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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 þ
    
    Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Fiscal Year Ended December 30, 2006
 or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (No Fee Required)
 For the transition period from  to
 Commission file number 333-80361-01
 Bottling Group, LLC
  Organized in 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)
 (914) 767-6000
 
 Securities registered pursuant to Section 12(b) of the Act: None
 Securities registered pursuant to Section 12(g) of the Act: None
 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes þ No o
 Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act. Yes o No þ
 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 þ No o
 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K . þ
 Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act.
 Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer þ
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ
 The aggregate market value of Bottling Group, LLC Capital Stock held by non-affiliates of
Bottling Group, LLC as of June 17, 2006 was $0.




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##### 



TABLE OF CONTENTS
 PART IItem 1.
    
    BusinessItem 1A.
    
    Risk FactorsItem 1B.
    
    Unresolved Staff CommentsItem 2.
    
    PropertiesItem 3.
    
    Legal ProceedingsItem 4.
    
    Submission of Matters to a Vote of Security HoldersPART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity SecuritiesItem 6.
    
    Selected Financial DataItem 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A.
    
    Quantitative and Qualitative Disclosures About Market RiskItem 8.
    
    Financial Statements and Supplementary DataItem 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial DisclosureItem 9A.
    
    Controls and ProceduresItem 9B.
    
    Other InformationPART IIIItem 10.
    
    Directors, Executive Officers and Corporate GovernanceItem 11.
    
    Executive CompensationItem 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13.
    
    Certain Relationships and Related Transactions, and Director IndependenceItem 14.
    
    Principal Accountant Fees and ServicesPART IVItem 15.
    
    Exhibits and Financial Statement SchedulesSIGNATURESINDEX TO FINANCIAL STATEMENT SCHEDULESINDEX TO EXHIBITSEX-10.4: COMMITMENT INCREASE NOTICEEX-12: STATEMENT RE COMPUTATION OF RATIOSEX-21: SUBSIDIARIES OF BOTTLING LLCEX-23.1: REPORT AND CONSENT OF KPMG LLPEX-23.2: CONSENT OF DELOITTE & TOUCHE LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATIONEX-99.1: THE PEPSI BOTTLING GROUP, INC.'S ANNUAL REPORT ON FORM 10-K




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PART I
 
 Item 1. Business
 Introduction
      Principal Products
 mr
   1




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United States & Canada
 Pepsi

    AMP
    
    Trademark Dr PepperDiet Pepsi

    Mountain Dew Code Red
    
    LiptonWild Cherry Pepsi

    Sierra Mist
    
    SoBePepsi Lime

    Sierra Mist Free
    
    SoBe No FearJazz by Diet Pepsi

    Aquafina
    
    Starbucks Frappuccino®Pepsi ONE

    Tropicana Twister Soda
    
    DoleMountain Dew

    Tropicana juice drinksDiet Mountain Dew

    Mug Root Beer
 Europe
 Pepsi
    
    Tropicana
    
    FrukoPepsi Light
    
    Aqua Minerale
    
    YedigunPepsi Max
    
    Mirinda
    
    Tamek7UP
    
    IVI
    
    LiptonKAS
    
    Fiesta
 Mexico
 Pepsi
    
    Mirinda
    
    Aguas FrescasPepsi Light
    
    Manzanita Sol
    
    Electropura7UP
    
    Squirt
    
    e-puramrKAS
    
    Garci Crespo
    
    Jarritos
  Raw Materials and Other Supplies
   Franchise Agreements
   2




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Terms of the Master Bottling Agreement.
  (1)
    
    maintain such plant and equipment, staff, and distribution facilities and
vending equipment that are capable of manufacturing, packaging, and distributing the
cola beverages in sufficient quantities to fully meet the demand for these beverages in
our territories;(2)
    
    undertake adequate quality control measures prescribed by PepsiCo;(3)
    
    push vigorously the sale of the cola beverages in our territories;(4)
    
    increase and fully meet the demand for the cola beverages in our territories;(5)
    
    use all approved means and spend such funds on advertising and other forms of
marketing beverages as may be reasonably required to push vigorously the sale of cola
beverages in our territories; and(6)
    
    maintain such financial capacity as may be reasonably necessary to assure
performance under the Master Bottling Agreement by us.
       3




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(1)
    
    PBGs insolvency, bankruptcy, dissolution, receivership or the like;(2)
    
    any disposition of any voting securities of one of our bottling subsidiaries or
substantially all of our bottling assets without the consent of PepsiCo;(3)
    
    PBGs entry into any business other than the business of manufacturing, selling
or distributing non-alcoholic beverages or any business which is directly related and
incidental to such beverage business; and(4)
    
    any material breach under the contract that remains uncured for 120 days after
notice by PepsiCo.
    Terms of the Non-Cola Bottling Agreements.
 Terms of Certain Distribution Agreements.
 Terms of the Master Syrup Agreement.
 4




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Terms of Other U.S. Bottling Agreements. ®
 Terms of the Country-Specific Bottling Agreements.
 Seasonality
  Competition
   5




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Governmental Regulation Applicable to Bottling LLC
   Bottle and Can Legislation
       Soft Drink Excise Tax Legislation
    6




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Trade Regulation
  School Sales Legislation; Industry Guidelines
  California Carcinogen and Reproductive Toxin Legislation
  Mexican Water Regulation
  Employees
  Available Information
 www.pbg.com
 7




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Financial Information on Industry Segments and Geographic Areas
  
 Item 1A. Risk Factors
  We may not be able to respond successfully to consumer trends related to carbonated and
non-carbonated beverages.
  We may not be able to respond successfully to the demands of our largest customers.
  We may not be able to compete successfully within the highly competitive carbonated and
non-carbonated beverage markets.
  Because we depend upon PepsiCo to provide us with concentrate, certain funding and various
services, changes in our relationship with PepsiCo could adversely affect our business and
financial results.
    Our business requires a significant supply of raw materials and energy, the limited availability or
increased costs of which could adversely affect our business and financial results.
  8




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PepsiCos equity ownership of PBG could affect matters concerning us.
  We may have potential conflicts of interest with PepsiCo, which could result in PepsiCos
objectives being favored over our objectives.
    Our acquisition strategy may be limited by our ability to successfully integrate acquired
businesses into ours or our failure to realize our expected return on acquired businesses.
  Our success depends on key members of our management, the loss of whom could disrupt our business
operations.
  If we are unable to fund our substantial capital requirements, it could cause us to reduce our
planned capital expenditures and could result in a material adverse effect on our business and
financial results.
  Our substantial indebtedness could adversely affect our financial health.
  9




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Our foreign operations are subject to social, political and economic risks and may be adversely
affected by foreign currency fluctuations.
  If we are unable to maintain brand image and product quality, or if we encounter other product
issues such as product recalls, our business may suffer.
  Newly adopted governmental regulations could increase our costs or liabilities or impact the sale
of our products.
  Adverse weather conditions could reduce the demand for our products.
  Catastrophic events in the markets in which we operate could have a material adverse effect on our
financial condition.
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  United States& Canada
    
    Europe
    
    MexicoManufacturing FacilitiesOwned
    
    
    50
    
    
    
    14
    
    
    
    28Leased
    
    
    3
    
    
    
    1
    
    
    
    3Joint venture operated
    
    
    4
    
    
    
    
    
    
    
    Total
    
    
    57
    
    
    
    15
    
    
    
    31Distribution FacilitiesOwned
    
    
    241
    
    
    
    12
    
    
    
    90Leased
    
    
    57
    
    
    
    53
    
    
    
    93Total
    
    
    298
    
    
    
    65
    
    
    
    183
 10




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Item 3. Legal Proceedings
     
 Item 4. Submission of Matters to a Vote of Security Holders
  Executive Officers of the Registrant
   Eric J. Foss
 Alfred H. Drewes
 11




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Andrea L. Forster
 
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
  12




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Item 6. Selected Financial Data
 SELECTED FINANCIAL AND OPERATING DATA
 in millionsFiscal years ended
    
    2006
    
    
    2005(2)
    
    
    2004
    
    
    2003
    
    
    2002Statement of Operations Data:Net revenues
    
    $
    12,730
    
    
    $
    11,885
    
    
    $
    10,906
    
    
    $
    10,265
    
    
    $
    9,216Cost of sales
    
    
    6,810
    
    
    
    6,253
    
    
    
    5,656
    
    
    
    5,215
    
    
    
    5,001Gross profit
    
    
    5,920
    
    
    
    5,632
    
    
    
    5,250
    
    
    
    5,050
    
    
    
    4,215Selling, delivery and administrative expenses(1)
    
    
    4,932
    
    
    
    4,625
    
    
    
    4,285
    
    
    
    4,089
    
    
    
    3,318Operating income(1)
    
    
    988
    
    
    
    1,007
    
    
    
    965
    
    
    
    961
    
    
    
    897Interest expense, net
    
    
    53
    
    
    
    110
    
    
    
    132
    
    
    
    143
    
    
    
    98Other non-operating expenses, net
    
    
    10
    
    
    
    1
    
    
    
    1
    
    
    
    7
    
    
    
    7Minority
interest (income)/expense
    
    
    (2
    )
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    9Income before income taxes
    
    
    927
    
    
    
    895
    
    
    
    832
    
    
    
    811
    
    
    
    783Income tax expense(3)(4)(5)
    
    
    3
    
    
    
    24
    
    
    
    3
    
    
    
    84
    
    
    
    49Income before cumulative effect of change in accounting
principle
    
    
    924
    
    
    
    871
    
    
    
    829
    
    
    
    727
    
    
    
    734Cumulative effect of change in accounting principle, net
of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    Net income
    
    $
    924
    
    
    $
    871
    
    
    $
    829
    
    
    $
    721
    
    
    $
    734Balance Sheet Data (at period end):Total assets
    
    $
    14,955
    
    
    $
    13,745
    
    
    $
    12,724
    
    
    $
    12,997
    
    
    $
    11,015Long-term debt
    
    $
    3,759
    
    
    $
    2,943
    
    
    $
    3,495
    
    
    $
    3,497
    
    
    $
    3,541Minority interest
    
    $
    18
    
    
    $
    3
    
    
    $
    3
    
    
    $
    
    
    
    $
    Accumulated other comprehensive loss(6)
    
    $
    (589
    )
    
    $
    (395
    )
    
    $
    (447
    )
    
    $
    (503
    )
    
    $
    (596
    )Owners equity
    
    $
    8,092
    
    
    $
    7,581
    
    
    $
    6,620
    
    
    $
    5,902
    
    
    $
    5,186
 
 (1)
    
    In fiscal year 2006, we adopted SFAS 123R resulting in a $65 million decrease in
operating income. See Critical Accounting Policies in Item 7.(2)
    
    Our fiscal year 2005 results included an extra week of activity. The pre-tax income
generated from the extra week was spent back in strategic initiatives within our selling,
delivery and administrative expenses. The 53rd week had no impact on our net
income.(3)
    
    Fiscal year 2003 includes Canada tax law change expense of $11 million.(4)
    
    Fiscal year 2004 includes Mexico tax law change benefit of $26 million.(5)
    
    Fiscal year 2006 includes a tax benefit of $12 million from tax law changes in Canada,
Turkey, and in certain jurisdictions within the U.S.(6)
    
    In fiscal year 2006, we adopted SFAS 158 resulting in a $278 million adjustment to
accumulated other comprehensive loss. See Critical Accounting
Policies in Item 7. 13




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 MANAGEMENTS FINANCIAL REVIEW
Tabular dollars in millions
 OVERVIEW
   
 mr
    14




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
    
    Critical accounting policies
    
    Relationship with PepsiCo
    
    Items that affect historical or future comparability
    
    Financial performance summary
    
    Results of operations
    
    Liquidity and financial condition and
    
    Market risks and cautionary statements.
 .
 15




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CRITICAL ACCOUNTING POLICIES
  Allowance for Doubtful Accounts
 Recoverability of Goodwill and Intangible Assets with Indefinite Lives
    16




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Pension and Postretirement Medical Benefit Plans
    Assumptions
     17




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Pension
    
    2007
    
    2006Discount rate
    
    
    6.00
    %
    
    
    5.80
    %Expected return on plan assets (net of administrative expenses)
    
    
    8.50
    %
    
    
    8.50
    %Rate of compensation increase
    
    
    3.55
    %
    
    
    3.53
    %
 Postretirement
    
    2007
    
    2006Discount rate
    
    
    5.80
    %
    
    
    5.55
    %Rate of compensation increase
    
    
    3.55
    %
    
    
    3.53
    %Health care cost trend rate
    
    
    8.00
    %
    
    
    9.00
    %
  
    
    An increase in our weighted-average discount rate for our pension and postretirement
medical expense from 5.80 percent and 5.55 percent to 6.00 percent and 5.80 percent,
respectively, reflecting increases in the yields of long-term corporate bonds comprising
the yield curve. This change in assumption will decrease our 2007 defined benefit pension
and postretirement medical expense by approximately $8 million.
    
    A change to our mortality assumption to reflect six years of projected mortality
improvement will increase our 2007 defined benefit pension and postretirement medical
expense by approximately $5 million.
    
    Other changes will increase our 2007 defined benefit pension and postretirement medical
expenses by approximately $1 million. These changes include certain benefit plan
modifications, demographic changes and reflection of actual asset returns.
 18




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Sensitivity Analysis
  2006
    
    2005
    
    2004Expected return on plan assets (net of administrative expenses)
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    8.50
    %Actual return on plan assets (net of administrative expenses)
    
    
    9.74
    %
    
    
    13.33
    %
    
    
    11.61
    %
  
    
    Discount rate  A 25-basis point change in the discount rate would increase or decrease
the expense for PBGs pension and postretirement medical benefit plans in 2007 by
approximately $10 million.
    
