##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the quarterly period ended June 16, 2007 (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
  o o þ
 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 24 weeks ended June 16, 2007 and June 17, 2006
    
    
    2Condensed Consolidated Statements of Cash Flows  24 weeks ended June 16, 2007 and June 17, 2006
    
    
    3Condensed Consolidated Balance Sheets  June 16, 2007 and December 30, 2006
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5-14Item 2.
    
    Managements Financial Review
    
    
    15-22Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4.
    
    Controls and Procedures
    
    
    23Part II
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    24Item 6.
    
    Exhibits
    
    
    24




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.
 
 Bottling Group, LLC
Condensed Consolidated Statements of Operations
 12 Weeks Ended
    
    
    24 Weeks EndedJune
    
    
    June
    
    
    June
    
    
    June16, 2007
    
    
    17, 2006
    
    
    16, 2007
    
    
    17, 2006Net revenues
    
    $
    3,360
    
    
    $
    3,138
    
    
    $
    5,826
    
    
    $
    5,505Cost of sales
    
    
    1,825
    
    
    
    1,685
    
    
    
    3,168
    
    
    
    2,956Gross profit
    
    
    1,535
    
    
    
    1,453
    
    
    
    2,658
    
    
    
    2,549Selling, delivery and administrative expenses
    
    
    1,215
    
    
    
    1,150
    
    
    
    2,219
    
    
    
    2,127Operating income
    
    
    320
    
    
    
    303
    
    
    
    439
    
    
    
    422Interest expense
    
    
    55
    
    
    
    56
    
    
    
    108
    
    
    
    101Interest income
    
    
    47
    
    
    
    39
    
    
    
    91
    
    
    
    68Other non-operating (income) expenses, net
    
    
    (3
    )
    
    
    9
    
    
    
    (2
    )
    
    
    10Minority interest
    
    
    3
    
    
    
    
    
    
    
    4
    
    
    
    (1
    )Income before income taxes
    
    
    312
    
    
    
    277
    
    
    
    420
    
    
    
    380Income tax expense
    
    
    11
    
    
    
    8
    
    
    
    17
    
    
    
    13Net income
    
    $
    301
    
    
    $
    269
    
    
    $
    403
    
    
    $
    367
  2




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Bottling Group, LLC
Condensed Consolidated Statements of Cash Flows
 24 Weeks Ended
    
    
    24 Weeks EndedJune 16, 2007
    
    
    June 17, 2006Cash Flows  OperationsNet income
    
    $
    403
    
    
    $
    367Adjustments to reconcile net income to net cash provided by operations:Depreciation and amortization
    
    
    300
    
    
    
    291Deferred income taxes
    
    
    (10
    )
    
    
    (12
    )Stock-based compensation
    
    
    29
    
    
    
    32Other non-cash charges and credits, net
    
    
    91
    
    
    
    97Changes in operating working capital, excluding effects of acquisitions:Accounts receivable, net
    
    
    (435
    )
    
    
    (350
    )Inventories
    
    
    (193
    )
    
    
    (190
    )Prepaid expenses and other current assets
    
    
    41
    
    
    
    (6
    )Accounts payable and other current liabilities
    
    
    260
    
    
    
    276Income taxes payable
    
    
    10
    
    
    
    3Net change in operating working capital
    
    
    (317
    )
    
    
    (267
    )Pension contributions
    
    
    (1
    )
    
    
    (1
    )Other, net
    
    
    (30
    )
    
    
    (26
    )Net Cash Provided by Operations
    
    
    465
    
    
    
    481Cash Flows  InvestmentsCapital expenditures
    
    
    (374
    )
    
    
    (355
    )Acquisitions
    
    
    (49
    )
    
    
    Proceeds from sale of property, plant and equipment
    
    
    6
    
    
    
    4Notes receivable from PBG, net
    
    
    (331
    )
    
    
    (738
    )Other investing activities, net
    
    
    6
    
    
    
    Net Cash Used for Investments
    
    
    (742
    )
    
    
    (1,089
    )Cash Flows  FinancingShort-term borrowings, net
    
    
    196
    
    
    
    136Proceeds from long-term debt
    
    
    
    
    
    
    793Payments of long-term debt
    
    
    (10
    )
    
