9
    )Balance at end of the first half of 2008
    
    $
    0.8
  3. Interest Expense, Net
  Second Quarter
    
    
    First Half2008
    
    
    2007
    
    
    2008
    
    
    2007Interest expense
    
    $
    29.4
    
    
    $
    26.8
    
    
    $
    60.0
    
    
    $
    53.0Interest income
    
    
    (0.9
    )
    
    
    (0.7
    )
    
    
    (1.9
    )
    
    
    (1.2
    )Interest expense, net
    
    $
    28.5
    
    
    $
    26.1
    
    
    $
    58.1
    
    
    $
    51.8
 4. Income Taxes
     Jurisdiction
    
    Subject to ExaminationFederal (U.S.)
    
    2005-2007Illinois
    
    1999-2007Indiana
    
    2004-2007Iowa
    
    2004-2007Romania
    
    2003-2007Poland
    
    2002-2007Czech Republic
    
    2004-2007Ukraine
    
    2005-2007
 
 7




---



##### Table of Contents



5. Comprehensive Income
  Second Quarter
    
    
    First Half2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    90.8
    
    
    $
    78.0
    
    
    $
    115.5
    
    
    $
    98.6Foreign currency translation adjustment
    
    
    60.7
    
    
    
    14.7
    
    
    
    84.0
    
    
    
    16.9Unrealized (losses) gains on investments
    
    
    (0.2
    )
    
    
    0.4
    
    
    
    (0.3
    )
    
    
    -Unrealized (losses) gains on derivatives
    
    
    (0.1
    )
    
    
    -
    
    
    
    -
    
    
    
    0.4Amortization of unrecognized pension and
postretirement benefit cost
    
    
    -
    
    
    
    -
    
    
    
    0.1
    
    
    
    -Comprehensive income
    
    $
    151.2
    
    
    $
    93.1
    
    
    $
    199.3
    
    
    $
    115.9
  6. Acquisitions
   Goodwill
    
    $
    430.6Trademark and tradenames
    
    
    116.0Customer relationships and lists
    
    
    48.2Net assets assumed, net of cash acquired
    
    
    142.5Deferred tax liabilities
    
    
    (56.9
    )Total
    
    $
    680.4
 7. Goodwill and Intangible Assets
  U.S.
    
    
    CEE
    
    
    Caribbean
    
    
    TotalBalance at end of fiscal year 2007
    
    $
    1,824.1
    
    
    $
    592.8
    
    
    $
    15.8
    
    
    $
    2,432.7Purchase accounting adjustments
    
    
    -
    
    
    
    (63.1
    )
    
    
    -
    
    
    
    (63.1
    )Foreign currency translation adjustment
    
    
    -
    
    
    
    23.6
    
    
    
    (0.1
    )
    
    
    23.5Balance at end of the first half of 2008
    
    $
    1,824.1
    
    
    $
    553.3
    
    
    $
    15.7
    
    
    $
    2,393.1
 8




---



##### Table of Contents



End of First
    
    
    End of FiscalHalf 2008
    
    
    Year 2007Intangible assets subject to amortization:Gross carrying amountTrademarks and tradenames
    
    $
    -
    
    
    $
    109.0Customer relationships and lists
    
    
    74.9
    
    
    
    56.2Franchise and distribution agreements
    
    
    3.3
    
    
    
    3.3Other
    
    
    2.9
    
    
    
    2.9Total
    
    $
    81.1
    
    
    $
    171.4Accumulated amortizationTrademarks and tradenames
    
    $
    -
    
    
    $
    (1.2
    )Customer relationships and lists
    
    
    (10.8
    )
    
    
    (6.3
    )Franchise and distribution agreements
    
    
    (1.1
    )
    
    
    (1.1
    )Other
    
    
    (0.9
    )
    
    
    (0.8
    )Total
    
    $
    (12.8
    )
    
