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 12, 2004
                               -------------

                                       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 incorporation 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 10, 2004:
254,345,509

<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 12, 2004 and June 14, 2003                              2

                      Condensed Consolidated Statements of Cash Flows -
                           24 weeks ended June 12, 2004 and June 14, 2003                                     3

                      Condensed Consolidated Balance Sheets -
                           June 12, 2004 and December 27, 2003                                                4

                      Notes to Condensed Consolidated Financial Statements                                 5-11

                      Report of Independent Registered Public Accounting Firm                                12

      Item 2.         Management's Financial Review                                                       13-19

      Item 3.         Quantitative and Qualitative Disclosures About Market Risk                             20

      Item 4.         Controls and Procedures                                                                20

Part II               Other Information

      Item 1.         Legal Proceedings                                                                      21

      Item 2.         Changes in Securities, Use of Proceeds and Issuer Purchases
                             of Equity Securities                                                         21-22

      Item 4.         Submission of Matters to a Vote of Security Holders                                    22

      Item 5.         Other Information                                                                      23

      Item 6.         Exhibits and Reports on Form 8-K                                                       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 12,  June 14,      June 12,   June 14,
                                                                                   2004      2003          2004       2003
                                                                                 ------     ------        ------     ------

<S>                                                                              <C>        <C>           <C>        <C>
     Net revenues............................................................... $2,675     $2,532        $4,742     $4,406
     Cost of sales..............................................................  1,378      1,290         2,429      2,217
                                                                                 ------     ------        ------     ------

     Gross profit...............................................................  1,297      1,242         2,313      2,189
     Selling, delivery and administrative expenses..............................  1,011        971         1,890      1,798
                                                                                 ------     ------        ------     ------

     Operating income...........................................................    286        271           423        391
     Interest expense, net......................................................     53         57           108        110
     Other non-operating expenses, net..........................................      2          -             2          3
     Minority interest..........................................................     15         15            21         20
                                                                                 ------     ------        ------     ------

     Income before income taxes.................................................    216        199           292        258
     Income tax expense.........................................................     74         68           100         88
                                                                                 ------     ------        ------     ------

     Income before cumulative effect of change in accounting
     principle..................................................................    142        131           192        170
     Cumulative effect of change in accounting principle, net of
     tax and minority interest..................................................      -          -             -          6
                                                                                 ------     ------        ------     ------

     Net income................................................................. $  142     $  131        $  192     $  164
                                                                                 ======     ======        ======     ======

     Basic  earnings per share before  cumulative  effect of change
     in accounting principle.................................................... $ 0.55     $ 0.48        $ 0.74     $ 0.61
     Cumulative effect of change in accounting principle........................      -          -             -      (0.02)
                                                                                 ------     ------        ------     ------
     Basic earnings per share................................................... $ 0.55     $ 0.48        $ 0.74     $ 0.59
                                                                                 ======     ======        ======     ======

     Weighted-average shares outstanding........................................    258        273           259        276

     Diluted earnings per share before  cumulative effect of change
     in accounting principle.................................................... $ 0.53     $ 0.47        $ 0.72     $ 0.60
     Cumulative effect of change in accounting principle........................      -          -             -      (0.02)
                                                                                 ------     ------        ------     ------
     Diluted earnings per share................................................. $ 0.53     $ 0.47        $ 0.72     $ 0.58
                                                                                 ======     ======        ======     ======

     Weighted-average shares outstanding........................................    267        279           268        283
</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 12,      June 14,
                                                                                        2004          2003
                                                                                       ------        ------
    Cash Flows - Operations
<S>                                                                                    <C>           <C>
      Net income................................................................       $  192        $  164
      Adjustments to reconcile net income to net cash provided by operations:
        Depreciation............................................................          258           244
        Amortization............................................................            6             4
        Deferred income taxes...................................................           31            34
        Cumulative effect of change in accounting principle.....................            -             6
        Other non-cash charges and credits, net.................................          122           142
        Changes in operating working capital, excluding effects of acquisitions:
         Accounts receivable, net...............................................         (242)         (256)
         Inventories, net.......................................................         (126)          (68)
         Prepaid expenses and other current assets..............................           (8)          (18)
         Accounts payable and other current liabilities.........................          121           (41)
         Income taxes payable...................................................           30            20
                                                                                       ------        ------
        Net change in operating working capital ................................         (225)         (363)
                                                                                       ------        ------
         Pension contributions..................................................          (51)            -
         Other, net.............................................................          (20)          (16)
                                                                                       ------        ------

    Net Cash Provided by Operations.............................................          313           215
                                                                                       ------        ------

    Cash Flows - Investments
      Capital expenditures......................................................         (270)         (282)
      Acquisitions of bottlers..................................................           (7)          (83)
      Sale of property, plant and equipment.....................................            5             2
                                                                                       ------        ------

    Net Cash Used for Investments...............................................         (272)         (363)
                                                                                       ------        ------

    Cash Flows - Financing
      Short-term borrowings - three months or less..............................          200            84
      Proceeds from issuance of long-term debt..................................           17           248
      Repayments of long-term debt..............................................       (1,008)           (3)
      Dividends paid............................................................           (5)           (6)
      Proceeds from exercise of stock options...................................           65            21
      Purchases of treasury stock...............................................         (298)         (228)
                                                                                       ------        ------

    Net Cash (Used for) Provided by Financing...................................       (1,029)          116
                                                                                       ------        ------

    Effect of Exchange Rate Changes on Cash and Cash Equivalents................           (2)            3
                                                                                       ------        ------
    Net Decrease in Cash and Cash Equivalents...................................         (990)          (29)
    Cash and Cash Equivalents - Beginning of Period.............................        1,235           222
                                                                                       ------        ------
    Cash and Cash Equivalents - End of Period...................................       $  245        $  193
                                                                                       ======        ======
    Supplemental Cash Flow Information
    Net third-party interest paid...............................................       $  130        $  120
                                                                                       ======        ======
    Income taxes paid...........................................................       $   39        $   39
                                                                                       ======        ======
</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 12,   December 27,
                                                                                        2004         2003
                                                                                      -------       -------
    Assets
    Current Assets
<S>                                                                                   <C>           <C>
     Cash and cash equivalents..................................................      $   245       $ 1,235
     Accounts receivable, less allowance of $67 at
        June 12, 2004 and $72 at December 27, 2003..............................        1,202           994
     Inventories................................................................          497           374
     Prepaid expenses and other current assets..................................          254           268
     Investment in debt defeasance trust........................................            -           168
                                                                                      -------       -------
        Total Current Assets....................................................        2,198         3,039

