##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 6, 2008 (12 weeks)
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 333-80361-01
 BOTTLING
GROUP, LLC
  Delaware
    
    13-4042452(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)
 One Pepsi Way, Somers, New York
    
    10589(Address of Principal Executive Offices)
    
    (Zip Code)
 
  
  þ o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



Bottling Group, LLC
Index
 Page No.Part I
    
    Financial InformationItem 1.
    
    Financial StatementsCondensed Consolidated Statements of Operations  12 and
36 weeks ended September 6, 2008 and September 8, 2007
    
    
    2Condensed
Consolidated Statements of Cash Flows  36
weeks ended September 6, 2008 and September 8, 2007
    
    
    3Condensed Consolidated Balance Sheets  September 6, 2008
and December 29, 2007
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5-15Item 2.
    
    Managements Financial Review
    
    
    16-24Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4.
    
    Controls and Procedures
    
    
    25Part II
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    26Item 1A.
    
    Risk Factors
    
    
    26Item 6.
    
    Exhibits
    
    
    27




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.
 Bottling Group, LLC
 
 Condensed Consolidated Statements of Operations
 12 Weeks Ended
    
    
    36 Weeks EndedSeptember
    
    
    September
    
    
    September
    
    
    September6, 2008
    
    
    8, 2007
    
    
    6, 2008
    
    
    8, 2007Net revenues
    
    $
    3,814
    
    
    $
    3,729
    
    
    $
    9,987
    
    
    $
    9,555Cost of sales
    
    
    2,077
    
    
    
    2,003
    
    
    
    5,475
    
    
    
    5,171Gross profit
    
    
    1,737
    
    
    
    1,726
    
    
    
    4,512
    
    
    
    4,384Selling, delivery and administrative expenses
    
    
    1,284
    
    
    
    1,296
    
    
    
    3,610
    
    
    
    3,515Operating income
    
    
    453
    
    
    
    430
    
    
    
    902
    
    
    
    869Interest expense
    
    
    52
    
    
    
    56
    
    
    
    151
    
    
    
    164Interest income
    
    
    34
    
    
    
    52
    
    
    
    108
    
    
    
    143Other non-operating expenses (income), net
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Minority interest
    
    
    17
    
    
    
    15
    
    
    
    23
    
    
    
    19Income before income taxes
    
    
    413
    
    
    
    411
    
    
    
    836
    
    
    
    831Income tax expense
    
    
    29
    
    
    
    10
    
    
    
    57
    
    
    
    27Net income
    
    $
    384
    
    
    $
    401
    
    
    $
    779
    
    
    $
    804
  2




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##### Table of Contents



Bottling Group, LLC
 
 Condensed Consolidated Statements of Cash Flows
 36 Weeks EndedSeptember
    
    
    September6, 2008
    
    
    8, 2007Cash Flows  OperationsNet income
    
    $
    779
    
    
    $
    804Adjustments to reconcile net income to net cash provided by operations:Depreciation and amortization
    
    
    468
    
    
    
    457Deferred income taxes
    
    
    26
    
    
    
    (21
    )Share-based compensation
    
    
    40
    
    
    
    43Net other non-cash charges and credits
    
    
    144
    
    
    
    151Changes in operating working capital, excluding effects of acquisitions:Accounts receivable, net
    
    
    (469
    )
    
    
    (533
    )Inventories
    
    
    (104
    )
    
    
    (97
    )Prepaid expenses and other current assets
    
    
    (67
    )
    
    
    6Accounts payable and other current liabilities
    
    
    198
    
    
    
    431Income taxes payable
    
    
    15
    
    
    
    38Net change in operating working capital
    
    
    (427
    )
    
    
    (155
    )Other, net
    
    
    (105
    )
    
    
    (45
    )Net Cash Provided by Operations
    
    
    925
    
    
    
    1,234Cash Flows  InvestmentsCapital expenditures
    
    
    (574
    )
    
    
    (563
    )Acquisitions, net of cash acquired
    
    
    (22
    )
    
