UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------
                                    FORM 10-Q

(Mark One)
 X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
---  ACT OF 1934

For the quarterly period ended   June 14, 2003
                                 ------------

                                       OR

___  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  1-14893
                        -------


                         THE PEPSI BOTTLING GROUP, INC.
                         ------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                          13-4038356
     ---------------------                                   ----------
(State or other jurisdiction of                               (I.R.S.
Employer incorporate or organization)                    Identification No.)

   One Pepsi Way, Somers, New York                            10589
   -------------------------------                           --------
(Address of principal executive offices)                   (Zip Code)

                                  914-767-6000
                                  ------------
              (Registrant's telephone number, including area code)

                                       N/A
                                       ---
(Former  name,  former  address and former  fiscal year,  if changed  since last
report.)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. YES X  NO
                                      ---    ---

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes X  No
                                               ---    ---

Number of shares of Common Stock outstanding as of July 12, 2003:
267,880,300


<PAGE>


                         The Pepsi Bottling Group, Inc.
                         ------------------------------
                                      Index

<TABLE>
<CAPTION>

                                                                                                           Page No.
                                                                                                           ---------

Part I                Financial Information

        Item 1.       Financial Statements
<S>          <C>                                                                                           <C>
                      Condensed Consolidated Statements of Operations -
                           12 and 24-weeks ended June 14, 2003 and June 15, 2002                               2

                      Condensed Consolidated Statements of Cash Flows -
                           24-weeks ended June 14, 2003 and June 15, 2002                                      3

                      Condensed Consolidated Balance Sheets -
                           June 14, 2003 and December 28, 2002                                                 4

                      Notes to Condensed Consolidated Financial Statements                                  5-11

                      Independent Accountants' Review Report                                                  12

        Item 2.       Management's Discussion and Analysis of Financial
                      Condition and Results of Operations                                                  13-18

        Item 3.       Quantitative and Qualitative Disclosures About Market Risk                              19

        Item 4.       Controls and Procedures                                                                 19

Part II               Other Information

      Item 4.         Submission of Matters to a Vote of Security Holders                                     20

      Item 5.         Other Information                                                                       21

      Item 6.         Exhibits and Reports on Form 8-K                                                     22-23
</TABLE>


<PAGE>


                         PART I - FINANCIAL INFORMATION
Item 1.
                         The Pepsi Bottling Group, Inc.
                 Condensed Consolidated Statements of Operations
                in millions, except per share amounts, unaudited
<TABLE>
<CAPTION>

                                                                                     12-weeks Ended           24-weeks Ended
                                                                                     --------------           --------------
                                                                                  June 14,    June 15,      June 14,   June 15,
                                                                                    2003        2002          2003       2002
                                                                                    ----        ----          ----       ----

<S>                                                                                <C>         <C>           <C>        <C>
Net revenues....................................................................   $2,532      $2,209        $4,406     $3,981
Cost of sales...................................................................    1,290       1,185         2,217      2,127
                                                                                   ------      ------        ------     ------

Gross profit....................................................................    1,242       1,024         2,189      1,854
Selling, delivery and administrative expenses...................................      971         753         1,798      1,448
                                                                                   ------      ------        ------     ------

Operating income................................................................      271         271           391        406
Interest expense, net...........................................................       57          46           110         91
Other non-operating expenses, net...............................................        -           -             3          -
Minority interest...............................................................       15          16            20         24
                                                                                   ------      -------        ------     ------

Income before income taxes......................................................      199         209           258        291
Income tax expense..............................................................       68          70            88         98
                                                                                   ------      ------        ------     ------

Income before cumulative effect of change in accounting principle...............      131         139           170        193
Cumulative effect of change in accounting principle, net of
tax and minority interest.......................................................        -           -             6          -
                                                                                   ------      ------        ------     ------

Net income......................................................................   $  131      $  139        $  164     $  193
                                                                                   ======      ======        ======     ======

Basic  earnings per share before  cumulative  effect of change
in accounting principle.........................................................   $ 0.48      $ 0.49        $ 0.61     $ 0.68
Cumulative effect of change in accounting principle.............................        -           -         (0.02)         -
                                                                                   ------      ------        ------     ------
Basic earnings per share........................................................   $ 0.48      $ 0.49        $ 0.59     $ 0.68
                                                                                   ======      ======        ======     ======

Weighted-average shares outstanding.............................................      273         283           276        282

Diluted earnings per share before  cumulative effect of change
in accounting principle.........................................................   $ 0.47      $ 0.47        $ 0.60     $ 0.66
Cumulative effect of change in accounting principle.............................        -           -         (0.02)         -
                                                                                   ------      ------        ------     ------
Diluted earnings per share......................................................   $ 0.47      $ 0.47        $ 0.58     $ 0.66
                                                                                   ======      ======        ======     ======

Weighted-average shares outstanding.............................................      279         296           283        294
</TABLE>

     See accompanying notes to Condensed Consolidated Financial Statements.


                                       2
<PAGE>


                         The Pepsi Bottling Group, Inc.
                 Condensed Consolidated Statements of Cash Flows
                             in millions, unaudited
<TABLE>
<CAPTION>

                                                                                      24-weeks Ended
                                                                                      --------------
                                                                                   June 14,    June 15,
                                                                                     2003        2002
                                                                                     ----        ----
Cash Flows - Operations
<S>                                                                                 <C>         <C>
  Net income....................................................................    $ 164       $ 193
  Adjustments to reconcile net income to net cash provided by operations:
    Depreciation................................................................      244         189
    Amortization................................................................        4           3
    Deferred income taxes.......................................................       34          36
    Cumulative effect of change in accounting principle.........................        6           -
    Other non-cash charges and credits, net.....................................      142         113
    Changes in operating working capital, excluding effects of acquisitions:
      Accounts receivable, net..................................................     (256)       (235)
      Inventories, net..........................................................      (68)        (58)
      Prepaid expenses and other current assets.................................      (18)         (1)
      Accounts payable and other current liabilities............................      (21)         56
                                                                                    -----       -----
    Net change in operating working capital ....................................     (363)       (238)
                                                                                    -----       -----
      Other, net................................................................      (16)        (18)
                                                                                    -----       -----

Net Cash Provided by Operations.................................................      215         278
                                                                                    -----       -----

Cash Flows - Investments
  Capital expenditures..........................................................     (282)       (299)
  Acquisitions of bottlers......................................................      (83)        (30)
  Sale of property, plant and equipment.........................................        2           7
                                                                                    -----       -----

Net Cash Used for Investments...................................................     (363)       (322)
                                                                                    -----       -----

Cash Flows - Financing
  Short-term borrowings - three months or less..................................       84         (80)
  Proceeds from issuance of long-term debt......................................      248          37
  Payments of long-term debt....................................................       (3)         (1)
  Dividends paid................................................................       (6)         (6)
  Proceeds from exercise of stock options.......................................       21          70
  Purchases of treasury stock...................................................     (228)        (53)
                                                                                    -----       -----

Net Cash Provided by (Used for) Financing.......................................      116         (33)
                                                                                    -----       -----

Effect of Exchange Rate Changes on Cash and Cash Equivalents....................        3           2
                                                                                    -----       -----
Net Decrease in Cash and Cash Equivalents.......................................      (29)        (75)
Cash and Cash Equivalents - Beginning of Period.................................      222         277
                                                                                    -----       -----
Cash and Cash Equivalents - End of Period.......................................    $ 193       $ 202
                                                                                    =====       =====

Supplemental Cash Flow Information

Net third-party interest paid...................................................    $ 120       $  97
                                                                                    =====       =====
Income taxes paid...............................................................    $  39       $  25
                                                                                    =====       =====
</TABLE>

     See accompanying notes to Condensed Consolidated Financial Statements.