    Property, plant and equipment, net.........................................         3,399         3,423
    Other intangible assets, net...............................................         3,525         3,562
    Goodwill...................................................................         1,389         1,386
    Other assets...............................................................           130           134
                                                                                      -------       -------
        Total Assets............................................................      $10,641       $11,544
                                                                                      =======       =======

    Liabilities and Shareholders' Equity
    Current Liabilities
     Accounts payable and other current liabilities.............................      $ 1,346       $ 1,231
     Short-term borrowings......................................................          265            67
     Current maturities of long-term debt.......................................           28         1,180
                                                                                      -------       -------
        Total Current Liabilities...............................................        1,639         2,478

    Long-term debt.............................................................         4,467         4,493
    Other liabilities..........................................................           906           875
    Deferred income taxes......................................................         1,420         1,421
    Minority interest..........................................................           413           396
                                                                                      -------       -------
        Total Liabilities.......................................................        8,845         9,663
                                                                                      -------       -------

    Shareholders' Equity
     Common stock, par value $0.01 per share:
       authorized 900 shares, issued 310 shares.................................            3             3
     Additional paid-in capital.................................................        1,735         1,743
     Retained earnings..........................................................        1,648         1,471
     Accumulated other comprehensive loss.......................................         (440)         (380)
     Deferred compensation......................................................           (4)           (4)
     Treasury stock: 55 shares and 49 shares at June 12, 2004 and December 27,
       2003, respectively.......................................................       (1,146)         (952)
                                                                                      -------       -------
        Total Shareholders' Equity..............................................        1,796         1,881
                                                                                      -------       -------
        Total Liabilities and Shareholders' Equity..............................      $10,641       $11,544
                                                                                      =======       =======
</TABLE>

     See accompanying notes to Condensed Consolidated Financial Statements.


                                       -4-
<PAGE>



Notes to Condensed Consolidated Financial Statements
Tabular dollars in millions, except per share data
--------------------------------------------------------------------------------

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. When used in these Condensed  Consolidated  Financial
Statements, "PBG," "we," "our" and "us" each refers to The Pepsi Bottling Group,
Inc. and,  where  appropriate,  to Bottling  Group,  LLC ("Bottling  LLC"),  our
principal operating subsidiary.

     As of June 12, 2004,  PepsiCo  Inc.'s  ("PepsiCo")  ownership  consisted of
41.5% of our outstanding common stock and 100% of our outstanding Class B common
stock,  together  representing  46.7% 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 12, 2004, the
Condensed  Consolidated  Statements of Operations for the twelve and twenty-four
weeks  ended  June 12,  2004 and June 14,  2003 and the  Condensed  Consolidated
Statements of Cash Flows for the twenty-four  weeks ended June 12, 2004 and June
14,  2003 have not been  audited,  but have been  prepared  in  conformity  with
accounting  principles  generally  accepted in the United  States of America 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 27, 2003 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.

     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 2003 amounts to conform to the 2004 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>



Note 3 - New Accounting Standards

     EITF 02-16

     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  consideration  given by a
vendor to a customer.  The consensus  requires  that certain cash  consideration
received by a customer  from a vendor is 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.  Prior to 2003, 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.  During
2003,  we  recorded a  transition  adjustment  of $6  million,  net of taxes and
minority interest of $1 million,  for the cumulative effect on prior years. This
adjustment  reflects the amount of bottler  incentives that can be attributed to
our 2003 beginning inventory balances.

     FASB Staff Position FAS 106-2

     During  the  second  quarter,  the  Financial  Accounting  Standards  Board
("FASB")  issued  FASB Staff  Position  FAS 106-2,  "Accounting  and  Disclosure
Requirements  Relating  to  the  Medicare  Prescription  Drug,  Improvement  and
Modernization  Act of 2003".  See Note 8 - Pension  and  Postretirement  Benefit
Plans for further details regarding the impact of FASB Staff Position FAS 106-2.

     Share-Based Payments

     The FASB has issued an exposure  draft  proposing to expense the fair value
of  share-based  payments  to  employees  beginning  in 2005.  We are  currently
evaluating the impact of this proposed standard on our financial statements.


Note 4 - 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  Statement  of
Financial  Accounting  Standards  ("SFAS") No. 148,  "Accounting for Stock-Based
Compensation-Transition  and  Disclosure,"  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,  "Accounting  for  Stock-Based
Compensation." If we had measured compensation cost for the stock 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:



                                      -6-
<PAGE>

<TABLE>
<CAPTION>

                                                                           12 Weeks Ended              24 Weeks Ended
                                                                           --------------              --------------
                                                                       June 12,      June 14,       June 12,      June 14,
                                                                         2004          2003           2004          2003
                                                                        -----         -----          -----         -----
Net income:
<S>                                                                     <C>           <C>            <C>           <C>
As reported.....................................................        $ 142         $ 131          $ 192         $ 164
Add:  Total stock-based employee compensation expense
       included in reported net income, net of taxes and
       minority interest.........................................           0             1              1             2
Less: Total stock-based employee compensation expense
       determined under fair-value based method for all
       awards, net of taxes and minority interest................          (9)          (10)           (19)          (20)
                                                                        -----         -----          -----         -----

Pro forma.......................................................        $ 133         $ 122          $ 174         $ 146
                                                                        =====         =====          =====         =====

Earnings per share:
   Basic - as reported..........................................        $0.55         $0.48          $0.74         $0.59
   Basic - pro forma............................................         0.52          0.44           0.67          0.53
   Diluted - as reported........................................        $0.53         $0.47          $0.72         $0.58
   Diluted - pro forma..........................................         0.50          0.44           0.64          0.52
</TABLE>


     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.