    
    (49
    )Investments in noncontrolled affiliates
    
    
    (608
    )
    
    
    Proceeds from sale of property, plant and equipment
    
    
    15
    
    
    
    9Notes receivable from PBG, net
    
    
    (157
    )
    
    
    (657
    )Other investing activities, net
    
    
    (139
    )
    
    
    6Net Cash Used for Investments
    
    
    (1,485
    )
    
    
    (1,254
    )Cash Flows  FinancingShort-term borrowings, net
    
    
    209
    
    
    
    173Proceeds from long-term debt
    
    
    
    
    
    
    1Payments of long-term debt
    
    
    (7
    )
    
    
    (12
    )Contributions from minority interest holder
    
    
    308
    
    
    
    Other financing activities
    
    
    (1
    )
    
    
    Net Cash Provided by Financing
    
    
    509
    
    
    
    162Effect of Exchange Rate Changes on Cash and Cash Equivalents
    
    
    (10
    )
    
    
    3Net (Decrease) / Increase in Cash and Cash Equivalents
    
    
    (61
    )
    
    
    145Cash and Cash Equivalents  Beginning of Period
    
    
    459
    
    
    
    441Cash and Cash Equivalents  End of Period
    
    $
    398
    
    
    $
    586
  3




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Bottling Group, LLC
 
 Condensed Consolidated Balance Sheets
 (Unaudited)September
    
    
    December6, 2008
    
    
    29, 2007ASSETSCurrent AssetsCash and cash equivalents
    
    $
    398
    
    
    $
    459Accounts receivable, net
    
    
    1,985
    
    
    
    1,520Inventories
    
    
    680
    
    
    
    577Prepaid expenses and other current assets
    
    
    501
    
    
    
    308Total Current Assets
    
    
    3,564
    
    
    
    2,864Property, plant and equipment, net
    
    
    4,147
    
    
    
    4,071Other intangible assets, net
    
    
    4,208
    
    
    
    4,181Goodwill
    
    
    1,526
    
    
    
    1,533Investments in noncontrolled affiliates
    
    
    608
    
    
    
    Note receivable from PBG
    
    
    4,037
    
    
    
    3,880Other assets
    
    
    192
    
    
    
    183Total Assets
    
    $
    18,282
    
    
    $
    16,712LIABILITIES AND OWNERS EQUITYCurrent LiabilitiesAccounts payable and other current liabilities
    
    $
    1,997
    
    
    $
    1,829Short-term borrowings
    
    
    389
    
    
    
    190Current maturities of long-term debt
    
    
    1,306
    
    
    
    6Total Current Liabilities
    
    
    3,692
    
    
    
    2,025Long-term debt
    
    
    2,479
    
    
    
    3,776Other liabilities
    
    
    848
    
    
    
    832Deferred income taxes
    
    
    480
    
    
    
    471Minority interest
    
    
    740
    
    
    
    379Total Liabilities
    
    
    8,239
    
    
    
    7,483Owners EquityOwners net investment
    
    
    10,236
    
    
    
    9,418Accumulated other comprehensive loss
    
    
    (193
    )
    
    
    (189
    )Total Owners Equity
    
    
    10,043
    
    
    
    9,229Total Liabilities and Owners Equity
    
    $
    18,282
    
    
    $
    16,712
 
 4




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Notes to Condensed Consolidated Financial Statements
 Note 1Basis of Presentation
      Quarter
    
    U.S. & Canada
    
    Mexico & EuropeFirst Quarter
    
    12 weeks
    
    January and FebruarySecond Quarter
    
    12 weeks
    
    March, April and MayThird Quarter
    
    12 weeks
    
    June, July and AugustFourth Quarter
    
    16 weeks
    
    September, October, November and December
    5




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Note 2Seasonality of Business
  Note 3New Accounting Standards
 SFAS No. 157
   SFAS No. 158
  SFAS No. 141(R)
  SFAS No. 160
  6