    Expected return on plan assets  A 25-basis point change in the expected return on plan
assets would increase or decrease the expense for PBGs pension plans in 2007 by
approximately $3 million. The postretirement medical benefit plans have no expected return
on plan assets as they are funded from the general assets of the Company as the payments come
due.
  Share-Based Compensation 
      Income Taxes 
 19




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RELATIONSHIP WITH PEPSICO
     20




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ITEMS THAT AFFECT HISTORICAL OR FUTURE COMPARABILITY
  December
    
    December(Expense)/Income
    
    30, 2006
    
    31, 2005Operating incomeImpact of SFAS 123R
    
    $
    (65
    )
    
    $
    HFCS litigation settlement
    
    
    
    
    
    $
    2953rd week
    
    
    
    
    
    $
    24Strategic spending initiatives
    
    
    
    
    
    $
    (48
    )
 2006 Items
 SFAS 123R
  Tax Law Changes
  2005 Items
 High Fructose Corn Syrup (HFCS) Litigation Settlement
  53 rd Week
 rd rd
 Strategic Spending Initiatives
 rd
 21




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FINANCIAL PERFORMANCE SUMMARY
 December
    
    December
    
    Fiscal Year30, 2006
    
    31, 2005
    
    % ChangeNet revenues
    
    $
    12,730
    
    
    $
    11,885
    
    
    
    7
    %Gross profit
    
    $
    5,920
    
    
    $
    5,632
    
    
    
    5
    %Operating income
    
    $
    988
    
    
    $
    1,007
    
    
    
    (2
    )%Net income
    
    $
    924
    
    
    $
    871
    
    
    
    6
    %
  rd
 rd
   rd
  22




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2007 Outlook
 Forecasted 2007growth vs. 2006Worldwide Volume
    
    1%-2%U.S. Volume
    
    Flat to 1%Worldwide Net Revenue per Case
    
    3%-4%U.S. Net Revenue per Case
    
    4%+Worldwide Cost of Sales per Case
    
    6%
    RESULTS OF OPERATIONS  2006
 Volume
 Fiscal Year Ended2006 vs. 2005World-
    
    U.S. &wide
    
    Canada
    
    Europe
    
    MexicoBase volume
    
    
    3
    %
    
    
    3
    %
    
    
    7
    %
    
    
    1
    %Acquisitions
    
    
    1
    %
    
    
    1
    %
    
    
    0
    %
    
    
    3
    %Impact of 53rd week in 2005
    
    
    (1
    )%
    
    
    (2
    )%
    
    
    0
    %
    
    
    0
    %Total Volume Change
    
    
    3
    %
    
    
    2
    %
    
    
    7
    %
    
    
    4
    %
  rd
 rd
 23




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rd
   Net Revenues
 Fiscal Year Ended2006 vs. 2005World-
    
    U.S. &wide
    
    Canada
    
    Europe
    
    MexicoVolume impact
    
    
    3
    %
    
    
    3
    %
    
    
    7
    %
    
    
    1
    %Net price per case impact (rate/mix)
    
    
    3
    %
    
    
    3
    %
    
    
    5
    %
    
    
    5
    %Acquisitions
    
    
    1
    %
    
    
    1
    %
    
    
    0
    %
    
    
    3
    %Currency translation
    
    
    1
    %
    
    
    1
    %
    
    
    0
    %
    
    
    0
    %Impact of 53rd week in 2005
    
    
    (1
    )%
    
    
    (2
    )%
    
    
    0
    %
    
    
    0
    %Total Net Revenues Change
    
    
    7
    %
    
    
    6
    %
    
    
    12
    %
    
    
    9
    %
 rd
    24




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Cost of Sales
 Fiscal Year Ended2006 vs. 2005WorldwideVolume impact
    
    
    3
    %Cost per case impact
    
    
    5
    %Acquisitions
    
    
    1
    %Currency translation
    
    
    1
    %Impact of 53rd week in 2005
    
    
    (1
    )%Total Cost of Sales Change
    
    
    9
    %
 rd
 Selling, Delivery and Administrative Expenses
 Fiscal Year Ended2006 vs. 2005WorldwideCost impact
    
    
    5
    %Adoption of SFAS 123R in 2006
    
    
    1
    %Acquisitions
    
    
    1
    %Currency translation
    
    
    1
    %HFCS Settlement in 2005
    
    
    1
    %Strategic Spending Initiatives in 2005
    
    
    (1
    )%Impact of 53rd week in 2005
    
    
    (1
    )%Total SD&A Change
    
    
    7
    %
 rd
 Interest Expense
  Interest Income
  25




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Other Non-Operating Expenses, net
  Income Tax Expense
  RESULTS OF OPERATIONS  2005
 Volume
 Fiscal Year Ended2005 vs. 2004World-
    
    U.S. &wide
    
    Canada
    
    Europe
    
    MexicoBase volume
    
    
    3
    %
    
    
    2
    %
    
    
    8
    %
    
    
    5
    %Acquisitions
    
    
    1
    %
    
    
    1
    %
    
    
    0
    %
    
    
    0
    %Impact of 53rd week
    
    
    1
    %
    
    
    2
    %
    
    
    0
    %
    
    
    0
    %Total Volume Change
    
    
    5
    %
    
    
    5
    %
    
    
    8
    %
    
    
    5
    %
  rd
 rd ,  . , , rd
 rd
 
 26




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Net Revenues
 Fiscal Year Ended2005 vs. 2004World-
    
    U.S. &wide
    
    Canada
    
    Europe
    
    MexicoVolume impact
    
    
    3
    %
    
    
    2
    %
    
    
    8
    %
    
    
    5
    %Net price per case impact (rate/mix)
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %
    
    
    0
    %Acquisitions
    
    
    1
    %
    
    
    1
    %
    
    
    0
    %
    
    
    1
    %Currency translation
    
    
    1
    %
    
    
    1
    %
    
    
    1
    %
    
    
    4
    %Impact of 53rd week
    
    
    1
    %
    
    
    2
    %
    
    
    0
    %
    
    
    0
    %Total Net Revenues Change
    
    
    9
    %
    
    
    9
    %
    
    
    12
    %
    
    
    10
    %
 rd
    Cost of Sales
 Fiscal Year Ended2005 vs. 2004WorldwideVolume impact
    
    
    4
    %Cost per case impact
    
    
    4
    %Acquisitions
    
    
    1
    %Currency translation
    
    
    1
    %Impact of 53rd week
    
    
    1
    %Total Cost of Sales Change
    
    
    11
    %
 rd
 27




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Selling, Delivery and Administrative Expenses
 Fiscal Year Ended2005 vs. 2004WorldwideCost impact
    
    
    5
    %HFCS Settlement
    
    
    (1
    )%Strategic Spending Initiatives
    
    
    1
    %Acquisitions
    
    
    1
    %Currency translation
    
    
    1
    %Impact of 53rd week
    
    
    1
    %Total SD&A Change
    
    
    8
    %
 rd rd
  Interest Expense
  Interest Income
  Income Tax Expense
  LIQUIDITY AND FINANCIAL CONDITION
 Liquidity and Capital Resources
  28




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2006 Long-Term Debt Activities
  2006 Short-Term Debt Activities
   Financial Covenants
   Cash Flows
 Fiscal 2006 Compared with Fiscal 2005
    Fiscal 2005 Compared with Fiscal 2004
    29




---



##### Table of Contents



Contractual Obligations
  Payments Due by Period2008-
    
    
    2010-
   
    
    2012 andContractual Obligations
    
    Total
    
    
    2007
    
    
    2009
    
    
    2011
    
    
    beyondLong-term debt obligations (1)
    
    $
    3,761
    
    
    $
    10
    
    
    $
    1,301
    
    
    $
    
    
    
    $
    2,450Capital lease obligations (2)
    
    
    45
    
    
    
    9
    
    
    
    13
    
    
    
    11
    
    
    
    12Operating leases (2)
    
    
    210
    
    
    
    51
    
    
    
    68
    
    
    
    32
    
    
    
    59Interest obligations (3)
    
    
    1,119
    
    
    
    199
    
    
    
    358
    
    
    
    242
    
    
    
    320Purchase obligations:Raw material obligations (4)
    
    
    180
    
    
    
    18
    
    
    
    145
    
    
    
    17
    
    
    
    Capital expenditure obligations (5)
    
    
    45
    
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    Other obligations (6)
    
    
    345
    
    
    
    151
    
    
    
    88
    
    
    
    44
    
    
    
    62Other long-term liabilities (7)
    
    
    14
    
    
    
    5
    
    
    
    5
    
    
    
    2
    
    
    
    2Total
    
    $
    5,719
    
    
    $
    488
    
    
    $
    1,978
    
    
    $
    348
    
    
    $
    2,905
 
 (1)
    
    See Note 10 in the Notes to Consolidated Financial Statements for additional information
relating to our long-term debt obligations.(2)
    
    See Note 11 in the Notes to Consolidated Financial Statements for additional information
relating to our lease obligations.(3)
    
    Represents interest payment obligations related to our long-term fixed-rate debt as specified
in the applicable debt agreements. Additionally, a portion of our long-term debt has
variable interest rates due to either existing swap agreements or interest arrangements. We
estimated our variable interest payment obligations by using the interest rate forward curve.(4)
    
    Represents obligations to purchase raw materials pursuant to contracts entered into by
PepsiCo on our behalf and international agreements to purchase raw materials.(5)
    
    Represents commitments to suppliers under capital expenditure related contracts or purchase
orders.(6)
    
    Represents non-cancellable agreements that specify fixed or minimum quantities, price
arrangements and timing of payments. Also includes agreements that provide for termination
penalty clauses.(7)
    
    Primarily relates to contractual obligations associated with non-compete contracts that
resulted from business acquisitions. The table excludes other long-term liabilities included
in our Consolidated Financial Statements, such as pension, postretirement and other
non-contractual obligations. See Note 13 in the Notes to Consolidated Financial Statements
for a discussion of our future pension and postretirement contributions and corresponding
expected benefit payments for years 2007 through 2016. Off-Balance Sheet Arrangements
    30




---



##### Table of Contents



Capital Expenditures
  MARKET RISKS AND CAUTIONARY STATEMENTS
 Quantitative and Qualitative Disclosures about Market Risk
    Commodity Price Risk
  Interest Rate Risk
   31




---



##### Table of Contents



Foreign Currency Exchange Rate Risk
     Unfunded Deferred Compensation Liability
  32




---



##### 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 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.
 33




---



##### Table of Contents



Bottling Group, LLC
Consolidated Statements of Operations
 Fiscal years ended December 30, 2006, December 31, 2005 and December 25, 2004
 2006
    
    
    2005
    
    
    2004Net Revenues
    
    $
    12,730
    
    
    $
    11,885
    
    
    $
    10,906Cost of sales
    
    
    6,810
    
    
    
    6,253
    
    
    
    5,656Gross Profit
    
    
    5,920
    
    
    
    5,632
    
    
    
    5,250Selling, delivery and administrative expenses
    
    
    4,932
    
    
    
    4,625
    
    
    
    4,285Operating Income
    
    
    988
    
    
    
    1,007
    
    
    
    965Interest expense
    
    
    227
    
    
    
    187
    
    
    
    166Interest income
    
    
    174
    
    
    
    77
    
    
    
    34Other non-operating expenses, net
    
    
    10
    
    
    
    1
    
    
    
    1Minority
interest (income)/expense
    
    
    (2
    )
    
    
    1
    
    
    
    Income Before Income Taxes
    
    
    927
    
    
    
    895
    
    
    
    832Income tax expense
    
    
    3
    
    
    
    24
    
    
    
    3Net Income
    
    $
    924
    
    
    $
    871
    
    
    $
    829
  34




---



##### Table of Contents



Bottling Group, LLC
Consolidated Statements of Cash Flows
 Fiscal years ended December 30, 2006, December 31, 2005 and December 25, 2004
 2006
    
    
    2005
    
    
    2004Cash FlowsOperationsNet income
    
    $
    924
    
    
    $
    871
    
    
    $
    829Adjustments to reconcile net income to net cash provided by operations:Depreciation
    
    
    636
    
    
    
    615
    
    
    
    580Amortization
    
    
    12
    
    
    
    15
    
    
    
    13Deferred income taxes
    
    
    (41
    )
    
    
    (28
    )
    
    
    (52
    )Stock-based compensation
    
    
    65
    
    
    
    
    
    
    
    Other non-cash charges and credits:Defined benefit pension and postretirement expenses
    
    
    119
    
    
    
    109
    
    
    
    88Other non-cash charges and credits
    
    
    66
    
    
    
    83
    
    
    
    62Net other non-cash charges and credits
    
    
    185
    
    
    
    192
    
    
    
    150Changes in operating working capital, excluding effects of acquisitions:Accounts receivable, net
    
    
    (120
    )
    
    
    7
    
    
    
    (53
    )Inventories
    
    
    (57
    )
    
    
    (29
    )
    
    
    (38
    )Prepaid expenses and other current assets
    
    
    (75
    )
    
    
    (40
    )
    
    
    (22
    )Accounts payable and other current liabilities
    
    
    87
    
    
    
    2
    
    
    
    97Income taxes payable
    
    
    25
    
    
    
    8
    
    
    
    (7
    )Net change in operating working capital
    
    
    (140
    )
    
    
    (52
    )
    
    
    (23
    )Pension contributions
    
    
    (68
    )
    
    
    (77
    )
    
    
    (83
    )Other, net
    
    
    (46
    )
    
    
    (65
    )
    
    
    (42
    )Net Cash Provided by Operations
    
    
    1,527
    
    
    
    1,471
    
    
    
    1,372Cash FlowsInvestmentsCapital expenditures
    
    
    (721
    )
    
    
    (709
    )
    
    
    (688
    )Acquisitions of bottlers, net of cash acquired
    
    
    (33
    )
    
    
    (1
    )
    
    
    (96
    )Proceeds from sale of property, plant and equipment
    
    
    18
    
    
    
    20
    
    
    
    22Notes receivable from PBG, net
    
    
    (763
    )
    
    
    (436
    )
    
    
    (442
    )Other investing activities, net
    
    
    5
    
    
    
    4
    
    
    
    Net Cash Used for Investments
    
    
    (1,494
    )
    
    
    (1,122
    )
    
    
    (1,204
    )Cash FlowsFinancingShort-term borrowings, netthree months or less
    
    
    133
    
    
    
    (9
    )
    
    
    11Proceeds from short-term borrowings  more than three months
    
    
    96
    
    
    
    74
    
    
    
    55Payments of short-term borrowings  more than three months
    
    
    (74
    )
    
    
    (68
    )
    
    
    (40
    )Proceeds from issuances of long-term debt
    
    
    793
    
    
    
    36
    
    
    
    22Payments of long-term debt
    
    
    (603
    )
    
    
    (35
    )
    
    
    (1,013
    )Distributions to owners
    
    
    (284
    )
    
    
    (181
    )
    
    
    (185
    )Net Cash Provided by/(Used for) Financing
    
    
    61
    
    
    
    (183
    )
    
    
    (1,150
    )Effect of Exchange Rate Changes on Cash and Cash Equivalents
    
    
    1
    
    
    
    3
    
    
    
    5Net Increase/(Decrease) in Cash and Cash Equivalents
    
    
    95
    
    
    
    169
    
    
    
    (977
    )Cash and Cash EquivalentsBeginning of Year
    
    
    346
    
    
    
    177
    
    
    
    1,154Cash and Cash EquivalentsEnd of Year
    
    $
    441
    
    
    $
    346
    
    
    $
    177Supplemental Cash Flow InformationNon-Cash Investing and Financing Activities:Liabilities incurred and/or assumed in conjunction with acquisitions of bottlers
    
    $
    20
    
    
    $
    
    
    
    $
    20Change in accounts payable related to capital expenditures
    
    $
    7
    
    
    $
    (6
    )
    