     The fair value of PBG stock  options  used to compute  pro forma net income
disclosures  was  estimated  on  the  date  of  grant  using  the  Black-Scholes
option-pricing model based on the following weighted-average assumptions:

<TABLE>
<CAPTION>

                                                                          12 Weeks Ended               24 Weeks Ended
                                                                          --------------               --------------
                                                                       June 12,      June 14,       June 12,      June 14,
                                                                         2004          2003           2004          2003
                                                                        -----         -----          -----         -----
<S>                                                                      <C>           <C>            <C>          <C>
Risk-free interest rate.........................................         3.1%          3.0%           3.2%         2.8%
Expected life...................................................       6 years       6 years        6 years      6 years
Expected volatility.............................................          35%           37%            35%          37%
Expected dividend yield.........................................        0.66%         0.22%          0.68%        0.17%


Note 5 - Inventories
                                                                       June 12,    December 27,
                                                                         2004          2003
                                                                        -----         -----
Raw materials and supplies......................................        $ 178         $ 140
Finished goods..................................................          319           234
                                                                        -----         -----
                                                                        $ 497         $ 374
                                                                        =====         =====
</TABLE>



                                      -7-
<PAGE>

<TABLE>
<CAPTION>


Note 6 - Property, plant and equipment, net
                                                                      June 12,    December 27,
                                                                        2004          2003
                                                                      -------       -------
<S>                                                                   <C>           <C>
Land............................................................      $   253       $   241
Buildings and improvements......................................        1,211         1,185
Manufacturing and distribution equipment........................        3,033         3,028
Marketing equipment.............................................        2,172         2,131
Other...........................................................          174           176
                                                                      -------       -------
                                                                        6,843         6,761
Accumulated depreciation........................................       (3,444)       (3,338)
                                                                      -------       -------
                                                                      $ 3,399       $ 3,423
                                                                      =======       =======

Note 7 - Other intangible assets, net and Goodwill
                                                                      June 12,    December 27,
                                                                        2004          2003
                                                                      -------       -------
Intangibles subject to amortization:
     Gross carrying amount:
         Customer relationships and lists ......................      $    45          $ 42
         Franchise rights.......................................           24            23
         Other identified intangibles...........................           28            27
                                                                      -------       -------
                                                                           97            92
                                                                      -------       -------
     Accumulated amortization:
         Customer relationships and lists ......................           (4)           (3)
         Franchise rights.......................................          (12)          (10)
         Other identified intangibles...........................          (15)          (12)
                                                                      -------       -------
                                                                          (31)          (25)
                                                                      -------       -------
Intangibles subject to amortization, net........................           66            67
                                                                      -------       -------

Intangibles not subject to amortization:
     Carrying amount:
         Franchise rights.......................................        2,883         2,908
         Distribution rights....................................          280           286
         Trademarks.............................................          203           207
         Other identified intangibles...........................           93            94
                                                                      -------       -------
     Intangibles not subject to amortization....................        3,459         3,495
                                                                      -------       -------
Total other intangible assets, net..............................      $ 3,525       $ 3,562
                                                                      =======       =======

Goodwill........................................................      $ 1,389       $ 1,386
                                                                      =======       =======
</TABLE>



                                      -8-
<PAGE>



     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 $6 million  and $4  million  for the
twenty-four  weeks  ended June 12,  2004 and June 14,  2003,  respectively.  The
weighted-average  amortization period for each category of intangible assets and
their estimated  aggregate  amortization  expense expected to be recognized over
the next five years are as follows:

<TABLE>
<CAPTION>

                                          Weighted-Average   Estimated Aggregate Amortization Expense to be Incurred
                                          ----------------   -------------------------------------------------------
                                            Amortization
                                            ------------
                                              Period
                                              -------
                                                             Balance of                 Fiscal Year Ending
                                                             ----------                 ------------------
                                                               2004         2005        2006        2007         2008
                                                               ----         ----        ----        ----         ----
<S>                                          <C>                <C>          <C>         <C>         <C>          <C>
Customer relationships and lists..........   17-20 years        $1           $3          $3          $3           $3
Franchise rights..........................       5 years        $2           $5          $2          $1           $-
Other identified intangibles..............       6 years        $3           $4          $3          $2           $1
</TABLE>


Note 8 -  Pension and Postretirement Benefit Plans

     Pension Benefits

     Our U.S. employees  participate in noncontributory  defined benefit pension
plans, which cover  substantially all full-time salaried  employees,  as well as
most  hourly  employees.  Benefits  generally  are based on years of service and
compensation,  or stated amounts for each year of service.  All of our qualified
plans are funded and  contributions  are made in amounts  not less than  minimum
statutory funding  requirements and not more than the maximum amount that can be
deducted for U.S.  income tax purposes.  Our net pension expense for the defined
benefit plans for our operations outside the U.S. was not significant and is not
included in the tables presented below.

     Our U.S.  employees are also eligible to  participate in our 401(k) savings
plans,  which  are  voluntary  defined  contribution  plans.  We  make  matching
contributions to the 401(k) savings plans on behalf of participants  eligible to
receive such  contributions.  If a participant  has one or more but less than 10
years of  eligible  service,  our match  will  equal  $0.50 for each  dollar the
participant  elects  to  defer  up  to 4%  of  the  participant's  pay.  If  the
participant has 10 or more years of eligible service, our match will equal $1.00
for each dollar the  participant  elects to defer up to 4% of the  participant's
pay.



                                      -9-
<PAGE>



     Components  of our  pension  expense for the twelve and  twenty-four  weeks
ended June 12, 2004 and June 14, 2003 are as follows:
<TABLE>
<CAPTION>

                                                                        12 Weeks Ended          24 Weeks Ended
                                                                        --------------          --------------
                                                                      June 12,   June 14,      June 12,  June 14,
                                                                       2004       2003           2004      2003
                                                                      -----      -----          ------    ------
<S>                                                                   <C>        <C>            <C>       <C>
   Service cost.................................................      $ 10       $  9           $ 20      $ 17
   Interest cost................................................        16         14             32        29
   Expected return on plan assets...............................       (19)       (16)           (38)      (31)
   Amortization of prior service cost...........................         2          2              3         3
   Amortization of net loss.....................................         5          3             11         6
                                                                      ----       ----           ----      ----
   Net pension expense for the defined benefit plans............        14         12             28        24
                                                                      ----       ----           ----      ----

   Defined contribution plans expense...........................         5          4             10         9
                                                                      ----       ----           ----      ----

   Total pension expense recognized in the Condensed
   Consolidated Statements of Operations........................      $ 19       $ 16           $ 38      $ 33
                                                                      ====       ====           ====      ====
</TABLE>

     We expect to  contribute  $100 million to our pension  plans in 2004. As of
June 12, 2004, $51 million of contributions to our pension plans have been made.

     Postretirement Benefits

     Our  postretirement  plans  provide  medical  and life  insurance  benefits
principally to U.S.  retirees and their  dependents.  Employees are eligible for
benefits if they meet age and service  requirements  and qualify for  retirement
benefits.  The plans are not funded and since 1993 have  included  retiree  cost
sharing.