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SFAS No. 161
  EITF Issue No. 07-1
  Note 4Share-Based Compensation
     Note 5Balance Sheet Details
 September
    
    
    December6, 2008
    
    
    29, 2007Accounts Receivable, netTrade accounts receivable
    
    $
    1,802
    
    
    $
    1,319Allowance for doubtful accounts
    
    
    (64
    )
    
    
    (54
    )Accounts receivable from PepsiCo
    
    
    182
    
    
    
    188Other receivables
    
    
    65
    
    
    
    67$
    1,985
    
    
    $
    1,520InventoriesRaw materials and supplies
    
    $
    239
    
    
    $
    195Finished goods
    
    
    441
    
    
    
    382$
    680
    
    
    $
    577
 7




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September
    
    
    December6, 2008
    
    
    29, 2007Prepaid Expenses and Other Current AssetsPrepaid expenses
    
    $
    325
    
    
    $
    256Other current assets
    
    
    176
    
    
    
    52$
    501
    
    
    $
    308Property, Plant and Equipment, netLand
    
    $
    325
    
    
    $
    320Buildings and improvements
    
    
    1,585
    
    
    
    1,484Manufacturing and distribution equipment
    
    
    4,197
    
    
    
    4,091Marketing equipment
    
    
    2,414
    
    
    
    2,389Capital leases
    
    
    37
    
    
    
    36Other
    
    
    147
    
    
    
    1548,705
    
    
    
    8,474Accumulated depreciation
    
    
    (4,558
    )
    
    
    (4,403
    )$
    4,147
    
    
    $
    4,071
 Industrial Revenue Bonds
  September
    
    
    December6, 2008
    
    
    29, 2007Accounts Payable and Other Current LiabilitiesAccounts payable
    
    $
    608
    
    
    $
    615Accounts payable to PepsiCo
    
    
    353
    
    
    
    255Trade incentives
    
    
    221
    
    
    
    235Accrued compensation and benefits
    
    
    238
    
    
    
    276Other accrued taxes
    
    
    157
    
    
    
    139Accrued interest
    
    
    50
    
    
    
    47Other current liabilities
    
    
    370
    
    
    
    262$
    1,997
    
    
    $
    1,829
 8




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Note 6Other Intangible Assets, net and Goodwill
 Other intangible assets, net
 September
    
    
    December6, 2008
    
    
    29, 2007Intangibles subject to amortization:Gross carrying amount:Customer relationships and lists
    
    $
    57
    
    
    $
    54Franchise and distribution rights
    
    
    47
    
    
    
    46Other identified intangibles
    
    
    34
    
    
    
    30138
    
    
    
    130Accumulated amortization:Customer relationships and lists
    
    
    (18
    )
    
    
    (15
    )Franchise and distribution rights
    
    
    (33
    )
    
    
    (31
    )Other identified intangibles
    
    
    (20
    )
    
    
    (17
    )(71
    )
    
    
    (63
    )Intangibles subject to amortization, net
    
    
    67
    
    
    
    67Intangibles not subject to amortization:Carrying amount:Franchise rights
    
    
    3,226
    
    
    
    3,235Licensing rights
    
    
    315
    
    
    
    315Distribution rights
    
    
    317
    
    
    
    294Trademarks
    
    
    226
    
    
    
    213Other identified intangibles
    
    
    57
    
    
    
    57Intangibles not subject to amortization
    
    
    4,141
    
    
    
    4,114Total other intangible assets, net
    
    $
    4,208
    
    
    $
    4,181
   Intangible asset amortization
  9




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Goodwill
  U.S. &Canada
    
    
    Europe
    
    
    Mexico
    
    
    TotalBalance at December 29, 2007
    
    $
    1,290
    
    
    $
    17
    
    
    $
    226
    
    
    $
    1,533Purchase price allocations relating
to acquisitions
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    9Impact of foreign currency translation
    
    
    (30
    )
    
    
    
    
    
    
    14
    
    
    
