UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 2522, ~~2006~~2008 (12 weeks)


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 333-80361-01

BOTTLING GROUP, LLC

(Exact ~~name~~Name of ~~registrant~~Registrant as ~~specified~~Specified in ~~its~~Its ~~charter~~Charter)

Delaware		13-4042452
(State or other jurisdiction of employer incorporation or organization)		(I.R.S. Identification No.)
(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)
(Address of Principal Executive Offices)		(Zip Code)

914-767-6000

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

~~914-767-6000~~Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(~~Registrant’s~~d) ~~telephone~~of ~~number,~~the ~~including~~Securities ~~area~~Exchange ~~code~~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

~~N/A~~Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, ~~(Former~~a ~~name~~non-accelerated filer, ~~former~~or ~~address~~a ~~and~~smaller ~~former~~reporting ~~fiscal~~company. ~~year~~See the definitions of “large accelerated filer,” if“accelerated ~~changed~~filer” ~~since~~and ~~last~~“smaller ~~report~~reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

~~Indicate~~Large byaccelerated ~~check~~filer ~~mark~~o ~~whether~~Accelerated ~~the~~filer ~~registrant~~o ~~(1) has~~Non-accelerated ~~filed~~filer ~~all~~þ ~~reports~~Smaller ~~required~~reporting tocompany beo ~~filed by Section 13 or 15~~(d)Do ofnot ~~the~~check ~~Securities~~if ~~Exchange~~a ~~Act~~smaller ofreporting ~~1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports~~company)~~, and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o~~

Indicate by ~~checkmark~~check mark whether the registrant is a ~~large~~shell ~~accelerated~~company ~~filer,~~(as andefined ~~accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer”~~ in Rule 12b-2 of the Exchange Act). YES o NO þ

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

Bottling Group, LLC
Index

			Page No.
Part I		Financial Information
	Item 1.	Financial Statements
		Condensed Consolidated Statements of Operations — 12 weeks ended March 25, 2006 and March 19, 2005		2
		Condensed Consolidated Statements of Operations - 12 weeks ended March 22, 2008 and March 24, 2007		2
		Condensed Consolidated Statements of Cash Flows — 12 weeks ended March 25, 2006 and March 19, 2005		3
		Condensed Consolidated Statements of Cash Flows - 12 weeks ended March 22, 2008 and March 24, 2007		3
		Condensed Consolidated Balance Sheets — March 25, 2006 and December 31, 2005		4
		Condensed Consolidated Balance Sheets - March 22, 2008 and December 29, 2007		4
		Notes to Condensed Consolidated Financial Statements		5-1416
	Item 2.	Management’s Financial Review		1517-2324
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		2425
	Item 4.	Controls and Procedures		2425
Part II		Other Information
	Item 6.	Exhibits		2526
EX-4.1: INDENTURE
EX-4.2: FORM OF NOTE
EX-10.1: 5-YEAR CREDIT AGREEMENT
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION
EX-32.2: CERTIFICATION
EX-99.1: THE PEPSI BOTTLING GROUP, INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 22, 2008

PART I — FINANCIAL INFORMATION

Item 1.

Bottling Group, LLC

Condensed Consolidated Statements of Operations in millions, unaudited

in millions, unaudited


	12 Weeks Ended
	March			March
	22, 2008			24, 2007
Net revenues	$	2,651		$	2,466
Cost of sales		1,482			1,343


Gross profit		1,169			1,123
Selling, delivery and administrative expenses		1,063			1,004


Operating income		106			119
Interest expense		47			53
Interest income		41			44
Other non-operating (income) expenses, net		(2	)		1
Minority interest		(3	)		1


Income before income taxes		105			108
Income tax expense		7			6


Net income	$	98		$	102

	12 Weeks Ended
	March		March
	25, 2006		19, 2005
Net revenues	$	2,367	$	2,147
Cost of sales		1,253		1,116
Gross profit		1,114		1,031
Selling, delivery and administrative expenses		995		912
Operating income		119		119
Interest expense		45		40
Interest income		29		13
Income before income taxes		103		92
Income tax expense		5		4
Net income	$	98	$	88

See accompanying notes to Condensed Consolidated Financial Statements.

Bottling Group, LLC

Condensed Consolidated Statements of Cash Flows in millions, unaudited

in millions, unaudited


	12 Weeks Ended
	March			March
	22, 2008			24, 2007
Cash Flows — Operations
Net income	$	98		$	102
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		144			144
Deferred income taxes		1			(6	)
Share-based compensation		12			14
Net other non-cash charges and credits		38			43
Changes in operating working capital:
Accounts receivable, net		(4	)		(13	)
Inventories		(88	)		(125	)
Prepaid expenses and other current assets		(17	)		81
Accounts payable and other current liabilities		(42	)		14
Income taxes payable		8			—

Net change in operating working capital		(143	)		(43	)
Other, net		(39	)		(20	)

Net Cash Provided by Operations		111			234


Cash Flows — Investments
Capital expenditures		(185	)		(174	)
Acquisitions		(6	)		(49	)
Proceeds from sale of property, plant and equipment		2			4
Notes receivable from PBG, net		8			(98	)
Other investing activities, net		—			6

Net Cash Used for Investments		(181	)		(311	)


Cash Flows — Financing
Short-term borrowings, net		29			12
Payments of long-term debt		(2	)		(8	)