    
    (63
    )Net Cash Provided by Financing
    
    
    186
    
    
    
    866Effect of Exchange Rate Changes on Cash and Cash Equivalents
    
    
    4
    
    
    
    (5
    )Net (Decrease) Increase in Cash and Cash Equivalents
    
    
    (87
    )
    
    
    253Cash and Cash Equivalents  Beginning of Period
    
    
    441
    
    
    
    346Cash and Cash Equivalents  End of Period
    
    $
    354
    
    
    $
    599Supplemental Cash Flow InformationInterest paid
    
    $
    111
    
    
    $
    92Income taxes paid
    
    $
    17
    
    
    $
    21Non Cash Transactions:Changes in accounts payable related to capital expenditures
    
    $
    (32
    )
    
    $
    (22
    )Capital lease additions
    
    $
    2
    
    
    $
    8Acquisition of intangible asset
    
    $
    315
    
    
    $
    
  3




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Bottling Group, LLC
Condensed Consolidated Balance Sheets
 (Unaudited)June 16, 2007
    
    
    December 30, 2006ASSETSCurrent AssetsCash and cash equivalents
    
    $
    354
    
    
    $
    441Accounts receivable, less allowance of $50 at
June 16, 2007 and December 30, 2006
    
    
    1,785
    
    
    
    1,331Inventories
    
    
    738
    
    
    
    533Prepaid expenses and other current assets
    
    
    313
    
    
    
    355Total Current Assets
    
    
    3,190
    
    
    
    2,660Property, plant and equipment, net
    
    
    3,874
    
    
    
    3,776Other intangible assets, net
    
    
    4,149
    
    
    
    3,768Goodwill
    
    
    1,517
    
    
    
    1,490Notes receivable from PBG
    
    
    3,478
    
    
    
    3,147Other assets
    
    
    122
    
    
    
    114Total Assets
    
    $
    16,330
    
    
    $
    14,955LIABILITIES AND OWNERS EQUITYCurrent LiabilitiesAccounts payable and other current liabilities
    
    $
    1,796
    
    
    $
    1,559Short-term borrowings
    
    
    454
    
    
    
    242Current maturities of long-term debt
    
    
    10
    
    
    
    16Total Current Liabilities
    
    
    2,260
    
    
    
    1,817Long-term debt
    
    
    3,759
    
    
    
    3,759Other liabilities
    
    
    955
    
    
    
    863Deferred income taxes
    
    
    413
    
    
    
    406Minority interest
    
    
    337
    
    
    
    18Total Liabilities
    
    
    7,724
    
    
    
    6,863Owners EquityOwners net investment (includes impact from
adopting FIN 48 in fiscal year 2007 of ($45))
    
    
    9,067
    
    
    
    8,681Accumulated other comprehensive loss
    
    
    (461
    )
    
    
    (589
    )Total Owners Equity
    
    
    8,606
    
    
    
    8,092Total Liabilities and Owners Equity
    
    $
    16,330
    
    
    $
    14,955
  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. 159
  6




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Note 4  Share-Based Compensation
    12 Weeks Ended
    
    24 Weeks EndedJune 16,
    
    June 17,
    
    June 16,
    
    June 17,2007
    
    2006
    
    2007
    
    2006Total share-based compensation expense
    
    $
    15
    
    
    $
    16
    
    
    $
    29
    
    
    $
    32
    7




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Note 5  Balance Sheet Details
 June
    
    
    December16, 2007
    
    
    30, 2006Accounts ReceivableTrade accounts receivable
    
    $
    1,563
    
    
    $
    1,163Allowance for doubtful accounts
    
    
    (50
    )
    
    
    (50
    )Accounts receivable from PepsiCo
    
    
    208
    
    
    
    168Other receivables
    
    
    64
    
    
    
    50$
    1,785
    
    
    $
    1,331InventoriesRaw materials and supplies
    
    $
    274
    
    
    $
    201Finished goods
    
    
    464
    
    
    
    332$
    738
    
    
    $
    533Property, Plant and Equipment, netLand
    
    $
    312
    
    
    $
    291Buildings and improvements
    
    
    1,417
    
    
    
    1,404Manufacturing and distribution equipment
    
    
    3,773
    
    
    