    $
    29
  35




---



##### Table of Contents



Bottling Group, LLC
Consolidated Balance Sheets
 December 30, 2006 and December 31, 2005
 2006
    
    
    2005ASSETSCurrent AssetsCash and cash equivalents
    
    $
    441
    
    
    $
    346Accounts receivable, less allowance of $50 in 2006 and $51 in 2005
    
    
    1,331
    
    
    
    1,186Inventories
    
    
    533
    
    
    
    458Prepaid expenses and other current assets
    
    
    355
    
    
    
    274Total Current Assets
    
    
    2,660
    
    
    
    2,264Property, plant and equipment, net
    
    
    3,776
    
    
    
    3,643Other intangible assets, net
    
    
    3,768
    
    
    
    3,814Goodwill
    
    
    1,490
    
    
    
    1,516Notes receivable from PBG
    
    
    3,147
    
    
    
    2,384Other assets
    
    
    114
    
    
    
    124Total Assets
    
    $
    14,955
    
    
    $
    13,745LIABILITIES AND OWNERS EQUITYCurrent LiabilitiesAccounts payable and other current liabilities
    
    $
    1,559
    
    
    $
    1,456Short-term borrowings
    
    
    242
    
    
    
    71Current maturities of long-term debt
    
    
    16
    
    
    
    588Total Current Liabilities
    
    
    1,817
    
    
    
    2,115Long-term debt
    
    
    3,759
    
    
    
    2,943Other liabilities
    
    
    863
    
    
    
    681Deferred income taxes
    
    
    406
    
    
    
    422Minority interest
    
    
    18
    
    
    
    3Total Liabilities
    
    
    6,863
    
    
    
    6,164Owners EquityOwners net investment
    
    
    8,681
    
    
    
    7,990Accumulated other comprehensive loss
    
    
    (589
    )
    
    
    (395
    )Deferred compensation
    
    
    
    
    
    
    (14
    )Total Owners Equity
    
    
    8,092
    
    
    
    7,581Total Liabilities and Owners Equity
    
    $
    14,955
    
    
    $
    13,745
  36




---



##### Table of Contents



Bottling Group, LLC
Consolidated Statements of Changes in Owners Equity
 December 30, 2006, December 31, 2005 and December 25, 2004
 AccumulatedOwners
    
    
    
    
    
    
    OtherNet
    
    
    Deferred
    
    
    Comprehensive
    
    
    
    
    
    
    ComprehensiveInvestment
    
    
    Compensation
    
    
    Loss
    
    
    Total
    
    
    IncomeBalance at December 27, 2003
    
    $
    6,409
    
    
    $
    (4
    )
    
    $
    (503
    )
    
    $
    5,902Comprehensive income:Net income
    
    
    829
    
    
    
    
    
    
    
    
    
    
    
    829
    
    
    $
    829Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    91
    
    
    
    91Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    (29
    )
    
    
    (29
    )
    
    
    (29
    )Cash flow hedge adjustment
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    (6
    )
    
    
    (6
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    885Cash distributions to owners
    
    
    (185
    )
    
    
    
    
    
    
    
    
    
    
    (185
    )Non-cash contributions from owners
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    17Stock compensation
    
    
    (2
    )
    
    
    3
    
    
    
    
    
    
    
    1Balance at December 25, 2004
    
    
    7,068
    
    
    
    (1
    )
    
    
    (447
    )
    
    
    6,620Comprehensive income:Net income
    
    
    871
    
    
    
    
    
    
    
    
    
    
    
    871
    
    
    $
    871Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    70
    
    
    
    70
    
    
    
    70Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    (8
    )
    
    
    (8
    )Cash flow hedge adjustment (net
of tax of $2)
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    (10
    )
    
    
    (10
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    923Cash distributions to owners
    
    
    (181
    )
    
    
    
    
    
    
    
    
    
    
    (181
    )Non-cash contributions from owners
    
    
    216
    
    
    
    
    
    
    
    
    
    
    
    216Stock compensation
    
    
    16
    
    
    
    (13
    )
    
    
    
    
    
    
    3Balance at December 31, 2005
    
    
    7,990
    
    
    
    (14
    )
    
    
    (395
    )
    
    
    7,581Comprehensive income:Net income
    
    
    924
    
    
    
    
    
    
    
    
    
    
    
    924
    
    
    $
    924Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    26
    
    
    
    26Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    48
    
    
    
    48FAS 158  pension liability
adjustment (net of tax of $4)
    
    
    
    
    
    
    
    
    
    
    (278
    )
    
    
    (278
    )
    
    
    Cash flow hedge adjustment (net
of tax of $(3))
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    10
    
    
    
    10Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,008Cash distributions to owners
    
    
    (284
    )
    
    
    
    
    
    
    
    
    
    
    (284
    )Stock compensation
    
    
    51
    
    
    
    14
    
    
    
    
    
    
    
    65Balance at December 30, 2006
    
    $
    8,681
    
    
    $
    
    
    
    $
    (589
    )
    
    $
    8,092
  37




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 1Basis of Presentation
     Note 2Summary of Significant Accounting Policies
 Basis of Consolidation 
 Fiscal Year 
 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/17 weeks (FY 2005)
    
    September, October,November and December
 Revenue Recognition 
  38




---



##### Table of Contents



Advertising and Marketing Costs 
 Bottler Incentives 
 
    
    Direct marketplace support represents PepsiCos and other brand
owners agreed-upon funding to assist us in offering sales and
promotional discounts to retailers and is generally recorded as an
adjustment to cost of sales. If the direct marketplace support is
a reimbursement for a specific, incremental and identifiable
program, the funding is recorded as an offset to the cost of the
program.
 
    
    Advertising support represents agreed-upon funding to assist
us for the cost of media time and promotional materials and is
generally recorded as an adjustment to cost of sales. Advertising
support that represents reimbursement for a specific, incremental
and identifiable media cost, is recorded as a reduction to
advertising and marketing expenses within selling, delivery and
administrative expenses.
  Fiscal Year Ended2006
    
    
    2005
    
    
    2004Net revenues
    
    $
    67
    
    
    $
    51
    
    
    $
    22Cost of sales
    
    
    649
    
    
    
    604
    
    
    
    559Selling, delivery and administrative expenses
    
    
    70
    
    
    
    79
    
    
    
    84Total bottler incentives
    
    $
    786
    
    
    $
    734
    
    
    $
    665
 Share-Based Compensation
 Shipping and Handling Costs
 Foreign Currency Gains and Losses 
 Pension and Postretirement Medical Benefit Plans 
  39




---



##### Table of Contents



Income Taxes
  Cash Equivalents 
 Allowance for Doubtful Accounts 
 Inventories 
 Property, Plant and Equipment 
 Goodwill and Other Intangible Assets, net 
  40




---



##### Table of Contents



Financial Instruments and Risk Management 
    Commitments and Contingencies 
 New Accounting Standards
 SFAS No. 158
  SAB No. 108
  41




---



##### Table of Contents



FASB Interpretation No. 48
  SFAS No. 157
  Note 3 Share-Based Compensation
 Accounting for Share-Based Compensation 
    42




---



##### Table of Contents



Fiscal Year Ended2005
    
    
    2004Net income:As reported
    
    $
    871
    
    
    $
    829Add: Total share-based employee compensation included in reported net income
    
    
    1
    
    
    
    Less: Total share-based employee compensation determined under fair-value
based method for all awards
    
    
    (64
    )
    
    
    (65
    )Pro forma
    
    $
    808
    
    
    $
    764
 Share-Based Long-Term Incentive Compensation Plans 
    2006
    
    2005
    
    2004Risk-free interest rate
    
    
    4.7
    %
    
    
    4.1
    %
    
    
    3.2
    %Expected term (in years)
    
    
    5.7
    
    
    
    5.8
    
    
    
    6.0Expected volatility
    
    
    27.0
    %
    
    
    28.0
    %
    
    
    35.0
    %Expected dividend yield
    
    
    1.5
    %
    
    
    1.1
    %
    
    
    0.7
    %
    43




---



##### Table of Contents



Stock Options 
  WeightedWeighted
    
    AverageAverage
    
    RemainingExercise
    
    Contractual
    
    AggregateShares
    
    Price per
    
    Term
    
    IntrinsicOptions
    
    (in millions)
    
    Share
    
    (years)
    
    ValueOutstanding at January 1, 2006
    
    
    38.1
    
    
    $
    22.54Granted
    
    
    3.2
    
    
    $
    29.69Exercised
    
    
    (8.7
    )
    
    $
    19.39Forfeited or expired
    
    
    (0.9
    )
    
    $
    27.51Outstanding at December 30, 2006
    
    
    31.7
    
    
    $
    24.16
    
    
    
    6.3
    
    
    $
    215Exercisable at December 30, 2006
    
    
    19.9
    
    
    $
    21.28
    
    
    
    5.1
    
    
    $
    191
   Restricted Stock Units 
 44




---



##### Table of Contents



WeightedAverageWeighted
    
    RemainingAverage
    
    Contractual
    
    AggregateShares
    
    Grant-Date
    
    Term
    
    IntrinsicRestricted Stock Units
    
    (in thousands)
    
    Fair Value
    
    (years)
    
    ValueOutstanding at January 1, 2006
    
    
    533
    
    
    $
    28.12Granted
    
    
    1,148
    
    
    $
    29.52Converted
    
    
    
    
    
    
    Forfeited
    
    
    (29
    )
    
    $
    29.44Outstanding at December 30, 2006
    
    
    1,652
    
    
    $
    29.07
    
    
    
    2.3
    
    
    $
    51Convertible at December 30, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
  Note 4Inventories
 2006
    
    
    2005Raw materials and supplies
    
    $
    201
    
    
    $
    173Finished goods
    
    
    332
    
    
    
    285$
    533
    
    
    $
    458
 Note 5Prepaid Expenses and Other Current Assets
 2006
    
    
    2005Prepaid expenses
    
    $
    314
    
    
    $
    226Other current assets
    
    
    41
    
    
    
    48$
    355
    
    
    $
    274
 Note 6Accounts Receivable
 2006
    
    
    2005Trade accounts receivable
    
    $
    1,163
    
    
    $
    1,018Allowance for doubtful accounts
    
    
    (50
    )
    
    
    (51
    )Accounts receivable from PepsiCo
    
    
    168
    
    
    
    143Other receivables
    
    
    50
    
    
    
    76$
    1,331
    
    
    $
    1,186
 45




---



##### Table of Contents



Note 7Property, Plant and Equipment, net
 2006
    
    
    2005Land
    
    $
    291
    
    
    $
    277Buildings and improvements
    
    
    1,404
    
    
    
    1,299Manufacturing and distribution equipment
    
    
    3,705
    
    
    
    3,425Marketing equipment
    
    
    2,425
    
    
    
    2,334Capital leases
    
    
    60
    
    
    
    28Other
    
    
    162
    
    
    
    1438,047
    
    
    
    7,506Accumulated depreciation
    
    
    (4,271
    )
    
    
    (3,863
    )$
    3,776
    
    
    $
    3,643
  Buildings and improvements
    
    20-33 yearsManufacturing and distribution equipment
    
    2-15 yearsMarketing equipment
    
    2-7 years
 Note 8Other Intangible Assets, net and Goodwill
  2006
    
    
    2005Intangibles subject to amortization:Gross carrying amount:Customer relationships and lists
    
    $
    54
    
    
    $
    53Franchise/distribution rights
    
    
    45
    
    
    
    46Other identified intangibles
    
    
    32
    
    
    
    39131
    
    
    
    138Accumulated amortization:Customer relationships and lists
    
    
    (11
    )
    
    
    (9
    )Franchise/distribution rights
    
    
    (27
    )
    
    
    (22
    )Other identified intangibles
    
    
    (16
    )
    
    
    (18
    )(54
    )
    
    
    (49
    )Intangibles subject to amortization, net
    
    
    77
    
    
    
    89Intangibles not subject to amortization:Carrying amount:Franchise rights
    
    
    3,128
    
    
    
    3,093Distribution rights
    
    
    297
    
    
    
    302Trademarks
    
    
    215
    
    
    
    218Other identified intangibles
    
    
    51
    
    
    
    112Intangibles not subject to amortization
    
    
    3,691
    
    
    
    3,725Total other intangible assets, net
    
    $
    3,768
    
    
    $
    3,814
 46




---



##### Table of Contents



Fiscal Year Ending2007
    
    $
    102008
    
    $
    92009
    
    $
    72010
    
    $
    62011
    
    $
    6
   U.S. &Canada
    
    
    Europe
    
    
    Mexico
    
    
    TotalBalance at December 25, 2004
    
    $
    1,147
    
    
    $
    16
    
    
    $
    253
    
    
    $
    1,416Purchase price allocations relating to acquisitions
    
    
    77
    
    
    
    
    
    
    
    (5
    )
    
    
    72Impact of foreign currency translation
    
    
    16
    
    
    
    
    
    
    
    12
    
    
    
    28Balance at December 31, 2005
    
    
    1,240
    
    
    
    16
    
    
    
    260
    
    
    
    1,516Purchase price allocations relating to acquisitions
    
    
    (11
    )
    
    
    
    
    
    
    (11
    )
    
    
    (22
    )Impact of foreign currency translation
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    (4
    )Balance at December 30, 2006
    
    $
    1,229
    
    
    $
    16
    
    
    $
    245
    
    
    $
    1,490
    47




---



##### Table of Contents



Note 9Accounts Payable and Other Current Liabilities
 2006
    
    
    2005Accounts payable
    
    $
    525
    
    
    $
    501Trade incentives
    
    
    194
    
    
    
    185Accrued compensation and benefits
    
    
    237
    
    
    
    211Other accrued taxes
    
    
    111
    
    
    
    123Accrued interest
    
    
    49
    
    
    
    42Accounts payable to PepsiCo
    
    
    234
    
    
    
    176Other current liabilities
    
    
    209
    
    
    
    218$
    1,559
    
    
    $
    1,456
 Note 10Short-term Borrowings and Long-term Debt
 2006
    
    
    2005Short-term borrowingsCurrent maturities of long-term debt and capital leases
    
    $
    16
    
    
    $
    593SFAS No. 133 adjustment (1)
    
    
    
    
    
    
    (4
    )Unamortized discount, net
    
    
    
    
    
    
    (1
    )Current maturities of long-term debt, net
    
    
    16
    
    
    
    588Other short-term borrowings
    
    
    242
    
    
    
    71$
    258
    
    
    $
    659Long-term debt2.45% (3.9% effective rate) (2) senior notes due 2006
    
    $
    
    
    
    $
    5005.63% (6.3% effective rate) (2)(3) senior notes due 2009
    
    
    1,300
    
    
    
    1,3004.63% (4.6% effective rate)(3) senior notes due 2012
    
    
    1,000
    
    
    