Net Cash Provided by Financing		27			4


Effect of Exchange Rate Changes on Cash and Cash Equivalents		(3	)		(4	)

Net Decrease in Cash and Cash Equivalents		(46	)		(77	)
Cash and Cash Equivalents — Beginning of Period		459			441

Cash and Cash Equivalents — End of Period	$	413		$	364

	12 Weeks Ended
	March			March
	25, 2006			19, 2005
Cash Flows – Operations
Net income	$	98		$	88
Adjustments to reconcile net income to net cash provided by operations:
Depreciation		136			130
Amortization		3			3
Deferred income taxes		(10	)		—
Stock-based compensation		16			—
Other non-cash charges and credits, net		42			36
Changes in operating working capital, excluding effects of acquisitions:
Accounts receivable, net		(5	)		—
Inventories		(95	)		(48	)
Prepaid expenses and other current assets		32			(28	)
Accounts payable and other current liabilities		11			(19	)
Income taxes payable		4			(8	)
Net change in operating working capital		(53	)		(103	)
Pension contributions		—			(20	)
Other, net		(16	)		(15	)
Net Cash Provided by Operations		216			119
Cash Flows – Investments
Capital expenditures		(171	)		(138	)
Acquisitions of bottlers, net of cash acquired		—			(1	)
Proceeds from sale of property, plant and equipment		3			1
Notes receivable from PBG, net		(199	)		(73	)
Net Cash Used for Investments		(367	)		(211	)
Cash Flows – Financing
Short-term borrowings – three months or less, net		56			30
Proceeds of long-term debt		—			23
Payments of long-term debt		(61	)		(4	)
Net Cash (Used for) Provided by Financing		(5	)		49
Effect of Exchange Rate Changes on Cash and Cash Equivalents		2			—
Net Decrease in Cash and Cash Equivalents		(154	)		(43	)
Cash and Cash Equivalents – Beginning of Period		346			177
Cash and Cash Equivalents – End of Period	$	192		$	134
Supplemental Cash Flow Information
Interest paid	$	37		$	30
Income taxes paid	$	12		$	12
Changes in accounts payable related to capital expenditures	$	(35	)	$	(45	)
Capital lease additions	$	7		$	—

See accompanying notes to Condensed Consolidated Financial Statements.

Bottling Group, LLC

Condensed Consolidated Balance Sheets in millions

in millions


	(Unaudited)
	March			December
	22, 2008			29, 2007
ASSETS
Current Assets
Cash and cash equivalents	$	413		$	459
Accounts receivable, net		1,527			1,520
Inventories		666			577
Prepaid expenses and other current assets		331			308

Total Current Assets		2,937			2,864
Property, plant and equipment, net		4,063			4,071
Other intangible assets, net		4,178			4,181
Goodwill		1,542			1,533
Note receivable from PBG		3,872			3,880
Other assets		183			183

Total Assets	$	16,775		$	16,712


LIABILITIES AND OWNERS’ EQUITY
Current Liabilities
Accounts payable and other current liabilities	$	1,739		$	1,829
Short-term borrowings		215			190
Current maturities of long-term debt		1,304			6

Total Current Liabilities		3,258			2,025
Long-term debt		2,485			3,776
Other liabilities		833			832
Deferred income taxes		452			471
Minority interest		388			379

Total Liabilities		7,416			7,483


Owners’ Equity
Owners’ net investment (includes impact from adopting FIN 48 in fiscal year 2007 of $(45))		9,523			9,418
Accumulated other comprehensive loss		(164	)		(189	)

Total Owners’ Equity		9,359			9,229

Total Liabilities and Owners’ Equity	$	16,775		$	16,712

	(Unaudited)
	March			December
	25, 2006			31, 2005
ASSETS
Current Assets
Cash and cash equivalents	$	192		$	346
Accounts receivable, less allowance of $49 at March 25, 2006 and $51 at December 31, 2005		1,196			1,186
Inventories		555			458
Prepaid expenses and other current assets		261			274
Total Current Assets		2,204			2,264
Property, plant and equipment, net		3,657			3,643
Other intangible assets, net		3,822			3,814
Goodwill		1,519			1,516
Notes receivable from PBG		2,583			2,384
Other assets		123			124
Total Assets	$	13,908		$	13,745
LIABILITIES AND OWNERS’ EQUITY
Current Liabilities
Accounts payable and other current liabilities	$	1,436		$	1,456
Short-term borrowings		128			71
Current maturities of long-term debt		533			588
Total Current Liabilities		2,097			2,115
Long-term debt		2,943			2,943
Other liabilities		713			681
Deferred income taxes		418			422
Minority interest		3			3
Total Liabilities		6,174			6,164
Owners’ Equity
Owners’ net investment		8,090			7,990
Accumulated other comprehensive loss		(356	)		(395	)
Deferred compensation		—			(14	)
Total Owners’ Equity		7,734			7,581
Total Liabilities and Owners’ Equity	$	13,908		$	13,745

See accompanying notes to Condensed Consolidated Financial Statements.