                                       3
<PAGE>

                         The Pepsi Bottling Group, Inc.
                      Condensed Consolidated Balance Sheets
                      in millions, except per share amounts
<TABLE>
<CAPTION>

                                                                                   (Unaudited)
                                                                                     June 14,    December 28,
                                                                                       2003          2002
                                                                                     ------         ------
Assets
<S>                                                                                   <C>             <C>
Current Assets
  Cash and cash equivalents.....................................................    $   193         $   222
  Accounts receivable, less allowance of $74 at
        June 14, 2003 and $67 at December 28, 2002..............................      1,216             922
  Inventories...................................................................        452             378
  Prepaid expenses and other current assets.....................................        261             203
  Investment in debt defeasance trust...........................................        174              12
                                                                                    -------         -------
          Total Current Assets..................................................      2,296           1,737

Property, plant and equipment, net..............................................      3,411           3,308
Other intangible assets, net....................................................      3,647           3,495
Goodwill........................................................................      1,241           1,192
Investment in debt defeasance trust.............................................          -             170
Other assets....................................................................        155             141
                                                                                    -------         -------
           Total Assets.........................................................    $10,750         $10,043
                                                                                    =======         =======

Liabilities and Shareholders' Equity
Current Liabilities
  Accounts payable and other current liabilities................................    $ 1,275         $ 1,179
  Short-term borrowings.........................................................        145              51
  Current maturities of long-term debt..........................................      1,189              18
                                                                                    -------         -------
          Total Current Liabilities.............................................      2,609           1,248

Long-term debt..................................................................      3,630           4,539
Other liabilities...............................................................        873             819
Deferred income taxes...........................................................      1,326           1,265
Minority interest...............................................................        379             348
                                                                                    -------         -------
          Total Liabilities.....................................................      8,817           8,219

Shareholders' Equity
   Common stock, par value $0.01 per share:
       authorized 900 shares, issued 310 shares.................................          3               3
   Additional paid-in capital...................................................      1,750           1,750
   Retained earnings............................................................      1,224           1,066
   Accumulated other comprehensive loss.........................................       (318)           (468)
   Deferred compensation........................................................         (5)              -
   Treasury stock: 39 shares and 30 shares at June 14, 2003 and December 28,
      2002, respectively........................................................       (721)           (527)
                                                                                    -------         -------
          Total Shareholders' Equity............................................      1,933           1,824
                                                                                    -------         -------
           Total Liabilities and Shareholders' Equity...........................    $10,750         $10,043
                                                                                    =======         =======
</TABLE>

     See accompanying notes to Condensed Consolidated Financial Statements.


                                       4
<PAGE>


Notes to Condensed Consolidated Financial Statements
Tabular dollars in millions
--------------------------------------------------------------------------------

Note 1 - Basis of Presentation

     The Pepsi  Bottling  Group,  Inc.  ("PBG" or "the  Company") is the world's
largest manufacturer,  seller and distributor of Pepsi-Cola beverages consisting
of bottling  operations  located in the United States,  Mexico,  Canada,  Spain,
Greece,  Russia  and  Turkey.  References  to  PBG  throughout  these  Condensed
Consolidated  Financial Statements are made using the first-person  notations of
"we," "our" and "us."

     As of June 14, 2003,  PepsiCo  Inc.'s  ("PepsiCo")  ownership  consisted of
39.1% of our outstanding common stock and 100% of our outstanding Class B common
stock,  together  representing  44.2% of the voting  power of all classes of our
voting  stock.  PepsiCo also owns  approximately  6.8% of the equity of Bottling
Group, LLC, our principal operating subsidiary.

     The accompanying Condensed Consolidated Balance Sheet at June 14, 2003, the
Condensed  Consolidated  Statements of Operations for the 12 and 24- weeks ended
June 14, 2003 and June 15, 2002 and the  Condensed  Consolidated  Statements  of
Cash Flows for the 24-weeks  ended June 14, 2003 and June 15, 2002 have not been
audited,  but have  been  prepared  in  conformity  with  accounting  principles
generally  accepted in the United States for interim  financial  information and
with the  instructions  to Form 10-Q and  Article 10 of  Regulation  S-X.  These
Condensed  Consolidated  Financial Statements should be read in conjunction with
the audited consolidated financial statements for the fiscal year ended December
28,  2002 as  presented  in our Annual  Report on Form 10-K.  In the  opinion of
management,  this interim information includes all material  adjustments,  which
are of a normal and recurring nature, necessary for a fair presentation.

     Beginning in 2003, Russia is no longer considered highly inflationary,  and
as a result, changed its functional currency from the U.S. dollar to the Russian
ruble. There was no material impact on our consolidated  financial statements as
a result of Russia's change in functional currency in 2003.

     Our U.S. and Canadian  operations  report using a fiscal year that consists
of 52 weeks, ending on the last Saturday in December.  Every five or six years a
53rd week is added. Our remaining  countries report using a calendar year basis.
Accordingly, we recognize our quarterly business results as outlined below:

     Quarter                U.S. & Canada               Mexico & Europe
     -------                -------------               ---------------
  First Quarter               12 weeks               January and February
 Second Quarter               12 weeks               March, April and May
  Third Quarter               12 weeks               June, July and August
 Fourth Quarter               16 weeks                September, October,
                                                     November and December

     Certain reclassifications were made in our Condensed Consolidated Financial
Statements to 2002 amounts to conform to the 2003 presentation.

Note 2 - Seasonality of Business

     The results for the second  quarter are not  necessarily  indicative of the
results that may be expected for the full year because of business  seasonality.
The seasonality of our operating  results arises from higher sales in the second
and third quarters  versus the first and fourth  quarters of the year,  combined
with the impact of fixed costs, such as depreciation and interest, which are not
significantly impacted by business seasonality.


                                       5
<PAGE>

<TABLE>
<CAPTION>

Note 3 - Inventories
                                                                                 June 14,   December 28,
                                                                                   2003         2002
                                                                                  -----         -----
<S>                                                                              <C>           <C>
Raw materials and supplies.............................................           $  170        $  162
Finished goods.........................................................              282           216
                                                                                  ------        ------
                                                                                  $  452        $  378
                                                                                  ======        ======


Note 4 - Property, plant and equipment, net
                                                                                 June 14,    December 28,
                                                                                   2003          2002
                                                                                  -----         ------
Land...................................................................           $  243        $  228
Buildings and improvements.............................................            1,157         1,126
Manufacturing and distribution equipment...............................            2,910         2,768
Marketing equipment....................................................            2,113         2,008
Other..................................................................              163           154
                                                                                  ------        ------
                                                                                   6,586         6,284
Accumulated depreciation...............................................           (3,175)       (2,976)
                                                                                  ------        ------
                                                                                  $3,411        $3,308
                                                                                  ======        ======

Note 5 - Other intangible assets, net and Goodwill
                                                                                 June 14,    December 28,
                                                                                   2003         2002
                                                                                  -----         -----
Intangibles subject to amortization:
   Gross carrying amount:
     Franchise rights..................................................           $   22        $   20
     Other identifiable intangibles....................................               25            24
                                                                                  ------        ------
                                                                                      47            44
                                                                                  ------        ------
   Accumulated amortization:
     Franchise rights..................................................               (8)           (6)
     Other identifiable intangibles....................................              (12)           (9)
                                                                                  ------        ------
                                                                                     (20)          (15)
                                                                                  ------        ------
Intangibles subject to amortization, net...............................               27            29
                                                                                  ------        ------

Intangibles not subject to amortization:
   Carrying amount:
     Franchise rights..................................................            3,578         3,424
     Other identifiable intangibles....................................               42            42
                                                                                  ------        ------
Intangibles not subject to amortization................................            3,620         3,466
                                                                                  ------        ------
Total other intangible assets, net.....................................           $3,647        $3,495
                                                                                  ======        ======

Goodwill...............................................................           $1,241        $1,192
                                                                                  ======        ======
</TABLE>

     Total other intangible  assets, net and goodwill increased by approximately
$201  million  due  to  purchase  price  allocations   relating  to  our  recent
acquisitions  of $106  million,  coupled with the impact from  foreign  currency
translation of $99 million,  offset by amortization  of intangible  assets of $4
million.

