##### Table of Contents





UNITED STATES SECURITIES AND EXCHANGE COMMISSION
      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 29, 2007oro

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 1-14893
  The Pepsi
    Bottling Group, Inc.
   Incorporated in Delaware(State or other Jurisdiction of Incorporation or
    Organization)

13-4038356(I.R.S. Employer Identification No.)One Pepsi Way, Somers, New York(Address of Principal Executive Offices)

10589(Zip code)       Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $.01 per share

New York Stock Exchange      þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller
    reporting company)   Rule 12b-2 o þ
    Documents of Which Portions Are Incorporated by Reference

Parts of Form 10-K into Which Portion of Documents Are
    IncorporatedProxy Statement for The Pepsi Bottling Group, Inc.
    May 28, 2008 Annual Meeting of Shareholders

III




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##### 



Table of
    Contents


PART IItem 1.

Business

3Item 1A.

Risk Factors

9Item 1B.

Unresolved Staff Comments

11Item 2.

Properties

11Item 3.

Legal Proceedings

12Item 4.

Submission of Matters to a Vote of Security
    Holders

12PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of
    Equity Securities

13Item 6.

Selected Financial Data

15Item 7.

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

16Item 7A.

Quantitative and Qualitative Disclosures
    About Market Risk

60Item 8.

Financial Statements and Supplementary Data

60Item 9.

Changes in and Disagreements With
    Accountants on Accounting and
    Financial Disclosure

60Item 9A.

Controls and Procedures

60Item 9B.

Other Information

61PART IIIItem 10.

Directors, Executive Officers and
    Corporate Governance

62Item 11.

Executive Compensation

62Item 12.

Security Ownership of Certain Beneficial
    Owners and Management and Related
    Stockholder Matters

62Item 13.

Certain Relationships and Related Transactions,
    and Director Independence

62Item 14.

Principal Accountant Fees and Services

62PART IVItem 15.

Exhibits and Financial Statement Schedules

63SIGNATURES

64INDEX TO FINANCIAL
    STATEMENT SCHEDULES

65INDEX TO
    EXHIBITS

67




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##### Table of Contents



PART
    I    ITEM 1.
    BUSINESS  Introduction
        Principal
    Products
  e-pura mr
      U.S. &
    CanadaPepsi

Sierra Mist

Trademark Dr PepperDiet Pepsi

Sierra Mist Free

LiptonDiet Pepsi Max

Aquafina

SoBeWild Cherry Pepsi

Aquafina Alive

SoBe No FearPepsi Lime

Aquafina FlavorSplash

SoBe Life WaterPepsi ONE

G2 from Gatorade

Starbucks
    Frappuccino®Mountain Dew

Propel

DoleDiet Mountain Dew

Tropicana
Twistertm
SodaAMP

Tropicana juice drinksMountain Dew Code Red

Mug Root Beer   EuropePepsi

Tropicana

FrukoPepsi Light

Aqua Minerale

YedigunPepsi Max

Mirinda

Tamek7UP

IVI

LiptonKAS

Fiesta   MexicoPepsi

Mirinda

ElectropuraPepsi Light

Manzanita Sol

e-puramr7UP

Squirt

JarritosKAS

Garci CrespoBelight

Aguas Frescas




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##### Table of Contents



PART
    I(continued)    Raw
    Materials and Other Supplies
      Franchise
    and Venture Agreements
      Terms of the Master Bottling
    Agreement.
    (1)
    maintain such plant and equipment, staff, 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.




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##### Table of Contents



(1)
    our 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)
    our 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.




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##### Table of Contents



PART
    I(continued)     five-year
    Terms of Other
    U.S. Bottling Agreements. ®
  Terms of the Country-Specific
    Bottling Agreements.
  Terms of the Russia Venture
    Agreement.
  Seasonality
    Competition
  Coca-Cola Coca-Cola Coca-Cola Coca-Cola Coca-Cola




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##### Table of Contents



Governmental
    Regulation Applicable to PBG
      Bottle and Can
    Legislation.
            Soft Drink Excise Tax
    Legislation.




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##### Table of Contents



PART
    I(continued)    Trade Regulation.
  School Sales Legislation;
    Industry Guidelines.
  California Carcinogen and
    Reproductive Toxin Legislation.
  Mexican Water Regulation. plant-by-plant
  Employees
    Available
    Information
  www.pbg.com Form 10-K, Form 10-Q, Form 8-K,
  www.pbg.com
  Financial
    Information on 
    Industry Segments and Geographic Areas




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##### Table of Contents



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 compete successfully within the highly
    competitive carbonated and non-carbonated beverage
    markets.
    We
    may not be able to respond successfully to the demands of our
    largest customers.
    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.




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##### Table of Contents



PART
    I(continued)     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.
      and/or agreed-upon agreed-upon
  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.
    The
    level of our indebtedness could adversely affect our financial
    health.
    Our
    foreign operations are subject to social, political and economic
    risks and may be adversely affected by foreign currency
    fluctuations.




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##### Table of Contents



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.
    Changes
    in the legal and regulatory environment 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    U.S. & Canada

Europe

MexicoManufacturing FacilitiesOwned


50


13


26Leased


3


1


3Other


4


0


0Total


57


14


29Distribution FacilitiesOwned


235


11


89Leased


55


53


86Total


290


64


175




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##### Table of Contents



PART
    I(continued)  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
  Robert C. King
  Pablo Lagos
  Yiannis Petrides
  Steven M. Rapp




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##### Table of Contents



PART
    II     ITEM 5. MARKET
    FOR REGISTRANTS COMMON EQUITY,
    2007

High

LowFirst Quarter

$
32.54

$
30.13Second Quarter

$
35.23

$
31.55Third Quarter

$
36.76

$
32.35Fourth Quarter

$
43.38

$
34.72   2006

High

LowFirst Quarter

$
31.00

$
27.99Second Quarter

$
32.68

$
30.30Third Quarter

$
35.23

$
30.81Fourth Quarter

$
35.83

$
30.59   Shareholders
  Dividend
    Policy
    Quarter

2007

20061

$
.11

$
.082

$
.14

$
.113

$
.14

$
.114

$
.14

$
.11Total

$
.53

$
.41   Performance
    Graph Coca-Cola Coca-Cola Coca-Cola Coca-Cola Coca-Cola Coca-Cola Coca-Cola Coca-Cola Coca-Cola Coca-Cola
  
  Year-ended2002


2003


2004


2005


2006


2007PBG(1)


100



94



106



114



125



164New Bottling Group Index


100



117



125



137



166



244Old Bottling Group Index


100



114



125



127



145



199Standard & Poors 500 Index


100



127



143



150



174



185  (1)
    The closing price for a share
    of our common stock on December 28, 2007, the last trading
    day of our fiscal year, was $39.96.




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##### Table of Contents



PART
    II(continued)    PBG Purchases of Equity
    Securities 
  MaximumNumber (orTotal Number


Approximateof Shares


Dollar Value)(or Units)


of SharesPurchased


(or Units)Total





as Part of


that May YetNumber


Average


Publicly


Be Purchasedof Shares


Price Paid


Announced


Under the(or Units)


per Share


Plans or


Plans orPeriod

Purchased(1)


(or
    Unit)(2)


Programs(3)


Programs(3)Period 1009/09/07-10/06/07


1,425,000


$
36.92



1,425,000



19,921,000Period 1110/07/07-11/03/07


878,300


$
40.02



878,300



19,042,700Period 1211/04/07-12/01/07


475,000


$
41.83



475,000



18,567,700Period 1312/02/07-12/29/07


26,300


$
42.35



26,300



18,541,400Total


2,804,600


$
38.77



2,804,600  (1)
    Shares have only been repurchased
    through publicly announced programs.(2)
    Average share price excludes
    brokerage fees.(3)
    Our Board has authorized the
    repurchase of shares of our common stock on the open market and
    through negotiated transactions as follows:  Number of SharesDate Share Repurchase Programs

Authorized to bewere Publicly Announced

RepurchasedOctober 14, 1999


20,000,000July 13, 2000


10,000,000July 11, 2001


20,000,000May 28, 2003


25,000,000March 25, 2004


25,000,000March 24, 2005


25,000,000December 15, 2006


25,000,000Total shares authorized to be repurchased as of
    December 29, 2007


150,000,000




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##### Table of Contents





ITEM 6.
    SELECTED FINANCIAL DATA  SELECTED
    FINANCIAL AND OPERATING DATA
 in millions, except per share data
  Fiscal years ended

2007(1)


2006(2)(3)


2005(2)(4)


2004


2003Statement of Operations Data:Net revenues

$
13,591


$
12,730


$
11,885


$
10,906


$
10,265Cost of sales


7,370



6,900



6,345



5,656



5,215Gross profit


6,221



5,830



5,540



5,250



5,050Selling, delivery and administrative expenses


5,150



4,813



4,517



4,274



4,094Operating income


1,071



1,017



1,023



976



956Interest expense, net


274



266



250



230



239Other non-operating (income) expenses, net


(6
)


11



1



1



7Minority interest


94



59



59



56



50Income before income taxes


709



681



713



689



660Income tax
    expense(5)(6)(7)(8)


177



159



247



232



238Income before cumulative effect of change in accounting principle


532



522



466



457



422Cumulative effect of change in accounting principle, net of tax
    and minority interest


