Notes to Condensed Consolidated Financial Statements
Tabular dollars in millions

~~Notes~~Note to1—Basis ~~Condensed~~of ~~Consolidated Financial Statements~~Presentation ~~Tabular dollars in millions, except per share amounts~~

~~Note~~ Bottling 1Group, —LLC ~~Basis~~is the principal operating subsidiary of ~~Presentation~~The Pepsi Bottling Group, Inc. (“PBG”) and consists of substantially all of the operations and assets of PBG. Bottling Group, LLC, which is consolidated by PBG, has the exclusive right to manufacture, sell and distribute Pepsi-Cola beverages, in all or a portion of the U.S., Mexico, Canada, Spain, Russia, Greece and Turkey.

~~Bottling~~We ~~Group,~~prepare ~~LLC~~our ~~(collectively~~unaudited ~~referred~~Condensed toConsolidated asFinancial ~~“Bottling~~Statements ~~LLC,”~~in ~~“we,”~~conformity ~~“our”~~with accounting ~~and~~principles ~~“us”)~~generally isaccepted in the ~~principal~~ ~~operating~~United ~~subsidiary~~States of ~~The~~America, ~~Pepsi~~which ~~Bottling~~requires ~~Group,~~us ~~Inc.~~to ~~(“PBG”)~~make judgments, estimates and ~~consists~~assumptions that affect the results of operations, financial position and ~~substantially~~cash ~~all~~flows of Bottling Group, LLC as well as the ~~operations~~related ~~and~~footnote ~~assets~~disclosures. ofActual ~~PBG~~results could differ from these estimates. ~~Bottling~~These ~~LLC,~~interim ~~which~~financial isstatements ~~consolidated~~have bybeen ~~PBG,~~prepared in conformity ~~has~~with the ~~exclusive~~instructions ~~right~~ to ~~manufacture,~~Form ~~sell~~10-Q and ~~distribute~~Article 10 ~~from~~of ~~Pepsi~~Regulation S-~~Cola~~X. ~~beverages~~Accordingly, they do not include certain information and disclosures required for comprehensive annual financial statements. Therefore, the Condensed Consolidated Financial Statements should be read in ~~all~~conjunction orwith athe ~~portion~~audited ofconsolidated financial statements for the ~~United~~fiscal ~~States~~year ended December 29, ~~Mexico~~2007 as presented in our Annual Report on Form 10-K. In the opinion of management, ~~Canada~~this ~~and~~interim ~~Europe~~information includes all material adjustments, which ~~consist~~are of ~~operations~~a innormal ~~Spain,~~and ~~Greece~~recurring nature, ~~Russia~~necessary ~~and~~for ~~Turkey~~a fair presentation.

InWhen ~~conjunction~~used ~~with~~in ~~PBG’s~~these ~~initial~~Condensed ~~public~~Consolidated ~~offering~~Financial ~~and~~Statements, ~~other~~“Bottling ~~subsequent transactions~~LLC,” ~~PBG and PepsiCo~~“we,” ~~Inc. (~~“~~PepsiCo~~our,”) “us” ~~contributed bottling businesses~~ and ~~assets~~the ~~used~~“Company” ineach ~~the~~refers ~~bottling businesses~~ to Bottling ~~LLC. As a result of the contribution of these assets~~Group, ~~PBG owns 93.3% of Bottling~~ LLC ~~and PepsiCo owns the remaining 6~~.~~7% as of March 25, 2006.~~

~~The~~Our ~~accompanying~~U.S. ~~Condensed~~and ~~Consolidated~~Canadian ~~Balance~~operations ~~Sheet~~report atusing ~~March 25,~~a ~~2006~~fiscal ~~and~~year ~~the~~that ~~Condensed Consolidated~~consists ~~Statements~~ of ~~Operations~~fifty-two ~~and Cash Flows for the 12~~ weeks ~~ended March 25~~, ~~2006 and~~ ~~March 19,~~ending ~~2005~~on ~~have~~the ~~not~~last ~~been~~Saturday ~~audited, but have been prepared~~ in ~~conformity with accounting principles generally accepted in the United States of America (“U~~December.S. ~~GAAP”)~~Every ~~for~~five ~~interim~~or ~~financial information~~six ~~and~~years ~~with~~a ~~the instructions to Form 10~~fifty-Qthird ~~and~~week ~~Article 10~~is ~~of Regulation S-X~~added. ~~The~~ ~~preparation~~Fiscal ofyears ~~our~~2008 ~~consolidated financial statements in conformity with U.S. GAAP often requires us to make judgments, estimates~~ and ~~assumptions~~2007 ~~that~~consist ~~affect the results~~ of ~~operations,~~fifty-two ~~financial position and cash flows of Bottling LLC, as well as the related footnote disclosures~~weeks. ~~Actual results~~Our ~~could~~remaining ~~differ~~countries ~~from~~report ~~these~~using ~~estimates. These Condensed Consolidated Financial Statements~~a ~~should be read in conjunction with the audited consolidated financial statements for the fiscal~~ calendar-year ~~ended~~basis. ~~December 31~~Accordingly, ~~2005~~we asrecognize ~~presented in~~ our ~~Annual~~quarterly ~~Report~~business onresults ~~Form~~as ~~10-K.~~outlined ~~In the opinion of~~below: ~~management, this interim information includes all material adjustments, which are of a normal and recurring nature, necessary for a fair presentation.~~

Our U.S. and Canadian operations report using a fiscal year that consists of fifty-two weeks, ending on the last Saturday in December. Every five or six years a fifty-third week is added. Fiscal year 2006 consists of fifty-two weeks. In 2005, our fiscal year consisted of fifty-three weeks (the additional week was added to the fourth quarter). Our remaining countries report using a calendar-year basis. Accordingly, we recognize our quarterly business results as outlined below:


Quarter	U.S. & Canada	Mexico & Europe
First Quarter	12 weeks	January and February
Second Quarter	12 weeks	March, April and May
Third Quarter	12 weeks	June, July and August
Fourth Quarter	16 weeks	September, October, November and December

Quarter	U.S. & Canada	Mexico & Europe
First Quarter	12 weeks	January and February
Second Quarter	12 weeks	March, April and May
Third Quarter	12 weeks	June, July and August
Fourth Quarter	16 weeks (FY 2006)/	September, October,
	17 weeks (FY 2005)	November and December

In conjunction with PBG’s initial public offering and other subsequent transactions, PBG and PepsiCo, Inc. (“PepsiCo”) contributed bottling businesses and assets used in the bottling businesses to Bottling LLC. As a result of the contribution of these assets, PBG owns 93.4% of Bottling LLC and PepsiCo owns the remaining 6.6% as of March 22, 2008. In addition, PepsiCo has a 40 percent ownership interest in our Russian venture, PR Beverages Limited.

~~Certain~~We ~~reclassifications~~consolidate ~~were~~in ~~made~~our financial statements entities in ~~our~~which ~~Condensed~~we ~~Consolidated~~have ~~Financial~~a ~~Statements~~controlling tofinancial interest, ~~2005~~as well as variable interest entities where we are the primary beneficiary. Minority ~~amounts~~interest toin ~~conform~~earnings toand ownership has been recorded for the ~~2006~~percentage ~~presentation~~of these entities not owned by Bottling LLC. We have eliminated all intercompany accounts and transactions in consolidation.

Note 2 — Seasonality of Business

The results for the first quarter are not necessarily indicative of the results that may be expected for the full year because sales of ~~business~~our ~~seasonality~~products are seasonal, especially in our Europe segment where sales tend to be more sensitive to weather conditions. The seasonality of our ~~operating~~ operating results arises from higher sales in the second and third quarters versus the first and ~~fourth~~ fourth quarters of the year, combined with the impact of fixed costs, such as depreciation and interest, which are not significantly impacted by business seasonality. From a cash flow perspective, the majority of our cash flow from operations is generated in the third and fourth quarters.

Note 3 —New ~~Share-Based~~Accounting ~~Compensation~~Standards

~~Share-Based~~SFAS ~~Long-term Incentive Compensation Plans~~No. 157

~~Under~~In ~~PBG’s~~September 2006, ~~share-based~~the ~~long-term~~Financial ~~incentive~~Accounting ~~compensation~~Standards ~~plans~~Board (“~~incentive plans~~FASB”) ~~PBG~~issued ~~grants~~Statement of ~~non-qualified~~Financial ~~stock~~Accounting ~~options~~Standards to(“SFAS”) ~~certain~~No. 157, ~~employees~~“Fair Value Measurements” (“SFAS 157”), ~~including~~which establishes ~~middle~~a framework for reporting fair value and ~~senior~~expands ~~management~~disclosures about fair value measurements. ~~PBG~~The ~~also~~Company adopted the required provisions of SFAS 157 that became effective in our ~~grants~~first ~~restricted~~quarter ~~stock~~of ~~and~~2008. ~~restricted~~The ~~stock~~adoption ~~units~~of tothese ~~certain~~provisions ~~senior~~did ~~executives~~not have a material impact on our Consolidated Financial Statements. For further information about the adoption of the required provisions of SFAS 157 see Note 7.

~~Beginning~~In inFebruary 2008, ~~2006~~the FASB issued FASB Staff Position No. FAS 157-2, ~~PBG’s~~“Effective ~~incentive~~Date ~~plans~~of ~~will~~FASB Statement ~~grant~~No. 157” a(“FSP ~~mix~~157-2”). FSP 157-2 delays the effective date of ~~stock~~SFAS ~~options~~157 for nonfinancial assets and ~~restricted~~nonfinancial liabilities, except for certain items that are recognized or disclosed at ~~stock~~fair ~~units~~value toin ~~middle~~the ~~and~~financial ~~senior~~statements ~~management~~on ~~employees~~a ~~under~~recurring ~~PBG’s~~basis ~~incentive~~(at ~~plans~~least annually). We are currently evaluating the impact of SFAS 157 on our Consolidated Financial Statements for items within the scope of FSP 157-2, which will become effective beginning with our first quarter of 2009.

~~Shares~~SFAS ~~available for future issuance to Bottling LLC’s employees under existing plans were 11~~No.3 ~~million at March 25, 2006.~~158

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for ~~Share~~Defined Benefit Pension and Other Postretirement Plans” (“SFAS 158”). Effective for the current fiscal year, the standard requires the measurement date for PBG sponsored plan assets and liabilities to coincide with our fiscal year-~~Based~~end. ~~Compensation~~SFAS 158 provides two transition alternatives related to the change in measurement date provisions. We adopted the measurement date provisions of SFAS 158 on the first day of fiscal year 2008 using the “two-measurement” approach. As a result, we measured our plan assets and benefit obligations on December 30, 2007 and adjusted our opening balances of retained earnings and accumulated comprehensive loss for the change in net periodic benefit cost and fair value, respectively, from the previously used September 30 measurement date. The adoption of the measurement date provisions resulted in a net decrease in our pension and other postretirement medical benefit plans liability of $9 million, a net decrease in retained earnings of $27 million and a net decrease in accumulated comprehensive loss of $35 million. There was no impact on our results of operations.