    1,0005.00% (5.2% effective rate) senior notes due 2013
    
    
    400
    
    
    
    4004.13% (4.4% effective rate) senior notes due 2015
    
    
    250
    
    
    
    2505.50% (5.4% effective rate) senior notes due 2016
    
    
    800
    
    
    
    Capital leases obligations (Note 11)
    
    
    33
    
    
    
    5Other (average rate 5.4%)
    
    
    11
    
    
    
    1023,794
    
    
    
    3,557SFAS No. 133 adjustment (1)
    
    
    (13
    )
    
    
    (19
    )Unamortized discount, net
    
    
    (6
    )
    
    
    (7
    )Current maturities of long-term debt, net
    
    
    (16
    )
    
    
    (588
    )$
    3,759
    
    
    $
    2,943
 
 (1)
    
    In accordance with the requirements of SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities (SFAS 133), the portion of our fixed-rate debt obligations that is hedged is reflected in our Consolidated Balance
Sheets as an amount equal to the sum of the debts carrying value plus a SFAS 133 fair value adjustment, representing changes
recorded in the fair value of the hedged debt obligations attributable to movements in market interest rates.(2)
    
    Effective interest rates include the impact of the gain/loss realized on swap instruments and represent the rates
that were achieved in 2006.(3)
    
    These notes are guaranteed by PepsiCo. Aggregate Maturities  Long-term Debt 
 2006 Short-Term Debt Activities 
 48




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##### Table of Contents



Financial Covenants 
 .
 Interest Payments 
 Letters of Credit, Bank Guarantees and Surety Bonds 
 Note 11Leases
   49




---



##### Table of Contents



LeasesFuture Minimum Rental Payments
    
    Capital
    
    
    Operating2007
    
    $
    9
    
    
    $
    512008
    
    
    7
    
    
    
    392009
    
    
    6
    
    
    
    292010
    
    
    5
    
    
    
    222011
    
    
    6
    
    
    
    10Thereafter
    
    
    12
    
    
    
    59Total
    
    $
    45
    
    
    $
    210Amounts representing interest
    
    
    (12
    )Present value of net minimum lease payments
    
    
    33Less: current portion of net minimum lease payments
    
    
    6Long-term portion of net minimum lease payments
    
    $
    27
  Components of net rental expense under operating leases:
 2006
    
    
    2005
    
    
    2004Minimum rentals
    
    $
    99
    
    
    $
    90
    
    
    $
    77Sublease rental
income
    
    
    (3
    )
    
    
    (2
    )
    
    
    (2
    )Total
    
    $
    96
    
    
    $
    88
    
    
    $
    75
 Note 12Financial Instruments and Risk Management
 Cash Flow Hedges
    50




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##### Table of Contents



Before
    
    
    
    
    
    
    Net ofTaxes
    
    
    Taxes
    
    
    TaxesAccumulated net gains as of December 27, 2003
    
    $
    23
    
    
    $
    
    
    
    $
    23Net changes in the fair value of cash flow hedges
    
    
    29
    
    
    
    
    
    
    
    29Net gains reclassified from AOCL into earnings
    
    
    (35
    )
    
    
    
    
    
    
    (35
    )Accumulated net gains as of December 25, 2004
    
    
    17
    
    
    
    
    
    
    
    17Net changes in the fair value of cash flow hedges
    
    
    5
    
    
    
    3
    
    
    
    8Net gains reclassified from AOCL into earnings
    
    
    (17
    )
    
    
    (1
    )
    
    
    (18
    )Accumulated net gains as of December 31, 2005
    
    
    5
    
    
    
    2
    
    
    
    7Net changes in the fair value of cash flow hedges
    
    
    14
    
    
    
    (2
    )
    
    
    12Net gains reclassified from AOCL into earnings
    
    
    (1
    )
    
    
    (1
    )
    
    
    (2
    )Accumulated net gains as of December 30, 2006
    
    $
    18
    
    
    $
    (1
    )
    
    $
    17
  Fair Value Hedges 
 Unfunded Deferred Compensation Liability 
   51




---



##### Table of Contents



Other Financial Assets and Liabilities 
  Note 13Pension and Postretirement Medical Benefit Plans
 Employee Benefit Plans
   Defined Benefit Pension Plans
 Postretirement Medical Plans
  52




---



##### Table of Contents



Incremental Effects of Applying SFAS 158 on the Consolidated Balance Sheet at December 30, 2006:
 Prior to AML
    
    
    
    
    
    Prior to
    
    
    
    
    
    Post AMLand SFAS 158
    
    AML
    
    SFAS 158
    
    SFAS 158
    
    and SFAS 158Adjustments
    
    Adjustments
    
    Adjustments
    
    Adjustments
    
    AdjustmentsPrepaid expenses and other
current assets
    
    $
    365
    
    
    $
    
    
    
    $
    365
    
    
    $
    (10
    )
    
    $
    355Other intangible assets, net
    
    $
    3,832
    
    
    $
    (4
    )
    
    $
    3,828
    
    
    $
    (60
    )
    
    $
    3,768Other assets
    
    $
    111
    
    
    $
    
    
    
    $
    111
    
    
    $
    3
    
    
    $
    114Accounts payable and other
current liabilities
    
    $
    1,551
    
    
    $
    
    
    
    $
    1,551
    
    
    $
    8
    
    
    $
    1,559Other liabilities
    
    $
    707
    
    
    $
    (52
    )
    
    $
    655
    
    
    $
    208
    
    
    $
    863Deferred income taxes, net
    
    $
    410
    
    
    $
    
    
    
    $
    410
    
    
    $
    (4
    )
    
    $
    406Accumulated other
comprehensive loss
    
    $
    (359
    )
    
    $
    48
    
    
    $
    (311
    )
    
    $
    (278
    )
    
    $
    (589
    )
 Amounts
Recognized in AOCL at Fiscal Year End Related to U.S. Plans:
 Pension
    
    
    Postretirement2006
    
    
    2006Prior Service Cost
    
    $
    47
    
    
    $
    3Net Loss
    
    
    460
    
    
    
    98Total amount recognized in AOCL
    
    $
    507
    
    
    $
    101
 Estimated Amounts in AOCL to be Recognized in 2007 for U.S. Net Periodic Benefit Cost:
 Pension
    
    PostretirementPrior Service Cost
    
    $
    7
    
    
    $
    Net Loss
    
    $
    38
    
    
    $
    4
 Defined Contribution Benefits
 53




---



##### Table of Contents



Pension2006
    
    
    2005
    
    
    2004Components of U.S. pension expense:Service cost
    
    $
    53
    
    
    $
    46
    
    
    $
    43Interest cost
    
    
    82
    
    
    
    75
    
    
    
    69Expected return on plan assets  (income)
    
    
    (94
    )
    
    
    (90
    )
    
    
    (83
    )Amortization of net loss
    
    
    38
    
    
    
    30
    
    
    
    25Amortization of prior service amendments
    
    
    9
    
    
    
    7
    
    
    
    7Special termination benefits
    
    
    
    
    
    
    9
    
    
    
    Net pension expense for the defined benefit plans
    
    $
    88
    
    
    $
    77
    
    
    $
    61Defined contribution plans expense
    
    $
    22
    
    
    $
    20
    
    
    $
    19Total pension expense recognized in the
Consolidated Statements of Operations
    
    $
    110
    
    
    $
    97
    
    
    $
    80
 Postretirement2006
    
    
    2005
    
    
    2004Components of U.S. postretirement benefits expense:Service cost
    
    $
    4
    
    
    $
    3
    
    
    $
    4Interest cost
    
    
    20
    
    
    
    22
    
    
    
    18Amortization of net loss
    
    
    7
    
    
    
    8
    
    
    
    6Amortization of prior service amendments
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Net postretirement benefits expense recognized in
the Consolidated Statements of Operations
    
    $
    31
    
    
    $
    32
    
    
    $
    27
 Changes in the Projected Benefit Obligations
 Pension
    
    
    Postretirement2006
    
    
    2005
    
    
    2006
    
    
    2005Obligation at beginning of year
    
    $
    1,439
    
    
    $
    1,252
    
    
    $
    384
    
    
    $
    379Service cost
    
    
    53
    
    
    
    46
    
    
    
    4
    
    
    
    3Interest cost
    
    
    82
    
    
    
    75
    
    
    
    20
    
    
    
    22Plan amendments
    
    
    (8
    )
    
    
    21
    
    
    
    1
    
    
    
    8Actuarial loss/(gain)
    
    
    43
    
    
    
    91
    
    
    
    (32
    )
    
    
    (1
    )Benefit payments
    
    
    (69
    )
    
    
    (54
    )
    
    
    (23
    )
    
    
    (27
    )Special termination benefits
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    Transfers
    
    
    (1
    )
    
    
    (1
    )
    
    
    
    
    
    
    Obligation at end of year
    
    $
    1,539
    
    
    $
    1,439
    
    
    $
    354
    
    
    $
    384
 54




---



##### Table of Contents



Changes in the Fair Value of Assets
 Pension
    
    
    Postretirement2006
    
    
    2005
    
    
    2006
    
    
    2005Fair value at beginning of year
    
    $
    1,149
    
    
    $
    1,025
    
    
    $
    
    
    
    $
    Actual return on plan assets
    
    
    114
    
    
    
    135
    
    
    
    
    
    
    
    Transfers
    
    
    (1
    )
    
    
    (1
    )
    
    
    
    
    
    
    Employer contributions
    
    
    96
    
    
    
    44
    
    
    
    23
    
    
    
    27Benefit payments
    
    
    (69
    )
    
    
    (54
    )
    
    
    (23
    )
    
    
    (27
    )Fair value at end of year
    
    $
    1,289
    
    
    $
    1,149
    
    
    $
    
    
    
    $
    
 Additional Plan Information
 Pension
    
    Postretirement2006
    
    2005
    
    2006
    
    2005Projected benefit obligation
    
    $
    1,539
    
    
    $
    1,439
    
    
    $
    354
    
    
    $
    384Accumulated benefit obligation
    
    $
    1,407
    
    
    $
    1,330
    
    
    $
    354
    
    
    $
    384Fair value of plan assets (1)
    
    $
    1,299
    
    
    $
    1,190
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Includes fourth quarter employer contributions.  Reconciliation of Funded Status at Fiscal Year End
 Pension
    
    
    Postretirement2006
    
    
    2005
    
    
    2006
    
    
    2005Funded status at measurement date
    
    $
    (250
    )
    
    $
    (290
    )
    
    $
    (354
    )
    
    $
    (384
    )Fourth quarter employer contributions/payments
    
    
    10
    
    
    
    41
    
    
    
    5
    
    
    
    6Funded status at end of year
    
    $
    (240
    )
    
    
    (249
    )
    
    $
    (349
    )
    
    
    (378
    )Unrecognized prior service cost (1)
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    2Unrecognized loss (1)
    
    
    
    
    
    
    474
    
    
    
    
    
    
    
    137Total recognized in the balance sheet
    
    
    
    
    
    $
    289
    
    
    
    
    
    
    $
    (239
    )
 
 (1)
    
    Upon adoption of SFAS 158, the full funded status of our
pension plans and postretirement plan is now
recognized on our balance sheet. Funded Status Recognized in the Consolidated Balance Sheets at Fiscal Year End
 Pension
    
    
    Postretirement2006
    
    
    2005
    
    
    2006
    
    
    2005Accounts payable and other current liabilities
    
    $
    (1
    )
    
    $
    
    
    
    $
    (26
    )
    
    $
    Other liabilities
    
    
    (239
    )
    
    
    (158
    )
    
    
    (323
    )
    
    
    (239
    )Total liabilities
    
    
    (240
    )
    
    
    (158
    )*
    
    
    (349
    )
    
    
    (239
    )*Intangible assets
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    Accumulated other comprehensive loss **
    
    
    507
    
    
    
    383
    
    
    
    101
    
    
    
    Net amounts recognized
    
    $
    267
    
    
    $
    289
    
    
    $
    (248
    )
    
    $
    (239
    )
 
 *
    
    Prior to the adoption of SFAS 158 and in accordance with existing accounting guidance for pension
plans, we recorded a minimum pension liability equal to the excess of the accumulated benefit obligation over
the fair market value of the plan assets. Also, in accordance with then existing accounting guidance for
postretirement plans, we were not required to record a minimum liability.**
    
    Amounts presented are before the impact of taxes. 55




---



##### Table of Contents



Assumptions
  Pension
    
    Postretirement2006
    
    2005
    
    2004
    
    2006
    
    2005
    
    2004Discount rate
    
    
    5.80
    %
    
    
    6.15
    %
    
    
    6.25
    %
    
    
    5.55
    %
    
    
    6.15
    %
    
    
    6.25
    %Expected return on plan assets (1)
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ARate of compensation increase
    
    
    3.53
    %
    
    
    3.60
    %
    
    
    4.20
    %
    
    
    3.53
    %
    
    
    3.60
    %
    
    
    4.20
    %
 
 (1)
    
    Expected return on plan assets is presented after administration expenses.  Pension
    
    Postretirement2006
    
    2005
    
    2006
    
    2005Discount rate
    
    
    6.00
    %
    
    
    5.80
    %
    
    
    5.80
    %
    
    
    5.55
    %Rate of compensation increase
    
    
    3.55
    %
    
    
    3.53
    %
    
    
    3.55
    %
    
    
    3.53
    %
  Funding and Plan Assets
 Allocation PercentageAsset Category
    
    Target
    
    Actual
    
    Actual2007
    
    2006
    
    2005Equity securities
    
    
    75
    %
    
    
    76
    %
    
    
    76
    %Debt securities
    
    
    25
    %
    
    
    24
    %
    
    
    24
    %
   Health Care Cost Trend Rates
 56




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##### Table of Contents



1%
    
    1%Increase
    
    DecreaseEffect on total fiscal year 2006 service and interest cost components
    
    $
    1
    *
    
    $
    (1)
    *Effect on the fiscal year 2006 postretirement benefit obligation
    
    $
    9
    
    
    $
    (8
    )
 *
    
    Impact was slightly less than $0.5 million. Pension and Postretirement Cash Flow 
 Employer Contributions to U.S. Plans
    
    Pension
    
    Postretirement2005
    
    $
    77
    
    
    $
    272006
    
    $
    66
    
    
    $
    222007 (expected)
    
    $
    40
    
    
    $
    26
  Expected Benefit  U.S. Plans 
 Pension
    
    PostretirementIncluding
    
    ExcludingMedicare
    
    MedicareExpected Benefit Payments
    
    
    
    
    
    Subsidy
    
    Subsidy2007
    
    $
    58
    
    
    $
    26
    
    
    $
    272008
    
    $
    64
    
    
    $
    25
    
    
    $
    262009
    
    $
    69
    
    
    $
    25
    
    
    $
    262010
    
    $
    76
    
    
    $
    26
    
    
    $
    272011
    
    $
    85
    
    
    $
    27
    
    
    $
    282012 to 2016
    
    $
    577
    
    
    $
    139
    
    
    $
    144
 57




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##### Table of Contents



Note 14Income Taxes
  2006
    
    
    2005
    
    
    2004Current:Federal
    
    $
    6
    
    
    $
    1
    
    
    $
    17Foreign
    
    
    36
    
    
    
    26
    
    
    
    35State
    
    
    2
    
    
    
    3
    
    
    
    2International legal entity/ debt restructuring reserves
    
    
    
    
    
    
    22
    
    
    
    44
    
    
    
    52
    
    
    
    54Deferred:Federal
    
    
    (5
    )
    
    
    (12
    )
    
    
    (3
    )Foreign
    
    
    (22
    )
    
    
    (19
    )
    
    
    (22
    )State
    
    
    (2
    )
    
    
    3
    
    
    
    Tax rate change benefit
    
    
    (12
    )
    
    
    
    
    
    
    (26
    )(41
    )
    
    
    (28
    )
    
    
    (51
    )$
    3
    
    
    $
    24
    
    
    $
    3
  
    
    Valuation allowances  During 2006, we reversed valuation allowances resulting in a $34
million tax benefit. These reversals were due to improved profitability trends and certain
restructurings in Spain, Russia and Turkey.
    