     For intangible  assets subject to amortization,  we calculate  amortization
expense on a straight-line  basis over the period we expect to receive  economic
benefit.  Total  amortization  expense  was $4 million  and $3  million  for the
24-weeks   ended  June  14,   2003  and  June  15,   2002,   respectively.   The
weighted-average  amortization period for each category of intangible assets and
its estimated aggregate  amortization expense expected to be recognized over the
next five years are as follows:


                                       6
<PAGE>

<TABLE>
<CAPTION>

                                     Weighted-Average       Estimated Aggregate Amortization Expense to be Incurred
                                     ----------------       -------------------------------------------------------
                                      Amortization
                                      ------------
                                         Period
                                         ------
                                                           Balance of                 Fiscal Year Ending
                                                           ----------       -----------------------------------------
                                                              2003          2004       2005         2006         2007
                                                              ----          ----       ----         ----         ----
<S>                                      <C>                  <C>           <C>        <C>          <C>          <C>
Franchise rights....................     5 years              $2            $4         $4           $2           $1
Other identifiable intangibles.......    7 years              $2            $4         $3           $2           $1
</TABLE>

Note 6 - Acquisitions

     During 2003 we acquired the operations and exclusive  right to manufacture,
sell and distribute  Pepsi-Cola  beverages from two PepsiCo franchise  bottlers.
The  following  acquisitions  occurred  for an aggregate  purchase  price of $77
million in cash and liabilities of $12 million:

o Pepsi-Cola  Buffalo  Bottling  Corp. of Buffalo,  New York in February 2003.
o Cassidy's Beverage Limited of New Brunswick, Canada in February 2003.

     These  acquisitions were made to enable us to provide better service to our
large retail  customers.  We expect these  acquisitions  to reduce costs through
economies of scale.

     As a result of these  acquisitions,  we have  assigned  $80  million of the
purchase  price to  intangible  assets,  of which $10  million  was  assigned to
goodwill and $70 million to franchise rights.  The goodwill and franchise rights
are not subject to amortization. The allocations of the purchase price for these
acquisitions  are still  preliminary  and will be  determined  based on the fair
value of assets acquired and liabilities assumed as of the dates of acquisition.

     In addition,  we made  purchase  price  allocations  of  approximately  $26
million during the first half of 2003,  primarily relating to Pepsi-Gemex,  S.A.
de. C.V. of Mexico.  The  allocations  of the  purchase  price of the prior year
acquisitions are still preliminary,  pending final valuations on certain assets.
The final allocations of the purchase price will be determined based on the fair
value  of  assets  acquired  and   liabilities   assumed  as  of  the  dates  of
acquisitions.

     During 2003, we paid  approximately  $3 million to PepsiCo for distribution
rights relating to the SoBe brand in certain PBG-owned territories in the United
States,  which are being  amortized  over their  estimated  useful  life of five
years.  In  addition,  we paid $3 million for purchase  obligations  relating to
acquisitions made in the prior year.

Note 7 - Treasury Stock

     In the first 24-weeks of 2003 and 2002, we repurchased  approximately  10.9
million  shares for $228 million and  approximately  2.1 million  shares for $53
million,  respectively.  During the second  quarter,  we completed  our original
share  repurchase  program of 50 million shares of common stock.  PBG's Board of
Directors  announced  a new share  repurchase  program at the  Company's  Annual
Meeting in May 2003,  under which 25 million  additional  shares of common stock
may be repurchased.  Approximately  1.3 million shares have been  repurchased to
date under the new program.


                                       7
<PAGE>


Note 8 - Geographic Data

     We operate in one industry, carbonated soft drinks and other ready-to-drink
beverages. We conduct business in all or a portion of the United States, Mexico,
Canada, Spain, Russia, Greece and Turkey.

<TABLE>
<CAPTION>
Net Revenues                                                          12-weeks Ended               24-weeks Ended
                                                                      --------------               --------------
                                                                  June 14,         June 15,      June 14,    June 15,
                                                                    2003             2002          2003        2002
                                                                    ----             ----          ----        ----
<S>                                                              <C>              <C>           <C>         <C>
U.S..........................................................     $1,797           $1,865        $3,293      $3,445
Mexico.......................................................        308                -           465           -
Other countries..............................................        427              344           648         536
                                                                  ------           ------        ------      ------
                                                                  $2,532           $2,209        $4,406      $3,981
                                                                  ======           ======        ======      ======

Long-Lived Assets                                                 June 14,       December 28,
                                                                    2003             2002
                                                                    ----             ----
U.S..........................................................     $5,683           $5,593
Mexico.......................................................      1,452            1,586
Other countries..............................................      1,319            1,127
                                                                  ------           ------
                                                                  $8,454           $8,306
                                                                  ======           ======
</TABLE>


Note 9 - Stock-Based Compensation

     During 2002,  the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standard  ("SFAS") No. 148  "Accounting  for
Stock-Based   Compensation-Transition  and  Disclosure,  an  Amendment  of  FASB
Statement  No.  123,"  which  provides  alternative  methods of  accounting  for
stock-based compensation.  We measure stock-based compensation expense using the
intrinsic value method in accordance with  Accounting  Principles  Board ("APB")
Opinion No. 25,  "Accounting  for Stock  Issued to  Employees,"  and its related
interpretations.  Accordingly,  compensation  expense for stock option grants to
our  employees  is measured as the excess of the quoted  market  price of common
stock at the grant date over the amount the employee must pay for the stock. Our
policy is to grant stock options at fair value on the date of grant.  As allowed
by SFAS No. 148, we have elected to continue to apply the intrinsic  value-based
method  of  accounting   described   above,  and  have  adopted  the  disclosure
requirements  of SFAS No.  123.  If we had  measured  compensation  cost for the
stock-based  awards granted to our employees under the fair  value-based  method
prescribed  by SFAS No. 123, net income would have been changed to the pro forma
amounts set forth below:
<TABLE>
<CAPTION>

                                                                             12-weeks Ended            24-weeks Ended
                                                                             --------------            --------------
                                                                       June 14,       June 15,      June 14,      June 15,
                                                                         2003           2002          2003          2002
                                                                         ----           ----          ----          ----
Net income:
<S>                                                                    <C>            <C>           <C>           <C>
As reported.....................................................        $ 131          $ 139         $ 164         $ 193
Add: Total stock-based employee compensation expense
          included in reported net income, net of taxes and
          minority interest.....................................            1              -             2             -
Less: Total stock-based employee compensation expense
          determined under fair value based method for
          all awards, net of taxes and minority interest........          (10)            (9)          (20)          (22)
                                                                        -----          -----         -----         -----
Pro forma.......................................................        $ 122          $ 130         $ 146         $ 171
                                                                        =====          =====         =====         =====

Earnings per share:
   Basic - as reported..........................................        $0.48          $0.49         $0.59         $0.68
   Basic - pro forma............................................         0.44           0.46          0.53          0.61
   Diluted - as reported........................................        $0.47          $0.47         $0.58         $0.66
   Diluted - pro forma..........................................         0.44           0.44          0.52          0.58
</TABLE>


                                       8
<PAGE>

     Pro forma compensation cost measured for stock options granted to employees
is  amortized  using a  straight-line  basis over the vesting  period,  which is
typically three years.

     In the first quarter of 2003, we issued  restricted stock awards to certain
key members of senior management,  which vest over periods ranging from three to
five years from the date of grant. These restricted stock awards are earned only
if the Company achieves certain  performance  targets over a three-year  period.
These  restricted  share awards are considered  variable  awards pursuant to APB
Opinion  No.  25,  which  requires  the  related   compensation  expense  to  be
re-measured each period until the performance  targets are met and the amount of
the awards becomes fixed. When the restricted stock award was granted,  deferred
compensation  of  approximately  $6  million  was  recorded  as a  reduction  to
shareholders'  equity,  and such amount will be adjusted quarterly and amortized
on a  straight-line  basis over the vesting  periods.  As of June 14, 2003,  the
deferred  compensation  balance  remaining to be amortized is  approximately  $5
million.