~~Effective January 1, 2006, we adopted Financial Accounting Standards Board (“FASB”) Statement No. 123 (revised), “Share-Based Payment” (“~~SFAS 123R”). Among its provisions, SFAS 123R requires us to recognize compensation expense for equity awards over the vesting period based on their grant-date fair value. Prior to the adoption of SFAS 123R, we utilized the intrinsic-value based method of accounting under APB Opinion No. ~~25, “Accounting for Stock Issued to Employees” and~~159 related interpretations, and adopted the disclosure requirements of SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). Under the intrinsic-value based method of accounting, compensation expense for stock options granted to our employees was measured as the excess of the quoted market price of PBG’s common stock at the grant date over the amount the employee must pay for the stock. PBG’s policy is to grant PBG stock options at fair value on the date of grant and as a result no compensation expense was historically recognized for stock options.

WeIn ~~adopted~~February 2007, ~~SFAS 123R in~~ the ~~first~~FASB ~~quarter~~issued ofSFAS ~~2006 using the modified prospective approach~~No. ~~Under this transition method~~ 159, ~~the~~“The ~~measurement~~Fair ~~and~~Value ~~our~~Option ~~method~~for ofFinancial ~~amortization of costs for~~Assets ~~share-based~~and ~~payments~~Financial ~~granted~~Liabilities” ~~prior~~(“SFAS to159”), ~~but~~which ~~not~~allows ~~vested~~entities asto ofchoose ~~January 1,~~to ~~2006,~~measure ~~would be based on the~~financial ~~same~~instruments ~~estimate~~and ofcertain ~~the~~other ~~grant-date~~items at fair value. ~~and~~SFAS ~~the~~159 ~~same~~became ~~amortization~~effective ~~method~~beginning ~~that~~with ~~was previously~~our ~~used~~first inquarter ~~our~~of ~~SFAS 123 pro forma disclosure~~2008. ~~Results~~We ~~for~~have ~~prior~~currently ~~periods~~chosen ~~have~~ not ~~been~~to ~~restated~~adopt ~~as provided for under~~ the ~~modified~~provisions ~~prospective approach. For equity awards granted after the date~~ of ~~adoption,~~ weSFAS ~~will~~159 ~~amortize~~for ~~share-based compensation expense on a straight-line basis over the~~our ~~vesting~~existing ~~term~~financial instruments.

Compensation expense is recognized only for share-based payments expected to vest. We estimate forfeitures at the date of grant based on our historical experience and future expectations. Prior to the adoption of SFAS ~~123R, the effect of forfeitures on the pro forma expense amounts was recognized based on estimated forfeitures~~No. 141(R)

~~The~~In ~~pre-tax~~December 2007, ~~and~~the ~~after-tax~~FASB ~~charge~~issued ~~associated~~SFAS ~~with~~No. 141(R), ~~share-based~~“Business ~~compensation~~Combinations” ~~expense~~(“SFAS ~~recognized~~141(R)”), inwhich ~~selling~~addresses the recognition and accounting for identifiable assets acquired, ~~delivery~~liabilities assumed, and ~~administrative~~noncontrolling ~~expenses~~interests in ~~the~~business ~~Condensed~~combinations. ~~Consolidated~~SFAS ~~Statement~~141(R) ofalso establishes ~~Operations~~expanded disclosure requirements for business combinations. SFAS 141(R) will become effective beginning with our first quarter of 2009. We are currently evaluating the ~~12 weeks~~impact ~~ended~~of ~~March 25,~~this ~~2006~~standard on ~~was~~our ~~$16 million~~Consolidated Financial Statements.

The following table shows the effect on net income for the 12 weeks ended March 19, 2005 had compensation expense been recognized based upon the estimated fair value on the grant date of awards, in accordance with SFAS ~~123, as amended by SFAS~~ No. ~~148 “Accounting for Stock-Based~~160 ~~Compensation – Transition and Disclosure”:~~

	12 Weeks Ended
	March
	19, 2005
Net income:
As reported	$	88
Add: Total share-based employee compensation included in reported net income, net of taxes		—
Less: Total share-based employee compensation determined under fair-value based method for all awards, net of taxes		(18	)
Pro forma	$	70

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS 160”), which addresses the accounting and reporting framework for minority interests by a parent company. SFAS 160 also addresses disclosure requirements to distinguish between interests of the parent and interests of the noncontrolling owners of a subsidiary. SFAS 160 will become effective beginning with our first quarter of 2009. We are currently evaluating the impact of this standard on our Consolidated Financial Statements.

AsSFAS ~~of March 25, 2006, there was approximately $127 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the incentive plans~~No. ~~That cost is expected to be recognized over a weighted-average period of 2.4~~ ~~years.~~161

~~The~~In ~~fair~~March 2008, ~~value~~the ofFASB ~~PBG~~issued ~~stock~~SFAS ~~options~~No. 161, ~~was~~“Disclosures ~~estimated~~about atDerivative ~~the~~Instruments ~~date~~and Hedging Activities, an amendment of ~~grant~~FASB ~~using~~Statement ~~the~~No. 133” (“SFAS 161”), which requires enhanced ~~Black-Scholes-Merton~~disclosures ~~option-valuation~~for ~~model~~derivative and hedging activities. ~~The~~SFAS ~~table~~161 ~~below~~will ~~outlines~~become ~~the~~effective ~~weighted~~beginning ~~average~~with ~~assumptions~~our ~~for~~first ~~options~~quarter ~~granted~~of ~~during~~2009. Early adoption is permitted. We are currently evaluating the ~~12 weeks~~impact ~~ended~~of this ~~March 25,~~standard ~~2006~~on ~~and~~our ~~March 19,~~Consolidated ~~2005:~~Financial Statements.