6Net income

$
532


$
522


$
466


$
457


$
416Per Share Data:Basic earnings per share

$
2.35


$
2.22


$
1.91


$
1.79


$
1.54Diluted earnings per share

$
2.29


$
2.16


$
1.86


$
1.73


$
1.50Cash dividends declared per share

$
0.53


$
0.41


$
0.29


$
0.16


$
0.04Weighted-average basic shares outstanding


226



236



243



255



270Weighted-average diluted shares outstanding


233



242



250



263



277Other Financial Data:Cash provided by operations

$
1,437


$
1,228


$
1,219


$
1,222


$
1,075Capital expenditures

$
(854
)

$
(725
)

$
(715
)

$
(688
)

$
(635
)Balance Sheet Data (at period end):Total assets

$
13,115


$
11,927


$
11,524


$
10,937


$
11,655Long-term debt

$
4,770


$
4,754


$
3,939


$
4,489


$
4,493Minority interest

$
973


$
540


$
496


$
445


$
396Accumulated other comprehensive
    loss(9)

$
(48
)

$
(361
)

$
(262
)

$
(315
)

$
(380
)Shareholders equity

$
2,615


$
2,084


$
2,043


$
1,949


$
1,881  (1)
    Our fiscal year 2007 results
    include a $30 million pre-tax charge related to
    restructuring charges and a $23 million pre-tax charge
    related to our Full Service Vending Rationalization plan. See
    Items Affecting Comparability of Our Financial Results in
    Item 7.(2)
    We made a classification correction
    for certain miscellaneous costs incurred from product losses in
    the trade. Approximately $90 million and $92 million
    of costs incurred, which were incorrectly included in selling,
    delivery and administrative expenses, were reclassified to cost
    of sales in our Consolidated Statements of Operations for the
    years ended 2006 and 2005, respectively. We have not
    reclassified these expenses for the 2004 and 2003 fiscal years.(3)
    In fiscal year 2006, we adopted the
    Statement of Financial Accounting Standards No. 123(R),
    Share-Based Payment (SFAS 123R) resulting in a
    $65 million decrease in operating income or $0.17 per
    diluted earnings per share. Results for prior periods have not
    been restated as provided for under the modified prospective
    approach.(4)
    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 and,
    accordingly, had no impact on our diluted earnings per share.(5)
    Fiscal year 2003 includes Canada
    tax law change expense of $11 million.(6)
    Fiscal year 2004 includes Mexico
    tax law change benefit of $26 million and international tax
    restructuring charge of $30 million.(7)
    Fiscal year 2006 includes a tax
    benefit of $11 million from tax law changes in Canada,
    Turkey, and in various U.S. jurisdictions and a $55 million
    tax benefit from the reversal of tax contingency reserves due to
    completion of our IRS audit of our
    1999-2000
    income tax returns. See Note 11 in the Notes to
    Consolidated Financial Statements.(8)
    Our fiscal year 2007 results
    include a non-cash tax benefit of $46 million due to the
    reversal of net tax contingency reserves and a net non-cash
    benefit of $13 million due to tax law changes in Canada and
    Mexico. See Note 11 in the Notes to Consolidated Financial
    Statements.(9)
    In fiscal year 2006, we adopted the
    Employers Accounting for Defined Benefit Pension and Other
    Postretirement Plans (SFAS 158) and recorded a
    $159 million loss, net of taxes and minority interest, to
    accumulated other comprehensive loss.




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##### 



PART
    II(continued)    ITEM 7.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND RESULTS OF OPERATIONS  TABLE
    OF CONTENTS
  MANAGEMENTS
    FINANCIAL REVIEW
  
  Our Business


16Our Critical Accounting Policies


17Our Relationship with PepsiCo


21Our Financial Results:Items Affecting Comparability of Our Financial
    Results


22Financial Performance Summary and Worldwide
    Financial Highlights for Fiscal Year 2007


23Results of Operations


24Liquidity and Financial Condition


28Market Risks and Cautionary Statements


30    AUDITED
    CONSOLIDATED FINANCIAL STATEMENTS
  Consolidated Statements of Operations


33Consolidated Statements of Cash Flows


34Consolidated Balance Sheets


35Consolidated Statements of Changes in
    Shareholders Equity


36Notes to Consolidated Financial Statements


37Report of Independent Registered Public
    Accounting Firm


59   MANAGEMENTS
    FINANCIAL REVIEW
  Tabular dollars in millions, except per share data
 OUR
    BUSINESS      
  non-carbonated ready-to-drink
  take-home




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##### Table of Contents



OUR
    CRITICAL ACCOUNTING POLICIES      Other
    Intangible Assets, Net and Goodwill




---



##### Table of Contents



PART
    II(continued)             Pension
    and Postretirement Medical Benefit Plans
        Assumptions




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##### Table of Contents



15-year 15-year
        Pension

2008(1)


2007(2)Discount rate


6.70%



6.00%Expected return on plan assets
    (net of administrative expenses)


8.50%



8.50%Rate of compensation increase


3.56%



3.55%   Postretirement

2008(1)


2007(2)Discount rate


6.35%



5.80%Rate of compensation increase


3.56%



3.55%Health care cost trend rate


9.50%



8.00%  (1)
    Our 2008 discount rate was
    determined as of December 29, 2007 and reflects the
    implementation of SFAS 158 Measurement Date provisions.(2)
    Our 2007 discount rate was
    determined as of September 30, 2006.  Company-sponsored
  
    An increase in our weighted-average discount rate for our
    pension and postretirement medical expense from
    6.00 percent and 5.80 percent to 6.70 percent and
    6.35 percent, respectively, reflecting increases in the
    yields of long-term corporate bonds comprising the yield curve.
    This change in assumption will decrease our 2008 defined benefit
    pension and postretirement medical expense by approximately
    $27 million.
    A change to our mortality assumption to reflect four years of
    projected mortality improvement will increase our 2008 defined
    benefit pension and postretirement medical expense by
    approximately $3 million.
    Other factors, including changes in gains and losses resulting
    from differences between actual experience and assumptions, will
    decrease our 2008 defined benefit pension and postretirement
    medical expenses by approximately $6 million.  Sensitivity
    Analysis




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##### Table of Contents



PART
    II(continued)     2007


2006


2005Expected return on plan assets 
    (net of administrative expenses)


8.50
%


8.50
%


8.50
%Actual return on plan assets 
    (net of administrative expenses)


12.64
%


9.74
%


13.33
%     
    Discount rate  A 25-basis point change in the
    discount rate would increase or decrease the expense for our
    pension and postretirement medical benefit plans in 2008 by
    approximately $9 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 our pension plans in 2008 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.    Casualty
    Insurance Costs
    case-based
  Income
    Taxes
          2003-2005




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##### Table of Contents



OUR
    RELATIONSHIP WITH PEPSICO          non-carbonated




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##### Table of Contents



PART
    II(continued)  OUR
    FINANCIAL RESULTS
ITEMS AFFECTING
    COMPARABILITY OF OUR FINANCIAL RESULTS  Certain reclassifications were made to the prior years
    Consolidated Financial Statements to conform to the current year
    presentation, including a classification correction for certain
    miscellaneous costs incurred from product losses in the trade.
    Approximately $90 million and $92 million of costs
    incurred, which were incorrectly included in selling, delivery
    and administrative expenses, were reclassified to cost of sales
    in our Consolidated Statements of Operations for the years ended
    2006 and 2005, respectively.
    December 29,


December 30,

December 31,Income/(Expense)

2007


2006

2005Gross profitPR Beverages

$
29






Operating incomePR Beverages


29






Restructuring Charges


(30
)





Full Service Vending Rationalization


(23
)





HFCS Litigation Settlement








$
2953rd Week









24Strategic Spending Initiatives









(48
)Net incomeRestructuring Charges


(22
)





Full Service Vending Rationalization


(13
)





Tax Audit Settlement


46


$
55


Tax Law Changes


10



10


HFCS Litigation Settlement









1753rd Week









12Strategic Spending Initiatives









(28
)Diluted earnings per shareRestructuring Charges


(0.09
)





Full Service Vending Rationalization


(0.06
)





Tax Audit Settlement


0.20



0.22


Tax Law Changes


0.04



0.05


HFCS Litigation Settlement









0.0753rd Week









0.05Strategic Spending Initiatives









(0.12
)   2007
    Items
  PR
    Beverages
   Restructuring
    Charges
  Organizational
    Realignment
      Other Restructuring
    Charges
  Full
    Service Vending Rationalization




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##### Table of Contents



Tax
    Audit Settlement
   Tax
    Law Changes
   2006
    Items
  Tax
    Law Changes
   Tax
    Audit Settlement
 1999-2000
  2005
    Items
  High
    Fructose Corn Syrup (HFCS) Litigation
    Settlement
   53rd
    Week
   Strategic
    Spending Initiatives
  FINANCIAL
    PERFORMANCE SUMMARY AND WORLDWIDE FINANCIAL HIGHLIGHTS FOR
    FISCAL YEAR 2007  December 29,

December 30,

Fiscal Year2007

2006

% ChangeNet revenues

$
13,591

$
12,730


7
%Cost of sales


7,370


6,900


7Gross profit


6,221


5,830


7Selling, delivery and administrative (SD&A)
    expenses


5,150


4,813


7Operating income


1,071


1,017


5Net income


532


522


2Diluted earnings per
    share(1)

$
2.29

$
2.16


6
%  (1)
    Percentage change for diluted earnings per share is calculated
    by using earnings per share data that is expanded to the fourth
    decimal place.