    3,705Marketing equipment
    
    
    2,400
    
    
    
    2,425Capital leases
    
    
    62
    
    
    
    60Other
    
    
    160
    
    
    
    1628,124
    
    
    
    8,047Accumulated depreciation
    
    
    (4,250
    )
    
    
    (4,271
    )$
    3,874
    
    
    $
    3,776Accounts Payable and Other Current LiabilitiesAccounts payable
    
    $
    613
    
    
    $
    525Accounts payable to PepsiCo
    
    
    323
    
    
    
    234Trade incentives
    
    
    191
    
    
    
    194Accrued compensation and benefits
    
    
    217
    
    
    
    237Other accrued taxes
    
    
    110
    
    
    
    111Accrued interest
    
    
    45
    
    
    
    49Other current liabilities
    
    
    297
    
    
    
    209$
    1,796
    
    
    $
    1,559
 8




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Note 6  Other Intangible Assets, net and Goodwill
  June
    
    
    December16, 2007
    
    
    30, 2006Intangibles subject to amortization:Gross carrying amount:Customer relationships and lists
    
    $
    54
    
    
    $
    54Franchise/distribution rights
    
    
    45
    
    
    
    45Other identified intangibles
    
    
    30
    
    
    
    32129
    
    
    
    131Accumulated amortization:Customer relationships and lists
    
    
    (13
    )
    
    
    (11
    )Franchise/distribution rights
    
    
    (29
    )
    
    
    (27
    )Other identified intangibles
    
    
    (15
    )
    
    
    (16
    )(57
    )
    
    
    (54
    )Intangibles subject to amortization, net
    
    
    72
    
    
    
    77Intangibles not subject to amortization:Carrying amount:Franchise rights
    
    
    3,194
    
    
    
    3,128Licensing rights
    
    
    315
    
    
    
    Distribution rights
    
    
    299
    
    
    
    297Trademarks
    
    
    216
    
    
    
    215Other identified intangibles
    
    
    53
    
    
    
    51Intangibles not subject to amortization
    
    
    4,077
    
    
    
    3,691Total other intangible assets, net
    
    $
    4,149
    
    
    $
    3,768
    9




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U.S. & Canada
    
    
    Europe
    
    
    Mexico
    
    
    TotalBalance at December 30, 2006
    
    $
    1,229
    
    
    $
    16
    
    
    $
    245
    
    
    $
    1,490Purchase price allocations relating to acquisitions
    
    
    1
    
    
    
    
    
    
    
    (4
    )
    
    
    (3
    )Impact of foreign currency translation
    
    
    29
    
    
    
    
    
    
    
    1
    
    
    
    30Balance at June 16, 2007
    
    $
    1,259
    
    
    $
    16
    
    
    $
    242
    
    
    $
    1,517
  Note 7  Pension and Postretirement Medical Benefit Plans
 Employee Benefit Plans
  Defined Benefit Pension Plans
  Defined Contribution Benefits
   10




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12 Weeks Ended
    
    
    24 Weeks EndedJune
    
    
    June
    
    
    June
    
    
    June16, 2007
    
    
    17, 2006
    
    
    16, 2007
    
    
    17, 2006Service cost
    
    $
    12
    
    
    $
    12
    
    
    $
    25
    
    
    $
    24Interest cost
    
    
    21
    
    
    
    19
    
    
    
    42
    
    
    
    38Expected return on plan assets
    
    
    (23
    )
    
    
    (22
    )
    
    
    (47
    )
    
    
    (44
    )Amortization of prior service cost
    
    
    2
    
    
    
    2
    
    
    
    3
    
    
    
    4Amortization of net loss
    
    
    9
    
    
    
    9
    
    
    
    18
    
    
    
    18Net pension expense for the defined benefit plans
    
    
    21
    
    
    
    20
    
    
    
    41
    
    
    
    40Defined contribution plans expense
    
    
    7
    
    
    
    5
    
    
    
    13
    
    
    
    10Total U.S. pension expense recognized in the
Condensed Consolidated Statements of Operations
    