    $
    (9.4
    )Intangible assets subject to amortization, net
    
    $
    68.3
    
    
    $
    162.0Intangible assets not subject to amortization:Franchise and distribution agreements
    
    
    384.8
    
    
    
    383.6Trademarks and tradenames
    
    
    120.7
    
    
    
    -Total intangible assets, net
    
    $
    573.8
    
    
    $
    545.6
   8. Receivables
  End of First
    
    
    End of FiscalHalf 2008
    
    
    Year 2007Trade receivables, net of securitization
    
    $
    388.1
    
    
    $
    290.6Funding and rebates, net
    
    
    63.1
    
    
    
    42.3Other receivables
    
    
    11.9
    
    
    
    12.4Allowance for doubtful accounts
    
    
    (14.8
    )
    
    
    (14.7
    )Receivables, net of allowance
    
    $
    448.3
    
    
    $
    330.6
 9




---



##### Table of Contents



9. Payables
  End of First
    
    
    End of FiscalHalf 2008
    
    
    Year 2007Trade payables
    
    $
    226.2
    
    
    $
    189.4Dividends payable
    
    
    16.8
    
    
    
    16.6Income tax and other payables
    
    
    26.0
    
    
    
    18.0Payables
    
    $
    269.0
    
    
    $
    224.0
 10. Financial Instruments
  Cash Flow Hedges.
   First Half2008
    
    
    2007Balance at beginning of fiscal year
    
    $
    (2.7
    )
    
    $
    (3.3
    )Deferral of net derivative losses in accumulated other comprehensive income
    
    
    -
    
    
    
    (0.2
    )Reclassification of net derivative losses to income
    
    
    0.1
    
    
    
    0.6Balance at end of the first half
    
    $
    (2.6
    )
    
    $
    (2.9
    )
 Fair Value Hedges.
 11. Fair Value Measurements
  10




---



##### 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
    
    
    Inputs2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Available-for-sale equity securities
    
    $
    1.1
    
    
    $
    1.1
    
    
    $
    -
    
    
    $
    -Deferred compensation plan assets
    
    
    4.4
    
    
    
    4.4
    
    
    
    -
    
    
    
    -Total assets
    
    $
    5.5
    
    
    $
    5.5
    
    
    $
    -
    
    
    $
    -Deferred compensation plan
liabilities
    
    $
    39.7
    
    
    $
    -
    
    
    $
    39.7
    
    
    $
    -Hedge liabilities
    
    
    0.1
    
    
    
    -
    
    
    
    0.1
    
    
    
    -Total liabilities
    
    $
    39.8
    
    
    $
    -
    
    
    $
    39.8
    
    
    $
    -
 Available-For-Sale Equity Securities.
 Deferred Compensation Plan Assets and Liabilities.
 11




---



##### Table of Contents



Derivative Liabilities.
 12. Pension and Other Postretirement Benefit Plans
  Second QuarterPension
    
    
    Other PostretirementBenefit Costs
    
    
    Benefit Costs2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    0.8
    
    
    $
    0.8
    
    
    $
    -
    
    
    $
    -Interest cost
    
    
    2.8
    
    
    
    2.7
    
    
    
    0.2
    
    
    
    0.3Expected return on plan assets
    
    
    (3.8
    )
    
    
    (3.7
    )
    
    
    -
    
    
    
    -Amortization of prior service cost
    
    
    0.1
    
    
    
    -
    
    
    
    -
    
    
    
    -Amortization of net loss (gain)
    
    
    0.5
    
    
    
    0.7
    
    
    
    (0.2
    )
    
    
    (0.1
    )Net periodic pension cost
    
    $
    0.4
    
    
    $
    0.5
    
    
    $
    -
    
    
    $
    0.2
 First HalfPension
    
    
    Other PostretirementBenefit Costs
    
    
    Benefit Costs2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    1.6
    
    
    $
    1.6
    
    
    $
    -
    
    
    $
    -Interest cost
    
    
    5.6
    
    
    