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##### Table of Contents



PART
    II(continued)    The impact of foreign currency translation, driven by the
    strength of the Canadian Dollar, the Euro, the Turkish Lira and
    the Russian Ruble, contributed approximately two percentage
    points of growth in worldwide net revenues, cost of sales, gross
    profit, and selling, delivery and administrative expenses, and
    contributed approximately one percentage point of growth in
    worldwide operating income.
  Net
    revenues
  Cost of
    sales
  Gross
    profit
  SD&A
    expenses
  Operating
    income
  Net income and Diluted Earnings
    per Share
 RESULTS
    OF OPERATIONS  Except where noted, tables and discussion are presented as
    compared to the prior fiscal year. Growth rates are rounded to
    the nearest whole percentage.
  Volume
  2007
    vs. 2006
  U.S. &Worldwide


Canada


Europe


MexicoBase volume


0
%


0
%


4
%


(2
)%Acquisitions


1











3Total Volume Change


1
%


0
%


4
%


1
%       three-percent




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##### Table of Contents



2006
    vs. 2005
  U.S. &Worldwide


Canada


Europe


MexicoBase volume


3
%


3
%


7
%


1
%Acquisitions


1



1







3Impact of 53rd week in 2005


(1
)


(2
)






Total Volume Change


3
%


2
%


7
%


4
%       three-percent  four-percent
        Net
    Revenues
  2007
    vs. 2006
  U.S. &Worldwide


Canada


Europe


MexicoVolume impact


0
%


0
%


4
%


(2
)%Net price per case impact (rate/mix)


4



4



9



7Acquisitions


1











3Currency translation


2



0



9



0Total Net Revenues Change


7
%


4
%


22
%


8
%           2006
    vs. 2005
  U.S. &Worldwide


Canada


Europe


MexicoVolume impact


3
%


3
%


7
%


1
%Net price per case impact (rate/mix)


3



3



5



5Acquisitions


1



1







3Currency translation


1



1



0



0Impact of 53rd week in 2005


(1
)


(2
)






Total Net Revenues Change


7
%


6
%


12
%


9
%




---



##### Table of Contents



PART
    II(continued)     non-carbonated
      Cost
    of Sales
  2007
    vs. 2006
  WorldwideVolume impact


0
%Cost per case impact


4Acquisitions


1Currency translation


2PR Beverages


0Total Cost of Sales Change


7
%           2006
    vs. 2005
  WorldwideVolume impact


3
%Cost per case impact


5Acquisitions


1Currency translation


1Impact of 53rd week in 2005


(1
)Total Cost of Sales Change


9
%   cost-per-case
  Selling,
    Delivery and Administrative Expenses
  2007
    vs. 2006
  WorldwideCost impact (without Restructuring Charges and 
    FSV Rationalization)


4
%Restructuring Charges and FSV Rationalization


1Currency translation


2Total SD&A Change


7
%




---



##### Table of Contents



2006
    vs. 2005
  WorldwideCost impact


5
%Adoption of SFAS 123R in 2006


1Acquisitions


1HFCS Settlement in 2005


1Strategic Spending Initiatives in 2005


(1
)Currency translation


1Impact of 53rd week in 2005


(1
)Total SD&A Change


7
%       Operating
    Income
  2007
    vs. 2006
          2006
    vs. 2005
      Interest
    Expense, net
  2007
    vs. 2006
    2006
    vs. 2005
    Other
    Non-Operating (Income) Expenses, net
  2007
    vs. 2006




---



##### Table of Contents



PART
    II(continued)    2006
    vs. 2005
    Minority
    Interest
  2007
    vs. 2006
    2006
    vs. 2005
    Income
    Tax Expense
  2007
    vs. 2006
    2006
    vs. 2005
  1999-2000
  Diluted
    Weighted-Average Shares Outstanding
       LIQUIDITY
    AND FINANCIAL CONDITION  Cash
    Flows
  2007
    vs. 2006
        2006
    vs. 2005




---



##### Table of Contents



Capital
    Expenditures
    Liquidity
    and Capital Resources
    Long-Term
    Debt Activities
     Short-Term
    Debt Activities
         Debt
    Covenants and Credit Ratings
 non-financial




---



##### Table of Contents



PART
    II(continued)    Contractual
    Obligations
    Payments Due by Period2009-

2011-

2013 andContractual Obligations

Total


2008

2010

2012

beyondLong-term debt
    obligations(1)

$
4,779


$
3

$
1,326

$
1,000

$
2,450Capital lease
    obligations(2)


11



4


3


2


2Operating
    leases(2)


272



54


71


32


115Interest
    obligations(3)


2,419



262


421


382


1,354Purchase obligations:Raw material
    obligations(4)


199



119


69


11


Capital expenditure
    obligations(5)


81



81








Other
    obligations(6)


371



150


110


53


58Other long-term
    liabilities(7)


36



18


7


5


6Total

$
8,168


$
691

$
2,007

$
1,485

$
3,985  (1)
    See Note 7 in the Notes to Consolidated Financial
    Statements for additional information relating to our long-term
    debt obligations.(2)
    See Note 8 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.
    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-cancelable agreements that specify fixed or
    minimum quantities, price arrangements and timing of payments.
    Also includes agreements that provide for termination penalty
    clauses.(7)
    Primarily represents non-compete contracts that resulted from
    business acquisitions and also includes an estimated
    $7 million related to the current portion of unrecognized
    tax benefits. The non-current portion of unrecognized tax
    benefits recorded on the balance sheet as of December 29,
    2007 is not included in the table. For additional information
    about our income taxes see Note 11 in the Notes to
    Consolidated Financial Statements.    Off-Balance
    Sheet Arrangements
   MARKET
    RISKS AND CAUTIONARY STATEMENTS  Quantitative
    and Qualitative Disclosures 
    about Market Risk
  non-U.S. dollar




---



##### Table of Contents



Commodity
    Price Risk
   Interest
    Rate Risk
   Foreign
    Currency Exchange Rate Risk
     10-percent
      Unfunded
    Deferred Compensation Liability
   Cautionary
    Statements
  Form 10-K forward-looking




---



##### Table of Contents



PART
    II(continued)     
    changes in our relationship with PepsiCo;
    PepsiCos ability to affect matters concerning us through
    its equity ownership of PBG, representation on our Board and
    approval rights under our Master Bottling Agreement;
    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 successfully integrate acquired businesses or to
    meet projections for performance in newly acquired territories;
    loss of business from a significant customer;
    loss of key members of management;
    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 social, economic and political changes;
    possible recalls of our products;
    interruptions of operations due to labor disagreements;
    limitations on our ability to invest in our business as a result
    of our repayment obligations under our existing indebtedness;
    changes in our debt ratings;
    material changes in expected interest and currency exchange
    rates and unfavorable market performance of assets in our
    pension plans; and
    an inability to achieve strategic business plan targets that
    could result in a non-cash intangible asset impairment charge.







---



##### Table of Contents





CONSOLIDATED
    STATEMENTS OF OPERATIONS  Fiscal years ended December 29, 2007, December 30,
    2006 and December 31, 2005in millions, except per share data

2007


2006

2005Net Revenues

$
13,591


$
12,730

$
11,885Cost of sales


7,370



6,900


6,345Gross Profit


6,221



5,830


5,540Selling, delivery and administrative expenses


5,150



4,813


4,517Operating Income


1,071



1,017


1,023Interest expense, net


274



266


250Other non-operating (income) expenses, net


(6
)


11


1Minority interest


94



59


59Income Before Income Taxes


709



681


713Income tax expense


177



159


247Net Income

$
532


$
522

$
466Basic Earnings Per Share

$
2.35


$
2.22

$
1.91Weighted-average shares outstanding


226



236


243Diluted Earnings Per Share

$
2.29


$
2.16

$
1.86Weighted-average shares outstanding


233



242


250Dividends declared per common share

$
0.53


$
0.41

$
0.29   See accompanying notes to
    Consolidated Financial Statements.




---



##### Table of Contents



PART
    II(continued)  CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Fiscal years ended December 29, 2007, December 30,
    2006 and December 31, 2005in millions

2007


2006


2005Cash Flows  OperationsNet income

$
532


$
522


$
466Adjustments to reconcile net income to net cash provided by
    operations:Depreciation and amortization


669



649



630Deferred income taxes


(42
)


(61
)


(65
)Stock-based compensation


62



65



Other non-cash charges and credits:Defined benefit pension and postretirement expenses


121



119



109Minority interest expense


94



59



59Casualty self-insurance expense


90



80



85Other non-cash charges and credits


79



67



84Net other non-cash charges and credits


384



325



337Changes in operating working capital, excluding effects of
    acquisitions:Accounts receivable, net


(110
)


(120
)


7Inventories


(19
)


(57
)


(29
)Prepaid expenses and other current assets


(17
)


1



1Accounts payable and other current liabilities


185



88



4Income taxes payable


9



(2
)


77Net change in operating working capital


48



(90
)


60Casualty insurance payments


(70
)


(67
)


(66
)Pension contributions to funded plans


(70
)


(68
)


(77
)Other, net


(76
)


(47
)


(66
)Net Cash Provided by Operations


1,437



1,228



1,219Cash Flows  InvestmentsCapital expenditures


(854
)


(725
)


(715
)Acquisitions of bottlers, net of cash acquired


(49
)


(33
)


(155
)Proceeds from sale of property, plant and equipment


14



18



29Other investing activities, net


6



9



(1
)Net Cash Used for Investments


(883
)


(731
)


(842
)Cash Flows  FinancingShort-term borrowings, net  three months or less


(106
)


(107
)


268Proceeds from short-term borrowings  more than three
    months


167



96



74Payments of short-term borrowings  more than three
    months


(211
)


(74
)


(68
)Proceeds from issuances of long-term debt


24



793



36Payments of long-term debt


(42
)


(604
)


(36
)Minority interest distribution


(17
)


(19
)


(12
)Dividends paid


(113
)


(90
)


(64
)Excess tax benefit from exercise of stock options


14



19



Proceeds from exercise of stock options


159



168



109Share repurchases


(439
)


(553
)


(490
)Net Cash Used for Financing


(564
)


(371
)


(183
)Effect of Exchange Rate Changes on Cash and Cash
    Equivalents


28



1



3Net Increase in Cash and Cash Equivalents


18



127



197Cash and Cash Equivalents  Beginning of Year


629



502



305Cash and Cash Equivalents  End of Year

$
647


$
629


$
502Supplemental Cash Flow Information 
    Non-Cash Investing and Financing Activities:Liabilities incurred and/or assumed in conjunction with
    acquisitions of bottlers

$
1


$
20


$
22Change in accounts payable related to capital expenditures

$
15


$
7


$
(6
)Acquisition of intangible asset

$
315


$



$
   See accompanying notes to
    Consolidated Financial Statements.