    Tax rate changes  During 2006, changes to the income tax laws in Canada, Turkey and
certain jurisdictions within the U.S. were enacted. These law changes enabled us to
re-measure our net deferred tax liabilities using lower tax rates which decreased our
income tax expense by approximately $12 million.
  
    
    Valuation allowances  In the fourth quarter, we reversed valuation allowances resulting
in a $19 million tax benefit. This reversal was due to improved profitability trends in
Russia and a change to the Russia tax law that enables us to use a greater amount of our
Russian net operating losses (NOLs).
    
    International legal entity/debt restructuring  In the fourth quarter, we completed the
reorganization of our international legal entity and debt structure to allow for more
efficient cash mobilization, to reduce taxable foreign exchange risks and to reduce
potential future tax costs. This reorganization resulted in a $22 million tax charge.
  
    
    Mexico tax rate change  In December 2004, legislation was enacted changing the Mexican
statutory income tax rate. This rate change decreased our net deferred tax liabilities and
resulted in a $26 million tax benefit in the fourth quarter.
    
    Tax reserves  During 2004, we adjusted previously established liabilities for tax
exposures due largely to the settlement of certain international tax audits. The
adjustment of these liabilities resulted in an $18 million tax benefit for the year.
 58




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##### Table of Contents



2006
    
    
    2005
    
    
    2004U.S.
    
    $
    731
    
    
    $
    770
    
    
    $
    693Foreign
    
    
    196
    
    
    
    125
    
    
    
    139$
    927
    
    
    $
    895
    
    
    $
    832
  2006
    
    
    2005
    
    
    2004Income taxes computed at the U.S. federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Income taxable to owners
    
    
    (31.4
    )
    
    
    (27.9
    )
    
    
    (25.4
    )State income tax, net of federal tax benefit
    
    
    3.1
    
    
    
    0.7
    
    
    
    0.2Impact of foreign results
    
    
    (1.3
    )
    
    
    (3.9
    )
    
    
    (8.6
    )Change in valuation allowances, net
    
    
    (5.5
    )
    
    
    (3.9
    )
    
    
    2.9Nondeductible expenses
    
    
    1.4
    
    
    
    1.5
    
    
    
    1.6Qualified domestic production activity deduction
    
    
    (0.6
    )
    
    
    
    
    
    
    International tax audit settlements, net
    
    
    
    
    
    
    
    
    
    
    (2.2
    )Other, net
    
    
    1.0
    
    
    
    (1.2
    )
    
    
    (0.1
    )1.7
    
    
    
    0.3
    
    
    
    3.4International legal entity/debt restructuring reserves
    
    
    
    
    
    
    2.4
    
    
    
    Tax rate change benefit
    
    
    (1.4
    )
    
    
    
    
    
    
    (3.0
    )Total effective income tax rate
    
    
    0.3
    %
    
    
    2.7
    %
    
    
    0.4
    %
  2006
    
    
    2005Intangible assets and property, plant and equipment
    
    $
    437
    
    
    $
    447Other
    
    
    88
    
    
    
    82Gross deferred tax liabilities
    
    
    525
    
    
    
    529Net operating loss carryforwards
    
    
    (262
    )
    
    
    (276
    )Employee benefit obligations
    
    
    (23
    )
    
    
    (19
    )Bad debts
    
    
    (2
    )
    
    
    (2
    )Various liabilities and other
    
    
    (65
    )
    
    
    (46
    )Gross deferred tax assets
    
    
    (352
    )
    
    
    (343
    )Deferred tax asset valuation allowance
    
    
    189
    
    
    
    222Net deferred tax assets
    
    
    (163
    )
    
    
    (121
    )Net deferred tax liability
    
    $
    362
    
    
    $
    408Consolidated Balance Sheets ClassificationPrepaid expenses and other current assets
    
    $
    (29
    )
    
    $
    (17
    )Other assets
    
    
    (21
    )
    
    
    (14
    )Accounts payable and other current liabilities
    
    
    6
    
    
    
    17Deferred income taxes
    
    
    406
    
    
    
    422$
    362
    
    
    $
    408
  59




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##### Table of Contents



Note 15Segment Information
    Net Revenues2006
    
    
    2005
    
    
    2004U.S. & Canada
    
    $
    9,910
    
    
    $
    9,342
    
    
    $
    8,613Europe
    
    
    1,534
    
    
    
    1,366
    
    
    
    1,222Mexico
    
    
    1,286
    
    
    
    1,177
    
    
    
    1,071Worldwide net revenues
    
    $
    12,730
    
    
    $
    11,885
    
    
    $
    10,906
 60




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##### Table of Contents



Operating Income2006
    
    
    2005
    
    
    2004U.S. & Canada
    
    $
    849
    
    
    $
    910
    
    
    $
    860Europe
    
    
    57
    
    
    
    35
    
    
    
    54Mexico
    
    
    82
    
    
    
    62
    
    
    
    51Worldwide operating income
    
    
    988
    
    
    
    1,007
    
    
    
    965Interest expense
    
    
    227
    
    
    
    187
    
    
    
    166Interest Income
    
    
    174
    
    
    
    77
    
    
    
    34Other non-operating expenses, net
    
    
    10
    
    
    
    1
    
    
    
    1Minority
interest (income)/expense
    
    
    (2
    )
    
    
    1
    
    
    
    Income before income taxes
    
    $
    927
    
    
    $
    895
    
    
    $
    832
  Total Assets
    
    
    Long-Lived Assets12006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004U.S. & Canada
    
    $
    12,072
    
    
    $
    11,090
    
    
    $
    10,285
    
    
    $
    10,267
    
    
    $
    9,544
    
    
    $
    8,783Europe
    
    
    1,072
    
    
    
    894
    
    
    
    810
    
    
    
    554
    
    
    
    459
    
    
    
    475Mexico
    
    
    1,811
    
    
    
    1,761
    
    
    
    1,629
    
    
    
    1,474
    
    
    
    1,478
    
    
    
    1,435Worldwide total
    
    $
    14,955
    
    
    $
    13,745
    
    
    $
    12,724
    
    
    $
    12,295
    
    
    $
    11,481
    
    
    $
    10,693
 
 1
    
    Long-lived assets represent property, plant and equipment, other intangible assets, goodwill and other assets.  Capital Expenditures
    
    
    Depreciation and Amortization2006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004U.S. & Canada
    
    $
    554
    
    
    $
    540
    
    
    $
    534
    
    
    $
    513
    
    
    $
    486
    
    
    $
    463Europe
    
    
    99
    
    
    
    96
    
    
    
    82
    
    
    
    52
    
    
    
    63
    
    
    
    56Mexico
    
    
    68
    
    
    
    73
    
    
    
    72
    
    
    
    83
    
    
    
    81
    
    
    
    74Worldwide total
    
    $
    721
    
    
    $
    709
    
    
    $
    688
    
    
    $
    648
    
    
    $
    630
    
    
    $
    593
 Note 16Related Party Transactions
  (1)
    
    Master Bottling Agreement for cola beverages bearing the Pepsi-Cola and Pepsi
trademarks in the United States; bottling agreements and distribution agreements for
non-cola beverages; and a master fountain syrup agreement in the United States;(2)
    
    Agreements similar to the master bottling agreement and the non-cola agreement for each
country in which we operate, as well as a fountain syrup agreement for Canada;(3)
    
    A shared services agreement where we obtain various services from PepsiCo and provide
services to PepsiCo; and
 61




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##### Table of Contents



(4)
    
    Transition agreements that provide certain indemnities to the parties, and provide for
the allocation of tax and other assets, liabilities and obligations arising from periods
prior to the initial public offering.
   2006
    
    
    2005
    
    
    2004Net revenues:Bottler incentives (a)
    
    $
    67
    
    
    $
    51
    
    
    $
    22Cost of sales:Purchases of concentrate and finished products,
and royalty fees (b)
    
    $
    (3,227
    )
    
    $
    (2,993
    )
    
    $
    (2,741
    )Bottler incentives (a)
    
    
    595
    
    
    
    559
    
    
    
    522$
    (2,632
    )
    
    $
    (2,434
    )
    
    $
    (2,219
    )Selling, delivery and administrative expenses:Bottler incentives (a)
    
    $
    69
    
    
    $
    78
    
    
    $
    82Fountain service fee (c)
    
    
    178
    
    
    
    183
    
    
    
    180Frito-Lay purchases (d)
    
    
    (198
    )
    
    
    (144
    )
    
    
    (75
    )Shared services (e):Shared services expense
    
    
    (61
    )
    
    
    (69
    )
    
    
    (68
    )Shared services revenue
    
    
    8
    
    
    
    8
    
    
    
    10Net shared services
    
    
    (53
    )
    
    
    (61
    )
    
    
    (58
    )HFCS (f)
    
    
    
    
    
    
    23
    
    
    
    $
    (4
    )
    
    $
    79
    
    
    $
    129Income tax benefit (g)
    
    $
    6
    
    
    $
    3
    
    
    $
    10
 (a) Bottler Incentives and Other Arrangements 
 (b) Purchase of Concentrate and Finished Product 
 62




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##### Table of Contents



(c) Fountain Service Fee 
 (d) Frito-Lay Purchases 
 (e) Shared Services 
 (f) High Fructose Corn Syrup (HFCS) Settlement 
 (g) Income Tax Benefit 
     63




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Note 17Contingencies
  64




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##### Table of Contents



Note 18Accumulated Other Comprehensive Loss
  2006
    
    
    2005
    
    
    2004Net currency translation adjustment
    
    $
    7
    
    
    $
    (19
    )
    
    $
    (89
    )Cash flow hedge adjustment (1)
    
    
    17
    
    
    
    7
    
    
    
    17Minimum pension liability adjustment
    
    
    (335
    )
    
    
    (383
    )
    
    
    (375
    )Adoption of SFAS 158 (2)
    
    
    (278
    )
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    $
    (589
    )
    
    $
    (395
    )
    
    $
    (447
    )
 
 (1)
    
    Net of taxes of $(1) million in 2006, $2 million in 2005 and $0 million in 2004.(2)
    
    Net of taxes of $4 million in 2006. See Note 13 in the Notes to Consolidated Financial Statements for further
information on the adoption of SFAS 158. Note 19Selected Quarterly Financial Data (unaudited)
 First
    
    Second
    
    Third
    
    Fourth2006(1)
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Full YearNet revenues
    
    $
    2,367
    
    
    $
    3,138
    
    
    $
    3,460
    
    
    $
    3,765
    
    
    $
    12,730Gross profit
    
    
    1,114
    
    
    
    1,472
    
    
    
    1,609
    
    
    
    1,725
    
    
    
    5,920Operating income
    
    
    119
    
    
    
    303
    
    
    
    381
    
    
    
    185
    
    
    
    988Net income
    
    
    98
    
    
    
    269
    
    
    
    369
    
    
    
    188
    
    
    
    924
 First
    
    Second
    
    Third
    
    Fourth2005(1)
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Full YearNet revenues
    
    $
    2,147
    
    
    $
    2,862
    
    
    $
    3,214
    
    
    $
    3,662
    
    
    $
    11,885Gross profit
    
    
    1,031
    
    
    
    1,367
    
    
    
    1,519
    
    
    
    1,715
    
    
    
    5,632Operating income
    
    
    119
    
    
    
    293
    
    
    
    392
    
    
    
    203
    
    
    
    1,007Net income
    
    
    88
    
    
    
    252
    
    
    
    355
    
    
    
    176
    
    
    
    871
 
 (1)
    
    For additional unaudited information see Items that affect historical
or future comparability in Managements Financial Review in Item 7. 65




---



##### Table of Contents



66




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
      
 67




---



##### Table of Contents



Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
  
 Item 8. Financial Statements and Supplementary Data
   
 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   
 Item 9B. Other Information
  68




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##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  Andrea L. Forster
 Matthew M. McKenna
 Steven M. Rapp
   
 Item 11. Executive Compensation
 Compensation Discussion and Analysis
     69




---



##### Table of Contents



Oversight of PBGs Executive Compensation Program
  Objectives of PBGs Executive Compensation Program
   
    
    Attract, retain and motivate key executives whose performance is critical to the
Companys success by providing a total compensation program that is appropriately
competitive within our industry and reinforces our short-term and long-term business
objectives by;
 
    
    motivating and rewarding executives for achieving and exceeding our
business objectives
    
    providing financial consequences to executives for failing to
achieve our business objectives; and
    
    retaining key performers through meaningful wealth-creation
opportunities.
 
    
    Provide a program that is simple and straightforward so that our executives have
a clear understanding of our business objectives and the results required to earn
variable pay.
    
    Align the interests of PBG shareholders, the Company, and our executives by
placing particular emphasis on performance-based and equity-based compensation;
    
    Maintain a financially responsible program that is appropriate within our
financial structure and sensitive to the dilutive impact on PBG shareholders.
    
    Establish and maintain our program in accordance with all applicable laws and
regulations, as well as with corporate governance best practices.
  Executive Compensation Policies and Practices
  1. Process of Designing Executive Compensation Program
  2. Target Compensation Use of Peer Group Data
 th th
  70




---



##### Table of Contents







Anheuser-Busch Companies, Inc.
    
    H.J. Heinz CompanyAramark Corporation
    
    Hershey Foods CorporationCampbell Soup Company
    
    Kellogg CompanyClorox Company, Inc.
    
    Kimberly-Clark CorporationCoca-Cola Enterprises Inc.
    