    5.3
    
    
    
    0.5
    
    
    
    0.6Expected return on plan assets
    
    
    (7.6
    )
    
    
    (7.4
    )
    
    
    -
    
    
    
    -Amortization of prior service cost
    
    
    0.1
    
    
    
    0.1
    
    
    
    -
    
    
    
    -Amortization of net loss (gain)
    
    
    1.0
    
    
    
    1.4
    
    
    
    (0.4
    )
    
    
    (0.2
    )Net periodic pension cost
    
    $
    0.7
    
    
    $
    1.0
    
    
    $
    0.1
    
    
    $
    0.4
  13. Share-Based Compensation
   12




---



##### Table of Contents



14. Supplemental Cash Flow Information
  First Half2008
    
    2007Interest paid
    
    $
    60.9

    
    $
    53.1Interest received
    
    
    1.9

    
    
    1.1Income taxes paid, net of refunds
    
    
     0.2

    
    
    40.5
 15. Environmental and Other Commitments and Contingencies
 Current Operations .
   Discontinued Operations  Remediation.
    13




---



##### Table of Contents



People of the State of
California and the City of Willits, California v. Remco Hydraulics, Inc.
  Discontinued Operations-Insurance.
  Cooper Industries,
LLC v. PepsiAmericas, Inc., et al.,
  14




---



##### Table of Contents



Discontinued Operations-Product Liability and Toxic Tort Claims.
 16. Segment Reporting
   Second QuarterNet Sales
    
    
    Operating Income2008
    
    
    2007
    
    
    2008
    
    
    2007U.S.
    
    $
    917.2
    
    
    $
    929.9
    
    
    $
    112.6
    
    
    $
    113.8CEE
    
    
    359.0
    
    
    
    207.0
    
    
    
    51.7
    
    
    
    29.6Caribbean
    
    
    64.6
    
    
    
    62.0
    
    
    
    1.2
    
    
    
    0.8Total
    
    $
    1,340.8
    
    
    $
    1,198.9
    
    
    $
    165.5
    
    
    $
    144.2
 First HalfNet Sales
    
    
    Operating Income (Loss)2008
    
    
    2007
    
    
    2008
    
    
    2007U.S.
    
    $
    1,698.0
    
    
    $
    1,694.8
    
    
    $
    170.0
    
    
    $
    174.2CEE
    
    
    622.0
    
    
    
    350.0
    
    
    
    66.6
    
    
    
    30.6Caribbean
    
    
    119.5
    
    
    
    114.3
    
    
    
    (0.8
    )
    
    
    (1.2
    )Total
    
    $
    2,439.5
    
    
    $
    2,159.1
    
    
    $
    235.8
    
    
    $
    203.6
 17. Related Party Transactions
  15




---



##### Table of Contents



16




---



##### 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.
    Environmental Liabilities.
 17




---



##### Table of Contents



Income Taxes.
  Casualty Insurance Costs.
  Pension and Postretirement Benefits .
  18




---



##### Table of Contents



RESULTS OF OPERATIONS
 BUSINESS OVERVIEW
  volume. Constant territory Net pricing Cost of goods sold per unit
 Financial Results
   19




---



##### Table of Contents



2008 Outlook
  Impact of 53rdReported (53 weeks)
    
    week and special
    
    Adjusted comparisons (522008 vs. 2007
    
    charges
    
    weeks) 2008 vs. 2007Worldwide net sales
    
    +14 to 15 percent
    
    1 percent
    
    +13 to 14 percentCost of goods sold per unit
    
    + 6 to 7 percent
    
    --
    
    + 6 to 7 percentWorldwide SD&A expenses
    
    +11 percent
    
    1 percent
    
    +10 percentOperating income
    
    +13 to 14 percent
    
    1 percent
    
    +12 to 13 percentInterest expense
    
    $117 million
    
    $2 million
    
    $115 millionEffective tax rate
    
    Low end of 32 to 33 percent range
    
    --
    
    Low end of 32 to 33 percent 
range53rd week EPS impact
    
    
    