---



##### Table of Contents



CONSOLIDATED
    BALANCE SHEETS  December 29, 2007 and December 30, 2006in millions, except per share data

2007


2006ASSETSCurrent AssetsCash and cash equivalents

$
647


$
629Accounts receivable, less allowance of $54 in 2007 and $50 in
    2006


1,520



1,332Inventories


577



533Prepaid expenses and other current assets


342



255Total Current Assets


3,086



2,749Property, plant and equipment, net


4,080



3,785Other intangible assets, net


4,181



3,768Goodwill


1,533



1,490Other assets


235



135Total Assets

$
13,115


$
11,927LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable and other current liabilities

$
1,968


$
1,677Short-term borrowings


240



357Current maturities of long-term debt


7



17Total Current Liabilities


2,215



2,051Long-term debt


4,770



4,754Other liabilities


1,186



1,205Deferred income taxes


1,356



1,293Minority interest


973



540Total Liabilities


10,500



9,843Shareholders EquityCommon stock, par value $0.01 per share:authorized 900 shares, issued 310 shares


3



3Additional paid-in capital


1,805



1,751Retained earnings (includes impact from adopting FIN 48 in
    fiscal year 2007 of $5)


3,124



2,708Accumulated other comprehensive loss


(48
)


(361
)Treasury stock: 86 shares and 80 shares in 2007 and
    2006, respectively, at cost


(2,269
)


(2,017
)Total Shareholders Equity


2,615



2,084Total Liabilities and Shareholders Equity

$
13,115


$
11,927   See accompanying notes to
    Consolidated Financial Statements.




---



##### Table of Contents



PART
    II(continued)  CONSOLIDATED
    STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

Fiscal years
    ended December 29, 2007, December 30, 2006 and
    December 31, 2005 AccumulatedOtherCommon

Additional


Deferred


Retained


Comprehensive


Treasury





Comprehensivein millions, except per share data

Stock

Paid-In Capital


Compensation


Earnings


Loss


Stock


Total


IncomeBalance at December 25, 2004

$
3

$
1,719


$
(1
)

$
1,887


$
(315
)

$
(1,344
)

$
1,949Comprehensive income:Net income













466











466


$
466Net currency translation adjustment

















65







65



65Cash flow hedge adjustment (net of tax and minority interest of
    $5)

















(7
)






(7
)


(7
)Minimum pension liability adjustment
    (net of tax and minority interest of $3)

















(5
)






(5
)


(5
)Total comprehensive income




























$
519Stock option exercises: 7 shares





(49
)














158



109Tax benefit  equity awards





23



















23Share repurchases: 17 shares





















(490
)


(490
)Stock compensation





16



(13
)














3Cash dividends declared on common stock
    (per share: $0.29)













(70
)










(70
)Balance at December 31, 2005


3


1,709



(14
)


2,283



(262
)


(1,676
)


2,043Comprehensive income:Net income













522











522


$
522Net currency translation adjustment

















25







25



25Cash flow hedge adjustment (net of tax and minority interest of
    $(5))

















8







8



8Minimum pension liability adjustment (net of tax and minority
    interest of $(21))

















27







27



27FAS 158  pension liability adjustment (net of
    tax and minority interest of $124)

















(159
)






(159
)


Total comprehensive income




























$
582Stock option exercises: 9 shares





(44
)














212



168Tax benefit  equity awards





35



















35Share repurchases: 18 shares





















(553
)


(553
)Stock compensation





51



14















65Cash dividends declared on common stock
    (per share: $0.41)













(97
)










(97
)Balance at December 30, 2006


3


1,751







2,708



(361
)


(2,017
)


2,084Comprehensive income:Net income













532











532


$
532Net currency translation adjustment

















220







220



220Cash flow hedge adjustment (net of tax and minority interest of
    $(1))

















(1
)






(1
)


(1
)Pension and postretirement medical benefit plans adjustment (net
    of tax and minority interest of $(72))

















94







94



94Total comprehensive income




























$
845Stock option exercises: 7 shares





(28
)














187



159Tax benefit  equity awards





22



















22Share repurchases: 13 shares





















(439
)


(439
)Stock compensation





60



















60Impact from adopting FIN 48













5











5Cash dividends declared on common stock
    (per share: $0.53)













(121
)










(121
)Balance at December 29, 2007

$
3

$
1,805


$



$
3,124


$
(48
)

$
(2,269
)

$
2,615   See accompanying notes to
    Consolidated Financial Statements.




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Tabular dollars in
    millions, except per share data)
  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




---



##### Table of Contents



PART
    II(continued)    Revenue
    Recognition
    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
    either in net revenues or selling, delivery and administrative
    expenses.
    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 Ended2007

2006

2005Net revenues

$
66

$
67

$
51Cost of sales


626


612


589Selling, delivery and administrative expenses


67


70


79Total bottler incentives

$
759

$
749

$
719     Share-Based
    Compensation
  Shipping and Handling
    Costs
  Foreign Currency Gains and
    Losses and Currency Translation
  Pension and Postretirement
    Medical Benefit Plans




---



##### Table of Contents



15-year
    Income
    Taxes
        Earnings Per
    Share
  Cash and Cash
    Equivalents
  Allowance for Doubtful
    Accounts
  Inventories first-in,
  Property, Plant and
    Equipment
  Other Intangible Assets, Net and
    Goodwill




---



##### Table of Contents



PART
    II(continued)    Casualty Insurance
    Costs self-insurance third-party
  Minority
    Interest
  Treasury
    Stock
  Financial Instruments and Risk
    Management
        Commitments and
    Contingencies
  New
    Accounting Standards
  SFAS No. 157
   SFAS No. 158




---



##### Table of Contents



SFAS No. 159
   SFAS No. 141(R)
   SFAS No. 160
   EITF
    Issue
    No. 06-11
 No. 06-11, (EITF 06-11), EITF 06-11 EITF 06-11
  Note 3 
    Earnings per Share
    Fiscal Year EndedShares in millions

2007

2006

2005Net Income

$
532

$
522

$
466Weighted average shares outstanding during period on which basic
    earnings per share is calculated


226


236


243Effect of dilutive shares:Incremental shares under stock compensation plans


7


6


7Weighted average shares outstanding during period on which
    diluted earnings per share is calculated


233


242


250Basic earnings per share

$
2.35

$
2.22

$
1.91Diluted earnings per share

$
2.29

$
2.16

$
1.86     Note 4 
    Share-Based Compensation
  Accounting for Share-Based
    Compensation




---



##### Table of Contents



PART
    II(continued)    share-based
      Fiscal Year Ended2007


2006Total share-based compensation expense

$
62


$
65Income tax benefit


(17
)


(18
)Minority interest


(5
)


(4
)Net income impact

$
40


$
43       Fiscal YearEnded2005Net income:As reported

$
466Add: Total share-based employee compensation included
    in reported net income, net of taxes and minority interest


1Less: Total share-based employee compensation
    determined under fair-value based method for all awards,
    net of taxes and minority interest


(43
)Pro forma

$
424Earnings per share:Basic  as reported

$
1.91Basic  pro forma


1.74Diluted  as reported


1.86Diluted  pro forma


1.68   Share-Based Long-Term Incentive
    Compensation Plans
        2007


2006


2005Risk-free interest rate


4.5
%


4.7
%


4.1
%Expected term (in years)


5.6



5.7



5.8Expected volatility


25
%


27
%


28
%Expected dividend yield


1.8
%


1.5
%


1.1
%




---



##### Table of Contents



share-based
  Stock
    Options


Weighted-AverageWeighted-Average

Remaining

AggregateShares


Exercise Price

Contractual

Intrinsic(in millions)


per Share

Term (years)

ValueOutstanding at December 30, 2006


32.1


$
24.11Granted


3.4



30.99Exercised


(7.2
)


22.12Forfeited


(1.4
)


28.74Outstanding at December 29, 2007


26.9



25.27


5.9

$
395Vested or expected to vest at December 29, 2007


26.6



25.22


5.8


392Exercisable at December 29, 2007


18.6



23.29


4.8


310       Restricted Stock
    Units




---



##### Table of Contents



PART
    II(continued)      Weighted-AverageWeighted-Average

Remaining

AggregateShares


Grant-Date

Contractual

Intrinsic(in thousands)


Fair Value

Term (years)

ValueOutstanding at December 30, 2006


1,697


$
28.96Granted


1,129



31.02Converted


(18
)


28.60Forfeited


(429
)