Note 10 - New Accounting Standards

     In  January  2003,  the  Emerging  Issues  Task  Force  ("EITF")  reached a
consensus on Issue No. 02-16,  "Accounting by a Customer  (Including a Reseller)
for Certain  Consideration  Received from a Vendor,"  addressing the recognition
and income statement  classification of various cash  considerations  given by a
vendor to a customer.  The consensus  requires that certain cash  considerations
received by a customer from a vendor are presumed to be a reduction of the price
of the vendor's  products,  and therefore should be characterized as a reduction
of cost of sales when  recognized in the  customer's  income  statement,  unless
certain criteria are met. EITF Issue No. 02-16 became effective beginning in our
fiscal year 2003. In the prior year we classified  worldwide bottler  incentives
received from PepsiCo and other brand owners as  adjustments to net revenues and
selling,  delivery and administrative expenses depending on the objective of the
program.  In accordance with EITF Issue No. 02-16,  we have  classified  certain
bottler  incentives  as a reduction of cost of sales  beginning in 2003. We have
recorded  a  transition  adjustment  of $6  million,  net of taxes and  minority
interest of $1 million,  for the cumulative  effect on prior years, in the first
quarter of 2003. This adjustment  reflects the amount of bottler incentives that
can be attributed to our 2003  beginning  inventory  balances.  This  accounting
change did not have a material effect on our income before  cumulative effect of
change in accounting  principle in the second quarter and first 24-weeks of 2003
and is not expected to have a material effect on such amounts for the balance of
fiscal  2003.  Assuming  that  EITF  Issue  No.  02-16 had been in place for all
periods  presented,  the following pro forma adjustments would have been made to
our reported results for the 12 and 24-weeks ended June 15, 2002:

<TABLE>
<CAPTION>

                                                                             12-weeks Ended June 15, 2002
                                                                             ----------------------------
                                                                         As          EITF 02-16     Pro Forma
                                                                         --          ----------     ---------
                                                                      Reported       Adjustment      Results
                                                                      --------       ----------      -------
<S>                                                                    <C>             <C>           <C>
  Net revenues................................................         $2,209          $ (71)        $2,138
  Cost of sales...............................................          1,185           (119)         1,066
  Selling, delivery and administrative expenses...............            753             49            802
                                                                       ------          -----         ------
  Operating income............................................         $  271          $  (1)        $  270
                                                                       ======          =====         ======
</TABLE>

<TABLE>
<CAPTION>

                                                                             24-weeks Ended June 15, 2002
                                                                             ----------------------------
                                                                         As           EITF 02-16    Pro Forma
                                                                         --           ----------    ---------
                                                                      Reported        Adjustment     Results
                                                                      --------        ----------     -------
<S>                                                                    <C>            <C>            <C>
  Net revenues................................................         $3,981         $ (130)        $3,851
  Cost of sales...............................................          2,127           (214)         1,913
  Selling, delivery and administrative expenses...............          1,448             86          1,534
                                                                       ------         ------         ------
  Operating income............................................         $  406         $   (2)        $  404
                                                                       ======         ======         ======
</TABLE>


                                       9
<PAGE>


     Assuming  EITF Issue No. 02-16 had been adopted for all periods  presented,
pro forma net income and earnings  per share for the 12 and 24-weeks  ended June
14, 2003 and June 15, 2002, would have been as follows:

<TABLE>
<CAPTION>

                                                                      12-weeks Ended               24-weeks Ended
                                                                      --------------               --------------
                                                                  June 14,       June 15,       June 14,    June 15,
                                                                    2003           2002           2003        2002
                                                                    ----           ----           ----        ----
     Net income:
<S>                                                               <C>            <C>            <C>         <C>
       As reported....................................             $ 131          $ 139          $ 164       $ 193
       Pro forma......................................               131            138            170         192

     Earnings per share:
       Basic - as reported............................             $0.48          $0.49          $0.59       $0.68
       Basic - pro forma..............................              0.48           0.49           0.61        0.68

       Diluted - as reported..........................             $0.47          $0.47          $0.58       $0.66
       Diluted - pro forma............................              0.47           0.47           0.60        0.65
</TABLE>

     During 2003,  the FASB issued SFAS No. 149,  "Amendment of Statement 133 on
Derivative  Instruments  and  Hedging  Activities."  SFAS  No.  149  amends  and
clarifies  financial  accounting  and  reporting  for  derivative   instruments,
including   certain   derivative   instruments   embedded  in  other   contracts
(collectively  referred to as derivatives) and for hedging activities under SFAS
No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities." This
statement is effective  for  contracts  entered into or modified  after June 30,
2003,  and  will  not  have a  material  impact  on our  Condensed  Consolidated
Financial Statements.

     During 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with  Exit or  Disposal  Activities."  SFAS  No.  146 is  effective  for exit or
disposal activities initiated after December 31, 2002. We do not anticipate that
the  adoption  of SFAS No.  146 will have a  material  impact  on our  Condensed
Consolidated Financial Statements.

     In  November  2002,  the FASB  issued  Interpretation  No.  45 ("FIN  45"),
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees  of  Indebtedness  of  Others  an  interpretation  of  FASB
Statements  No. 5, 57, and 107 and  rescission of FASB  Interpretation  No. 34,"
which  addresses  the  disclosures  to be made by a guarantor in its interim and
annual financial statements about its obligations under guarantees.  FIN 45 also
requires  the  recognition  of a liability  by a guarantor  at the  inception of
certain guarantees that are entered into or modified after December 31, 2002. We
do not anticipate that the adoption of FIN 45 will have a material impact on our
Condensed Consolidated Financial Statements.

     In  January  2003,  the FASB  issued  Interpretation  No.  46  ("FIN  46"),
"Consolidation of Variable Interest Entities," which addresses  consolidation by
business  enterprises of variable interest entities that either: (1) do not have
sufficient  equity  investment  at risk to  permit  the  entity to  finance  its
activities without additional  subordinated financial support, or (2) the equity
investors lack an essential  characteristic of a controlling financial interest.
We do not anticipate  that the adoption of FIN 46 will have a material impact on
our Condensed Consolidated Financial Statements.


                                       10
<PAGE>

Note 11 - Short-term Borrowings and Long-term Debt

     We intend to refinance  all or a portion of our $1 billion of 5 3/8% senior
notes upon their maturity in February 2004.

     During the quarter,  we issued $250 million of Series B Senior Notes with a
coupon rate of 4 1/8%,  which has a yield of 4.4%,  maturing  on June 15,  2015.
These notes are general  unsecured  obligations  and rank on an equal basis with
all of our other  existing and future  senior  unsecured  indebtedness  and rank
senior to all of our existing and future subordinated indebtedness. These senior
notes have redemption features and covenants similar to our other senior notes.

     PBG has a $500 million  commercial  paper  program that is supported by two
$250 million credit  facilities,  which are guaranteed by Bottling  Group,  LLC.
During the quarter,  PBG renegotiated the credit  facilities.  One of the credit
facilities  expires in April 2004 and the other credit facility expires in April
2008.


Note 12 - Comprehensive Income
<TABLE>
<CAPTION>

                                                                     12-weeks Ended         24-weeks Ended
                                                                     --------------         --------------
                                                                  June 14,   June 15,    June 14,    June 15,
                                                                    2003       2002        2003        2002
                                                                    ----       ----        ----        ----
<S>                                                                <C>        <C>         <C>         <C>
Net income....................................................      $131       $139        $164        $193
Currency translation adjustment...............................       166         25         142          27
Cash flow hedge adjustment (a) (b)............................         -          9           7          16
                                                                    ----       ----        ----        ----
Comprehensive income..........................................      $297       $173        $313        $236
                                                                    ====       ====        ====        ====
</TABLE>
(a)  Net of minority interest and taxes of $0 and $6 for the
     12-weeks ended June 14, 2003 and June 15, 2002, respectively.
(b)  Net of minority  interest  and taxes of $6 and $11 for the
     24-weeks  ended June 14, 2003 and June 15, 2002, respectively.

Note 13 - Contingencies
     We are subject to various  claims and  contingencies  related to  lawsuits,
taxes and  environmental  and other matters  arising out of the normal course of
business.  We believe  that the ultimate  liability  arising from such claims or
contingencies,  if any, in excess of amounts already recognized, is not expected
to have a  material  adverse  effect on our  results  of  operations,  financial
condition or liquidity.