    $0.01Special charges impact
    
    
    
    ($0.01)Estimated 2008 EPS
    
    $1.92 to $1.96
    
    
    
    $1.92 to $1.96
  Seasonality
  Items Impacting Comparability
 Acquisitions
   Special Charges
  20




---



##### Table of Contents



RESULTS OF OPERATIONS
2008 SECOND QUARTER COMPARED WITH 2007 SECOND QUARTER
  Volume
  2008
    
    2007U.S.
    
    
    (5.4
    %)
    
    
    (3.3
    %)CEE
    
    
    51.7
    %
    
    
    56.3
    %Caribbean
    
    
    1.3
    %
    
    
    (4.1
    %)Worldwide
    
    
    8.4
    %
    
    
    6.2
    %
 2008 compared to 2007Volume Change
    
    U.S.
    
    CEE
    
    Caribbean
    
    WorldwideConstant territory volume
    
    
    (5.4
    %)
    
    
    1.0
    %
    
    
    1.3
    %
    
    
    (3.6
    %)Acquisitions
    
    
    --
    
    
    
    50.7
    %
    
    
    --
    
    
    
    12.0
    %Change in volume
    
    
    (5.4
    %)
    
    
    51.7
    %
    
    
    1.3
    %
    
    
    8.4
    %
     Net Sales
  Net Sales
    
    2008
    
    
    2007
    
    
    ChangeU.S.
    
    $
    917.2
    
    
    $
    929.9
    
    
    
    (1.4
    %)CEE
    
    
    359.0
    
    
    
    207.0
    
    
    
    73.4
    %Caribbean
    
    
    64.6
    
    
    
    62.0
    
    
    
    4.2
    %Worldwide
    
    $
    1,340.8
    
    
    $
    1,198.9
    
    
    
    11.8
    %
 21




---



##### Table of Contents



2008 compared to 2007Net Sales Change
    
    U.S.
    
    CEE
    
    Caribbean
    
    WorldwideVolume impact*
    
    
    (4.7
    %)
    
    
    0.9
    %
    
    
    1.1
    %
    
    
    (3.1
    %)Net price per case, excluding impact of currency
translation
    
    
    3.7
    %
    
    
    5.3
    %
    
    
    6.2
    %
    
    
    3.7
    %Currency translation
    
    
    --
    
    
    
    20.4
    %
    
    
    (2.5
    %)
    
    
    3.4
    %Acquisitions
    
    
    --
    
    
    
    50.0
    %
    
    
    --
    
    
    
    8.6
    %Non-core
    
    
    (0.4
    %)
    
    
    (3.2
    %)
    
    
    (0.6
    %)
    
    
    (0.8
    %)Change in net sales
    
    
    (1.4
    %)
    
    
    73.4
    %
    
    
    4.2
    %
    
    
    11.8
    %
 
 Net Pricing Growth**
    
    2008
    
    2007U.S.
    
    
    3.7
    %
    
    
    7.3
    %CEE
    
    
    18.6
    %
    
    
    19.5
    %Caribbean
    
    
    3.7
    %
    
    
    5.1
    %Worldwide
    
    
    4.2
    %
    
    
    6.0
    %
      Cost of Goods Sold
  Cost of Goods Sold
    
    2008
    
    
    2007
    
    
    ChangeU.S.
    
    $
    533.3
    
    
    $
    541.1
    
    
    
    (1.4
    %)CEE
    
    
    212.4
    
    
    
    114.9
    
    
    
    84.9
    %Caribbean
    
    
    48.3
    
    
    
    45.8
    
    
    
    5.5
    %Worldwide
    
    $
    794.0
    
    
    $
    701.8
    
    
    
    13.1
    %
 22




---



##### Table of Contents



2008 compared to 2007Cost of Goods Sold Change
    
    U.S.
    