    (16
    )Balance at September 6, 2008
    
    $
    1,260
    
    
    $
    26
    
    
    $
    240
    
    
    $
    1,526
  Accounting change
   Note 7  Investment in Noncontrolled Affiliate
    10




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Note 8Fair Value Measurements
  Level 1
 Level 2 
 Level 3
  Level 2Financial Assets:Prepaid forward contract (a)
    
    $
    15Foreign currency forward contracts (b)
    
    
    3Interest rate swaps (c)
    
    
    2Total
    
    $
    20Financial Liabilities:Treasury rate locks (d)
    
    $
    21Commodity contracts (b)
    
    
    5Foreign currency forward contracts (b)
    
    
    1Total
    
    $
    27
 
 (a)
    
    Based primarily on the value of PBGs stock price.(b)
    
    Based primarily on the forward curves of the specific indices upon which settlement is based.(c)
    
    Based primarily on the LIBOR index.(d)
    
    Based primarily on the 10-year Treasury Note rate. Note 9 Pension and Postretirement Medical Benefit Plans
  11




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Components of net pension expense
 12 Weeks Ended
    
    
    36 Weeks EndedSeptember
    
    
    September
    
    
    September
    
    
    September6, 2008
    
    
    8, 2007
    
    
    6, 2008
    
    
    8, 2007Service cost
    
    $
    12
    
    
    $
    13
    
    
    $
    35
    
    
    $
    38Interest cost
    
    
    23
    
    
    
    21
    
    
    
    69
    
    
    
    63Expected return on plan assets  (income)
    
    
    (27
    )
    
    
    (24
    )
    
    
    (80
    )
    
    
    (71
    )Amortization of net loss
    
    
    4
    
    
    
    8
    
    
    
    11
    
    
    
    26Amortization of prior service costs
    
    
    1
    
    
    
    2
    
    
    
    5
    
    
    
    5Special termination benefits
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    4Net pension expense for the defined
benefit plans
    
    $
    13
    
    
    $
    24
    
    
    $
    40
    
    
    $
    65
  Components of postretirement medical expense
 12 Weeks Ended
    
    
    36 Weeks EndedSeptember
    
    
    September
    
    
    September
    
    
    September6, 2008
    
    
    8, 2007
    
    
    6, 2008
    
    
    8, 2007Service cost
    
    $
    1
    
    
    $
    1
    
    
    $
    3
    
    
    $
    3Interest cost
    
    
    5
    
    
    
    5
    
    
    
    15
    
    
    
    14Amortization of net loss
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    3Total postretirement medical expense
    
    $
    7
    
    
    $
    7
    
    
    $
    20
    
    
    $
    20
 Defined contribution expense
  Note 10Income Taxes
  12




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Note 11Segment Information
    12 Weeks Ended
    
    
    36 Weeks EndedSeptember
    
    
    September
    
    
    September
    
    
    September6, 2008
    
    
    8, 2007
    
    
    6, 2008
    
    
    8, 2007Net RevenuesU.S. & Canada
    
    $
    2,652
    
    
    $
    2,665
    
    
    $
    7,395
    
    
    $
    7,294Europe
    
    
    770
    
    
    
    683
    
    
    
    1,598
    
    
    
    1,327Mexico
    
    
    392
    
    
    
    381
    
    
    
    994
    
    
    
    934Worldwide net revenues
    
    $
    3,814
    
    
    $
    3,729
    
    
    $
    9,987
    
    
    $
    9,555Operating IncomeU.S. & Canada
    
    $
    298
    
    
    $
    297
    
    
    $
    701
    
    
    $
    723Europe
    
    
    123
    
    
    
    110
    
    
    
    137
    
    
    
    99Mexico
    
    
    32
    
    
    
    23
    
    
    
    64
    
    
    
    47Worldwide operating income
    
    
    453
    
    
    
    430
    
    
    
    902
    
    
    
    869Interest expense
    
    
    52
    
    
    
    56
    
    
    