                                       11
<PAGE>


                     Independent Accountants' Review Report
                     --------------------------------------

The Board of Directors and Shareholders
The Pepsi Bottling Group, Inc.:

We have reviewed the accompanying  condensed  consolidated  balance sheet of The
Pepsi  Bottling  Group,  Inc. as of June 14,  2003,  and the  related  condensed
consolidated statements of operations for the twelve and twenty-four weeks ended
June 14, 2003 and June 15, 2002 and the  condensed  consolidated  statements  of
cash flows for the  twenty-four  weeks  ended June 14,  2003 and June 15,  2002.
These condensed  consolidated financial statements are the responsibility of the
Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information  consists  principally of applying analytical  procedures and making
inquiries of persons  responsible  for financial and accounting  matters.  It is
substantially less in scope than an audit conducted in accordance with generally
accepted  auditing  standards,  the  objective of which is the  expression of an
opinion regarding the financial statements taken as a whole. Accordingly,  we do
not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with accounting  principles  generally  accepted in the
United States of America.

We have  previously  audited,  in accordance with auditing  standards  generally
accepted in the United States of America,  the consolidated balance sheet of The
Pepsi Bottling Group, Inc. as of December 28, 2002, and the related consolidated
statements of operations,  changes in shareholders'  equity,  and cash flows for
the  fifty-two  week period then ended not presented  herein;  and in our report
dated  January  28,  2003,  we  expressed  an   unqualified   opinion  on  those
consolidated financial statements.  In our opinion, the information set forth in
the accompanying  condensed  consolidated balance sheet as of December 28, 2002,
is fairly  stated,  in all material  respects,  in relation to the  consolidated
balance sheet from which it has been derived.


                                                                   /s/ KPMG LLP
New York, New York
July 8, 2003


                                       12
<PAGE>


Item 2.

Management's  Discussion and Analysis of Financial  Condition and Results of
Operations


OVERVIEW
--------
     The Pepsi Bottling Group,  Inc.  (collectively  referred to as "PBG," "we,"
"our" and "us") is the world's largest  manufacturer,  seller and distributor of
Pepsi-Cola  beverages.  We have the  exclusive  right to  manufacture,  sell and
distribute  Pepsi-Cola  beverages  in all or a  portion  of the  United  States,
Mexico, Canada, Spain, Greece, Russia and Turkey. In the second quarter of 2003,
approximately  71% of our net revenues were generated in the United States,  12%
of our net  revenues  were  generated  in  Mexico  and the  remaining  17%  were
generated outside the United States and Mexico.  For the first 24-weeks of 2003,
approximately  75% of our net revenues were generated in the United States,  10%
of our net  revenues  were  generated  in  Mexico  and the  remaining  15%  were
generated outside the United States and Mexico.


ITEMS THAT AFFECT HISTORICAL OR FUTURE COMPARABILITY
----------------------------------------------------
Gemex Acquisition
-----------------

     In November  2002,  we acquired  all of the  outstanding  capital  stock of
Pepsi-Gemex,  S.A.  de. C.V. of Mexico  ("Gemex").  Our total  acquisition  cost
consisted   of  a  net  cash  payment  of  $871  million  and  assumed  debt  of
approximately  $305  million.  The  Gemex  acquisition  was  made to allow us to
increase our markets outside the United States. Gemex was the largest Pepsi-Cola
bottler  in  Mexico  and the  largest  bottler  outside  the  United  States  of
Pepsi-Cola soft drink products based on sales volume.  Gemex produced,  sold and
distributed a variety of soft drink products under the PEPSI-COLA,  PEPSI LIGHT,
PEPSI  MAX,  MIRINDA,  7 UP,  DIET 7 UP,  KAS,  MOUNTAIN  DEW,  POWER  PUNCH and
MANZANITA SOL trademarks,  under exclusive  franchise and bottling  arrangements
with  PepsiCo  and  certain  affiliates  of  PepsiCo.  Gemex  also had rights to
produce,  sell and distribute in Mexico soft drink  products of other  companies
and it produced, sold and distributed purified and mineral water in Mexico under
the trademarks  ELECTROPURA and GARCI CRESPO,  respectively.  As a result of the
acquisition of Gemex, we own the ELECTROPURA and GARCI CRESPO brands.

New Accounting Standards
------------------------
     See  Note  10 -  New  Accounting  Standards,  in  our  Notes  to  Condensed
Consolidated  Financial Statements,  for a detailed discussion of new accounting
standards that were adopted in 2003.

RESULTS OF OPERATIONS
----------------------
Volume

                                                        Worldwide
                                                        ----------
                                                      Volume Drivers
                                                      --------------
                                             12-weeks Ended     24-weeks Ended
                                             --------------     --------------
                                            June 14, 2003 vs.  June 14, 2003 vs.
                                            -----------------  ----------------
                                             June 15, 2002      June 15, 2002
                                             ------------       -------------
Acquisitions............................          29 %                 25 %
Base business...........................          (1)%                 (2)%
                                                 ----                 ----
    Total Worldwide Change..............          28 %                 23 %

     Our  reported  worldwide  physical  case  volume  increased  28%  and  23%,
respectively,  in the second quarter and first  24-weeks of 2003,  when compared
with  similar  periods of 2002.  The increase in reported  worldwide  volume was
driven by our  acquisitions,  partially  offset by volume  declines  in our base
business  (base  business  reflects  territories  that we owned and operated for
comparable periods in both the current and prior year). Our acquisition of Gemex
contributed over

                                       13
<PAGE>


85% of the growth  resulting from  acquisitions  for both the second quarter and
first 24-weeks of 2003.

     In the U.S., our reported volume decreased by 1% and 3%,  respectively,  in
the second  quarter  and first 24- weeks of 2003,  when  compared  with  similar
periods of 2002. For the quarter and on a year-to-date  basis,  the decreases in
U.S.  reported volume were driven primarily by the overlap of strong  innovation
from the prior year and operating in a soft retail environment, partially offset
by incremental volume from acquisitions. Our cold drink business continues to be
soft, driven  predominantly by our performance in the on-premise segment,  which
includes  fountain  and full service  vending.  From a brand  perspective,  U.S.
volume  continues to benefit from strong  growth in Aquafina and the  lemon-lime
category, led by Sierra Mist, offset by declines in trademark Pepsi.

     Outside the U.S.,  reported  volume  increased  by 125% for both the second
quarter and the first  24-weeks of 2003,  when compared with similar  periods of
2002.  The increase in volume was driven by our Gemex  acquisition  coupled with
increases in our base business of 3% for both the quarter and on a  year-to-date
basis.  The  increase in base  business  volume  outside the U.S.  was driven by
double-digit  growth in Russia,  resulting from a solid performance in trademark
Pepsi and Aqua Minerale, coupled with growth in Spain.

Net Revenues

                                                         Worldwide
                                                         ---------
                                                       Net Revenues
                                                       ------------
                                                          Drivers
                                                          -------
                                             12-weeks Ended     24-weeks Ended
                                             --------------     --------------
                                            June 14, 2003 vs.  June 14, 2003 vs.
                                            -----------------  ----------------
                                              June 15, 2002     June 15, 2002
                                              -------------     -------------
Acquisitions............................          16 %                14 %
                                                  ----                ----
Base business:
    EITF Issue No. 02-16 impact.........          (3)%                (3)%
    Volume declines.....................          (1)%                (3)%
    Currency translations...............           2 %                 2 %
    Rate / mix impact...................           1 %                 1 %
                                                  ----                ----
Base business change....................          (1)%                (3)%
                                                  ----                ----

Total Worldwide Change..................          15 %                11 %
                                                  ====                ====

     Net revenues were $2.5 billion for the second  quarter and $4.4 billion for
the first 24-weeks in 2003, a 15% and 11% increase over similar periods in 2002,
respectively.  The  increase  in  net  revenues  was  driven  primarily  by  our
acquisition of Gemex,  which  contributed  over 85% of the growth resulting from
acquisitions  for both the second quarter and first 24-weeks of 2003,  partially
offset by declines  in our base  business.  For both the second  quarter and the
first  24-weeks of 2003,  the  decreases in our base  business net revenues were
driven by the  reclassification  of certain bottler incentives from net revenues
to cost of sales  resulting  from the  adoption  of  Emerging  Issues Task Force
("EITF") Issue No. 02-16,  "Accounting by a Customer  (Including a Reseller) for
Certain Consideration  Received from a Vendor, at the beginning of 2003, coupled
with volume declines.  The declines in base business net revenues were partially
offset by favorable currency translations and the net rate/mix impact.