    CEE
    
    Caribbean
    
    WorldwideVolume impact*
    
    
    (4.5
    %)
    
    
    0.8
    %
    
    
    1.1
    %
    
    
    (3.0
    %)Cost per case, excluding impact of currency 

translation
    
    
    3.4
    %
    
    
    9.3
    %
    
    
    6.3
    %
    
    
    4.4
    %Currency translation
    
    
    --
    
    
    
    15.6
    %
    
    
    (2.5
    %)
    
    
    2.4
    %Acquisitions
    
    
    --
    
    
    
    64.4
    %
    
    
    --
    
    
    
    10.5
    %Non-core
    
    
    (0.3
    %)
    
    
    (5.2
    %)
    
    
    0.6
    %
    
    
    (1.2
    %)Change in cost of goods sold
    
    
    (1.4
    %)
    
    
    84.9
    %
    
    
    5.5
    %
    
    
    13.1
    %
  Cost of Goods Sold per Unit Increase**
    
    2008
    
    2007U.S.
    
    
    3.4
    %
    
    
    5.4
    %CEE
    
    
    28.8
    %
    
    
    10.3
    %Caribbean
    
    
    3.8
    %
    
    
    4.2
    %Worldwide
    
    
    5.7
    %
    
    
    3.1
    %
      Selling, Delivery and Administrative Expenses
  SD&A Expenses
    
    2008
    
    
    2007
    
    
    ChangeU.S.
    
    $
    271.2
    
    
    $
    273.6
    
    
    
    (0.9
    %)CEE
    
    
    94.9
    
    
    
    62.5
    
    
    
    51.8
    %Caribbean
    
    
    15.1
    
    
    
    15.4
    
    
    
    (1.9
    %)Worldwide
    
    $
    381.2
    
    
    $
    351.5
    
    
    
    8.4
    %
 23




---



##### Table of Contents



2008 compared to 2007SD&A Expense Change
    
    U.S.
    
    CEE
    
    Caribbean
    
    WorldwideCost impact, excluding impact of currency translation
    
    
    (0.9
    %)
    
    
    6.9
    %
    
    
    0.2
    %
    
    
    0.6
    %Currency translation
    
    
    --
    
    
    
    21.6
    %
    
    
    (2.1
    %)
    
    
    3.7
    %Acquisitions
    
    
    --
    
    
    
    23.3
    %
    
    
    --
    
    
    
    4.1
    %Change in SD&A expense
    
    
    (0.9
    %)
    
    
    51.8
    %
    
    
    (1.9
    %)
    
    
    8.4
    %
 SD&A Expenses as a Percent of Net Sales
    
    2008
    
    2007U.S.
    
    
    29.6
    %
    
    
    29.4
    %CEE
    
    
    26.4
    %
    
    
    30.2
    %Caribbean
    
    
    23.4
    %
    
    
    24.8
    %Worldwide
    
    
    28.4
    %
    
    
    29.3
    %
     Special Charges
  Operating Income
  2008
    
    
    2007
    
    
    ChangeU.S.
    
    $
    112.6
    
    
    $
    113.8
    
    
    
    (1.1
    %)CEE
    
    
    51.7
    
    
    
    29.6
    
    
    
    74.7
    %Caribbean
    
    
    1.2
    
    
    
    0.8
    
    
    
    50.0
    %Worldwide
    
    $
    165.5
    
    
    $
    144.2
    
    
    
    14.8
    %
   24




---



##### Table of Contents



Interest Expense and Other Income
   Income Taxes
  Minority Interest
  Equity in Net Loss of Nonconsolidated Companies
  Loss on Discontinued Operations
  Net Income
  25




---



##### Table of Contents



RESULTS OF OPERATIONS
2008 FIRST HALF COMPARED WITH 2007 FIRST HALF
  Volume
  2008
    
    2007U.S.
    