    151
    
    
    
    164Interest income
    
    
    34
    
    
    
    52
    
    
    
    108
    
    
    
    143Other non-operating expenses (income), net
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Minority interest
    
    
    17
    
    
    
    15
    
    
    
    23
    
    
    
    19Income before income taxes
    
    $
    413
    
    
    $
    411
    
    
    $
    836
    
    
    $
    831
 September
    
    
    December6, 2008
    
    
    29, 2007Total AssetsU.S. & Canada
    
    $
    13,689
    
    
    $
    13,334Europe
    
    
    2,776
    
    
    
    1,671Mexico
    
    
    1,817
    
    
    
    1,707Worldwide total assets
    
    $
    18,282
    
    
    $
    16,712
 13




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Note 12Comprehensive Income
 12 Weeks Ended
    
    
    36 Weeks EndedSeptember
    
    
    September
    
    
    September
    
    
    September6, 2008
    
    
    8, 2007
    
    
    6, 2008
    
    
    8, 2007Net income
    
    $
    384
    
    
    $
    401
    
    
    $
    779
    
    
    $
    804Net currency translation adjustment
    
    
    (50
    )
    
    
    (10
    )
    
    
    (29
    )
    
    
    89Cash flow hedge adjustment (a) (b)
    
    
    (42
    )
    
    
    (3
    )
    
    
    (30
    )
    
    
    (2
    )Amortization of prior service cost and net
loss in net periodic pension /
postretirement cost to expense
    
    
    6
    
    
    
    11
    
    
    
    19
    
    
    
    34Pension liability adjustment (c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Comprehensive income
    
    $
    298
    
    
    $
    399
    
    
    $
    739
    
    
    $
    930
 
 (a)
    
    Net of taxes of $1 million and $0 million for the 12 weeks ended September 6, 2008
and September 8, 2007, respectively.(b)
    
    Net of taxes of $2 million and $(2) million for the 36 weeks ended September 6, 2008
and September 8, 2007, respectively.(c)
    
    Net of taxes of $3 million for the 36 weeks ended September 8, 2007. Note 13Contingencies
  Note 14Supplemental Cash Flow Information
  36 Weeks EndedSeptember
    
    September6, 2008
    
    8, 2007Interest paid
    
    $
    143
    
    
    $
    155Income taxes paid
    
    
    15
    
    
    
    11Non-cash investing and financing activities:Decrease in accounts payable related to capital expenditures
    
    
    (42
    )
    
    
    (36
    )Capital lease additions
    
    
    3
    
    
    
    3Acquisition of intangible asset
    
    
    
    
    
    
    315Contribution of acquired entity by PBG
    
    
    26
    
    
    
    Liabilities assumed in conjunction with acquisition of bottlers
    
    
    8
    
    
    
    1Capital-in-kind contributions (a)
    
    
    27
    
    
    
    5Share compensation
    
    
    1
    
    
    
    
 
 (a)
    
    On March 1, 2007, together with PepsiCo we formed PR Beverages Limited, our Russian
venture. In connection with the formation of this venture, PepsiCo agreed to contribute an
additional $83 million plus accrued interest to the venture in the form of property, plant and
equipment. PepsiCo has contributed $27 million in regards to this note during 2008. The
remaining balance to be contributed to the venture is $45 million as of September 6, 2008. 14




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Note 15Guarantees
   15




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##### Table of Contents



Item 2.
 MANAGEMENTS FINANCIAL REVIEW
  OUR BUSINESS
    OUR CRITICAL ACCOUNTING POLICIES
  
    
    Other Intangible Assets, net and Goodwill;
 
    
    Pension and Postretirement Medical Benefit Plans; and
 
    
    Income Taxes.
 Critical Accounting Policy Update  Other Intangible Assets, net and Goodwill
  16




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OUR FINANCIAL RESULTS
 ITEMS AFFECTING COMPARABILITY OF OUR FINANCIAL RESULTS
  12 Weeks Ended
    