     Components  of our  postretirement  benefits  expense  for the  twelve  and
twenty-four weeks ended June 12, 2004 and June 14, 2003 are as follows:
<TABLE>
<CAPTION>

                                                                       12 Weeks Ended           24 Weeks Ended
                                                                       --------------           --------------
                                                                     June 12,   June 14,      June 12,   June 14,
                                                                       2004       2003           2004      2003
                                                                      -----      -----          -----     ------
<S>                                                                    <C>        <C>           <C>       <C>
   Service cost.................................................       $ 1        $ 1           $  2      $  2
   Interest cost................................................         4          4              9         9
   Amortization of net loss.....................................         1          1              2         1
                                                                       ---        ---           ----      ----
   Net postretirement benefits expense recognized in the
   Condensed Consolidated Statements of Operations..............       $ 6        $ 6           $ 13      $ 12
                                                                       ===        ===           ====      ====
</TABLE>

     On May 19, 2004,  FASB Staff  Position No. FAS 106-2  ("FSP") was issued by
FASB to provide guidance  relating to the prescription  drug subsidy provided by
the  Medicare  Prescription  Drug,  Improvement  and  Modernization  Act of 2003
("Act").  We currently  provide  postretirement  benefits to a group of retirees
(employees who retired prior to 1993) with little or no cost sharing.  For these
retirees, the prescription drug benefit provided by us would be considered to be
actuarially equivalent to the benefit provided under the Act. Therefore, we have
retroactively applied the FSP to the date of enactment. As a result:

     o The obligation  (Accumulated  Projected Benefit Obligation)  decreased by
       $11.7 million, and



                                      -10-
<PAGE>



     o The net periodic  postretirement  benefits cost decreased by $0.3 million
       for twelve and twenty-four weeks ended June 12, 2004

     We also  provide  postretirement  benefits  to  another  group of  retirees
(employees  who retired  after 1992) with cost sharing.  At present,  due to the
lack of clarifying  regulations  related to the Act, we cannot  determine if the
benefit provided by us would be considered actuarially equivalent to the benefit
provided under the Act.

Note 9 - 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 12,      June 14,       June 12,     June 14,
                                                                    2004          2003           2004         2003
                                                                 --------      --------       --------     --------
<S>                                                              <C>           <C>            <C>          <C>
U.S..........................................................    $ 1,909       $ 1,797        $ 3,535      $ 3,293
Mexico.......................................................        276           308            434          465
Other countries..............................................        490           427            773          648
                                                                 -------       -------        -------      -------
                                                                 $ 2,675       $ 2,532        $ 4,742      $ 4,406
                                                                 =======       =======        =======      =======

Long-Lived Assets                                                 June 12,    December 27,
-----------------                                                   2004          2003
                                                                 --------      --------
U.S..........................................................    $ 5,715       $ 5,723
Mexico.......................................................      1,422         1,432
Other countries..............................................      1,306         1,350
                                                                 -------       -------
                                                                 $ 8,443       $ 8,505
                                                                 =======       =======
</TABLE>



Note 10 - Comprehensive Income
<TABLE>
<CAPTION>

                                                                     12 Weeks Ended               24 Weeks Ended
                                                                     --------------               --------------
                                                                  June 12,       June 14,      June 12,     June 14,
                                                                    2004          2003           2004         2003
                                                                   ------        ------        -------       ------
<S>                                                                <C>           <C>            <C>          <C>
Net income...................................................      $ 142         $ 131          $ 192        $ 164
Currency translation adjustment..............................        (59)          166            (57)         142
Cash flow hedge adjustment (a) (b)...........................         (4)            -             (3)           7
                                                                   -----         -----          -----        -----
Comprehensive income.........................................      $  79         $ 297          $ 132        $ 313
                                                                   =====         =====          =====        =====
</TABLE>

(a) Net of minority  interest and taxes of $4 and $0 for the 12 weeks ended June
    12, 2004 and June 14, 2003, respectively.
(b) Net of minority  interest and taxes of $3 and $6 for the  twenty-four  weeks
    ended June 12, 2004 and June 14, 2003, respectively.

Note 11 - 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 likely to
have a material adverse effect on our results of operations, financial condition
or liquidity.



                                      -11-
<PAGE>



             Report of Independent Registered Public Accounting Firm
             -------------------------------------------------------


The Board of Directors & Shareholders of
The Pepsi Bottling Group, Inc:

We have reviewed the accompanying  condensed  consolidated  balance sheet of The
Pepsi Bottling  Group,  Inc. and  subsidiaries  as of June 12, 2004, the related
condensed  consolidated  statements  of  operations  for  the  twelve  week  and
twenty-four  week periods  ended June 12, 2004 and June 14, 2003,  respectively,
and the related condensed consolidated  statements of cash flows for the twenty-
four  week  periods  ended  June 12,  2004 and June 14,  2003.  These  condensed
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.

We conducted our reviews in accordance with standards  established by the Public
Company  Accounting  Oversight  Board  (United  States).  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 the
standards of the Public Company Accounting  Oversight Board (United States), 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 reviews, 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 standards  established by the
Public Company  Accounting  Oversight Board (United  States),  the  consolidated
balance sheet of The Pepsi Bottling Group,  Inc. and subsidiaries as of December
27, 2003, and the related consolidated statements of operations,  cash flows and
changes in  shareholders'  equity,  for the fiscal year then ended not presented
herein;  and in our report dated January 27, 2004,  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 27, 2003, 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, 2004



                                      -12-
<PAGE>



Item 2.
Management's Financial Review
Tabular dollars in millions, except per share data

OVERVIEW
--------

     The Pepsi  Bottling  Group,  Inc.  ("PBG" or the  "Company") 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. When used in these Condensed Consolidated  Financial Statements,  "PBG,"
"we," "our" and "us" each refers to The Pepsi  Bottling  Group,  Inc. and, where
appropriate,  to Bottling Group, LLC ("Bottling  LLC"), our principal  operating
subsidiary .

     Management's  Financial  Review  should  be read in  conjunction  with  the
accompanying  unaudited financial  statements and our Annual Report on Form 10-K
for  the  fiscal  year  ended  December  27,  2003,  which  include   additional
information about our accounting  policies,  practices and the transactions that
underlie our financial results.