    
    (3.4
    %)
    
    
    (1.6
    %)CEE
    
    
    55.9
    %
    
    
    65.7
    %Caribbean
    
    
    2.9
    %
    
    
    (5.2
    %)Worldwide
    
    
    10.3
    %
    
    
    8.1
    %
 2008 compared to 2007Volume Change
    
    U.S.
    
    CEE
    
    Caribbean
    
    WorldwideConstant territory volume
    
    
    (3.4
    %)
    
    
    4.8
    %
    
    
    2.9
    %
    
    
    (1.2
    %)Acquisitions
    
    
    --
    
    
    
    51.1
    %
    
    
    --
    
    
    
    11.5
    %Change in volume
    
    
    (3.4
    %)
    
    
    55.9
    %
    
    
    2.9
    %
    
    
    10.3
    %
     Net Sales
  Net Sales
    
    2008
    
    
    2007
    
    
    ChangeU.S.
    
    $
    1,698.0
    
    
    $
    1,694.8
    
    
    
    0.2
    %CEE
    
    
    622.0
    
    
    
    350.0
    
    
    
    77.7
    %Caribbean
    
    
    119.5
    
    
    
    114.3
    
    
    
    4.5
    %Worldwide
    
    $
    2,439.5
    
    
    $
    2,159.1
    
    
    
    13.0
    %
 26




---



##### Table of Contents



2008 compared to 2007Net Sales Change
    
    U.S.
    
    CEE
    
    Caribbean
    
    WorldwideVolume impact*
    
    
    (2.9
    %)
    
    
    4.3
    %
    
    
    2.5
    %
    
    
    (1.1
    %)Net price per case, excluding impact of currency 

translation
    
    
    3.4
    %
    
    
    4.2
    %
    
    
    4.5
    %
    
    
    3.1
    %Currency translation
    
    
    --
    
    
    
    19.1
    %
    
    
    (2.0
    %)
    
    
    3.0
    %Acquisitions
    
    
    --
    
    
    
    52.4
    %
    
    
    --
    
    
    
    8.5
    %Non-core
    
    
    (0.3
    %)
    
    
    (2.3
    %)
    
    
    (0.5
    %)
    
    
    (0.5
    %)Change in net sales
    
    
    0.2
    %
    
    
    77.7
    %
    
    
    4.5
    %
    
    
    13.0
    %
 *
    
    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**
    
    2008
    
    2007U.S.
    
    
    3.4
    %
    
    
    5.7
    %CEE
    
    
    18.0
    %
    
    
    19.2
    %Caribbean
    
    
    2.6
    %
    
    
    5.8
    %Worldwide
    
    
    3.6
    %
    
    
    4.5
    %
 **
    
    Includes the impact from acquisitions and currency translation on core net sales.
     Cost of Goods Sold
  Cost of Goods Sold
    
    2008
    
    
    2007
    
    
    ChangeU.S.
    
    $
    995.9
    
    
    $
    989.5
    
    
    
    0.6
    %CEE
    
    
    382.5
    
    
    
    202.9
    
    
    
    88.5
    %Caribbean
    
    
    90.5
    
    
    
    85.4
    
    
    
    6.0
    %Worldwide
    
    $
    1,468.9
    
    
    $
    1,277.8
    
    
    
    15.0
    %
 27




---



##### Table of Contents



2008 compared to 2007Cost of Goods Sold Change
    
    U.S.
    
    CEE
    
    Caribbean
    
    WorldwideVolume impact*
    
    
    (2.8
    %)
    
    
    4.2
    %
    
    
    2.5
    %
    
    
    (1.0
    %)Cost per case, excluding impact of currency 

translation
    
    
    3.7
    %
    
    
    6.3
    %
    
    
    5.3
    %
    
    
    3.9
    %Currency translation
    
    
    --
    
    
    
    14.7
    %
    
    
    (1.9
    %)
    
    
    2.2
    %Acquisitions
    
    
    --
    
    
    
    66.8
    %
    
    
    --
    
    
    
    10.6
    %Non-core
    
    
    (0.3
    %)
    
    
    (3.5
    %)
    
    
    0.1
    %
    
    
    (0.7
    %)Change in cost of goods sold
    
    
    0.6
    %
    
    
    88.5
    %
    
    
    6.0
    %
    
    
    15.0
    %
 *
    
    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**
    
    2008
    
    2007U.S.
    