28.86Outstanding at December 29, 2007


2,379



29.96


1.7

$
95Vested or expected to vest at December 29, 2007


2,286



29.92


1.7


91Convertible at December 29, 2007


146



27.83





6     Note 5 
    Balance Sheet Details
  2007


2006Accounts ReceivableTrade accounts receivable

$
1,319


$
1,163Allowance for doubtful accounts


(54
)


(50
)Accounts receivable from PepsiCo


188



168Other receivables


67



51$
1,520


$
1,332InventoriesRaw materials and supplies

$
195


$
201Finished goods


382



332$
577


$
533Prepaid Expenses and Other Current AssetsPrepaid expenses

$
290


$
214Other current assets


52



41$
342


$
255Property, Plant and Equipment, netLand

$
320


$
291Buildings and improvements


1,484



1,404Manufacturing and distribution equipment


4,091



3,705Marketing equipment


2,389



2,425Capital leases


36



60Other


164



1728,484



8,057Accumulated depreciation


(4,404
)


(4,272
)$
4,080


$
3,785       Buildings and improvements

2033 yearsManufacturing and distribution equipment

215 yearsMarketing equipment

27 years   Industrial Revenue
    Bonds
  2007

2006Accounts Payable and Other Current LiabilitiesAccounts payable

$
615

$
525Accounts payable to PepsiCo


255


234Trade incentives


235


194Accrued compensation and benefits


276


237Other accrued taxes


140


111Accrued interest


70


74Other current liabilities


377


302$
1,968

$
1,677




---



##### Table of Contents



Note 6 
    Other Intangible Assets, net and Goodwill
    2007


2006Intangibles subject to amortization:Gross carrying amount:Customer relationships and lists

$
54


$
54Franchise/distribution rights


46



45Other identified intangibles


30



32130



131Accumulated amortization:Customer relationships and lists


(15
)


(11
)Franchise/distribution rights


(31
)


(27
)Other identified intangibles


(17
)


(16
)(63
)


(54
)Intangibles subject to amortization, net


67



77Intangibles not subject to amortization:Carrying amount:Franchise rights


3,235



3,128Licensing rights


315



Distribution rights


294



297Trademarks


213



215Other identified intangibles


57



51Intangibles not subject to amortization


4,114



3,691Total other intangible assets, net

$
4,181


$
3,768   non-amortizable
      Intangible asset
    amortization
  Goodwill
  U.S. & Canada


Europe

Mexico


TotalBalance 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



1,490Purchase price allocations relating to acquisitions


1






(16
)


(15
)Impact of foreign 
    currency translation


60



1


(3
)


58Balance at December 29, 2007

$
1,290


$
17

$
226


$
1,533     Note 7 
    Short-term Borrowings and Long-term Debt
  2007


2006Short-term borrowingsCurrent maturities of long-term debt and capital leases

$
7


$
17Other short-term borrowings


240



357$
247


$
374Long-term debt5.63% (6.4% 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



8007.00% (7.1% effective rate) senior notes due 2029


1,000



1,000Capital leases obligations (Note 8)


9



33Other (average rate 6.9%)


29



134,788



4,796SFAS 133
    adjustment(1)






(13
)Unamortized discount, net


(11
)


(12
)Current maturities of long-term debt and capital leases


(7
)


(17
)$
4,770


$
4,754  (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 2007.(3)
    These notes are guaranteed by PepsiCo.




---



##### Table of Contents



PART
    II(continued)    Aggregate Maturities 
    Long-term Debt
  2007 Short-Term Debt
    Activities
      Debt
    Covenants lease-back
  
    Our debt to capitalization ratio should not be greater than .75
    on the last day of a fiscal quarter when PepsiCos ratings
    are
    A- by
    S&P and A3 by Moodys or higher. Debt is defined as
    total long-term and short-term debt plus accrued interest plus
    total standby letters of credit and other guarantees less cash
    and cash equivalents not in excess of $500 million.
    Capitalization is defined as debt plus shareholders equity
    plus minority interest, excluding the impact of the cumulative
    translation adjustment.
    Our debt to EBITDA ratio should not be greater than five on the
    last day of a fiscal quarter when PepsiCos ratings are
    less than A- by S&P or A3 by Moodys. EBITDA is
    defined as the last four quarters of earnings before
    depreciation, amortization, net interest expense, income taxes,
    minority interest, net other
    non-operating
    expenses and extraordinary items.
    New secured debt should not be greater than 15 percent of
    our net tangible assets. Net tangible assets are defined as
    total assets less current liabilities and net intangible assets.    Interest Payments and
    Expense
  Letters of Credit, Bank
    Guarantees and Surety Bonds
  Note 8 
    Leases
  long-term




---



##### Table of Contents



LeasesCapital

Operating2008

$
4

$
542009


2


392010


1


322011


1


182012


1


14Thereafter


2


115Total

$
11

$
272Less: Amount representing interest


2Present value of net minimum lease payments


9Less: current portion of net minimum lease payments


4Long-term portion of net minimum lease payments

$
5     Components
    of net rental expense under operating leases:
  2007


2006


2005Minimum rentals

$
114


$
99


$
90Sublease rental income


(2
)


(3
)


(2
)Net Rental Expense

$
112


$
96


$
88   Note 9 
    Financial Instruments and Risk Management
    Cash Flow
    Hedges




---



##### Table of Contents



PART
    II(continued)      Before








Net ofMinority








MinorityInterest


Minority





Interestand Taxes


Interest


Taxes


and TaxesAccumulated net gains as of December 25, 2004

$
17


$
(1
)

$
(6
)

$
10Net changes in the fair value of cash flow hedges


5







(2
)


3Net gains reclassified from AOCL into earnings


(17
)


1



6



(10
)Accumulated net gains as of December 31, 2005


5







(2
)


3Net changes in the fair value of cash flow hedges


14



(1
)


(5
)


8Net gains reclassified from AOCL into earnings


(1
)






1



Accumulated net gains as of December 30, 2006


18



(1
)


(6
)


11Net changes in the fair value of cash flow hedges


(4
)










(4
)Net losses reclassified from AOCL into earnings


4







(1
)


3Accumulated net gains as of December 29, 2007

$
18


$
(1
)

$
(7
)

$
10     Fair Value
    Hedges
  Foreign Currency
    Hedges
  Unfunded Deferred Compensation
    Liability
      Other Financial Assets and
    Liabilities




---



##### Table of Contents



Note 10 
    Pension and Postretirement Medical Benefit Plans
  Employee Benefit
    Plans
      Defined Benefit Pension
    Plans
  Postretirement Medical
    Plans
  Defined Contribution
    Benefits
  Components
    of net pension expense and other amounts recognized in other
    comprehensive income
  Pension2007


2006


2005Net pension expenseService cost

$
55


$
53


$
46Interest cost


90



82



75Expected return on plan assets  (income)


(102
)


(94
)


(90
)Amortization of net loss


38



38



30Amortization of prior service amendments


7



9



7Special termination benefits


4







9Net pension expense for the defined benefit plans

$
92


$
88


$
77Other comprehensive incomePrior service cost arising during the year

$
8



N/A



N/ANet (gain) loss arising during the year


(114
)


N/A



N/AAmortization of net loss


(38
)


N/A



N/AAmortization of prior service amendments


(7
)


N/A



N/ATotal recognized in other comprehensive
    income(1)

$
(151
)Total recognized in net pension expense and other comprehensive
    income

$
(59
)

$
88


$
77  (1)
    Prior to taxes and minority interest




---



##### Table of Contents



PART
    II(continued)   Components
    of postretirement medical expense and other amounts recognized
    in other comprehensive income
  Postretirement2007


2006

2005Net postretirement expenseService cost


$
5


$
4

$
3Interest cost



20



20


22Amortization of net loss



4



7


8Amortization of prior service amendments










(1
)Net postretirement expense


$
29


$
31

$
32Other comprehensive incomeNet (gain) loss arising during the year


$
(4
)


N/A


N/AAmortization of net loss



(4
)


N/A


N/ATotal recognized in other comprehensive
    income(1)


$
(8
)Total recognized in net postretirement expense and other
    comprehensive income


$
21


$
31

$
32  (1)
    
    Prior to taxes and minority interest  Changes
    in Benefit Obligations and Plan Assets
  Pension


Postretirement2007


2006


2007


2006Changes in benefit obligationsObligation at beginning of year

$
1,539


$
1,439


$
354


$
384Service cost


55



53



5



4Interest cost


90



82



20



20Plan amendments


8



(8
)






1Actuarial (gain) / loss


(53
)


43



(4
)


(32
)Benefit payments


(57
)


(69
)


(23
)


(23
)Special termination benefits


4











Adjustment for Medicare Subsidy










1



Transfers


(1
)


(1
)






Obligation at end of year

$
1,585


$
1,539


$
353


$
354   Pension


Postretirement2007


2006


2007


2006Changes in the fair value of plan assetsFair value of plan assets at beginning of year

$
1,289


$
1,149


$



$
Actual return on plan assets


163



114







Transfers


(1
)


(1
)






Employer contributions


61



96



22



23Adjustment for Medicare Subsidy










1



Benefit payments


(57
)


(69
)


(23
)


(23
)Fair value of plan assets at end of year

$
1,455


$
1,289


$



$
   Pension

Postretirement2007

2006

2007

2006Amounts included in
    AOCL(1)Prior Service Cost

$
48

$
47

$
3

$
3Net Loss


308


460


90


98Total

$
356

$
507

$
93

$
101  (1)
    
    Prior to taxes and minority interest  Pension

PostretirementEstimated gross amounts in AOCL to be amortized in 2008Prior Service Cost