Financial Performance Summary
-----------------------------
<TABLE>
<CAPTION>

                                                 12 Weeks Ended                         24 Weeks Ended
                                                 --------------                         --------------
                                     June 12,        June 14,      %         June 12,       June 14,         %
                                       2004            2003      Change        2004           2003         Change
                                     -------         -------     ------      -------        -------        ------


<S>                                  <C>             <C>           <C>       <C>            <C>              <C>
Net revenues.......................  $2,675          $2,532        6%        $4,742         $4,406           8%

Operating income...................     286             271        6%           423            391           8%

Income before cumulative effect
of change in accounting
principle 1........................     142             131        9%           192            170          13%

Net income.........................     142             131        9%           192            164          17%

Diluted earnings per share
before cumulative effect of
change in accounting
principle 1, 2.....................  $ 0.53          $ 0.47       14%        $ 0.72         $ 0.60          20%

Diluted earnings per share 2.......  $ 0.53          $ 0.47       14%        $ 0.72         $ 0.58          24%
</TABLE>

1 - Cumulative  effect of change in  accounting  principle  for the  twenty-four
weeks  ended June 14,  2003,  reflects  the impact of adoption of EITF Issue No.
02-16.  See  Note  3 - New  Accounting  Standards  in  the  Notes  to  Condensed
Consolidated Financial Statements for more information.

2 - Percentage  change for diluted  earnings per share and diluted  earnings per
share before cumulative  effect of change in accounting  principle is calculated
by using earnings per share data that is expanded to the fourth decimal place.


     For the second quarter,  diluted  earnings per share increased 14% to $0.53
and operating income grew 6% to $286 million,  reflecting strong topline results
in the United States.  This growth was driven by both volume and net revenue per
case  improvements.   Worldwide  volume  increased  2%  in  the  second  quarter
reflecting solid volume growth in the U.S. and Europe, partially offset by



                                      -13-
<PAGE>



volume declines in Mexico. Worldwide net revenue per case growth increased 4% in
the second quarter,  exceeding our expectations.  We have remained  committed to
our pricing  principles,  and continue to seek opportunities for net revenue per
case gains by leveraging both rate and mix strategies.

     Due to the solid  earnings  growth in the first  half of the year,  we have
raised  our  full-year  earnings  expectations  for  2004 to a range of $1.68 to
$1.74.  For the full year of 2004,  operating  income is expected to grow in the
mid-single  digits  driven by volume growth of 2% to 3% and net revenue per case
growth of 2% to 3%. Our cost of goods sold per case is expected to grow 3% to 5%
for the full year of 2004. We expect our full year outlook of operating  profits
for Mexico to be at the lower end of our guidance of $75 million to $85 million.

Volume
                           12 Weeks Ended                24 Weeks Ended
                         June 12, 2004 vs.               June 12, 2004 vs.
                           June 14, 2003                  June 14, 2003
                         -----------------               -----------------
                     World-                Outside     World-            Outside
                      wide        U.S.     the U.S.     wide      U.S.   the U.S
                     ------      ------    --------    ------    ------  -------
Volume change .....    2 %         3 %        1 %        3 %       4 %      2 %

     Our  reported  worldwide  physical  case volume  increased 2% in the second
quarter  and 3% in the  first  twenty-four  weeks of 2004,  when  compared  with
similar periods of 2003. The increase in reported worldwide volume was driven by
strong  growth in the U.S. and Europe,  partially  offset by volume  declines in
Mexico.

     In the U.S., our reported volume  increased by 3% in the second quarter and
4% on a  year-to-date  basis due to growth in both the  cold-drink and take-home
channels of our  business.  As consumers  continue to seek a greater  variety of
beverages,  we have seen  corresponding  growth in our  non-carbonated  beverage
portfolios,  driven  by  AQUAFINA  and  TROPICANA  juice  drinks.  Additionally,
Trademark  PEPSI  has  continued  to  show  positive  results  reflecting  solid
contributions from our diet portfolio as well as the addition of PEPSI VANILLA.

     In Europe,  volume grew 10% in the second quarter and 12% on a year-to-date
basis,  driven by strong  performances in Russia and Turkey.  In Russia,  we had
solid growth in our core brands,  coupled  with  contributions  from new product
introductions, including TROPICANA juice drinks and LIPTON ICED TEAS. In Turkey,
there was continued improved execution in the marketplace, particularly with our
large format customers,  resulting  primarily from an improvement in our selling
and distribution capabilities.

     Excluding the impact of  acquisitions,  Mexico's  volume declined 7% in the
second quarter and 5% on a year-to-date basis, which was below our expectations.
Mexico's  volume  declines  were driven  primarily  by softness in our jug water
business.  As jug water comprises 40% of Mexico's volume,  one of our priorities
is to develop this key component  our business.  There were also declines in our
carbonated  soft drink  volume in Mexico,  however,  we saw  continued  positive
trends in our eight-ounce  equivalent case volume (one eight-ounce case is equal
to 192 U.S.  fluid ounces of finished  beverages),  resulting  from the upsizing
initiatives of the 2.5-liter carbonated soft drink package.

     Our  worldwide  volume in the second  half of 2004 is  expected to grow 2%,
reflecting growth in the United States of 1% and a continued strong  performance
in Europe.  In Mexico,  for the second  half of 2004,  we expect  physical  case
volume declines in the low single digits.



                                      -14-
<PAGE>



Net Revenues
<TABLE>
<CAPTION>

                                                   12 Weeks Ended          24 Weeks Ended
                                                 June 12, 2004 vs.        June 12, 2004 vs.
                                                   June 14, 2003           June 14, 2003
                                                 -----------------        -----------------
                                             World-         Outside     World-           Outside
                                              wide   U.S.   the U.S.     wide    U.S.    the U.S.
                                             -----   ----   --------    -----   -----    --------
<S>                                            <C>    <C>     <C>         <C>     <C>      <C>
Volume impact.........................         2 %    3 %     1 %         3 %     4 %      2 %
Net price per case impact (rate/mix)..         4 %    3 %     2 %         4 %     3 %      3 %
Effect of currency translations.......         0 %    0 %     1 %         1 %     0 %      3 %
                                             -----   -----   -----       -----   -----   -----
    Total Net Revenues change.........         6 %    6 %     4 %         8 %     7 %      8 %
                                             =====   =====   =====       =====   =====   =====
</TABLE>

     Net revenues were $2.7 billion for the second  quarter and $4.7 billion for
the  first  twenty-four  weeks in 2004,  a 6% and 8%  respective  increase  over
similar  periods in 2003. The increases in net revenues for the quarter and on a
year-to-date  basis  were  driven by  improvements  in volume  and growth in net
revenue per case of 4%.