    $
    28
    
    
    $
    25
    
    
    $
    54
    
    
    $
    50
  Postretirement Medical Benefits
   12 Weeks Ended
    
    
    24 Weeks EndedJune
    
    
    June
    
    
    June
    
    
    June16, 2007
    
    
    17, 2006
    
    
    16, 2007
    
    
    17, 2006Service cost
    
    $
    1
    
    
    $
    1
    
    
    $
    2
    
    
    $
    2Interest cost
    
    
    4
    
    
    
    4
    
    
    
    9
    
    
    
    9Amortization of net loss
    
    
    1
    
    
    
    2
    
    
    
    2
    
    
    
    3Total U.S.
postretirement benefits
expense recognized in
the Condensed
Consolidated Statements
of Operations
    
    $
    6
    
    
    $
    7
    
    
    $
    13
    
    
    $
    14
 Note 8  Income Taxes
  ,
 11




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Note 9  Segment Information
   12




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12 Weeks Ended
    
    
    24 Weeks EndedJune
    
    
    June
    
    
    June
    
    
    JuneNet Revenues
    
    16, 2007
    
    
    17, 2006
    
    
    16, 2007
    
    
    17, 2006U.S. & Canada
    
    $
    2,527
    
    
    $
    2,422
    
    
    $
    4,629
    
    
    $
    4,458Europe
    
    
    468
    
    
    
    386
    
    
    
    644
    
    
    
    534Mexico
    
    
    365
    
    
    
    330
    
    
    
    553
    
    
    
    513Worldwide net revenues
    
    $
    3,360
    
    
    $
    3,138
    
    
    $
    5,826
    
    
    $
    5,505
 12 Weeks Ended
    
    
    24 Weeks EndedJune
    
    
    June
    
    
    June
    
    
    JuneOperating Income (Loss)
    
    16, 2007
    
    
    17, 2006
    
    
    16, 2007
    
    
    17, 2006U.S. & Canada
    
    $
    284
    
    
    $
    263
    
    
    $
    426
    
    
    $
    402Europe
    
    
    14
    
    
    
    12
    
    
    
    (11
    )
    
    
    (10
    )Mexico
    
    
    22
    
    
    
    28
    
    
    
    24
    
    
    
    30Worldwide operating income
    
    
    320
    
    
    
    303
    
    
    
    439
    
    
    
    422Interest expense
    
    
    55
    
    
    
    56
    
    
    
    108
    
    
    
    101Interest income
    
    
    47
    
    
    
    39
    
    
    
    91
    
    
    
    68Other non-operating (income) expenses, net
    
    
    (3
    )
    
    
    9
    
    
    
    (2
    )
    
    
    10Minority interest
    
    
    3
    
    
    
    
    
    
    
    4
    
    
    
    (1
    )Income before income taxes
    
    $
    312
    
    
    $
    277
    
    
    $
    420
    
    
    $
    380
 June
    
    
    DecemberTotal Assets
    
    16, 2007
    
    
    30, 2006U.S. & Canada
    
    $
    12,897
    
    
    $
    12,072Europe
    
    
    1,614
    
    
    
    1,072Mexico
    
    
    1,819
    
    
    
    1,811Worldwide total assets
    
    $
    16,330
    
    
    $
    14,955
 Note 10  Comprehensive Income
 12 Weeks Ended
    
    
    24 Weeks EndedJune
    
    
    June
    
    
    June
    
    
    June16, 2007
    
    
    17, 2006
    
    
    16, 2007
    
    
    17, 2006Net income
    
    $
    301
    
    
    $
    269
    
    
    $
    403
    
    
    $
    367Currency translation adjustment
    
    
    133
    
    
    
    (49
    )
    
    
    99
    
    
    
    (23
    )Cash flow hedge adjustment (a)
    
    
    
    
    
    
    (2
    )
    
    
    1
    
    
    
    11Amortization of prior service cost/
net loss in net periodic
pension/postretirement cost to
expense
    
    
    12
    
    
    
    N/A
    
    
    
    23
    
    
    
    N/APension liability adjustment (b)
    
    
    
    
    
    
    N/A
    
    
    
    5
    
    
    
    N/AComprehensive income
    
    $
    446
    
    
    $
    218
    
    
    $
    531
    
    
    $
    355
 
 (a)
    