    PepsiAmericas, Inc.Colgate-Palmolive Company
    
    Sara Lee CorporationDean Foods Company
    
    Staples, Inc.FedEx Corporation
    
    Supervalu Inc.General Mills, Inc.
    
    Yum! Brands, Inc.






3. Use of Tally Sheets





    
    Annual direct compensation: Information regarding base salary, annual incentive,
and long-term incentive for the past three years;
    
    Equity awards: Detailed chart of information regarding all PBG equity-based
awards, whether vested, unvested, exercised or unexercised, including total pre-tax
value to the executive and holdings relative to the executives Stock Ownership
Guidelines (see description below);
    
    Perquisites: Line item summary showing the value of each perquisite as well as
the value of the tax gross-up, if any;
    
    Pension / Deferred Compensation: Value of pension plan benefit (qualified plan,
non-qualified plan and total) and value of defined-contribution plan accounts
(401(k) and deferred compensation), including the year-over-year change in value in
those accounts;
    
    Life Insurance Benefits (expressed as multiple of cash compensation as well as actual dollar value);
    
    Description of all compensation and benefits payable upon a termination of employment.




4. Fixed Versus Performance-Based Compensation




71




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##### Table of Contents











5. Performance Targets






Short-Term Incentive




Long-Term Incentive


72




---



##### Table of Contents









6. Cash Versus Equity-Based Compensation














7. Form of Equity-Based Compensation




2006 Change in Form of Award


73




---



##### Table of Contents



SFAS 123R
 Dilutive Impact 1
   8. Equity Award Grant Practices
  Timing of Grants
   
 1
    
    Run rate is generally a measure of the number of
shares underlying equity-based awards granted to employees in a given year as a
percentage of the number of shares issued and outstanding as of the end of such
year. Overhang is generally a measure of the number of shares authorized to be
issued pursuant to employee awards, whether outstanding or to be granted in the
future (Plan Shares), as a percentage of the number of shares
issued and outstanding at a given point in time plus the Plan Shares. 74




---



##### Table of Contents



Pricing of Stock Options
   9. Perquisites
     10. Stock Ownership Guidelines
  11. Trading Windows / Hedging
  12. Compensation Recovery for Misconduct
   75




---



##### Table of Contents



13. Employment / Severance Agreements
   14. Approved Transfers To/From PepsiCo
   15. Change in Control Protections
    16. Deductibility of Compensation Expenses
  76




---



##### Table of Contents









Executive Compensation Elements


1. Base Salary




2. Annual Non-Equity Incentive Award




Maximum / Target Award Amounts




Performance Goals


Actual Awards




3. Long-Term Incentive


77




---



##### Table of Contents



Mr. Foss July 2006 Stock Option Award
  4. Perquisites
  5. Pension
   6. 401(k) / Non-Qualified Deferred Compensation
   78




---



##### Table of Contents



2006 SUMMARY COMPENSATION TABLE
 Change in PensionValue andNonqualifiedNon-Equity
    
    DeferredStock
    
    Option
    
    Incentive Plan
    
    Compensation
    
    All OtherSalary
    
    Awards
    
    Awards
    
    Compensation
    
    Earnings
    
    Compensation
    
    TotalName and Principal Position
    
    Year
    
    ($)
    
    ($)(1)
    
    ($)(1)
    
    ($)(2)
    
    ($)(3)
    
    ($)(4)
    
    ($)John T. Cahill(5)
Principal Executive
Officer
    
    
    2006
    
    
    $
    1,025,000
    (6)
    
    $
    3,368,536
    
    
    $
    4,941,055
    
    
    $
    5,000,000
    (7)
    
    $
    660,000
    
    
    $
    77,708
    (8)
    
    $
    15,072,299Eric J. Foss(9)
Principal Executive
Officer
    
    
    2006
    
    
    
    754,500
    
    
    
    975,979
    
    
    
    2,025,066
    
    
    
    1,289,000
    
    
    
    387,000
    
    
    
    64,513
    (10)
    
    
    5,496,058Alfred H. Drewes
Principal Financial
Officer
    
    
    2006
    
    
    
    425,385
    
    
    
    139,141
    
    
    
    899,853
    
    
    
    456,150
    
    
    
    180,000
    
    
    
    69,442
    (11)
    
    
    2,169,971Andrea L. Forster
Principal Accounting
Officer
    
    
    2006
    
    
    
    262,692
    
    
    
    80,010
    
    
    
    399,663
    
    
    
    214,980
    
    
    
    65,000
    
    
    
    29,436
    (12)
    
    
    1,051,781
 
 1.
    
    The amount included in this column is the compensation cost recognized by PBG in fiscal year
2006 related to the executives outstanding equity awards that were unvested for all or any
part of 2006, calculated in accordance with SFAS 123R without regard to forfeiture estimates.
This amount encompasses equity awards that were granted in 2001, 2003, 2004, 2005 and 2006 and
was determined using the assumptions set forth in Note 4, Share-Based Compensation, to PBGs
Annual Report on Form 10-K for the fiscal year ended December 30, 2006 (for 2006, 2005 and
2004 awards) and Note 11, Employee Stock Option Plans, to PBGs Annual Report on Form 10-K for
the fiscal year ended December 27, 2003 (for 2003 and 2001 awards).2.
    
    In past years, these amounts were reflected in a Bonus column of PBGs Summary Compensation
Table.3.
    
    This amount reflects the aggregate change in 2006 in the actuarial present value of the
executives accumulated benefit under all PBG-sponsored defined benefit pension plans in which
the executive participates calculated based on the material assumptions set forth in Note 14,
Pension and Postretirement Medical Benefit Plans, to PBGs Annual Report on Form 10-K for the
fiscal year ended December 30, 2006 and Note 12, Pension Postretirement Medical Benefit Plans,
to PBGs Annual Report on Form 10-K for the fiscal year ended December 31, 2005.4.
    
    PBG purchases club memberships, season tickets and passes to various sporting events and
other venues for purposes of business entertainment. On limited occasions, one or more of the
Named Executive Officers (as well as other employees of the Company) may use such memberships,
tickets or passes for personal use. There is no incremental cost to the Company in such
circumstances. Therefore, no cost of such memberships, tickets and passes is reflected in the
All Other Compensation column.5.
    
    Mr. Cahill relinquished his position as Bottling LLCs Principal Executive Officer
effective July 20, 2006.6.
    
    The amount of Mr. Cahills salary in excess of $1,000,000 ($25,000) was made subject to
mandatory deferral under the PBG Executive Income Deferral Program until his termination of
employment.7.
    
    As more fully described in the CD&A and footnote 4 to the Grants of Plan-Based Awards Table
and the accompanying narrative, the Committee awarded this bonus amount to Mr. Cahill in
recognition of his exceptional efforts and success in planning for and ensuring a smooth and
effective transition of his CEO responsibilities. While this bonus amount is in excess of the
maximum amount under PBGs non-equity incentive program reflected in the Grants of Plan-Based
Awards Table, it was not greater than the maximum payout amount established for purposes of
Section 162(m) based on the 2006 EPS performance of PBG.8.
    
    This amount includes: (i) $43,497, which equals the total cost of all perquisites and
personal benefits provided by PBG to Mr. Cahill, including an annual physical and travel
expenses related to the annual physical, a car allowance and related car expenses, financial
advisory services, and personal use of corporate ground transportation; (ii) $25,411, which
equals all tax reimbursements paid to Mr. Cahill for the tax liability related to PBG provided
perquisites and personal benefits, including his annual physical, car allowance and related
car expenses, and financial advisory services; and (iii) a standard PBG matching contribution
of $8,800 in PBG common stock to Mr. Cahills 401(k) account. 79




---



##### Table of Contents



9.
    
    Mr. Foss was appointed as Bottling LLCs Principal Executive Officer on July 20, 2006.10.
    
    This amount includes: (i) $37,409, which equals the total cost of all perquisites and
personal benefits provided by PBG to Mr. Foss, including an annual physical and travel
expenses related to the annual physical, a car allowance, financial advisory services and
personal use of corporate transportation; (ii) $18,304, which equals all tax reimbursements
paid to Mr. Foss for the tax liability related to PBG provided perquisites and personal
benefits, including his annual physical, car allowance, and financial advisory services; and
(iii) a standard PBG matching contribution of $8,800 in PBG common stock to Mr. Foss 401(k)
account.11.
    
    This amount includes: (i) $36,390, which equals the total cost of all perquisites and
personal benefits provided by PBG to Mr. Drewes, including an annual physical and travel
expenses related to the annual physical, a company car and related car expenses, financial
advisory services and personal use of corporate ground transportation; (ii) $24,252, which
equals all tax reimbursements paid to Mr. Drewes for the tax liability related to PBG provided
perquisites and personal benefits, including his annual physical, a company car, and financial
advisory services; and (iii) a standard PBG matching contribution of $8,800 in PBG common
stock to Mr. Drewes 401(k) account.12.
    
    This amount includes: (i) $13,838, which equals the total cost of all perquisites and
personal benefits provided by PBG to Ms. Forster, including a car allowance and related car
expenses; (ii) $6,798, which equals all tax reimbursements paid to Ms. Forster for the tax
liability related to PBG provided perquisites and personal benefits, including a car allowance
and related car expenses; and (iii) a standard PBG matching contribution of $8,800 in PBG
common stock to Ms. Forsters 401(k) account. GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2006
 All Other OptionEstimated Possible Payouts Under
    
    

    Estimated Future Payouts Under Equity
    
    Awards: Number of
    
    Exercise or Base
    
    Closing
    
    Grant Date FairNon-Equity Incentive Plan Awards(1)
    
    
    Incentive Plan Awards(2)
    
    Securities
    
    Price of Option
    
    Market Price on
    
    Value of Stock andGrant
    
    Date of Board
    
    Threshold
    
    Target
    
    Maximum
    
    
    Threshold
    
    Target
    
    
    
    
    
    Underlying
    
    Awards
    
    Grant
    
    Option AwardsName
    
    Date
    
    Action
    
    ($)
    
    ($)
    
    ($)
    
    
    (#)
    
    (#)
    
    Maximum(#)
    
    Options (#)
    
    ($/Sh)
    
    Date ($)
    
    ($)(3)J. T. Cahill
    
    
    
    
    
    
    02/02/2006
    
    
    $
    123,000
    
    
    $
    1,640,000
    
    
    $
    3,280,000
    (4)03/01/2006
    
    
    
    02/02/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92,087
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,699,99103/01/2006
    
    
    
    02/02/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    276,262
    
    
    $
    29.32
    
    
    $
    29.38
    
    
    
    2,381,378E. J. Foss
    
    
    
    
    
    
    02/02/2006
    
    
    
    77,297
    
    
    
    1,030,625
    
    
    
    2,061,25003/01/2006
    
    
    
    02/02/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,106
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    999,98803/01/2006
    
    
    
    02/02/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102,319
    
    
    
    29.32
    
    
    
    29.38
    
    
    
    881,99007/24/2006
    
    
    
    07/19/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    33.77
    
    
    
    33.50
    
    
    
    2,038,000A. H. Drewes
    
    
    
    
    
    
    02/02/2006
    
    
    
    27,413
    
    
    
    365,500
    
    
    
    731,00003/01/2006
    
    
    
    02/02/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,053
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    499,99403/01/2006
    
    
    
    02/02/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,160
    
    
    
    29.32
    
    
    
    29.38
    
    
    
    440,999A. L. Forster
    
    
    
    
    
    
    02/02/2006
    
    
    
    12,919
    
    
    
    172,250
    
    
    
    344,50003/01/2006
    
    
    
    02/02/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,806
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    287,51203/01/2006
    
    
    
    02/02/2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,417
    
    
    
    29.32
    
    
    
    29.38
    
    
    
    253,575
 
 1.
    
    Amounts shown reflect the threshold, target and maximum payout amounts under PBGs annual
incentive program which is administered under the PBG shareholder-approved 2005 Executive
Incentive Compensation Plan (EICP). The target amount is equal to a percentage of each
executives salary, which for 2006 ranged from 65% to 160%, depending on the executives role
and level of responsibility. The threshold amount equals the minimum amount payable (above
zero) to the executive and the maximum amount equals 200% of the target amount. The actual
payout amount is contingent upon satisfaction of certain performance criteria. Please refer
to the narrative below for more detail regarding each executives target amount, the specific
performance criteria used to determine the actual payout and how such payout is typically the
result of the Committees exercise of negative discretion with respect to separate maximum
payout amounts established for purposes of Section 162(m).2.
    
    The 2006 restricted stock unit awards were made under the LTIP, which was approved by PBG
shareholders in 2005.3.
    
    The assumptions used in calculating the SFAS 123R grant date fair value of the
option awards and stock awards are set forth in Note 4, Share-Based Compensation, to PBGs
Annual Report on Form 10-K for the fiscal year ended December 30, 2006, which is available at
www.pbg.com.4.
    