     In the U.S., net revenues increased 6% in the second quarter and 7% for the
first twenty-four weeks of 2004, when compared with the similar periods of 2003.
The  increases in net revenues in the U.S.  were driven by growth in both volume
and net price per case.  The 3% increase  in net price per case in the U.S.  for
the  quarter  and on a  year-to-date  basis  was  due to a  combination  of rate
increases and mix benefits.  Net price per case in the U.S. continues to benefit
from the strong cold drink growth, which is our most profitable  business.  This
growth was driven by the additional  space we allocated to our core soft drinks,
as well as the  introduction  of new products  including the launch of TROPICANA
juice drinks and PEPSI VANILLA.

     Net revenues  outside the U.S. grew  approximately 4% in the second quarter
and 8% for the first  twenty-four  weeks of 2004.  The increases in net revenues
outside  the U.S.  for the quarter  and on a  year-to-date  basis were driven by
volume  and net price per case  growth in Europe  and  Canada  coupled  with the
favorable impact of foreign exchange.  This growth was partially offset by a 10%
and 7%  decline  in net  revenues  in  Mexico  for the  quarter  and  the  first
twenty-four  weeks of 2004,  respectively,  due primarily to decreases in volume
and the devaluation of the Mexican peso.

     In the second quarter,  approximately 71% of our net revenues was generated
in the U.S.,  10% of our net revenues was  generated in Mexico and the remaining
19% was  generated  outside  the  U.S.  and  Mexico.  On a  year-to-date  basis,
approximately  75% of our net revenues was  generated in the U.S., 9% of our net
revenues was generated in Mexico and the remaining 16% was generated outside the
U.S. and Mexico.

     We expect our worldwide net revenue per case to grow about 2% in the second
half of the year in 2004,  driven by 2% to 3% net revenue per case growth in the
United States as we leverage both our rate and mix strategies.



                                      -15-
<PAGE>



Cost of Sales
<TABLE>
<CAPTION>

                                                 12 Weeks Ended               24 Weeks Ended
                                                June 12, 2004 vs.            June 12, 2004 vs.
                                                  June 14, 2003               June 14, 2003
                                                -----------------            -----------------
                                             World-         Outside     World-          Outside
                                              wide   U.S.   the U.S.     wide    U.S.   the U.S.
                                             ------ -----  ---------    ------  -----  ---------

<S>                                            <C>    <C>     <C>         <C>     <C>      <C>
Volume impact.........................         2 %    3 %     1 %         3 %     4 %      2 %
Costs per case impact.................         4 %    4 %     5 %         5 %     5 %      5 %
Currency translation..................         1 %    0 %     1 %         2 %     0 %      4 %
                                              -----  -----  -----       -----    ----     ----
     Total Cost of Sales change.......         7 %    7 %     7 %        10 %     9 %     11 %
                                              =====  =====  =====       =====    =====    ====
</TABLE>

     Cost of sales was $1.4  billion in the second  quarter and $2.4 billion for
the first  twenty-four  weeks of 2004,  a 7% and 10%  respective  increase  over
similar  periods  in  2003.  The  growth  in  cost of  sales  on a  quarter  and
year-to-date  basis was driven primarily by volume and costs per case increases,
coupled with the negative impact of foreign currency translation.

     In the U.S.,  cost of sales  grew 7% in the second  quarter  and 9% for the
first twenty-four weeks of 2004, due to volume growth and increases in costs per
case.  The increases in costs per case resulted from the impact of higher priced
products,  including our non-carbonated products,  coupled with higher commodity
costs.

     Cost of sales outside the U.S. grew  approximately 7% in the second quarter
and 11% for the first twenty-four weeks of 2004,  reflecting  increases in costs
per case in Europe and  Mexico,  coupled  with  volume  growth in Europe and the
negative  impact from foreign  currency  translation.  Costs per case  increases
outside  the U.S.  were driven by a mix shift into higher  priced  products  and
packages, coupled with increases in certain commodity costs.

     For the full year of 2004, we expect our  worldwide  cost of sales per case
to grow 3% to 5% as we continue to sell higher cost products.

Selling, Delivery and Administrative Expenses
<TABLE>
<CAPTION>

                                               12 Weeks Ended              24 Weeks Ended
                                              June 12, 2004 vs.           June 12, 2004 vs.
                                                June 14, 2003               June 14, 2003
                                              -----------------           ------------------
                                           World-          Outside     World-          Outside
                                            wide     U.S.  the U.S.     wide     U.S.   the U.S.
                                           ------   -----  --------    ------   -----  ---------

<S>                                          <C>     <C>     <C>        <C>      <C>      <C>
Cost impact...........................       4 %      3 %     6 %        4 %      3 %      6 %
Currency translation..................       0 %      0 %     2 %        1 %      0 %      4 %
                                            ----     ----    ----       ----     ----     ----
     Total SD&A change................       4 %      3 %     8 %        5 %      3 %     10 %
                                            ====     ====    ====       ====     ====     ====
</TABLE>

     Selling,  delivery  and  administrative  expenses  were $1.0 billion in the
second  quarter and $1.9 billion for the first  twenty-four  weeks of 2004, a 4%
and 5%  respective  increase  over  similar  periods in 2003.  The  increase  in
selling,  delivery  and  administrative  expenses  in  the  U.S.  resulted  from
additional  variable costs  associated with volume growth,  partially  offset by
lower  casualty  insurance  expenses.  The  increases  in selling,  delivery and
administrative expenses outside the U.S.



                                      -16-
<PAGE>



were driven  primarily by higher  operating costs in Mexico,  Russia and Turkey,
coupled with the negative impact of foreign currency translation.

     Selling, delivery and administrative expenses for the full year is expected
to grow in the low-single digits.

Operating Income

     Operating  income was $286  million in the second  quarter and $423 million
for the first  twenty-four  weeks of 2004, a 6% and 8% respective  increase over
similar periods in 2003.  Growth in operating income was driven by a 16% and 15%
increase in the U.S.  for the quarter and the first  twenty-four  weeks of 2004,
respectively.  Operating income increases in the U.S. were due to strong topline
growth,  partially  offset by higher  cost of sales and  selling,  delivery  and
administrative  expenses.  This growth was partially  offset by operating income
declines in Mexico due primarily to decreases in volume for both the quarter and
on a year-to-date basis.