    Net of taxes of $2 million and $0 million for the 12 and 24 weeks ended June 16, 2007 and June 17, 2006, respectively.(b)
    
    Net of taxes of $3 million for the 24 weeks ended June 16, 2007. 13




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Note 11  Contingencies
  14




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Item 2.  Managements Financial Review
 Overview
    Critical Accounting Policies
   
    
    Allowance for Doubtful Accounts;
 
    
    Recoverability of Goodwill and Intangible Assets with Indefinite Lives;
 
    
    Pension and Postretirement Medical Benefit Plans;
 
    
    Share-Based Compensation; and
 
    
    Income Taxes.
 Income Taxes
 ,
  15




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FINANCIAL PERFORMANCE SUMMARY
 12 Weeks Ended
    
    24 Weeks EndedJune
    
    June
    
    %
    
    June
    
    June
    
    %16, 2007
    
    17, 2006
    
    Change
    
    16, 2007
    
    17, 2006
    
    ChangeNet revenues
    
    $
    3,360
    
    
    $
    3,138
    
    
    
    7
    %
    
    $
    5,826
    
    
    $
    5,505
    
    
    
    6
    %Gross profit
    
    
    1,535
    
    
    
    1,453
    
    
    
    6
    %
    
    
    2,658
    
    
    
    2,549
    
    
    
    4
    %Operating income
    
    
    320
    
    
    
    303
    
    
    
    6
    %
    
    
    439
    
    
    
    422
    
    
    
    4
    %Net income
    
    
    301
    
    
    
    269
    
    
    
    12
    %
    
    
    403
    
    
    
    367
    
    
    
    10
    %
  
    16




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Full-Year 2007 Outlook
  Second Quarter 2007 Results
 Except where noted, tables and discussion are presented as compared to the similar periods in
the prior year. Growth rates are rounded to the nearest whole percentage. When used in these
tables, N/A describes the transaction categories that did not contribute any impact to the
overall cause of change.
 Volume
 12 Weeks Ended
    
    24 Weeks EndedJune 16, 2007 vs.
    
    June 16, 2007 vs.June 17, 2006
    
    June 17, 2006World
    
    U.S. &
    
    
    
    
    
    
    
    
    
    World
    
    U.S. &wide
    
    Canada
    
    Europe
    
    Mexico
    
    wide
    
    Canada
    
    Europe
    
    MexicoBase volume
    
    
    1
    %
    
    
    0
    %
    
    
    6
    %
    
    
    (2
    )%
    
    
    0
    %
    
    
    0
    %
    
    
    7
    %
    
    
    (2
    )%Acquisitions
    
    
    1
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    5
    %
    
    
    1
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    5
    %Total Volume
change
    
    
    2
    %
    
    
    0
    %
    
    
    6
    %
    
    
    3
    %
    
    
    1
    %
    
    
    0
    %
    
    
    7
    %
    
    
    3
    %
     17




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Net Revenues
 12 Weeks Ended
    
    24 Weeks EndedJune 16, 2007 vs.
    
    June 16, 2007 vs.June 17, 2006
    
    June 17, 2006Worldwide
    
    U.S. & Canada
    
    Europe
    
    Mexico
    
    Worldwide
    
    U.S. & Canada
    
    Europe
    
    MexicoVolume impact
    
    
    1
    %
    
    
    0
    %
    
    
    6
    %
    
    
    (2
    )%
    
    
    0
    %
    
    
    0
    %
    
    
    7
    %
    
    
    (2
    )%Net price per case
impact (rate/mix)
    
    
    5
    %
    
    
    4
    %
    
    
    9
    %
    
    
    6
    %
    
    
    4
    %
    
    
    4
    %
    
    
    7
    %
    
    
    5
    %Acquisitions
    
    
    0
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    6
    %
    
    
    1
    %
    
    
    N/A
    %
    
    
    N/A
    
    
    