    As more fully described in the CD&A, footnote 1 above and the accompanying narrative, the
Committee typically uses the above-stated threshold, target and maximum amounts to guide the
Committees negative discretion in determining the actual amount paid within the maximum
amount established by the Committee for purposes of Section 162(m). For 2006, based on PBGs
2006 EPS performance, the Committee determined that the maximum amount payable to each Named
Executive Officer for purposes of Section 162(m) was $5 million. In every instance of PBGs
history, the Committee has utilized its negative discretion to pay an amount that is
significantly less than the Section 162(m) maximum amount and often much less than the maximum
amount stated above. In light of Mr. Cahills exceptional efforts and success in planning for
and ensuring a smooth and effective transition of his CEO responsibilities, however, the
Committee determined 80




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##### Table of Contents



Narrative
to Summary Compensation and Grants of Plan-Based Awards Tables
 Salary
 Stock Awards
  Option Awards.
   Non-Equity Incentive Plan Compensation
 81




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##### Table of Contents



The Section
162(m) Goal and Maximum Payout Amount
 Committee Discretion.
  Name
    
    Target (% of Salary)John T. Cahill
    
    
    160%Eric J. Foss
    
    
    121%Alfred H. Drewes
    
    
    85%Andrea L. Forster
    
    
    65%
 Performance Factors.
 Results and Payouts.
 Change in Pension Value and Nonqualified Deferred Compensation Earnings.
 All Other Compensation
 Proportion of Salary to Total Compensation
 82




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##### Table of Contents



OUTSTANDING EQUITY AWARDS AT 2006 FISCAL YEAR-END
 Option Awards
    
    
    Stock AwardsNumber of
    
    Number ofSecurities
    
    Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Number of Shares
    
    Market Value of SharesUnderlying
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    or Units of Stock That
    
    or Units of StockUnexercised Options
    
    Unexercised Options
    
    Option Exercise
    
    Option
    
    
    
    
    
    
    Have
    
    That Have(#)
    
    (#)
    
    Price
    
    Expiration
    
    
    
    
    
    
    Not Vested
    
    Not VestedName
    
    Grant Date
    
    Exercisable
    
    Unexercisable
    
    ($)
    
    Date
    
    
    Grant Date
    
    (#)
    
    ($)(22)John T. Cahill
    
    
    03/01/2004
    (1)
    
    
    0
    
    
    
    222,457
    
    
    
    29.50
    
    
    
    03/29/2014
    
    
    
    
    10/07/2005
    (14)
    
    
    179,598
    
    
    $
    5,551,37403/01/2005
    (2)
    
    
    0
    
    
    
    465,929
    
    
    
    28.25
    
    
    
    02/28/2015
    
    
    
    
    03/01/2006
    (16)
    
    
    92,932
    (18)
    
    
    2,872,52803/01/2006
    (3)
    
    
    0
    
    
    
    276,262
    
    
    
    29.32
    
    
    
    02/29/2016Eric J. Foss
    
    
    03/01/2001
    (4)
    
    
    60,000
    
    
    
    0
    
    
    
    20.50
    
    
    
    03/29/2011
    
    
    
    
    10/07/2005
    (15)
    
    
    125,718
    
    
    
    3,885,94309/19/2001
    (5)
    
    
    160,000
    
    
    
    0
    
    
    
    22.50
    
    
    
    09/30/2011
    
    
    
    
    03/01/2006
    (16)
    
    
    34,419
    (19)
    
    
    1,063,89103/01/2002
    (6)
    
    
    145,743
    
    
    
    0
    
    
    
    25.25
    
    
    
    03/29/201203/01/2003
    (7)
    
    
    223,404
    
    
    
    0
    
    
    
    23.50
    
    
    
    03/29/201303/01/2004
    (8)
    
    
    91,187
    
    
    
    91,186
    
    
    
    29.50
    
    
    
    03/29/201403/01/2005
    (9)
    
    
    53,098
    
    
    
    159,291
    
    
    
    28.25
    
    
    
    02/28/201503/01/2006
    (3)
    
    
    0
    
    
    
    102,319
    
    
    
    29.32
    
    
    
    02/29/20167/24/2006
    (10)
    
    
    0
    
    
    
    200,000
    
    
    
    33.77
    
    
    
    07/23/2016Alfred H. Drewes
    
    
    06/25/2001
    (11)
    
    
    69,758
    
    
    
    0
    
    
    
    20.625
    
    
    
    03/29/2011
    
    
    
    
    03/01/2006
    (16)
    
    
    17,210
    (20)
    
    
    531,96103/01/2002
    (6)
    
    
    113,109
    
    
    
    0
    
    
    
    25.25
    
    
    
    03/29/201203/01/2003
    (7)
    
    
    127,660
    
    
    
    0
    
    
    
    23.50
    
    
    
    03/29/201303/01/2004
    (8)
    
    
    52,204
    
    
    
    52,203
    
    
    
    29.50
    
    
    
    03/29/201403/01/2005
    (9)
    
    
    28,319
    
    
    
    84,955
    
    
    
    28.25
    
    
    
    02/28/201503/01/2006
    (3)
    
    
    0
    
    
    
    51,160
    
    
    
    29.32
    
    
    
    02/29/2016Andrea L. Forster
    
    
    03/30/1999
    (12)
    
    
    35,114
    
    
    
    0
    
    
    
    11.50
    
    
    
    03/29/2009
    
    
    
    
    03/01/2006
    (17)
    
    
    9,896
    (21)
    
    
    305,88502/01/2001
    (13)
    
    
    8,110
    
    
    
    0
    
    
    
    19.50
    
    
    
    01/31/201103/01/2001
    (4)
    
    
    35,512
    
    
    
    0
    
    
    
    20.50
    
    
    
    03/29/201103/01/2002
    (6)
    
    
    29,941
    
    
    
    0
    
    
    
    25.25
    
    
    
    03/29/201203/01/2003
    (7)
    
    
    34,043
    
    
    
    0
    
    
    
    23.50
    
    
    
    03/29/201303/01/2004
    (8)
    
    
    22,882
    
    
    
    22,881
    
    
    
    29.50
    
    
    
    03/29/201403/01/2005
    (9)
    
    
    12,850
    
    
    
    38,548
    
    
    
    28.25
    
    
    
    02/28/201503/01/2006
    (3)
    
    
    0
    
    
    
    29,417
    
    
    
    29.32
    
    
    
    02/29/2016
 
 1.
    
    These 2004 stock options vest on March 30, 2007, provided the executive remains employed
through such date.2.
    
    The vesting schedule with respect to this 2005 stock option award is as follows: 155,310
options will vest and become exercisable on March 30, 2007; and the remaining 310,619 options
will vest and become exercisable on March 30, 2008, provided the executive remains employed
through the applicable vesting dates.3.
    
    The vesting schedule with respect to this 2006 stock option award is as follows: 33% of the
options vest and become exercisable on March 1, 2007; 33% of the options vest and become
exercisable on March 1, 2008; and (iii) the remaining 34% of the options vest and become
exercisable on March 1, 2009, provided the executive remains employed through the applicable
vesting dates.4.
    
    The vesting schedule with respect to this 2001 stock option award is as follows: 25% of the
options vested and became exercisable on March 30, 2002; 25% of the options vested and became
exercisable on March 30, 2003; and the remaining 50% of the options vested and became
exercisable on March 30, 2004.5.
    
    This stock option award vested and became exercisable on September 30, 2006.6.
    
    The vesting schedule with respect to this 2002 stock option award is as follows: 25% of the
options vested and became exercisable on March 30, 2003; 25% of the options vested and became
exercisable on March 30, 2004; and the remaining 50% of the options vested and became
exercisable on March 30, 2005.7.
    
    The vesting schedule with respect to this 2003 stock option award is as follows: 25% of the
options vested and became exercisable on March 30, 2004; 25% of the options vested and became
exercisable on March 30, 2005; and the remaining 50% of the options vested and became
exercisable on March 30, 2006.8.
    
    The vesting schedule with respect to this 2004 stock option award is as follows: 25% of the
options vested and became exercisable on March 30, 2005; 25% of the options vested and became
exercisable on March 30, 2006; and the remaining 50% of the options vest and become
exercisable on March 30, 2007, provided the executive remains employed through the applicable
vesting dates. 83




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##### Table of Contents



9.
    
    The vesting schedule with respect to this 2005 stock option award is as follows: 25% of the
options vested and became exercisable on March 30, 2006; 25% of the options vest and become
exercisable on March 30, 2007; and the remaining 50% of the options vest and become
exercisable on March 30, 2008, provided the executive remains employed through the applicable
vesting dates.10.
    
    This stock option award was granted to Mr. Foss in recognition of his new role and
responsibilities as President and Chief Executive Officer of PBG. The award fully
vests and becomes exercisable on July 24, 2011, provided Mr. Foss remains employed through
such date.11.
    
    This stock option award vested and became exercisable on March 30, 2004.12.
    
    This stock option award vested and became exercisable on March 30, 2002.13.
    
    This stock option award vested and became exercisable on February 1, 2001.14.
    
    Since the pre-established PBG earnings per share performance target was met, these restricted
stock units vest as follows: 33% on December 31, 2006; 33% on December 31, 2007; and 34% on
December 31, 2008, provided the executive remains employed through the applicable vesting
dates.15.
    
    Since the pre-established PBG earnings per share performance target was met, these restricted
stock units fully vest on October 7, 2010, provided the executive remains employed through
October 7, 2010.16.
    
    Since the pre-established PBG earnings per share performance target was met, these restricted
stock units fully vest on March 1, 2009, provided the executive remains employed through March
1, 2009.17.
    
    These restricted stock units fully vest on March 1, 2009, provided the executive remains
employed through March 1, 2009.18.
    
    This amount includes 845 restricted stock units accumulated as a result of dividend
equivalents credited to the executive at the same time and in the same amount as dividends
were paid to shareholders of PBG common stock in accordance with the governing restricted
stock unit agreement.19.
    
    This amount includes 313 restricted stock units accumulated as a result of dividend
equivalents credited to the executive at the same time and in the same amount as dividends
were paid to shareholders of PBG common stock in accordance with the governing restricted
stock unit agreement.20.
    
    This amount includes 157 restricted stock units accumulated as a result of dividend
equivalents credited to the executive at the same time and in the same amount as dividends
were paid to shareholders of PBG common stock in accordance with the governing restricted
stock unit agreement.21.
    
    This amount includes 90 restricted stock units accumulated as a result of dividend
equivalents credited to the executive at the same time and in the same amount as dividends
were paid to shareholders of PBG common stock in accordance with the governing restricted
stock unit agreement.22.
    
    The closing price for a share of PBG common stock on December 29, 2006, the last trading day
of PBGs fiscal year, was $30.91. 84




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##### Table of Contents



OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR 2006
 Option Awards
    
    
    Stock AwardsNumber of Shares
    
    Value Realized
    
    
    Number of Shares
    
    Value RealizedName
    
    Acquired on Exercise (#)
    
    on Exercise ($)(1)
    
    
    Acquired on Vesting (#)
    
    on Vesting ($)John T. Cahill
    
    
    1,989,053
    
    
    $
    19,136,113
    
    
    
    
    0
    (2)
    
    
    0Eric J. Foss
    
    
    165,364
    
    
    
    1,996,956
    
    
    
    
    0
    
    
    
    0Alfred H. Drewes
    
    
    44,000
    
    
    
    440,479
    
    
    
    
    0
    
    
    
    0Andrea L. Forster
    
    
    67,414
    
    
    
    1,566,897
    
    
    
    
    0
    
    
    
    0
 
 1.
    
    The value realized on exercise reflects the pre-tax amount.2.
    
    One-third (59,267) of Mr. Cahills 2005 grant of restricted stock units vested on December
31, 2006, one day after PBGs 2006 fiscal year end. The value realized upon vesting was
$1,831,943, determined by multiplying the number of vested restricted stock units by the
closing price of $30.91 on December 29, 2006, the last trading day immediately preceding the
vesting date. The restricted stock units were settled in an equal number of shares of PBG
common stock at vesting and such shares were mandatorily deferred for two years following the
vesting date. During the deferral period, Mr. Cahill will accrue amounts equal to the
dividends that are declared on PBG common stock. Payment will be made at the end of the
deferral period in shares of PBG common stock. PENSION BENEFITS FOR THE 2006 FISCAL YEAR
 Number of Years
    
    Present Value of
    
    Payments DuringCredited Service
    
    Accumulated Benefit
    
    Last Fiscal YearName
    
    Plan Name
    
    (#)(1)
    
    ($)(2)
    
    ($)John T. Cahill
    
    PBG Salaried Employees Retirement Plan
    
    
    17.3
    
    
    $
    307,000
    
    
    $
    0PBG Pension Equalization Plan
    
    
    17.3
    
    
    
    2,724,000
    
    
    
    0Eric J. Foss
    
    PBG Salaried Employees Retirement Plan
    
    
    24.3
    
    
    
    360,000
    
    
    
    0PBG Pension Equalization Plan
    
    
    24.3
    
    
    
    1,676,000
    
    
    
    0Alfred H. Drewes
    
    PBG Salaried Employees Retirement Plan
    
    
    24.3
    (3)
    
    
    437,000
    
    
    
    0PBG Pension Equalization Plan
    
    
    24.3
    (3)
    
    
    1,162,000
    
    
    
    0Andrea L. Forster
    
    PBG Salaried Employees Retirement Plan
    
    
    19.1
    
    
    
    270,000
    
    
    
    0PBG Pension Equalization Plan
    
    
    19.1
    
    
    
    179,000
    
    
    
    0
 
 1.
    
    The number of years of service shown for each executive includes service with PepsiCo, PBGs
parent company prior to March 31, 1999, at which time PBG became a separate, publicly traded
company. The executives service with PepsiCo prior to March 31, 1999 has not been separately
identified and the benefit attributable to such service has not been separately quantified for
such period. Any benefit amount attributable to the executives service with PepsiCo after
March 31, 1999 has been separately identified and quantified. In
this regard, the period of
PepsiCo service that Mr. Drewes accrued after PBG became a separate company has been
separately identified and quantified in footnote 3. PBGs policy for granting extra years of
credited service is discussed in more detail in the CD&A and in the narrative that follows
this table.2.
    
    The material assumptions used to quantify the present value of the accumulated benefit for
each executive are set forth in Note 14, Pension and Postretirement Medical Benefit Plans, to
PBGs Annual Report on Form 10-K for the fiscal year ended December 30, 2006, which is
available at www.pbg.com.3.
    
    Mr. Drewes transferred from PepsiCo on June 25, 2001. The years of credited service shown
above include all prior PepsiCo service. However, only the portion of the pension benefit
attributable to Mr. Drewes PepsiCo service that accrued after March 31, 1999 (two years of
service) has been separately quantified as follows: $44,000 under the PBG Salaried Employees
Retirement Plan and $66,000 under the
PBG Pension Equalization Plan. PepsiCo transferred to the PBG Salaried Employees 85




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##### Table of Contents



Narrative
to the Pension Benefits Table
 The PBG Salaried Employees Retirement Plan
       The PBG Pension Equalization Plan.
 86




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##### Table of Contents



NONQUALIFIED DEFERRED COMPENSATION FOR THE 2006 FISCAL YEAR
 Aggregate
    
    AggregateExecutive
    
    Company
    
    Aggregate Earnings
    
    Withdrawals/
    
    BalanceContributions
    
    Contributions
    
    in Last FY
    
    Distributions
    
    at Last FYEName
    
    in Last FY ($)
    
    in Last FY ($)
    
    ($)
    
    ($)
    
    ($)(7)John T. Cahill
    
    $
    25,000
    (1)
    
    $
    0
    
    
    $
    875,178
    (2)
    
    $
    0
    
    
    $
    7,765,275
    (3)Eric J. Foss
    
    
    0
    
    
    
    0
    
    
    
    56,123
    
    
    
    0
    
    
    
    1,712,862
    (4)Alfred H. Drewes
    
    
    0
    
    
    
    0
    
    
    
    137,328
    
    
    
    0
    
    
    
    1,863,997
    (5)Andrea L. Forster
    
    
    163,623
    
    
    
    0
    
    
    
    65,028
    
    
    
    0
    
    
    
    982,822
    (6)
 
 1.
    
    The Committee required that $25,000 of Mr. Cahills 2006 salary be deferred until his
termination of employment. This amount is reported as Salary in the Summary Compensation
Table.2.
    
    During 2006, a significant amount of Mr. Cahills deferred compensation was invested in
phantom PBG common stock units and this amount reflects the performance of PBG common stock in
2006.3.
    
    $3,494,634 of Mr. Cahills aggregate balance was previously reported as compensation in
Summary Compensation Tables for prior years.4.
    