                                       14
<PAGE>


     In the U.S., net revenues  decreased 4% for both the second quarter and the
first  24-weeks of 2003,  when  compared with the similar  periods of 2002.  The
decreases  in net  revenues in the U.S.  in the  quarter  and on a  year-to-date
basis,  are due  primarily  to the impact of adopting  EITF Issue No.  02-16 and
volume  declines,  partially  offset by the net rate/mix  impact and incremental
revenue from  acquisitions.  For both the second  quarter and on a  year-to-date
basis,  our net rate/mix impact reflects an approximate 2% price increase in the
marketplace,  partially  offset by a negative  mix impact of 1%,  driven by soft
cold drink performance.

     Net revenues outside the U.S. grew approximately 114% in the second quarter
and 108% for the first  24-weeks of 2003 when compared with the similar  periods
of 2002.  For both the  second  quarter  and the  first  24-weeks  of 2003,  the
increases  were  driven by our Gemex  acquisition,  favorable  foreign  currency
translation,  and the net  rate/mix  impact  and volume  performance,  partially
offset by a decline due to the impact of adopting EITF Issue No. 02-16.

     For the full year,  worldwide  net revenues are expected to increase in the
low double  digits  versus the prior year,  with the  majority  of the  increase
resulting from our Gemex acquisition. Worldwide net revenue per case is expected
to be down in the mid to high  single-digits  during the second half and for the
full year of 2003, as compared  with the prior year periods.  The decline in our
worldwide  net revenue per case will be driven by country mix as a result of our
Gemex  acquisition  and the  adoption  of EITF Issue No.  02-16.  We expect U.S.
pricing in the marketplace to continue to be solid, up about two percent for the
second half and the full year of 2003 versus the prior year comparable  periods.
Net revenue per case  results in the U.S. are  forecasted  to be down one to two
percent  during the second  half and for the full year of 2003  versus the prior
year comparable periods, reflecting the adoption of EITF Issue No. 02-16.

Cost of Sales

                                                        Worldwide
                                                        ---------
                                                      Cost of Sales
                                                      -------------
                                                         Drivers
                                                         -------
                                             12-weeks Ended     24-weeks Ended
                                             --------------     --------------
                                            June 14, 2003 vs.  June 14, 2003 vs.
                                            -----------------  -----------------
                                             June 15, 2002      June 15, 2002
                                             -------------      -------------
Acquisitions............................           15 %                13 %
                                                  -----               -----
Base business:
    EITF Issue No. 02-16 impact.........          (10)%               (10)%
    Cost per case impact................            4 %                 3 %
    Volume declines.....................           (1)%                (3)%
    Currency translations...............            1 %                 1 %
                                                  -----               -----
Base business change....................           (6)%                (9)%
                                                  -----               -----

Total Worldwide Change..................            9 %                 4 %
                                                  =====               =====

     Cost of sales was $1.3  billion in the second  quarter and $2.2 billion for
the first  24-weeks of 2003, a 9% and 4% increase over similar  periods in 2002,
respectively.  The  increase  in cost  of  sales  was  driven  primarily  by our
acquisition of Gemex,  which  contributed  over 80% of the growth resulting from
acquisitions  in both  the  second  quarter  and the  first  24-weeks  of  2003,
partially  offset by declines in our base business costs. Our base business cost
of sales  declines  were  driven  by the  reclassification  of  certain  bottler
incentives from net revenues and selling,  delivery and administrative  expenses
to cost of sales  resulting  from the adoption of EITF Issue No. 02-16,  coupled
with volume declines. The declines in base business cost of sales were partially
offset by cost per case increases and foreign currency translation.

     In the U.S.,  cost of sales  decreased 7% in the second  quarter and 9% for
the first 24-weeks of 2003,  when compared with the similar periods of 2002. The
decreases in our U.S.  cost of sales were driven by the impact of adopting  EITF
Issue No. 02-16 and volume declines, partially offset


                                       15
<PAGE>

by cost per case increases and incremental costs from acquisitions. In the U.S.,
cost per case  increased  3% for both the second  quarter and on a  year-to-date
basis, resulting from higher concentrate and resin costs.

     Cost of sales outside the U.S. grew approximately 83% in the second quarter
and 77% for the first 24-weeks of 2003,  when compared with the similar  periods
of 2002. The increases in cost of sales outside the U.S., for the quarter and on
a year-to-date  basis, were driven by our Gemex  acquisition,  impact of foreign
currency translation,  and increases in both cost per case and volume, partially
offset by a  reduction  resulting  from the  impact of  adopting  EITF Issue No.
02-16.

     For the balance of the year,  we expect our cost of sales  increases  to be
similar to those  experienced  during the first half of the year.  The  expected
growth in our cost of sales will be driven  primarily  by our Gemex  acquisition
and  cost  per  case   increases   in  the   U.S.,   partially   offset  by  the
reclassification  of certain  bottler  incentives from net revenues and selling,
delivery  and  administrative  expenses  to cost of  sales  resulting  from  the
adoption of EITF Issue No. 02-16.

Selling, Delivery and Administrative Expenses

                                                       Worldwide
                                                       ---------
                                                      SD&A Drivers
                                                      ------------
                                             12-weeks Ended     24-weeks Ended
                                             --------------     --------------
                                            June 14, 2003 vs.  June 14, 2003 vs.
                                            -----------------  -----------------
                                             June 15, 2002      June 15, 2002
                                             ------------       -------------
Acquisitions............................          20 %                17 %
                                                 -----               -----
Base business:
    EITF Issue No. 02-16 impact.........           7 %                 6 %
    Currency translations...............           2 %                 2 %
    Cost performance....................           0 %                (1)%
                                                 -----               -----
Base business change....................           9 %                 7 %
                                                 -----               -----

Total Worldwide Change..................          29 %                24 %
                                                 =====               =====

     Selling,  delivery  and  administrative  expenses  were $971 million in the
second  quarter and $1.8  billion for the first  24-weeks of 2003, a 29% and 24%
increase over similar  periods in 2002,  respectively.  The increase in selling,
delivery and administrative  expenses was driven primarily by our acquisition of
Gemex and  increases in our base  business.  Gemex  contributed  over 85% of the
growth  resulting  from  acquisitions  for both the  second  quarter  and  first
24-weeks  of  2003.  Increases  in  our  base  business  selling,  delivery  and
administrative  expenses in both the second  quarter and first 24-weeks of 2003,
were driven by the  reclassification of certain bottler incentives from selling,
delivery  and  administrative  expenses  to cost of  sales  resulting  from  the
adoption of EITF Issue No.  02-16,  coupled with the impact of foreign  currency
translation.  Our base  business  cost  performance  was flat and  declined  1%,
respectively,  in the second quarter and on a year-to-date basis, driven largely
by  reductions  in labor and other  costs,  partially  offset  by  increases  in
pension, benefit and casualty costs.

     For the balance of the year, we expect the growth of our selling,  delivery
and  administrative  expenses to be similar to that experienced during the first
half of the year.  Expected  increases in selling,  delivery and  administrative
expenses  will  be  driven  predominantly  by  our  Gemex  acquisition  and  the
reclassification  of certain  bottler  incentives  from  selling,  delivery  and
administrative  expenses to cost of sales  resulting  from the  adoption of EITF
Issue No. 02-16,  partially  offset by improved cost  performance  in the United
States.