    
    3.7
    %
    
    
    5.8
    %CEE
    
    
    26.9
    %
    
    
    11.3
    %Caribbean
    
    
    3.6
    %
    
    
    5.6
    %Worldwide
    
    
    5.7
    %
    
    
    3.6
    %
 **
    
    Includes the impact from acquisitions and currency translation on core cost of goods sold.
     Selling, Delivery and Administrative Expenses
  SD&A Expenses
    
    2008
    
    
    2007
    
    
    ChangeU.S.
    
    $
    531.5
    
    
    $
    528.5
    
    
    
    0.6
    %CEE
    
    
    172.9
    
    
    
    116.3
    
    
    
    48.7
    %Caribbean
    
    
    29.8
    
    
    
    30.1
    
    
    
    (1.0
    %)Worldwide
    
    $
    734.2
    
    
    $
    674.9
    
    
    
    8.8
    %
 28




---



##### Table of Contents



2008 compared to 2007SD&A Expense Change
    
    U.S.
    
    CEE
    
    Caribbean
    
    WorldwideCost impact, excluding impact of currency translation
    
    
    0.6
    %
    
    
    6.0
    %
    
    
    0.6
    %
    
    
    1.5
    %Currency translation
    
    
    --
    
    
    
    19.5
    %
    
    
    (1.6
    %)
    
    
    3.3
    %Acquisitions
    
    
    --
    
    
    
    23.2
    %
    
    
    --
    
    
    
    4.0
    %Change in SD&A expense
    
    
    0.6
    %
    
    
    48.7
    %
    
    
    (1.0
    %)
    
    
    8.8
    %
 SD&A Expenses as a Percent of Net Sales
    
    2008
    
    2007U.S.
    
    
    31.3
    %
    
    
    31.2
    %CEE
    
    
    27.8
    %
    
    
    33.2
    %Caribbean
    
    
    24.9
    %
    
    
    26.3
    %Worldwide
    
    
    30.1
    %
    
    
    31.3
    %
     Special Charges
  Operating Income
  2008
    
    
    2007
    
    
    ChangeU.S.
    
    $
    170.0
    
    
    $
    174.2
    
    
    
    (2.4
    %)CEE
    
    
    66.6
    
    
    
    30.6
    
    
    
    117.6
    %Caribbean
    
    
    (0.8
    )
    
    
    (1.2
    )
    
    
    33.3
    %Worldwide
    
    $
    235.8
    
    
    $
    203.6
    
    
    
    15.8
    %
   29




---



##### Table of Contents



Interest Expense and Other Income (Expense)
   Income Taxes
  Minority Interest
  Equity in Net Loss of Nonconsolidated Companies
  Loss on Discontinued Operations
  Net Income
  30




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Operating Activities .
 Investing Activities .
  Financing Activities.
     31




---



##### Table of Contents



Discontinued operations.
  RELATED PARTY TRANSACTIONS
       32




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  Commodity Prices
  Interest Rates
  Currency Exchange Rates
   33




---



##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
  34




---



##### 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
 
 Item 1A. Risk Factors
  
 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 June 28, 2008 was as follows:
 Total
    
    
    
    
    
    Total Number of
    
    Maximum NumberNumber of
    
    Average
    
    Shares Purchased
    
    of Shares that MayShares
    
    Price
    
    as Part of Publicly
    
    Yet Be PurchasedPurchased
    
    Paid per
    
    Announced Plans or
    
    Under the Plans orPeriod
    
    (1)
    