$
8

$
Net Loss

$
16

$
3     Pension

Postretirement2007

2006

2007

2006Selected information for plans with liabilities in excess of
    plan assetsProjected benefit obligation

$
777

$
1,539

$
353

$
354Accumulated benefit obligation

$
649

$
1,407

$
353

$
354Fair value of plan
    assets(1)

$
598

$
1,299

$


$
  (1)
    
    Includes fourth quarter employer
    contributions.  Pension


Postretirement2007


2006


2007


2006Reconciliation of funded statusFunded status at measurement date

$
(130
)

$
(250
)

$
(353
)

$
(354
)Fourth quarter employer contributions/payments


23



10



4



5Funded status at end of year

$
(107
)

$
(240
)

$
(349
)

$
(349
)Amounts recognizedOther assets

$
69


$



$



$
Accounts payable and other current liabilities


(5
)


(1
)


(26
)


(26
)Other liabilities


(171
)


(239
)


(323
)


(323
)Total liabilities


(107
)


(240
)


(349
)


(349
)Accumulated other
    comprehensive loss(1)


356



507



93



101Net amount recognized

$
249


$
267


$
(256
)

$
(248
)  (1)
    
    Prior to taxes and minority interest




---



##### Table of Contents



Pension


PostretirementWeighted Average Assumptions

2007


2006


2005


2007


2006


2005Expense discount rate


6.00
%


5.80
%


6.15
%


5.80
%


5.55
%


6.15
%Liability discount rate


6.35
%


6.00
%


5.80
%


6.20
%


5.80
%


5.55
%Expected return on plan
    assets(1)


8.50
%


8.50
%


8.50
%


N/A



N/A



N/AExpense rate of compensation increase


3.55
%


3.53
%


3.60
%


3.55
%


3.53
%


3.60
%Liability rate of compensation increase


3.56
%


3.55
%


3.53
%


3.56
%


3.55
%


3.53
%  (1)
    
    Expected return on plan assets is
    presented after administration expenses.  15-year
   Funding and Plan Assets

Allocation PercentageTarget


Actual


ActualAsset Category

2008


2007


2006Equity securities


75
%


75
%


76
%Debt securities


25
%


25
%


24
%       Health Care Cost Trend Rates 
    1% Increase

1% DecreaseEffect on total fiscal year 2007 service and interest cost
    components

$
1

$
(1
)*Effect on the fiscal year 2007 postretirement benefit obligation

$
5

$
(4
)  *
    
    Impact was slightly less than
    $0.5 million.  Pension and Postretirement Cash
    Flow 
   Employer Contributions

Pension

Postretirement2006

$
66

$
222007

$
74

$
212008 (expected)

$
30

$
26   Expected Benefits 
  Pension

PostretirementIncluding

ExcludingMedicare

MedicareExpected Benefit Payments



Subsidy

Subsidy2008

$
67

$
26

$
272009

$
68

$
26

$
282010

$
73

$
27

$
282011

$
80

$
28

$
292012

$
88

$
28

$
292013 to 2017

$
563

$
147

$
153




---



##### Table of Contents



PART
    II(continued)    Note 11 
    Income Taxes
    2007


2006


2005Current:Federal

$
168


$
154


$
238Foreign


25



36



48State


26



30



26219



220



312Deferred:Federal


(41
)


(26
)


(36
)Foreign


5



(35
)


(19
)State


(6
)






(10
)(42
)


(61
)


(65
)$
177


$
159


$
247     
    Valuation
    allowances During 2007, we reversed
    deferred tax asset valuation allowances resulting in an
    $11 million tax benefit. These reversals were due to
    improved profitability trends in Russia.
    Tax audit
    settlement The statute of limitations for
    the Internal Revenue Service (IRS) audit of our
    2001-2002
    tax returns closed on June 30, 2007, and we released
    approximately $46 million in reserves for uncertain tax
    benefits relating to such audit.
    Tax rate
    changes During 2007, changes to the
    income tax laws in Canada, Mexico and certain state
    jurisdictions in the U.S. were enacted. These law changes
    required us to re-measure our net deferred tax liabilities which
    resulted in a net decrease to our income tax expense of
    approximately $13 million before the impact of minority
    interest.    
    Valuation
    allowances During 2006, we reversed
    deferred tax asset 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 audit
    settlement The statute of limitations for
    the IRS audit of our
    1999-2000
    tax returns closed on December 30, 2006, and we released
    approximately $55 million in tax contingency reserves
    relating to such audit.
    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 required us
    to re-measure our net deferred tax liabilities using lower tax
    rates which decreased our income tax expense by approximately
    $11 million before the impact of minority interest.    
    Valuation
    allowances During 2005, we reversed
    deferred tax asset valuation allowances resulting in a
    $27 million tax benefit. These reversals were due in part
    to improved profitability trends in Russia and a change to the
    Russia tax law that enabled us to use a greater amount of our
    Russian net operating loss carryforwards (NOLs).
    Additionally, the implementation of U.S. legal entity
    restructuring contributed to the remainder of the valuation
    allowance reversal.
    International legal entity and
    debt restructuring During 2005, 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.    2007

2006

2005U.S.

$
474

$
485

$
588Foreign


235


196


125$
709

$
681

$
713     2007


2006


2005Income taxes computed at the U.S. federal statutory rate


35.0
%


35.0
%


35.0
%State income tax, net of federal tax benefit


2.2



4.2



2.1Impact of foreign results


(4.5
)


(1.8
)


(4.4
)Change in valuation allowances, net


(3.5
)


(7.5
)


(6.0
)Nondeductible expenses


2.6



1.9



1.8Other, net


1.5



1.3



3.2International legal entity and debt restructuring reserves










3.0Release of tax reserves from audit settlements


(6.5
)


(8.0
)


Tax rate change benefit


(1.8
)


(1.7
)


Total effective income tax rate


25.0
%


23.4
%


34.7
%




---



##### Table of Contents



The details of our 2007 and 2006
    deferred tax liabilities (assets) are set forth below:
  2007


2006Intangible assets and property, plant and equipment

$
1,585


$
1,620Investments


178



80Other


41



27Gross deferred tax liabilities


1,804



1,727Net operating loss carryforwards


(366
)


(275
)Employee benefit obligations


(248
)


(310
)Bad debts


(11
)


(12
)Various liabilities and other


(218
)


(105
)Gross deferred tax assets


(843
)


(702
)Deferred tax asset valuation allowance


244



195Net deferred tax assets


(599
)


(507
)Net deferred tax liability

$
1,205


$
1,220Consolidated Balance Sheets ClassificationPrepaid expenses and other current assets

$
(129
)

$
(58
)Other assets


(24
)


(21
)Accounts payable and other current liabilities


2



6Deferred income taxes


1,356



1,293Net amount recognized

$
1,205


$
1,220                   2007Balance at beginning of year

$
239Increases due to tax positions related to prior years


32Increases due to tax positions related to the current year


15Decreases due to tax positions related to prior years


(19
)Decreases due to tax positions related to the current year


Decreases due to settlements with taxing authorities


(6
)Decreases due to lapse of statute of limitations


(49
)Currency translation adjustment


8Balance at end of year

$
220




---



##### Table of Contents



PART
    II(continued)                  Note 12 
    Segment Information
  ready-to-drink




---



##### Table of Contents



Net Revenues2007

2006

2005U.S. & Canada

$
10,336

$
9,910

$
9,342Europe


1,872


1,534


1,366Mexico


1,383


1,286


1,177Worldwide net revenues

$
13,591

$
12,730

$
11,885     Operating Income2007


2006

2005U.S. & Canada

$
893


$
878

$
926Europe


106



57


35Mexico


72



82


62Worldwide operating income


1,071



1,017


1,023Interest expense, net


274



266


250Other non-operating (income) expenses, net


(6
)


11


1Minority interest


94



59


59Income before income taxes

$
709


$
681

$
713     Total Assets

Long-Lived
    Assets(1)2007

2006

2005

2007

2006

2005U.S. & Canada

$
9,737

$
9,044

$
8,869

$
7,572

$
7,150

$
7,175Europe


1,671


1,072


894


1,014


554


459Mexico


1,707


1,811


1,761


1,443


1,474


1,478Worldwide total

$
13,115

$
11,927

$
11,524

$
10,029

$
9,178

$
9,112  (1)
    
    Long-lived assets represent
    property, plant and equipment, other intangible assets, goodwill
    and other assets.    Capital Expenditures

Depreciation and Amortization2007

2006

2005

2007

2006

2005U.S. & Canada

$
626

$
558

$
546

$
510

$
514

$
486Europe


146


99


96


72


52


63Mexico


82


68


73


87


83


81Worldwide total

$
854

$
725

$
715

$
669

$
649

$
630   Note 13 
    Related Party Transactions
    (1)
    Master Bottling Agreement for cola beverages bearing the
    Pepsi-Cola and Pepsi trademarks in the U.S.; bottling agreements
    and distribution agreements for non-cola beverages; and a master
    fountain syrup agreement in the U.S.;(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;(4)
    Russia Venture Agreement related to the formation of PR
    Beverages. For further information about the Russia Venture
    Agreement see Note 2 and Note 6; and(5)
    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.