	12 Weeks Ended
	March 25,			March 19,
	2006			2005
Risk-free interest rate		4.6	%		4.1	%
Expected term (in years)		5.7			5.8
Expected volatility		27	%		28	%
Expected dividend yield		1.5	%		1.1	%
Estimated fair value per option granted	$	8.62		$	8.68

EITF Issue No. 06-11

~~The~~In ~~expected~~June 2007, ~~term~~the ofFASB ~~the~~ratified ~~options~~Emerging ~~represents~~Issues ~~the~~Task ~~estimated~~Force ~~period~~Issue ofNo. 06-11, ~~time~~“Accounting ~~until~~for Income ~~exercise~~Tax ~~and~~Benefits ~~is based~~of Dividends on ~~historical~~Share-Based ~~experience~~Payment ofAwards” ~~similar~~(“EITF ~~awards~~06-11”), ~~giving~~which ~~consideration~~requires income tax benefits from dividends or dividend equivalents that are charged to ~~the~~retained ~~contractual~~earnings and ~~terms~~are paid to employees for equity classified nonvested equity shares, ~~vesting~~ ~~schedules~~nonvested equity share units and ~~expectations~~outstanding ofequity ~~future~~share ~~employee~~options ~~behavior.~~to ~~Expected~~be ~~stock~~recognized ~~price~~as ~~volatility~~an isincrease in additional paid-in ~~based~~capital onand ato ~~combination~~be ofincluded ~~historical~~in ~~volatility~~the pool of ~~PBG’s~~excess ~~stock~~tax ~~and~~benefits ~~the~~available ~~implied~~to ~~volatility~~absorb ofpotential ~~PBG’s~~future ~~traded~~tax ~~options~~deficiencies on share-based payment awards. The ~~risk-free~~adoption ~~interest~~of ~~rate~~EITF is06-11, ~~based~~which onbecame effective in the ~~implied~~first ~~yield~~quarter ~~available~~of on2008, ~~U.S. Treasury~~did ~~zero-coupon~~not ~~issues~~have ~~with~~a anmaterial ~~equivalent~~impact ~~remaining~~on ~~term~~our Consolidated Financial Statements.

WeEITF ~~receive a~~Issue ~~tax deduction for certain stock option exercises when the options are exercised, generally for the excess of the stock price when the options are sold over the exercise price of the options~~No. Prior to the adoption of SFAS 123R, the Company presented all tax benefits resulting from the exercise of stock options as operating cash inflows in the Condensed Consolidated Statements of Cash Flows. SFAS 123R requires the benefits of tax deductions in excess of the grant 07-~~date fair value for those options to be classified as financing cash inflows rather than~~1 operating cash inflows, on a prospective basis. For the 12 weeks ended March 25, 2006, we recognized $223 thousand in tax benefits from the exercise of equity awards, of which $159 thousand was recorded as excess tax benefits in the Condensed Consolidated Statements of

In December 2007, the FASB ratified the EITF’s Consensus for Issue No. 07-1, “Accounting for Collaborative Arrangements” (“EITF 07-1”), which defines collaborative arrangements and establishes reporting requirements for transactions between participants in a collaborative arrangement and between participants in the arrangement and third parties. EITF 07-1 will become effective beginning with our first quarter of 2009. We are currently evaluating the impact, if any, of this standard on our Consolidated Financial Statements.

Note 4—Share-Based Compensation

We offer PBG stock option awards and restricted stock units as our primary form of long-term incentive compensation. Stock option awards generally vest over three years and have a 10 year term. Restricted stock unit awards generally vest over three years and are settled in shares of PBG stock after the vesting period.

Share-based compensation expense is recognized only for share-based payments expected to vest. We estimate forfeitures, both at the date of grant as well as throughout the vesting period, based on our historical experience and future expectations. We use the Black-Scholes-Merton option-valuation model to value stock option awards. The fair value of restricted stock unit awards is based on the fair value of PBG stock on the date of grant.

The total share-based compensation expense recognized in our Condensed Consolidated Statements of Operations was $12 million and $14 million for the 12 week periods ended March 22, 2008 and March 24, 2007, respectively.

During each of the 12 week periods ended March 22, 2008 and March 24, 2007, we granted approximately 3 million options at a weighted-average fair value of $7.06 and $8.15, respectively.

~~Cash~~ During ~~Flows~~each of the 12 week periods ended March 22, ~~resulting~~2008 inand aMarch 24, ~~decrease~~2007, ofwe ~~cash~~granted approximately ~~from~~1 million ~~operations~~restricted ~~and~~stock anunits ~~increase~~at ina ~~cash~~weighted-average ~~from~~fair ~~financing~~ value of $~~159~~35.77 ~~thousand~~and $30.85, respectively.