                                       16
<PAGE>


Operating Income

                                                        Worldwide
                                                        ---------
                                                    Operating Income
                                                    ----------------
                                                         Drivers
                                                         -------
                                             12-weeks Ended     24-weeks Ended
                                             --------------     --------------
                                            June 14, 2003 vs.  June 14, 2003 vs.
                                            -----------------  -----------------
                                             June 15, 2002      June 15, 2002
                                             -------------      -------------
Acquisitions............................          10 %                 7 %
                                                 -----               -----
Base business:
    Volume impact.......................          (5)%               (12)%
    Rate/mix impact.....................          11 %                13 %
    Cost of sales per case impact.......         (17)%               (15)%
    SD&A impact.........................           0 %                 2 %
    Currency translations...............           1 %                 1 %
                                                 -----               -----
Base business change....................         (10)%               (11)%
                                                 -----               -----

Total Worldwide Change..................           0 %                (4)%
                                                 =====               =====


     Operating  income was $271  million in the second  quarter and $391 million
for the first 24-weeks of 2003, a 0% change and 4% decrease over similar periods
in 2002, respectively. The primary drivers of change in operating income for the
quarter and on a year-to-date  basis were decreases in our base business  offset
by an increase from our acquisition of Gemex. The decreases in our base business
operating  income for the  quarter  and on a  year-to-date  basis were driven by
lower  volume in the U.S. and higher  product  costs,  partially  offset by rate
increases in the  marketplace,  reduced  selling,  delivery  and  administrative
expenses as a result of our focus on cost controls and the  favorable  impact of
foreign  currency  translation.  Gemex  contributed  the  majority of the growth
resulting  from  acquisitions  for both the second quarter and first 24-weeks of
2003.

     For the third quarter,  we anticipate  operating profit to grow in the high
single  digits  and for the full year we expect  operating  profit to grow about
10%, as compared with the prior-year  periods.  Expected  increases in operating
income  for the  third  quarter  and for the full year of 2003 will be driven by
improving trends in the U.S. and contributions from our Gemex acquisition.

Interest Expense, net

     Interest   expense,   net   increased  by  $11  million  and  $19  million,
respectively,  in the  second  quarter  and the  first  24-weeks  of 2003,  when
compared with similar  periods of 2002,  largely due to the additional  interest
associated  with  the $1  billion  4 5/8%  senior  notes  used  to  finance  our
acquisition of Gemex in November 2002,  partially offset by the favorable impact
of the interest rate swaps on $1.3 billion of our fixed rate long-term debt.

Income Tax Expense

     PBG's estimated full year effective tax rate for 2003 is 34.3%,  before the
cumulative effect of change in accounting principle, and has been applied to our
second  quarter 2003 results.  Our  effective tax rate in the second  quarter of
2002 was 33.8%.  The slight  increase in the effective tax rate is primarily due
to an increase in anticipated  pre-tax income in  jurisdictions  with higher tax
rates.


Liquidity and Capital Resources
-------------------------------
Cash Flows

     Net cash  provided by  operations  decreased by $63 million to $215 million
for the first  24-weeks of 2003,  when compared with the similar period in 2002,
reflecting a decline in net income


                                       17
<PAGE>


coupled with the increased use of cash from working  capital,  principally  from
the timing of payments.

     Net cash used for investments  increased by $41 million to $363 million for
the first  24-weeks of 2003,  when  compared  with the  similar  period in 2002,
reflecting higher acquisition spending,  partially offset by declines in capital
expenditures.

     Net cash  provided by  financing  increased  by $149  million for the first
24-weeks of 2003 when  compared with the similar  period in 2002,  driven by the
issuance of $250  million in  long-term  debt and other  short-term  borrowings,
partially offset by higher share repurchases and lower stock option exercises.

     For the full year in 2003,  we  expect  to  achieve  net cash  provided  by
operations of $1.1 billion.  In addition,  we expect capital  expenditures to be
approximately $700 million for the full year in 2003.

Short-term Borrowings and Long-term Debt

     We intend to refinance  all or a portion of our $1 billion of 5 3/8% senior
notes upon their maturity in February 2004. We are currently in compliance  with
all debt covenants in our indenture agreements.

     During the second  quarter we issued $250  million of Series B Senior Notes
with a coupon  rate of 4 1/8%,  which has a yield of 4.4%,  maturing on June 15,
2015. These notes are general  unsecured  obligations and rank on an equal basis
with all of our other existing and future senior unsecured indebtedness and rank
senior to all of our existing and future subordinated indebtedness. These senior
notes have redemption features and covenants similar to our other senior notes.

     PBG has a $500 million  commercial  paper  program that is supported by two
$250 million credit facilities.  During the quarter, PBG renegotiated the credit
facilities.  One of the  credit  facilities  expires in April 2004 and the other
credit facility expires in April 2008. Both credit  facilities are guaranteed by
Bottling Group, LLC.

Cautionary Statements
----------------------
     Except for the historical  information  and discussions  contained  herein,
statements contained in this Form 10-Q may constitute forward-looking statements
as defined  by the  Private  Securities  Litigation  Reform  Act of 1995.  These
forward-looking   statements  are  based  on  currently  available  competitive,
financial and economic data and our operating plans.  These statements involve a
number of risks, uncertainties and other factors that could cause actual results
to be  materially  different.  Among the  events  and  uncertainties  that could
adversely affect future periods are  lower-than-expected  net pricing  resulting
from marketplace competition,  material changes from expectations in the cost of
raw materials and  ingredients,  an inability to achieve the expected timing for
returns  on  cold  drink  equipment  and  related  infrastructure  expenditures,
material changes in expected levels of bottler incentive  payments from PepsiCo,
material  changes in our  expected  interest  and currency  exchange  rates,  an
inability to achieve cost savings, an inability to achieve volume growth through
product and packaging initiatives,  competitive pressures that may cause channel
and product mix to shift from more  profitable cold drink channels and packages,
weather  conditions  in PBG's  markets,  political  conditions  in PBG's markets
outside the United States and Canada,  possible  recalls of PBG's  products,  an
inability to meet  projections  for  performance in newly acquired  territories,
unfavorable market performance of our pension plan assets,  unfavorable outcomes
from our U.S. Internal Revenue Service audits, and changes in our debt ratings.


                                       18
<PAGE>


Item 3.

Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
     The  overall  risks to our  international  businesses  include  changes  in
foreign  governmental  policies,  and other political or economic  developments.
These  developments may lead to new product  pricing,  tax or other policies and
monetary fluctuations, which may adversely impact our business. In addition, our
results  of  operations  and the value of the  foreign  assets are  affected  by
fluctuations in foreign currency exchange rates.

     Foreign currency gains and losses reflect  transaction  gains and losses as
well as translation gains and losses arising from the  re-measurement  into U.S.
dollars  of the  net  monetary  assets  of  businesses  in  highly  inflationary
countries.   Beginning  in  2003,   Russia  is  no  longer   considered   highly
inflationary,  and changed its functional  currency from the U.S.  dollar to the
Russian ruble. The impact to our consolidated  financial  statements as a result
of Russia's change in functional currency in 2003 was not material.

     We acquired  Gemex in November 2002.  Approximately  12% and 10% of our net
revenues  were derived from Mexico in the second  quarter and first  24-weeks of
2003,  respectively.  During the second  quarter and the first 24-weeks of 2003,
the Mexican peso appreciated by approximately 6% and less than 1%, respectively.
Future  movements  in the  Mexican  peso  could  have a  material  impact on our
financial results.

 Item 4.

 Controls and Procedures
 -----------------------
     Within 90 days prior to the filing date of this report,  PBG carried out an
evaluation,  under the supervision and with the participation of our management,
including the Chief Executive Officer and the Chief Financial Officer of PBG, of
the  effectiveness  and design and  operation  of our  disclosure  controls  and
procedures pursuant to the Exchange Act Rule 13a-14. Based upon that evaluation,
the Chief Executive  Officer and the Chief Financial  Officer concluded that our
disclosure  controls and  procedures  are  effective in timely  alerting them to
material information relating to PBG and its consolidated  subsidiaries required
to be included in PBG's periodic  filings with the SEC. In addition,  there were
no significant  changes in our internal  controls or in other factors that could
significantly  affect these internal controls subsequent to the date of our most
recent evaluation.


                                       19
<PAGE>


                           PART II - OTHER INFORMATION

Item 4.

Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a)  Annual Meeting of Shareholders of PBG was held on May 28, 2003.