     Operating  profit for the full year in 2004 is  expected to increase in the
mid-single  digits driven by the continued  strong  topline  growth in the U.S.,
Europe and Canada.

Interest Expense, net

     Interest expense,  net decreased by $4 million in the second quarter and $2
million for the first  twenty-four  weeks of 2004,  when  compared  with similar
periods of 2003,  largely due to lower effective  interest rates achieved on our
long-term debt.

     For the full year of 2004, we expect  interest  expense,  net to be between
$240 million to $245 million.

Income Tax Expense

     Our  effective tax rate for the  twenty-four  weeks ended 2004 and 2003 was
34.3% and 34.25%, respectively.


Liquidity and Financial Condition
---------------------------------

Cash Flows

     Net  operating  cash  provided  by  operations  grew by $98 million to $313
million in the first  half of 2004 due to higher  profits,  lapping of  payments
related to the settlement of our New Jersey wage and hour litigation in 2003 and
working capital improvements.  These upsides were partially offset by the timing
of pension contributions during 2004.

     Net cash used for  investments  decreased  by $91 million to $272  million,
principally reflecting lower acquisition spending.

     Net cash used for financing  increased by $1,145  million to $1,029 million
driven  primarily by the repayment of our $1.0 billion note in February 2004 and
lower proceeds from long-term borrowings, coupled with higher share repurchases.

     For the full year in 2004,  we  expect  to  achieve  net cash  provided  by
operations  of  more  than  $1.2  billion.   In  addition,   we  expect  capital
expenditures to be between $675 million and $700 million.

Liquidity and Capital Resources

     We  believe  that our  future  cash flows  from  operations  and  borrowing
capacity  will  be  sufficient  to  fund  capital  expenditures,   acquisitions,
dividends  and  working  capital   requirements  for  the  foreseeable   future.
Additionally,  we are  currently in  compliance  with all debt  covenants in our
indenture agreements and credit facilities.



                                      -17-
<PAGE>



     During the first  quarter we repaid our $1 billion  5.38% senior notes with
the proceeds we received from debt issued in the prior year.

     We have a $500  million  commercial  paper  program  that is supported by a
credit facility,  which is guaranteed by Bottling Group,  LLC. During the second
quarter,  we have  renegotiated our two $250 million credit  facilities into one
$500 million credit facility,  which expires in April 2009. At June 12, 2004, we
had $115 million outstanding in commercial paper.

     Due to the  nature of our  business,  we  require  insurance  coverage  for
certain  casualty  risks.  Given the rapidly  increasing  costs  associated with
obtaining  third-party insurance coverage for our casualty risks in the U.S., we
moved to a  self-insurance  program in 2002.  In 2004, we are  self-insured  for
workers'  compensation  and automobile  risks for occurrences up to $10 million,
and product and general  liability risks for  occurrences up to $5 million.  For
losses exceeding these self-insurance thresholds, we purchase casualty insurance
from a third-party provider.

     During the second quarter, we repaid our $160 million 9.75% senior notes by
liquidating our investments in our debt defeasance trust.

     On June 22,  2004,  we signed a letter of intent to  purchase  the  Auburn,
Maine-based Pepsi bottling  operation of Seltzer and Rydholm,  Inc. We expect to
close in the fall of 2004.

Contractual Obligations

     As of June 12, 2004, there have been no material changes outside the normal
course of business in the contractual obligations disclosed in Exhibit 13 to our
Annual  Report on Form 10-K for the fiscal year ended  December 27, 2003,  under
the caption "Contractual Obligations," other than the repayment of our long-term
debt as discussed above.



                                      -18-
<PAGE>



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:
o changes in our  relationship  with PepsiCo that could have a material  adverse
  effect on our business and financial results;
o restrictions  imposed  by PepsiCo on our raw  material  suppliers  that could
  increase our costs;
o decreased  demand  for our  product  resulting  from  changes  in  consumers'
  preferences;
o an  inability  to  achieve  volume  growth  through   product  and  packaging
  initiatives;
o lower-than-expected  net pricing  resulting from marketplace  competition and
  competitive  pressures that may cause channel and product mix to shift from
  more profitable cold drink channels and packages;
o material  changes  from  expectations  in  the  cost  of  raw  materials  and
  ingredients;
o an inability to achieve cost savings;
o an  inability  to  achieve  the  expected  timing  for  returns  on cold drink
  equipment and related infrastructure expenditures;
o material  changes  in  expected  levels of bottler  incentive  payments  from
  PepsiCo;
o changes in product category consumption;
o unfavorable weather conditions in our markets;
o unforeseen economic and political changes;
o possible recalls of our products;
o an  inability  to  meet   projections   for  performance  in  newly  acquired
  territories;
o changes  in laws  and  regulations,  including  restrictions  on the  sale of
  carbonated soft drinks in schools, changes in food and drug laws,
  transportation regulations,  employee safety rules, labor laws, accounting
  standards,  taxation requirements  (including  unfavorable  outcomes from
  audits performed by various tax authorities) and environmental laws;
o changes in our debt ratings; and
o material  changes  in  expected  interest  and  currency  exchange  rates and
  unfavorable market performance of our pension plan assets.



                                      -19-
<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.

Item 4.

Controls and Procedures
-----------------------
     PBG's management carried out an evaluation (the "Evaluation"),  as required
by Rule 13a-15(b) of the Securities  Exchange Act of 1934 (the "Exchange  Act"),
with the  participation  of our Chief Executive  Officer and our Chief Financial
Officer, of the effectiveness of our disclosure  controls and procedures,  as of
the end of the  period  covered  by this  report on Form  10-Q.  Based  upon the
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 our Exchange Act reports filed with the
SEC. In addition,  there were no changes in our internal  control over financial
reporting  identified in connection with the Evaluation that occurred during our
last fiscal quarter that have materially  affected,  or are reasonably likely to
materially affect, our internal control over financial reporting.