    36 Weeks EndedSeptember
    
    September
    
    September
    
    SeptemberIncome/(Expense)
    
    6, 2008
    
    8, 2007
    
    6, 2008
    
    8, 2007Gross profitPR Beverages
    
    $
    
    
    
    $
    
    
    
    $
    (4
    )
    
    $
    Operating incomePR Beverages
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    Restructuring and
Full Service
Vending
Rationalization
Charges
    
    
    
    
    
    
    (20
    )
    
    
    (5
    )
    
    
    (20
    )
 2008 Items
 PR Beverages Limited (PR Beverages)
   Restructuring Charges
  Full Service Vending Rationalization
  17




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##### Table of Contents



FINANCIAL PERFORMANCE SUMMARY AND WORLDWIDE FINANCIAL HIGHLIGHTS
 12 Weeks Ended
    
    36 Weeks EndedSeptember
    
    September
    
    %
    
    September
    
    September
    
    %6, 2008
    
    8, 2007
    
    Change
    
    6, 2008
    
    8, 2007
    
    ChangeNet revenues
    
    $
    3,814
    
    
    $
    3,729
    
    
    
    2
    %
    
    $
    9,987
    
    
    $
    9,555
    
    
    
    5
    %Cost of sales
    
    
    2,077
    
    
    
    2,003
    
    
    
    4
    
    
    
    5,475
    
    
    
    5,171
    
    
    
    6Gross profit
    
    
    1,737
    
    
    
    1,726
    
    
    
    1
    
    
    
    4,512
    
    
    
    4,384
    
    
    
    3Selling, delivery
and administrative
expenses
    
    
    1,284
    
    
    
    1,296
    
    
    
    (1
    )
    
    
    3,610
    
    
    
    3,515
    
    
    
    3Operating income
    
    
    453
    
    
    
    430
    
    
    
    6
    
    
    
    902
    
    
    
    869
    
    
    
    4Net income
    
    $
    384
    
    
    $
    401
    
    
    
    (4
    )%
    
    $
    779
    
    
    $
    804
    
    
    
    (3
    )%
 Worldwide Financial Highlights for the 12 Weeks Ended September 6, 2008
 The impact of foreign currency translation, driven by the strength of all our foreign
functional currencies, contributed approximately three-percentage points of growth in worldwide net
revenues, cost of sales, gross profit, selling, delivery and administrative expenses and operating
income.
 Net revenues 
 Cost of sales 
 Gross profit 
 Selling, delivery and administrative (SD&A) expenses 
 Operating income 
 Net income
 18




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##### Table of Contents



2008 RESULTS OF OPERATIONS
 Tables and discussion are presented as compared to the similar periods in the prior year.
Growth rates are rounded to the nearest whole percentage.
 Volume
 12 Weeks Ended
    
    36 Weeks EndedSeptember 6, 2008 vs. September 8, 2007
    
    September 6, 2008 vs. September 8, 2007U.S. &
    
    
    
    
    
    
    
    
    
    
    
    U.S. &Worldwide
    
    Canada
    
    Europe
    
    Mexico
    
    Worldwide
    
    Canada
    
    Europe
    
    MexicoTotal volume change
    
    
    (6
    )%
    
    
    (6
    )%
    
    
    (6
    )%
    
    
    (9
    )%
    
    
    (3
    )%
    
    
    (3
    )%
    
    
    (1
    )%
    
    
    (4
    )%
     Net Revenues
 12 Weeks Ended
    
    36 Weeks EndedSeptember 6, 2008 vs. September 8, 2007
    
    September 6, 2008 vs. September 8, 2007U.S. &
    
    
    
    
    
    
    
    
    
    
    
    U.S. &Worldwide
    
    Canada
    
    Europe
    
    Mexico
    
    Worldwide
    
    Canada
    
    Europe
    
    MexicoVolume impact
    
    
    (6
    )%
    
    
    (6
    )%
    
    
    (6
    )%
    
    
    (9
    )%
    
    
    (3
    )%
    
    
    (3
    )%
    
    
    (1
    )%
    
    
    (4
    )%Net price per case
impact (rate/mix)
    