~~Stock~~ Unrecognized ~~Options~~compensation cost related to nonvested share-based compensation arrangements granted under the incentive plans amounted to $116 million as of March 22, 2008. That cost is expected to be recognized over a weighted-average period of 2.4 years.

~~PBG~~Note ~~stock~~5—Balance ~~options~~Sheet ~~expire in 10 years and prior to the 2006 grant year were generally~~Details ~~exercisable 25 percent in each of the first two years, and the remainder after three years. Beginning in 2006, new stock option grants will vest ratably over three years.~~

The following table summarizes PBG option activity for Bottling LLC employees during the 12 weeks ended March 25, 2006:


	March			December
	22, 2008			29, 2007
Accounts Receivable
Trade accounts receivable	$	1,341		$	1,319
Allowance for doubtful accounts		(56	)		(54	)
Accounts receivable from PepsiCo		173			188
Other receivables		69			67

	$	1,527		$	1,520


Inventories
Raw materials and supplies	$	221		$	195
Finished goods		445			382

	$	666		$	577


Property, Plant and Equipment, net
Land	$	323		$	320
Buildings and improvements		1,532			1,484
Manufacturing and distribution equipment		4,092			4,091
Marketing equipment		2,397			2,389
Capital leases		36			36
Other		147			154

		8,527			8,474
Accumulated depreciation		(4,464	)		(4,403	)

	$	4,063		$	4,071

~~Shares~~Industrial inRevenue ~~millions~~Bonds

						Weighted
				Weighted		Average
				Average		Remaining
				Exercise		Contractual		Aggregate
				Price per		Term		Intrinsic
Options	Shares			Share		(years)		Value
Outstanding at January 1, 2006		38.1		$	22.54
Granted		2.8		$	29.32
Exercised		(1.1	)	$	14.89
Forfeited or expired		(0.3	)	$	26.49
Outstanding at March 25, 2006		39.5		$	23.31		6.7	$	294
Exercisable at March 25, 2006		20.7		$	19.29		5.2	$	237

Pursuant to the terms of an industrial revenue bond, we transferred title of certain fixed assets with a net book value of $58 million to a state governmental authority in the U.S. to receive a property tax abatement. The title to these assets will revert back to Bottling LLC upon retirement or cancellation of the bond. These fixed assets are still recognized in the Company’s Condensed Consolidated Balance Sheet as all risks and rewards remain with the Company.

The aggregate intrinsic value in the table above is before income taxes, based on PBG’s closing stock price of $30.74 as of the last business day of the period ended March 25, 2006.

During the 12 weeks ended March 25, 2006, the total intrinsic value of PBG stock options exercised was $16 million.

Restricted Stock and Restricted Stock Units

PBG restricted stock and restricted stock units granted to employees have vesting periods that range from two to five years. In addition, restricted stock unit awards to certain senior executives contain vesting provisions that are contingent upon the achievement of pre-established performance targets. All restricted stock and restricted stock unit awards are settled in shares of PBG common stock.

The following table summarizes PBG restricted stock and restricted stock unit activity for Bottling LLC employees during the 12 weeks ended March 25, 2006:


	March		December
	22, 2008		29, 2007
Accounts Payable and Other Current Liabilities
Accounts payable	$	575	$	615
Accounts payable to PepsiCo		329		255
Trade incentives		183		235
Accrued compensation and benefits		203		276
Other accrued taxes		110		139
Accrued interest		57		47
Other current liabilities		282		262

	$	1,739	$	1,829

~~Shares~~Note in6—Other ~~millions~~Intangible Assets, net and Goodwill

Restricted Stocks and				Weighted Average
Restricted Stock Units	Shares			Grant-Date Fair Value
Nonvested at January 1, 2006		0.9			$26.31
Granted		1.1			$29.32
Vested		—			$24.25
Forfeited		(0.3	)		$23.50
Nonvested at March 25, 2006		1.7			$28.89

Other intangible assets, net

The ~~total~~components ~~fair value~~ of ~~PBG~~other ~~shares~~intangible ~~vested~~assets ~~during~~are ~~the~~as ~~12 weeks ended March 25, 2006 was $1~~follows: ~~million.~~

Note 4 — Accounts Receivable


	March			December
	22, 2008			29, 2007
Intangibles subject to amortization:
Gross carrying amount:
Customer relationships and lists	$	55		$	54
Franchise and distribution rights		46			46
Other identified intangibles		30			30

		131			130

Accumulated amortization:
Customer relationships and lists		(15	)		(15	)
Franchise and distribution rights		(32	)		(31	)
Other identified intangibles		(18	)		(17	)

		(65	)		(63	)

Intangibles subject to amortization, net		66			67


Intangibles not subject to amortization:
Carrying amount:
Franchise rights		3,223			3,235
Licensing rights		315			315
Distribution rights		299			294
Trademarks		217			213
Other identified intangibles		58			57

Intangibles not subject to amortization		4,112			4,114

Total other intangible assets, net	$	4,178		$	4,181

	March			December
	25, 2006			31, 2005
Trade accounts receivable	$	1,032		$	1,018
Allowance for doubtful accounts		(49	)		(51	)
Accounts receivable from PepsiCo		166			143
Other receivables		47			76
	$	1,196		$	1,186

Intangible asset amortization

~~Note~~ Intangible 5asset —amortization ~~Inventories~~expense was $2 million for the 12 weeks ended March 22, 2008 and March 24, 2007. Amortization expense for each of the next five years is estimated to be approximately $7 million or less.