                                      -20-
<PAGE>



                           PART II - OTHER INFORMATION

Item 1.
Legal Proceedings
-----------------

     On July 14, 2004,  Bottling LLC accepted three criminal  misdemeanor  pleas
from the  Onondaga  District  Attorney's  Office  and from the State of New York
Attorney General's Office relating to allegations that certain of Bottling LLC's
warehouses and distribution  centers  improperly  discharged  certain substances
into either storm drain systems or into publicly owned  treatment  works without
the requisite  permits.  The substances  consisted of fountain  syrup,  outdated
beverage products, water used to wash vehicles, waste water from cleaning floors
or spills from vehicle maintenance activities. The pleas provided for a $200,000
penalty and the funding of an existing  environmental  program to remediate Lake
Onondaga for the benefit of that community in the amount of $2.78 million.


Item 2.
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
--------------------------------------------------------------------------------

PBG Purchases of Equity Securities
-----------------------------------

     In the second  quarter of 2004, we  repurchased  approximately  7.3 million
shares.  Since the  inception of our share  repurchase  program in October 1999,
73.4  million  shares  of PBG  common  stock  have been  repurchased.  Our share
repurchases for the second quarter of, 2004, are as follows:
<TABLE>
<CAPTION>

                                                                                    Maximum Number (or
                 Total Number of                     Total Number of Shares (or   Approximate Dollar Value)
                    Shares (or     Average Price     Units) Purchased as Part of   of Shares (or Units) that
                      Units)       Paid per Share    Publicly Announced Plans or     May Yet Be Purchased
Period             Purchased 1      (or Unit)2               Programs 3          Under the Plans or Programs 3
--------------------------------------------------------------------------------------------------------------------
<S>    <C>          <C>               <C>                      <C>                         <C>
Period 4          1,925,000           $29.56                 1,925,000                     31,897,400
--------
03/21/04-
04/17/04
--------------------------------------------------------------------------------------------------------------------
Period 5          2,450,900           $29.34                 2,450,900                     29,446,500
--------
04/18/04-
05/15/04
--------------------------------------------------------------------------------------------------------------------
Period 6          2,887,500           $28.97                 2,887,500                     26,559,000
--------
05/16/04-
06/12/04
--------------------------------------------------------------------------------------------------------------------
Total             7,263,400           $29.25                 7,263,400                     26,559,000
</TABLE>

     1 Shares have only been repurchased through publicly announced programs.



                                      -21-
<PAGE>



     2 Average share price excludes brokerage fees.

     3 The PBG Board has  authorized the repurchase of shares of common stock on
     the open market and through negotiated transactions as follows:
<TABLE>
<CAPTION>

              Date Share Repurchase Program was Publicly Announced                Number of Shares
                                                                                  Authorized to be
                                                                                    Repurchased
<S>                                                                                 <C>
     October 14, 1999.......................................................         20,000,000
     July 13, 2000..........................................................         10,000,000
     July 11, 2001..........................................................         20,000,000
     May 28, 2003...........................................................         25,000,000
     March 25, 2004.........................................................         25,000,000
                                                                                     ----------
     Total shares authorized to be repurchased as of June 12, 2004..........        100,000,000
                                                                                    ===========
</TABLE>
     Unless  terminated by resolution  of the PBG Board,  each share  repurchase
     program  expires  when  we  have  repurchased  all  shares  authorized  for
     repurchase thereunder.

Item 4.

Submission of Matters to a Vote of Security Holders
----------------------------------------------------
(a) Annual Meeting of Shareholders of PBG was held on May 26, 2004.
(b) The names of all directors are set forth 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                     252      N/A       10          N/A
    Barry H. Beracha                      253      N/A        9          N/A
    John T. Cahill                        258      N/A        3          N/A
    Ira D. Hall                           253      N/A        9          N/A
    Thomas H. Kean                        254      N/A        8          N/A
    Susan D. Kronick                      253      N/A        9          N/A
    Blythe J. McGarvie                    253      N/A        9          N/A
    Margaret D. Moore                     259      N/A        3          N/A
    Rogelio Rebolledo                     256      N/A        6          N/A
    Clay G. Small                         259      N/A        3          N/A
2) 2004 Long-Term Incentive Plan          175       75        1           10
3) Approval of the appointment of
    KPMG LLP as independent auditors      258       3         1          N/A



                                      -22-
<PAGE>



Item 5.

Other Information
------------------
     The  financial  statements  of Bottling  LLC,  included  in Bottling  LLC's
Quarterly  Report  on Form  10-Q and filed  with the SEC on July 21,  2004,  are
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.

Item 6.

Exhibits and Reports on Form 8-K
--------------------------------

ITEM 6 (a). EXHIBITS
--------------------

Exhibit No.
-----------
4.1       U.S.  $500,000,000  5-Year Credit Agreement dated as of April 28, 2004
          among The Pepsi Bottling Group Inc.,  Bottling  Group,  LLC, JP Morgan
          Chase Bank as Agent,  Banc of  America  Securities  LLC and  Citigroup
          Global  Markets  Inc.,  as Joint Lead  Arrangers and Book Managers and
          Bank of America,  N.A., Citicorp USA, Inc., Credit Suisse First Boston
          and Deutsche Bank Securities Inc., as Syndication Agents

10.1      PBG 2004  Long-Term  Incentive  Plan which is  incorporated  herein by
          reference to Appendix B to PBG's Proxy  Statement  for the 2004 Annual
          Meeting of Shareholders

11.1      Computation of Basic and Diluted Earnings Per Share

15.1      Accountants' Acknowledgement

31.1      Certification  by the Chief Executive  Officer pursuant to Section 302
          of the Sarbanes-Oxley Act of 2002

31.2      Certification  by the Chief Financial  Officer pursuant to Section 302
          of the Sarbanes-Oxley Act of 2002

32.1      Certification  by the Chief Executive  Officer pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002

32.2      Certification  by the Chief Financial  Officer pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002


ITEM 6 (b). REPORTS ON FORM 8-K
-------------------------------

     On March 30,  2004,  we  announced  our  preliminary  results for the first
quarter ended March 20, 2004, and also affirmed our full year 2004 forecast.

     On April 13, 2004,  we announced  our results for the first  quarter  ended
March 20, 2004, our second quarter 2004 forecast and also affirmed our full year
2004 forecast.



                                      -23-
<PAGE>



                                   SIGNATURES


Pursuant  to the  requirements  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 21, 2004                            /s/ Andrea L. Forster
      -------------                            ---------------------
                                               Andrea L. Forster
                                               Vice President and Controller






Date: July 21, 2004                            /s/ Alfred H. Drewes
      -------------                            --------------------
                                               Alfred H. Drewes
                                               Senior Vice President and
                                               Chief Financial Officer