    Share
    
    Programs (2)
    
    Programs (3)March 30, 2008 - April 26, 2008
    
    
    548,000
    
    
    $
    25.64
    
    
    
    36,591,200
    
    
    
    3,408,800April 27, 2008 - May 24, 2008
    
    
    249,300
    
    
    
    25.45
    
    
    
    36,840,500
    
    
    
    3,159,500May 25, 2008 - June 28, 2008
    
    
    90,000
    
    
    
    22.50
    
    
    
    36,930,500
    
    
    
    3,069,500For the Quarter Ended June 28, 2008
    
    
    887,300
    
    
    $
    25.27
  (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. These
amounts are not included in the table above. 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. Share repurchase activity for the last two
authorizations is included in the table above.(3)
    
    As noted above, on July 21, 2005 we announced that our Board of Directors
authorized the repurchase of 20 million additional shares under a previously
authorized repurchase program. This repurchase authorization does not have a
scheduled expiration date. On July 24, 2008, we announced that our Board of
Directors authorized the repurchase of 10 million additional shares
under our previously authorized repurchase program. Such shares are not included in
the table above.
 35




---



##### Table of Contents



Item 4.
    
    Submission of Matters to a Vote of Security Holders(a)
    
    We held our Annual Meeting of Shareholders on April 24, 2008.(b)
    
    Election of DirectorsThe following persons, who together constituted all of the members of our Board of
Directors at that time, were elected at the Annual Meeting of Shareholders to serve as
directors for the ensuing year:
 Herbert M. Baum
    
    Jarobin Gilbert, Jr.Richard G. Cline
    
    James R. KackleyMichael J. Corliss
    
    Matthew M. McKennaPierre S. du Pont
    
    Robert C. PohladArchie R. Dykes
    
    Deborah E. Powell
 (c)
    
    Matters Voted Upon
  The following votes were recorded with respect to this proposal:
 Votes For
    
    Votes Against
    
    AbstentionHerbert M. Baum
    
    
    122,828,160
    
    
    
    792,477
    
    
    
    77,019Richard G. Cline
    
    
    122,821,499
    
    
    
    791,550
    
    
    
    84,607Michael J. Corliss
    
    
    123,201,999
    
    
    
    421,159
    
    
    
    74,498Pierre S. du Pont
    
    
    122,797,678
    
    
    
    816,131
    
    
    
    83,845Archie R. Dykes
    
    
    122,806,064
    
    
    
    836,918
    
    
    
    54,673Jarobin Gilbert, Jr.
    
    
    122,631,405
    
    
    
    1,003,354
    
    
    
    55,895James R. Kackley
    
    
    123,180,271
    
    
    
    461,952
    
    
    
    55,433Matthew M. McKenna
    
    
    122,890,147
    
    
    
    750,948
    
    
    
    56,560Robert C. Pohlad
    
    
    122,031,655
    
    
    
    1,609,857
    
    
    
    56,143Deborah E. Powell
    
    
    123,187,187
    
    
    
    465,896
    
    
    
    44,573
  The following votes were recorded with respect to the ratification of the appointment of
KPMG LLP as independent registered public accountants to audit our financial statements
for fiscal year 2008:
 Votes for
    
    
    123,572,528Votes against
    
    
    70,135Votes abstaining
    
    
    54,992Broker non-votes
    
    
    
 (d)
    
    Not applicable.
 
 Item 6.
    
    ExhibitsSee Exhibit Index.
 36




---



##### Table of Contents



SIGNATURES
  PEPSIAMERICAS, INC.Dated: August 1, 2008
    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 1, 2008
    By:
    /s/ TIMOTHY W. GORMANTimothy W. GormanSenior Vice President and Controller
(As Chief Accounting Officer) 37




---



##### 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 December 14, 2006 (incorporated by reference to the
Companys Current Report on Form 8-K (File No. 001-15019) filed on December 18, 2006).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.
 38