(b)  The names of all directors are set forth in (c) below.  The proxies for the
     meeting were  solicited  pursuant to Regulation  14A under the  Securities
     Exchange Act of 1934.  There were no  solicitations  in  opposition  to the
     nominees as listed in the proxy and all such nominees were elected.

(c)  A brief  description of each matter voted on and the approximate  number of
     votes cast are as follows:

                                                   Number of Votes (millions)
                                                   --------------------------
                                                           Withheld/    Broker
Description of Proposals                  For    Against    Abstain    Non-votes
------------------------                  ---    -------    -------    ---------
1) Election of Directors:
    Linda G. Alvarado                     256      N/A         23         N/A
    Barry H. Beracha                      257      N/A         22         N/A
    John T. Cahill                        262      N/A         17         N/A
    Ira D. Hall                           264      N/A         15         N/A
    Thomas H. Kean                        258      N/A         21         N/A
    Susan D. Kronick                      257      N/A         22         N/A
    Blythe J. McGarvie                    256      N/A         23         N/A
    Margaret D. Moore                     215      N/A         64         N/A
    Clay G. Small                         216      N/A         63         N/A
    Craig E. Weatherup                    263      N/A         16         N/A
2) Approval of the appointment of
    KPMG LLP as independent auditors      275       3          1          N/A


                                       20
<PAGE>


Item 5.

Other Information
------------------
     The following  financial  information  of Bottling  Group,  LLC  ("Bottling
LLC"),  filed  by  Bottling  LLC  with  the  SEC on July  28,  2003,  is  hereby
incorporated  by reference as required by the SEC as a result of Bottling  LLC's
guarantee of up to  $1,000,000,000  aggregate  principal amount of our 7% Senior
Notes due in 2029:

     >>   Condensed  Consolidated  Statements  of  Operations  - 12 and 24-weeks
          ended June 14, 2003 and June 15, 2002

     >>   Condensed Consolidated  Statements of Cash Flows - 24-weeks ended June
          14, 2003 and June 15, 2002

     >>   Condensed Consolidated Balance Sheets - June 14, 2003 and December 28,
          2002

     >>   Notes to Condensed Consolidated Financial Statements

     >>   Independent Accountants' Review Report


                                       21
<PAGE>


Item 6.

Exhibits and Reports on Form 8-K
--------------------------------
Item 6 (a) Exhibits
-------------------
Exhibit No.
-----------
10 *      Amendment No. 1 to the PBG Director's Stock Plan

11 *      Computation of Basic and Diluted Earnings Per Share

15 *      Accountants' Acknowledgement

4.1       Indenture,  dated as of June 10, 2003, by and between  Bottling Group,
          LLC, as Obligor,  and  JPMorgan  Chase Bank,  as Trustee,  relating to
          $250,000,000   4  1/8%  Senior  Notes  due  June  15,  2015  which  is
          incorporated  herein by  reference  to Exhibit 4.1 to Bottling  Group,
          LLC's registration statement on Form S-4 (Registration No. 333-106285)

4.2       Registration  Rights  Agreement,  dated  June 10,  2003,  by and among
          Bottling Group,  LLC, J.P.  Morgan  Securities  Inc.,  Lehman Brothers
          Inc., Banc of America  Securities LLC,  Citigroup  Global Markets Inc,
          Credit  Suisse  First  Boston  LLC,  Deutsche  Bank  Securities  Inc.,
          Blaylock  &  Partners,  L.P.  and  Fleet  Securities,  Inc.  which  is
          incorporated  herein by  reference  to Exhibit 4.3 to Bottling  Group,
          LLC's registration statement on Form S-4 (Registration No. 333-106285)

4.3       U.S. $250,000,000 5-Year Credit Agreement,  dated as of April 30, 2003
          among The Pepsi Bottling Group,  Inc.,  Bottling Group, LLC, Citibank,
          N.A.,  Bank of America,  N.A.,  Credit  Suisse  First  Boston,  Cayman
          Islands Branch, Deutsche Bank AG New York Branch, JPMorgan Chase Bank,
          The Northern Trust Company,  Lehman  Brothers Bank,  FSB, Banco Bilbao
          Vizcaya  Argentaria,  HSBC Bank USA,  Fleet National Bank, The Bank of
          New York,  State Street Bank and Trust Company,  Comerica Bank,  Wells
          Fargo Bank,  N.A.,  JPMorgan  Chase Bank, as Agent,  Citigroup  Global
          Markets  Inc.  and Banc of  America  Securities  LLC,  as  Joint  Lead
          Arrangers and Book Managers and Citibank, N.A., Bank of America, N.A.,
          Credit  Suisse First  Boston,  and Deutsche  Bank  Securities  Inc. as
          Syndication  Agents  which is  incorporated  herein  by  reference  to
          Exhibit 4.7 to Bottling Group,  LLC's  registration  statement on Form
          S-4/A (Registration No. 333-102035)

4.4       U.S. $250,000,000 364-Day Credit Agreement, dated as of April 30, 2003
          among The Pepsi Bottling Group,  Inc.,  Bottling Group, LLC, Citibank,
          N.A.,  Bank of America,  N.A.,  Credit  Suisse  First  Boston,  Cayman
          Islands Branch, Deutsche Bank AG New York Branch, JPMorgan Chase Bank,
          The Northern Trust Company,  Lehman  Brothers Bank,  FSB, Banco Bilbao
          Vizcaya  Argentaria,  HSBC Bank USA,  Fleet National Bank, The Bank of
          New York,  State Street Bank and Trust Company,  Comerica Bank,  Wells
          Fargo Bank,  N.A.,  JPMorgan  Chase Bank, as Agent,  Citigroup  Global
          Markets  Inc.  and Banc of  America  Securities  LLC,  as  Joint  Lead
          Arrangers and Book Managers and Citibank, N.A., Bank of America, N.A.,
          Credit  Suisse First  Boston,  and Deutsche  Bank  Securities  Inc. as
          Syndication  Agents  which is  incorporated  herein  by  reference  to
          Exhibit 4.8 to Bottling Group,  LLC's  registration  statement on Form
          S-4/A (Registration No. 333-102035)




                                       22
<PAGE>


99.1 *    Certification  by the Chief  Executive  Officer of Periodic  Financial
          Report pursuant to Section 906 of the Sarbanes - Oxley Act of 2002

99.2 *    Certification  by the Chief  Financial  Officer of Periodic  Financial
          Report pursuant to Section 906 of the Sarbanes - Oxley Act of 2002
-----------------

* Filed herewith.

ITEM 6(b) REPORTS ON FORM 8-K
-----------------------------
On April 22, 2003,  the Company  furnished a current Form 8-K Report  announcing
its financial results for its first quarter ended March 22, 2003.


                                       23
<PAGE>


                                   SIGNATURES


Pursuant  to the  requirement  of the  Securities  Exchange  Act  of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                                  THE PEPSI BOTTLING GROUP, INC.
                                                  ------------------------------
                                                           (Registrant)






Date:      July 25, 2003                           /s/ Andrea L. Forster
           -------------                           ---------------------
                                                   Andrea L. Forster
                                                   Vice President and Controller






Date:      July 25, 2003                           /s/ Alfred H. Drewes
           -------------                          ---------------------
                                                   Alfred H. Drewes
                                                   Senior Vice President and
                                                   Chief Financial Officer

<PAGE>


                             Form 10-Q Certification

I, John T. Cahill, certify that:

1.   I have reviewed this  quarterly  report on Form 10-Q of The Pepsi  Bottling
     Group, Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   Designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   All  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

<PAGE>


6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.




Date:    July 25, 2003                               /s/ John T. Cahill
         -------------                               ------------------
                                                     John T. Cahill
                                                     Chief Executive Officer


<PAGE>


                             Form 10-Q Certification

I, Alfred H. Drewes, certify that:

1.   I have reviewed this  quarterly  report on Form 10-Q of The Pepsi  Bottling
     Group, Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   Designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   All  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and


<PAGE>


6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



Date:    July 25, 2003                              /s/ Alfred H. Drewes
         -------------                              --------------------
                                                    Alfred H. Drewes
                                                    Senior Vice President and
                                                    Chief Financial Officer