    
    6
    
    
    
    5
    
    
    
    8
    
    
    
    5
    
    
    
    5
    
    
    
    3
    
    
    
    10
    
    
    
    6Currency translation
    
    
    3
    
    
    
    0
    
    
    
    10
    
    
    
    6
    
    
    
    3
    
    
    
    1
    
    
    
    12
    
    
    
    4Total net revenues
change
    
    
    2
    %*
    
    
    0
    %*
    
    
    13
    %*
    
    
    3
    %*
    
    
    5
    %
    
    
    1
    %
    
    
    20
    %*
    
    
    6
    %
 
 *
    
    Does not add due to rounding to the whole percent.  19




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##### Table of Contents



Cost of Sales
 12 Weeks Ended
    
    36 Weeks EndedSeptember 6, 2008 vs.
    
    September 6, 2008 vs.September 8, 2007
    
    September 8, 2007Worldwide
    
    WorldwideVolume impact
    
    
    (6
    )%
    
    
    (3
    )%Cost per case impact
    
    
    7
    
    
    
    6Currency translation
    
    
    3
    
    
    
    3Total cost of sales change
    
    
    4
    %
    
    
    6
    %
  Selling, Delivery and Administrative Expenses
 12 Weeks Ended
    
    36 Weeks EndedSeptember 6, 2008 vs.
    
    September 6, 2008 vs.September 8, 2007
    
    September 8, 2007Worldwide
    
    WorldwideCost impact
    
    
    (2
    )%
    
    
    0
    %Restructuring and
Full Service Vending
Rationalization
charges
    
    
    (2
    )
    
    
    0Currency translation
    
    
    3
    
    
    
    3Total SD&A change
    
    
    (1
    )%
    
    
    3
    %
 20




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##### Table of Contents



Operating Income
       Interest Expense
  21




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##### Table of Contents



Interest Income
  Other Non-operating Income, net
  Minority Interest
  Income Tax Expense
  22




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##### Table of Contents



LIQUIDITY AND FINANCIAL CONDITION
 Cash Flows
 36 Weeks Ended September 6, 2008 vs. September 8, 2007
    Liquidity and Capital Resources
     Contractual Obligations
  23




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##### Table of Contents



Off-Balance Sheet Arrangements
  CAUTIONARY STATEMENTS
   24




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##### Table of Contents



Item 3.
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 Item 4.
 CONTROLS AND PROCEDURES
   25




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Our business requires a significant supply of raw materials and energy, the limited availability or
increased costs of which could adversely affect our business and financial results.
    26




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##### Table of Contents



Item 6.
 EXHIBITS
 EXHIBIT NO.
    
    DESCRIPTION OF EXHIBIT31.1
    
    Certification by the Principal Executive Officer pursuant to
Section 302 of the SarbanesOxley Act of 200231.2
    
    Certification by the Principal Financial Officer pursuant to
Section 302 of the SarbanesOxley Act of 200232.1
    
    Certification by the Principal Executive Officer pursuant to
Section 906 of the SarbanesOxley Act of 200232.2
    
    Certification by the Principal Financial Officer pursuant to
Section 906 of the SarbanesOxley Act of 200299.1
    
    The Pepsi Bottling Group, Inc. Form 10-Q for the quarterly
period ended September 6, 2008, as required by the SEC as a
result of our guarantee of up to $1,000,000,000 aggregate
principal amount of PBGs 7% Senior Notes due in 2029
 27




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##### Table of Contents



SIGNATURES
  BOTTLING GROUP, LLC
(Registrant)Date: October 14, 2008
    /s/ Thomas M. LardieriThomas M. LardieriPrincipal Accounting Officer and Managing DirectorDate: October 14, 2008
    /s/ Alfred H. DrewesAlfred H. DrewesPrincipal Financial Officer