---



##### Table of Contents



PART
    II(continued)       2007


2006


2005Net revenues:Bottler incentives and other
    arrangements(a)

$
66


$
67


$
51Cost of sales:Purchases of concentrate and finished products, and
    royalty fees(b)

$
(3,406
)

$
(3,227
)

$
(2,993
)Bottler incentives and other
    arrangements(a)


582



570



544Total cost of sales

$
(2,824
)

$
(2,657
)

$
(2,449
)Selling, delivery and administrative expenses:Bottler incentives and other
    arrangements(a)

$
66


$
69


$
78Fountain service
    fee(c)


188



178



183Frito-Lay
    purchases(d)


(270
)


(198
)


(144
)Shared
    services(e):Shared services expense


(57
)


(61
)


(69
)Shared services revenue


8



8



8Net shared services


(49
)


(53
)


(61
)HFCS(f)










23Total selling, delivery and administrative expenses

$
(65
)

$
(4
)

$
79Income tax
    benefit:(g)

$
7


$
6


$
3   Bottler
    Incentives and Other Arrangements
    Purchases
    of Concentrate and Finished
    Product
  Fountain
    Service Fee
  Frito-Lay
    Purchases
  Shared
    Services
  High
    Fructose Corn Syrup (HFCS)
    Settlement




---



##### Table of Contents



Income
    Tax Benefit
  Other
    Related Party Transactions
             Note 14 
    Restructuring Charges and Full Service Vending
    Rationalization
  Restructuring
    Charges
  Organizational
    Realignment
      Worldwide

U.S. & Canada

EuropeCosts incurred through December 29, 2007

$
26

$
18

$
8




---



##### Table of Contents



PART
    II(continued)      Severance


Enhanced& Related


Pension

RelocationTotal


Benefits


Benefits

& OtherCosts incurred through December 29, 2007

$
26


$
15


$
4

$
7Cash payments (pre-tax)


(13
)


(7
)





(6
)Non-cash settlements


(1
)









(1
)Remaining costs accrued at December 29, 2007

$
12


$
8


$
4

$
   Other Restructuring
    Charges
  Full
    Service Vending Rationalization
       Note 15 
    Contingencies
    Note 16 
    Accumulated Other Comprehensive Loss
    2007


2006


2005Net currency translation adjustment

$
199


$
(21
)

$
(46
)Cash flow hedge
    adjustment(1)


10



11



3Minimum pension liability
    adjustment(2)






(192
)


(219
)Adoption of
    SFAS 158(3)






(159
)


Pension and postretirement medical benefit plans
    adjustment(4)


(257
)






Accumulated other comprehensive loss

$
(48
)

$
(361
)

$
(262
)  (1)
    Net of minority interest and taxes of $(8) million in 2007,
    $(7) million in 2006 and $(2) million in 2005.(2)
    Net of minority interest and taxes of $143 million in 2006
    and $164 million in 2005.(3)
    Net of minority interest and taxes of $124 million in 2006.(4)
    Net of minority interest and taxes of $195 million in 2007.  Note 17 
    Selected Quarterly Financial Data (unaudited)
    First

Second

Third

FourthQuarter

Quarter

Quarter

Quarter

Full Year2007(1)Net revenues

$
2,466

$
3,360

$
3,729

$
4,036

$
13,591Gross profit


1,123


1,535


1,726


1,837


6,221Operating income


120


338


433


180


1,071Net income


29


162


260


81


532Diluted earnings per
    share(2)

$
0.12

$
0.70

$
1.12

$
0.35

$
2.29   First

Second

Third

FourthQuarter

Quarter

Quarter

Quarter

Full Year2006(1)Net revenues

$
2,367

$
3,138

$
3,460

$
3,765

$
12,730Gross
    profit(3)


1,096


1,453


1,588


1,693


5,830Operating income


121


315


383


198


1,017Net income


34


148


207


133


522Diluted earnings per
    share(2)

$
0.14

$
0.61

$
0.86

$
0.55

$
2.16  (1)
    For additional unaudited information see Items affecting
    comparability of our financial results in
    Managements Financial Review in Item 7.(2)
    Diluted earnings per share are computed independently for each
    of the periods presented.(3)
    We reclassified certain costs in our 2006 Consolidated Statement
    of Operations to conform to the 2007 presentation. See
    Note 1 for further information about this reclassification.
    Accordingly, some of the 2006 amounts presented above may vary
    from the amounts reported in the quarterly reports filed during
    2006.




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##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED 
    PUBLIC ACCOUNTING FIRM  The Board of
    Directors and Shareholders of
    The Pepsi Bottling Group, Inc.
    Somers, New York
                  New York,
    New York
    February 27, 2008







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##### Table of Contents



PART
    II(continued)    ITEM 7A.
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK   ITEM 8.
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA    Form 10-K
 ITEM 9.
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE   ITEM 9A.
    CONTROLS AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15(b) Form 10-K,
  Managements
    Report on Internal Control Over Financial Reporting




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  The Board of
    Directors and Shareholders of
    The Pepsi Bottling Group, Inc.
    Somers, New York
              /s/
    Deloitte & Touche LLP
  New York,
    New York
 February 27,
    2008
  Changes
    in Internal Controls
  Rule 13a-15(d)
 ITEM 9B.
    OTHER INFORMATION




---



##### Table of Contents



PART
    III  ITEM 10.
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Regulation S-K,
          www.pbg.com
 ITEM 11.
    EXECUTIVE COMPENSATION       ITEM 12.
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
    AND RELATED STOCKHOLDER MATTERS     ITEM 13.
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE     ITEM 14.
    PRINCIPAL ACCOUNTANT FEES AND SERVICES  pre-approval




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##### Table of Contents



PART IV    ITEM 15.
    EXHIBITS AND 
    FINANCIAL STATEMENT SCHEDULES                  PageSchedule II  Valuation and Qualifying
    Accounts for the fiscal years ended December 29, 2007,
    December 30, 2006 and December 31, 2005


66




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##### Table of Contents





SIGNATURES        By:
    /s/  Eric
    J. Foss       SIGNATURE

TITLE

DATE/s/  Eric
    J. FossEric
    J. Foss

President, Chief Executive Officer and Director (Principal
    Executive Officer)

February 25, 2008/s/  Alfred
    H. DrewesAlfred
    H. Drewes

Senior Vice President and Chief Financial Officer (Principal
    Financial Officer)

February 25, 2008/s/  Thomas
    M. LardieriThomas
    M. Lardieri

Vice President and Controller (Principal Accounting Officer)

February 25, 2008/s/  Barry
    H. BerachaBarry
    H. Beracha

Non-Executive Chairman of the Board

February 25, 2008/s/  Linda
    G. AlvaradoLinda
    G. Alvarado

Director

February 25, 2008/s/  Ira
    D. HallIra
    D. Hall

Director

February 25, 2008/s/  Susan
    D. KronickSusan
    D. Kronick

Director

February 25, 2008/s/  Blythe
    J. McGarvieBlythe
    J. McGarvie

Director

February 25, 2008/s/  Margaret
    D. MooreMargaret
    D. Moore

Director

February 25, 2008/s/  John
    A. QuelchJohn
    A. Quelch

Director

February 25, 2008/s/  Javier
    G. TeruelJavier
    G. Teruel

Director

February 25, 2008




---



##### 



INDEX TO
    FINANCIAL STATEMENT SCHEDULES  PageSchedule II  Valuation and Qualifying
    Accounts for the fiscal years ended December 29, 2007,
    December 30, 2006 and December 31, 2005


66




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##### Table of Contents



SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS 
    THE PEPSI BOTTLING GROUP, INC.  Balance At

Charges to



Accounts


Foreign


Balance AtBeginning

Cost and



Written


Currency


End OfIn millions

Of Period

Expenses

Acquisitions

Off


Translation


PeriodFiscal Year Ended December 29, 2007Allowance for losses on trade accounts receivable

$
50

$
11

$


$
(10
)

$
3


$
54Fiscal 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
)

$
51




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##### Table of Contents



Index to
    Exhibits   
 EXHIBIT NO.

DESCRIPTION OF EXHIBIT3.1

Articles of Incorporation of PBG, which are incorporated herein
    by reference to Exhibit 3.1 to PBGs Registration
    Statement on
    Form S-1
    (Registration
    No. 333-70291).3.2

By-Laws of PBG, which are incorporated herein by reference to
    Exhibit 3.2 to PBGs Registration Statement on
    Form S-1
    (Registration
    No. 333-70291).3.3

Amendment to Articles of Incorporation of PBG, which is
    incorporated herein by reference to Exhibit 3.3 to
    PBGs Registration Statement on
    Form S-1
    (Registration
    No. 333-70291).3.4

Amendment to Articles of Incorporation of PBG, dated as of
    November 27, 2001, which is incorporated herein by
    reference to Exhibit 3.4 to PBGs Annual Report on
    Form 10-K
    for the year ended December 29, 2001.4.1

Form of common stock certificate, which is incorporated herein
    by reference to Exhibit 4 to PBGs Registration
    Statement on
    Form S-1
    (Registration
    No. 333-70291).4.2

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 $1,300,000,000
    55/8% Senior
    Notes due 2009, which is incorporated herein by reference to
    Exhibit 10.9 to PBGs Registration Statement on
    Form S-1
    (Registration
    No. 333-70291).4.3

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).4.4

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).4.5

Indenture dated as of November 15, 2002 among Bottling
    Group, LLC, PepsiCo, Inc., as guarantor, and JPMorgan Chase
    Bank, as trustee, relating to $1,000,000,000
    45/8% Senior
    Notes due November 15, 2012, which is incorporated herein
    by reference to Exhibit 4.8 to PBGs Annual Report on
    Form 10-K
    for the year ended December 28, 2002.4.6

Registration Rights Agreement dated as of November 7, 2002
    relating to the $1,000,000,000
    45/8% Senior
    Notes due November 15, 2012, which is incorporated herein
    by reference to Exhibit 4.8 to Bottling Group LLCs
    Annual Report on
    Form 10-K
    for the year ended December 28, 2002.4.7