    $1,062,235 of Mr. Foss aggregate balance was previously reported as compensation in Summary
Compensation Tables for prior years.5.
    
    $139,082 of Mr. Drewes aggregate balance was previously reported as compensation in Summary
Compensation Tables for prior years.6.
    
    Since Ms. Forster has not served as a named executive officer of PBG in any prior years, none
of Ms. Forsters aggregate balance has been previously reported in the Summary Compensation
Table for prior years.7.
    
    The amounts reflected in this column for Messrs. Cahill and Drewes and Ms. Forster include
compensation deferred by the Named Executive Officer over the entirety of their career at both
PepsiCo, Inc. and PBG. Narrative
to the Nonqualified Deferred Compensation Table
   Deferrals of Base Salary and Annual Non-Equity Incentive Award.
 Phantom Investment Options.
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PHANTOM FUND
    
    FYE RETURN RATE (%)The Phantom PBG Stock Fund
    
    
    9.37The Phantom Security Plus Fund
    
    
    4.93The Phantom Bond Index Fund
    
    
    4.31The Phantom Total U.S. Equity Index Fund
    
    
    15.74The Phantom Large Cap Equity Index Fund
    
    
    15.73The Phantom Mid Cap Equity Index Fund
    
    
    10.43The Phantom Small Cap Equity Index Fund
    
    
    18.16The Phantom International Equity Index Fund
    
    
    26.31
 Time and Form of Payment.
 Deferral Periods. th
 Distribution Rules.
  Deferral Extensions (Second Look Elections).
 Hardship Withdrawals.
 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
  88




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##### Table of Contents



Nonqualified Pension Benefits
 Disability
 Death
  Name
    
    Plan Name
    
    Disability
    
    DeathJohn T. Cahill
    
    PBG Pension Equalization Plan
    
    $
    791,300
    
    
    $
    197,800Eric J. Foss
    
    PBG Pension Equalization Plan
    
    
    547,600
    
    
    
    136,900Alfred H. Drewes
    
    PBG Pension Equalization Plan
    
    
    267,300
    
    
    
    66,800Andrea L. Forster
    
    PBG Pension Equalization Plan
    
    
    78,000
    
    
    
    19,500
 LTIP
 Disability
 Death.
 89




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##### Table of Contents



Retirement
 Approved Transfer to PepsiCo
 Change in Control
     Approved
    
    
    ChangeTransfer
    
    
    InName
    
    Disability
    
    
    Death
    
    
    to PepsiCo
    
    
    ControlJohn T. Cahill
    
    $
    5,724,200
    
    
    $
    8,425,800
    
    
    $
    4,864,800
    
    
    $
    10,432,800Eric J. Foss
    
    
    1,744,200
    
    
    
    2,734,900
    
    
    
    1,778,900
    
    
    
    5,664,800Alfred H. Drewes
    
    
    412,300
    
    
    
    912,800
    
    
    
    912,800
    
    
    
    912,800Andrea L. Forster
    
    
    209,000
    
    
    
    487,500
    
    
    
    487,500
    
    
    
    487,500
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##### Table of Contents



Nonqualified Deferred Compensation Plan.
 Severance
 Benefits Generally Available to All PBG Salaried Employees
 Compensation of Managing Directors
 
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  Stock Ownership and Director Relationships with PepsiCo .
 Agreements and Transactions with PepsiCo and Affiliates .
  Beverage Agreements and Purchases of Concentrates and Finished Products
  Transactions with Joint Ventures in which PepsiCo holds an equity interest.
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##### Table of Contents



Purchase of Snack Food Products from Frito-Lay, Inc.
 Shared Services
  Rental Payments.
 National Fountain Services
 Bottler Incentives
 PepsiCo Guarantees
 Lease
Arrangement
 PBG/Bottling LLC Transactions.
    Bottling LLC Distribution.
 Relationships and Transactions with Management and Others.
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##### Table of Contents



Item 14. Principal Accountant Fees and Services
 INDEPENDENT ACCOUNTANTS FEES AND SERVICES
  Audit and Non-Audit Fees
 2006
    
    2005Deloitte & Touche LLP
    
    Deloitte & Touche LLP
    
    KPMG LLP
    
    TotalAudit Fees (1)
    
    $
    5.2
    
    
    $
    4.4
    
    
    $
    0.7
    
    
    $
    5.1Audit-Related Fees (2)
    
    $
    0.9
    
    
    $
    0.0
    
    
    $
    0.0
    
    
    $
    0.0Tax Fees (3)
    
    $
    0.0
    
    
    $
    0.0
    
    
    $
    0.1
    
    
    $
    0.1All Other Fees
    
    $
    0.0
    
    
    $
    0.0
    
    
    $
    0.0
    
    
    $
    0.0Total
    
    $
    6.1
    
    
    $
    4.4
    
    
    $
    0.8
    
    
    $
    5.2
 
 (1)
    
    Represents fees for the audit of our consolidated financial statements, audit of
internal controls, the reviews of interim financial statements included in our Forms 10-Q and
all statutory audits.(2)
    
    Represents fees primarily related to audits of employee benefit plans and other
audit related services.(3)
    
    Represents fees related primarily to assistance with tax compliance matters. Pre-Approval Policies and Procedures .
 93




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PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a) 1.
    
    Financial Statements. The following consolidated financial statements of Bottling LLC and its subsidiaries are
included herein:
        2.
    
    Financial Statement Schedules. The following financial statement schedules of Bottling
LLC and its subsidiaries are included in this Report on the page indicated:
 PageReport of Independent Registered Public Accounting Firm (Deloitte & Touche LLP)
    
    
    F-2Report and Consent of Independent Registered Public Accounting Firm (KPMG LLP)
    
    
    F-3Schedule II  Valuation and Qualifying Accounts for the fiscal years ended
December 30, 2006, December 31, 2005 and December 25, 2004
    
    
    F-4
 3.
    
    Exhibits
  94




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##### Table of Contents



SIGNATURES
   Bottling Group, LLCBy:
    /s/ Eric J. FossEric J. FossPrincipal Executive Officer  SIGNATURE
    
    TITLE
    
    DATE/s/ Eric J. Foss

Eric J. Foss
    
    Principal Executive Officer
    
    February 26, 2007/s/ Alfred H. Drewes

Alfred H. Drewes
    
    Principal Financial Officer
    
    February 26, 2007/s/ Andrea L. Forster

Andrea L. Forster
    
    Principal Accounting Officer
and Managing Director
    
    February 26, 2007/s/ Steven M. Rapp

Steven M. Rapp
    
    Managing Director
    
    February 26, 2007/s/ Matthew M. McKenna

Matthew M. McKenna
    
    Managing Director
    
    February 26, 2007
 S-1




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##### Table of Contents



INDEX TO FINANCIAL STATEMENT SCHEDULES
 PageReport of Independent Registered Public Accounting Firm (Deloitte & Touche LLP)
    
    
    F-2Report and Consent of Independent Registered Public Accounting Firm (KPMG LLP)
    
    
    F-3Schedule II  Valuation and Qualifying Accounts for the fiscal years ended December 30, 2006,
December 31, 2005 and December 25, 2004
    
    
    F-4
 F-1




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F-2




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##### Table of Contents



Report and Consent of Independent Registered Public Accounting Firm
 
    
 F-3




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##### Table of Contents



SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
BOTTLING GROUP, LLC
IN MILLIONS
 ForeignBalance At Beginning
    
    Charged to Cost
    
    
    
    
    
    Accounts Written
    
    Currency
    
    Balance AtDescription
    
    Of Period
    
    and Expenses
    
    Acquisitions
    
    Off
    
    Translation
    
    End Of PeriodFiscal Year Ended
December 30, 2006Allowance for
losses on trade
accounts
receivable
    
    $
    51
    
    
    $
    5
    
    
    $
    
    
    
    $
    (7
    )
    
    $
    1
    
    
    $
    50Fiscal Year Ended
December 31, 2005Allowance for
losses on trade
accounts
receivable
    
    $
    61
    
    
    $
    3
    
    
    $
    
    
    
    $
    (12
    )
    
    $
    (1
    )
    
    $
    51Fiscal Year Ended
December 25, 2004Allowance for
losses on trade
accounts
receivable
    
    $
    72
    
    
    $
    (5
    )
    
    $
    
    
    
    $
    (7
    )
    
    $
    1
    
    
    $
    61
 F-4




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit No.
    
    Description of Exhibit3.1
    
    Articles of Formation of Bottling LLC which is incorporated herein by reference to Exhibit
3.4 to Bottling LLCs Registration Statement on Form S-4 (Registration No. 333-80361).3.2
    
    Amended and Restated Limited Liability Company Agreement of Bottling LLC which is
incorporated herein by reference to Exhibit 3.5 to Bottling LLCs Registration Statement on
Form S-4 (Registration No. 333-80361).4.1
    
    Indenture dated as of February 8, 1999 among Pepsi Bottling Holdings, Inc., PepsiCo, Inc., as
guarantor, and The Chase Manhattan Bank, as trustee, relating to $1,000,000,000 5 3/8% Senior
Notes due 2004 and $1,300,000,000 5 5/8% Senior Notes due 2009, which is incorporated herein
by reference to Exhibit 10.9 to The Pepsi Bottling Group, Inc. (PBG)s Registration
Statement on Form S-1 (Registration No. 333-70291).4.2
    
    First Supplemental Indenture dated as of February 8, 1999 among Pepsi Bottling Holdings,
Inc., Bottling Group, LLC, PepsiCo, Inc. and The Chase Manhattan Bank, as trustee,
supplementing the Indenture dated as of February 8, 1999 among Pepsi Bottling Holdings, Inc.,
PepsiCo, Inc. and The Chase Manhattan Bank, as trustee, which is incorporated herein by
reference to Exhibit 10.10 to PBGs Registration Statement on Form S-1 (Registration No.
333-70291).4.3
    
    Indenture dated as of March 8, 1999 by and among PBG, as obligor, Bottling Group, LLC, as
guarantor, and The Chase Manhattan Bank, as trustee, relating to $1,000,000,000 7% Series B
Senior Notes due 2029, which is incorporated herein by reference to Exhibit 10.14 to PBGs
Registration Statement on Form S-1 (Registration No. 333-70291).4.4
    
    Indenture dated as of November 15, 2002 among Bottling LLC, PepsiCo, Inc., as guarantor, and
JPMorgan Chase Bank, as trustee, relating to $1,000,000,000 4 5/8% Senior Notes due November
15, 2012, which is incorporated herein by reference to Exhibit 4.7 to Bottling LLCs Annual
Report on Form 10-K for the year ended December 28, 2002.4.5
    
    Registration Rights Agreement dated as of November 7, 2002 relating to the $1,000,000,000 4
5/8% Senior Notes due November 15, 2012, which is incorporated herein by reference to Exhibit
4.8 to Bottling LLCs Annual Report on Form 10-K for the year ended December 28, 2002.4.6
    
    Indenture, dated as of June 10, 2003 by and between Bottling LLC, as obligor, and JPMorgan
Chase Bank, as trustee, relating to $250,000,000 4 1/8 % Senior Notes due June 15, 2015, which
is incorporated herein by reference to Exhibit 4.1 to Bottling LLCs registration statement on
Form S-4 (Registration No. 333-106285).4.7
    
    Registration Rights Agreement dated June 10, 2003 by and among Bottling LLC, J.P. Morgan
Securities Inc., Lehman Brothers Inc., Banc of America Securities LLC, Citigroup Global
Markets Inc, Credit Suisse First Boston LLC, Deutsche Bank Securities Inc., Blaylock &
Partners, L.P. and Fleet Securities, Inc, relating to $250,000,000 4 1/8 % Senior Notes due
June 15, 2015, which is incorporated herein by reference to Exhibit 4.3 to Bottling LLCs
registration statement on Form S-4 (Registration No. 333-106285).4.8
    
    Indenture, dated as of October 1, 2003, by and between Bottling LLC, as obligor, and JPMorgan
Chase Bank, as trustee, which is incorporated herein by reference to Exhibit 4.1 to Bottling
LLCs Form 8-K dated October 3, 2003.4.9
    
    Form of Note for the $400,000,000 5.00% Senior Notes due November 15, 2013, which is
incorporated herein by reference to Exhibit 4.1 to Bottling LLCs Form 8-K dated November 13,
2003.4.10
    
    Indenture, dated as of March 30, 2006, by and between Bottling LLC, as obligor, and JPMorgan
Chase Bank, N.A., as trustee, which is incorporated herein by reference to Exhibit 4.1 to
Bottling LLCs Quarterly Report on Form 10-Q for the quarter ended March 25, 2006.4.11
    
    Form of Note for the $800,000,000 51/2% Senior Notes due April 1, 2016 which is incorporated
herein by reference to Exhibit 4.2 to Bottling LLCs Quarterly Report on Form 10-Q for the
quarter ended March 25, 2006.
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##### Table of Contents



Exhibit No.
    
    Description of Exhibit10.1
    
    Settlement Agreement between Bottling LLC and PepsiCo, Inc. dated June 28, 2005, which is
incorporated herein by reference to Exhibit 10.4 to PBGs Quarterly Report on Form 10-Q for
the quarter ended June 11, 2005.10.2
    
    $500,000,000 5-Year Credit Agreement dated as of April 28, 2004 among PBG, Bottling 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, w hich is
incorporated herein by reference to Exhibit 4.1 to PBGs Quarterly Report on Form 10-Q for the
quarter ended June 12, 2004.10.3
    
    $450,000,000 5-Year Credit Agreement dated as of March 22, 2006 among PBG., Bottling LLC,
Citibank, N.A as agent, Citigroup Global Markets Inc. and HSBC Securities (USA) Inc. as joint
lead arrangers and book managers and HSBC Bank USA, N.A., as syndication agents, which is
incorporated herein by reference to Exhibit 10.1 to Bottling LLCs Quarterly Report on Form
10-Q for the quarter ended March 25, 2006.10.4*
    
    Commitment Increase Notice dated March 22, 2006 relating to the $500,000,000 5-Year Credit
Agreement dated as of April 28, 2004 among PBG, Bottling LLC, JP Morgan Chase Bank, as agent,
and certain banks identified in the Credit Agreement.12*
    
    Statement re Computation of Ratios.21*
    
    Subsidiaries of Bottling LLC.23.1*
    
    Report and Consent of KPMG LLP.23.2*
    
    Consent of Deloitte & Touche LLP.31.1*
    
    Certification by the Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2*
    
    Certification by the Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1*
    
    Certification by the Principal Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2*
    
    Certification by the Principal Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.99.1*
    
    The Pepsi Bottling Group, Inc.s Annual Report on Form 10-K for the fiscal year ended
December 30, 2006.
 
 *
    
    Filed herewith E-2