    6
    %Currency translation
    
    
    1
    %
    
    
    0
    %
    
    
    6
    %
    
    
    0
    %
    
    
    1
    %
    
    
    0
    %
    
    
    6
    %
    
    
    (1
    )%Total Net Revenues change
    
    
    7
    %
    
    
    4
    %
    
    
    21
    %
    
    
    10
    %
    
    
    6
    %
    
    
    4
    %
    
    
    20
    %
    
    
    8
    %
      18




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##### Table of Contents



Cost of Sales
 12 Weeks Ended
    
    24 Weeks EndedJune 16, 2007 vs.
    
    June 16, 2007 vs.June 17, 2006
    
    June 17, 2006Worldwide
    
    WorldwideVolume impact
    
    
    1
    %
    
    
    0
    %Cost per case impact
    
    
    6
    %
    
    
    6
    %Acquisitions
    
    
    0
    %
    
    
    1
    %Currency translation
    
    
    1
    %
    
    
    0
    %Total Cost of Sales change
    
    
    8
    %
    
    
    7
    %
    Selling, Delivery and Administrative Expenses
 12 Weeks Ended
    
    24 Weeks EndedJune 16, 2007 vs.
    
    June 16, 2007 vs.June 17, 2006
    
    June 17, 2006Worldwide
    
    WorldwideCost impact
    
    
    4
    %
    
    
    3
    %Acquisitions
    
    
    1
    %
    
    
    1
    %Currency translation
    
    
    1
    %
    
    
    0
    %Total SD&A change
    
    
    6
    %
    
    
    4
    %
  19




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##### Table of Contents



Interest Expense
  Interest Income
  Other Non-operating (Income) Expenses, net
  Income Tax Expense
  Liquidity and Financial Condition
 Cash Flows
 24 Weeks Ended June 16, 2007 vs. June 17, 2006
   20




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##### Table of Contents



Liquidity and Capital Resources
  Contractual Obligations
  Off-Balance Sheet Arrangements
    21




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##### Table of Contents



Cautionary Statements
  
    
    changes in our relationship with PepsiCo that could have a material adverse effect on our long-term and short-term
business and financial results;
 
    
    material changes in expected levels of bottler incentive payments from PepsiCo;
 
    
    restrictions imposed by PepsiCo on our raw material suppliers that could increase our costs;
 
    
    material changes from expectations in the cost or availability of raw materials, ingredients or packaging
materials;
 
    
    limitations on the availability of water or obtaining water rights;
 
    
    an inability to achieve cost savings;
 
    
    material changes in capital investment for infrastructure and an inability to achieve the expected timing for
returns on cold-drink equipment and related infrastructure expenditures;
 
    
    decreased demand for our product resulting from changes in consumers preferences;
 
    
    an inability to achieve volume growth through product and packaging initiatives;
 
    
    impact of competitive activities on our business;
 
    
    impact of customer consolidations on our business;
 
    
    changes in product category consumption;
 
    
    unfavorable weather conditions in our markets;
 
    
    an inability to meet projections for performance in newly acquired territories;
 
    
    loss of business from a significant customer;
 
    
    failure or inability to comply with laws and regulations;
 
    
    changes in laws, regulations and industry guidelines governing the manufacture and sale of food and beverages,
including restrictions on the sale of carbonated soft drinks in schools;
 
    
    litigation, other claims and negative publicity relating to the alleged unhealthy properties of soft drinks;
 
    
    changes in laws and regulations governing the environment, transportation, employee safety, labor and government
contracts;
 
    
    changes in accounting standards and taxation requirements (including unfavorable outcomes from audits performed by
various tax authorities);
 
    
    unforeseen economic and political changes;
 
    
    possible recalls of our products;
 
    
    interruptions of operations due to labor disagreements;
 
    
    changes in our debt ratings;
 
    
    material changes in expected interest and currency exchange rates and unfavorable market performance of PBGs
pension plan assets; and
 
    
    an inability to achieve strategic business plan targets that could result in an intangible asset impairment charge.
 22




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##### Table of Contents



Item 3.
 Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4.
 Controls and Procedures
   23




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1.
 Legal Proceedings
  
 Item 6.
 Exhibits
 Exhibit No.31.1
    
    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 June 16, 2007, 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.
 24




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##### Table of Contents



SIGNATURES
  BOTTLING GROUP, LLC.(Registrant)Date: July 24, 2007
    /s/ Thomas M. LardieriThomas M. LardieriPrincipal Accounting Officer and
Managing DirectorDate: July 24, 2007
    /s/ Alfred H. DrewesAlfred H. DrewesPrincipal Financial Officer