Indenture, dated as of June 10, 2003 by and between
    Bottling Group, LLC, as obligor, and JPMorgan Chase Bank, as
    trustee, relating to $250,000,000
    41/8% Senior
    Notes due June 15, 2015, which is incorporated herein by
    reference to Exhibit 4.1 to Bottling Group, LLCs
    registration statement on
    Form S-4
    (Registration
    No. 333-106285).4.8

Registration Rights Agreement dated June 10, 2003 by and
    among Bottling Group, LLC, J.P. Morgan Securities Inc.,
    Lehman Brothers Inc., Banc of America Securities LLC, Citigroup
    Global Markets Inc, Credit Suisse First Boston LLC, Deutsche
    Bank Securities Inc., Blaylock & Partners, L.P. and
    Fleet Securities, Inc, relating to $250,000,000
    41/8% Senior
    Notes due June 15, 2015, which is incorporated herein by
    reference to Exhibit 4.3 to Bottling Group, LLCs
    registration statement on
    Form S-4
    (Registration
    No. 333-106285).4.9

Indenture, dated as of October 1, 2003, by and between
    Bottling Group, LLC, as obligor, and JPMorgan Chase Bank, as
    trustee, which is incorporated herein by reference to
    Exhibit 4.1 to Bottling Group, LLCs
    Form 8-K
    dated October 3, 2003.4.10

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 Group, LLCs
    Form 8-K
    dated November 13, 2003.4.11

Indenture, dated as of March 30, 2006, by and between
    Bottling Group, LLC, as obligor, and JPMorgan Chase Bank, N.A.,
    as trustee, which is incorporated herein by reference to
    Exhibit 4.1 to PBGs Quarterly Report on
    Form 10-Q
    for the quarter ended March 25, 2006.4.12

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 PBGs Quarterly Report on
    Form 10-Q
    for the quarter ended March 25, 2006.10.1

Form of Master Bottling Agreement, which is incorporated herein
    by reference to Exhibit 10.1 to PBGs Registration
    Statement on
    Form S-1
    (Registration
    No. 333-70291).10.2

Form of Master Syrup Agreement, which is incorporated herein by
    reference to Exhibit 10.2 to PBGs Registration
    Statement on
    Form S-1
    (Registration
    No. 333-70291).




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##### Table of Contents



EXHIBIT NO.

DESCRIPTION OF EXHIBIT10.3

Form of Non-Cola Bottling Agreement, which is incorporated
    herein by reference to Exhibit 10.3 to PBGs
    Registration Statement on
    Form S-1
    (Registration
    No. 333-70291).10.4

Form of Separation Agreement, which is incorporated herein by
    reference to Exhibit 10.4 to PBGs Registration
    Statement on
    Form S-1
    (Registration
    No. 333-70291).10.5

Form of Shared Services Agreement, which is incorporated herein
    by reference to Exhibit 10.5 to PBGs Registration
    Statement on
    Form S-1
    (Registration
    No. 333-70291).10.6

Form of Tax Separation Agreement, which is incorporated herein
    by reference to Exhibit 10.6 to PBGs Registration
    Statement on
    Form S-1
    (Registration
    No. 333-70291).10.7

Form of Employee Programs Agreement, which is incorporated
    herein by reference to Exhibit 10.7 to PBGs
    Registration Statement on
    Form S-1
    (Registration
    No. 333-70291).10.8

PBG Executive Income Deferral Plan, which is incorporated herein
    by reference to Exhibit 10.8 to PBGs Annual Report on
    Form 10-K
    for the year ended December 25, 1999.10.9

PBG 1999 Long-Term Incentive Plan, which is incorporated herein
    by reference to Exhibit 10.9 to PBGs Annual Report on
    Form 10-K
    for the year ended December 25, 1999.10.10

PBG Stock Incentive Plan, which is incorporated herein by
    reference to Exhibit 10.11 to PBGs Annual Report on
    Form 10-K
    for the year ended December 25, 1999.10.11

Amended PBG Executive Income Deferral Program, which is
    incorporated herein by reference to Exhibit 10.12 to
    PBGs Annual Report on
    Form 10-K
    for the year ended December 30, 2000.10.12

PBG Long Term Incentive Plan, which is incorporated herein by
    reference to Exhibit 10.13 to PBGs Annual Report on
    Form 10-K
    for the year ended December 30, 2000.10.13

2002 PBG Long-Term Incentive Plan, which is incorporated herein
    by reference to Exhibit 10.15 to PBGs Annual Report
    on
    Form 10-K
    for the year ended December 28, 2002.10.14

Form of Mexican Master Bottling Agreement, which is incorporated
    herein by reference to Exhibit 10.16 to PBGs Annual
    Report on
    Form 10-K
    for the year ended December 28, 2002.10.15

Form of Employee Restricted Stock Agreement under the PBG 2004
    Long-Term Incentive Plan, which is incorporated herein by
    reference to Exhibit 10.1 to PBGs Quarterly Report on
    Form 10-Q
    for the quarter ended September 4, 2004.10.16

Form of Employee Stock Option Agreement under the PBG 2004
    Long-Term Incentive Plan, which is incorporated herein by
    reference to Exhibit 10.2 to PBGs Quarterly Report on
    Form 10-Q
    for the quarter ended September 4, 2004.10.17

Form of Non-Employee Director Annual Stock Option Agreement
    under the PBG Directors Stock Plan which is incorporated
    herein by reference to Exhibit 10.3 to PBGs Quarterly
    Report on
    Form 10-Q
    for the quarter ended September 4, 2004.10.18

Form of Non-Employee Director Restricted Stock Agreement under
    the PBG Directors Stock Plan, which is incorporated herein
    by reference to Exhibit 10.4 to PBGs Quarterly Report
    on
    Form 10-Q
    for the quarter ended September 4, 2004.10.19

Summary of the material terms of the PBG Executive Incentive
    Compensation Plan, which is incorporated herein by reference to
    Exhibit 10.6 to PBGs Quarterly Report on
    Form 10-Q
    for the quarter ended September 4, 2004.10.20

Description of the compensation paid by PBG to its
    non-management directors which is incorporated herein by
    reference to the Directors Compensation section in
    PBGs Proxy Statement for the 2007 Annual Meeting of
    Shareholders.10.21

Form of Director Indemnification, which is incorporated herein
    by reference to Exhibit 10.1 to PBGs Quarterly Report
    on
    Form 10-Q
    for the quarter ended June 11, 2005.10.22

PBG 2005 Executive Incentive Compensation Plan, which is
    incorporated herein by reference to Appendix A to
    PBGs Proxy Statement for the 2005 Annual Meeting of
    Shareholders (the 2005 Proxy Statement).10.23

PBG 2004 Long-Term Incentive Plan as amended and restated,
    effective May 25, 2005, which is incorporated herein by
    reference to Appendix B to the 2005 Proxy Statement.10.24

Settlement Agreement between Bottling Group, 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, 2005.10.25

Form of Employee Restricted Stock Unit Agreement, which is
    incorporated herein by reference to Exhibit 10.1 to
    PBGs Quarterly Report on
    Form 10-Q
    for the quarter ended September 3, 2005.10.26

Form of Non-Employee Director Restricted Stock Unit Agreement
    under the Amended and Restated PBG Directors Stock Plan
    which is incorporated herein by reference to Exhibit 10.32
    to PBGs Annual Report on
    Form 10-K
    for the year ended December 31, 2005.




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##### Table of Contents



EXHIBIT NO.

DESCRIPTION OF EXHIBIT10.27

Amended and Restated PBG Directors Stock Plan dated as of
    July 19, 2006, which is incorporated herein by reference to
    Exhibit 10.1 to PBGs Quarterly Report on
    Form 10-Q
    for the quarter ended September 9, 2006.10.28

Amended and Restated PBG Pension Equalization Plan effective as
    of January 1, 2006, which is incorporated herein by
    reference to Exhibit 10.31 to PBGs Annual Report on
    Form 10-K
    for the fiscal year ended December 30, 2006.10.29

Private Limited Company Agreement of PR Beverages Limited dated
    as of March 1, 2007 among PBG Beverages Ireland Limited,
    PepsiCo (Ireland), Limited and PR Beverages Limited, which is
    incorporated herein by reference to Exhibit 10.1 to
    PBGs Quarterly Report on
    Form 10-Q
    for the quarter ended March 24, 2007.10.30

U.S. $1,200,000,000 First Amended and Restated Credit Agreement
    dated as of October 19, 2007 among The Pepsi Bottling
    Group, Inc., as borrower; Bottling Group, LLC, as guarantor;
    Citigroup Global Markets Inc. and HSBC Securities (USA) Inc., as
    joint lead arrangers and book managers; Citibank, N.A., as
    agent; HSBC Bank USA, N.A., as syndication agent; and certain
    other banks identified in the First Amended and Restated Credit
    Agreement, which is incorporated herein by reference to
    Exhibit 10.1 to PBGs Current Report on
    Form 8-K
    dated October 19, 2007 and filed October 25, 2007.12*

Statement re Computation of Ratios.21*

Subsidiaries of PBG.23*

Consent of Deloitte & Touche LLP.24*

Power of Attorney.31.1*

Certification by the Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31.2*

Certification by the Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32.1*

Certification by the Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32.2*

Certification by the Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.99.1*

Bottling Group, LLCs Annual Report on
    Form 10-K
    for the fiscal year ended December 29, 2007.   *
    
    Filed herewith