	March		December
	25, 2006		31, 2005
Raw materials and supplies	$	209	$	173
Finished goods		346		285
	$	555	$	458

Note 6 — Property, Plant and Equipment, net

	March			December
	25, 2006			31, 2005
Land	$	288		$	277
Buildings and improvements		1,321			1,299
Manufacturing and distribution equipment		3,469			3,425
Marketing equipment		2,341			2,334
Other		182			171
		7,601			7,506
Accumulated depreciation		(3,944	)		(3,863	)
	$	3,657		$	3,643

~~Note 7 — Other Intangible Assets, net and~~ Goodwill

	March			December
	25, 2006			31, 2005
Intangibles subject to amortization:
Gross carrying amount:
Customer relationships and lists	$	53		$	53
Franchise/distribution rights		46			46
Other identified intangibles		39			39
		138			138
Accumulated amortization:
Customer relationships and lists		(9	)		(9	)
Franchise/distribution rights		(24	)		(22	)
Other identified intangibles		(20	)		(18	)
		(53	)		(49	)
Intangibles subject to amortization, net		85			89
Intangibles not subject to amortization:
Carrying amount:
Franchise rights		3,096			3,093
Distribution rights		307			302
Trademarks		222			218
Other identified intangibles		112			112
Intangibles not subject to amortization		3,737			3,725
Total other intangible assets, net	$	3,822		$	3,814

The changes in the carrying value of goodwill by reportable segment for the 12 weeks ended March 22, 2008 are as follows:

For intangible assets subject to amortization, we calculate amortization expense over the period we expect to receive economic benefit. Total amortization expense was $3 million for the 12 weeks ended March 25, 2006 and March 19, 2005. The weighted-average amortization period for each category of intangible assets and its estimated aggregate amortization expense expected to be recognized over the next five years are as follows:


	U.S. & Canada			Europe		Mexico		Total
Balance at December 29, 2007	$	1,290		$	17	$	226	$	1,533
Unallocated purchase price relating to acquisition		21			—		—		21
Impact of foreign currency translation		(17	)		—		5		(12	)

Balance at March 22, 2008	$	1,294		$	17	$	231	$	1,542

	Weighted-
	Average	Estimated Aggregate Amortization Expense to be Incurred
	Amortization	Balance of		Fiscal Year Ending
	Period	2006		2007		2008		2009		2010
Customer relationships and lists	18 years	$	3	$	3	$	3	$	3	$	3
Franchise/distribution rights	7 years	$	4	$	3	$	2	$	2	$	2
Other identified intangibles	8 years	$	4	$	4	$	3	$	2	$	1

During the first quarter, PBG acquired Pepsi-Cola Batavia Bottling Corp, which was contributed to Bottling LLC. The Pepsi-Cola franchised bottler serves certain New York counties in whole or in part. The acquisition did not have a material impact on our Condensed Consolidated Financial Statements.

Note 7—Fair Value Measurements

SFAS 157 defines and establishes a framework for measuring fair value and expands disclosures about fair value measurements. In accordance with SFAS 157, we have categorized our financial assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded on the Condensed Consolidated Balance Sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1 — Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the company has the ability to access at the measurement date (examples include active exchange-traded equity securities, listed derivatives, and most U.S. Government and agency securities). We currently do not have any Level 1 financial assets or liabilities.

Level 2 — Financial assets and liabilities whose values are based on quoted prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets. Level 2 inputs include the following:

	•		Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds which trade infrequently);

	•		Inputs other than quoted prices that are observable for substantially the full term of the asset or liability (examples include interest rate and currency swaps); and

	•		Inputs that are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability (examples include certain securities and derivatives).

Level 3 — Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability. We currently do not have any Level 3 financial assets or liabilities.

The ~~changes~~following intable presents the ~~carrying~~financial ~~value~~assets ofand ~~goodwill~~liabilities bywe ~~reportable~~measure ~~segment~~at ~~for~~fair ~~the~~value ~~12 weeks ended~~on ~~March 25~~a recurring basis, ~~2006~~based ~~are~~on the fair value hierarchy as ~~follows~~of March 22, 2008:

	U.S. &
	Level 2
	Canada			Europe		Mexico		Total
Financial Assets:
Balance at December 31, 2005	$	1,240		$	16	$	260	$	1,516
Cash flow hedges	$	12
Impact of foreign currency translation		(1	)		—		4		3
Interest rate swaps		7
Balance at March 25, 2006	$	1,239		$	16	$	264	$	1,519
Prepaid forward contracts		21
Total	$	40
Financial Liabilities:
Unfunded deferred compensation liability	$	78
Foreign currency hedges		2
Cash flow hedges		1
Total	$	81

~~Note~~Cash ~~8 —~~Flow ~~Accounts Payable and Other Current Liabilities~~Hedges

	March		December
	25, 2006		31, 2005
Accounts payable	$	515	$	501
Trade incentives		139		185
Accrued compensation and benefits		168		211
Other accrued taxes		101		123
Accounts payable to PepsiCo		226		176
Other current liabilities		287		260
	$	1,436	$	1,456

We use futures contracts to hedge the risk of adverse movements in commodity prices primarily related to anticipated purchases of raw materials and energy used in our operations. We also enter into forward exchange contracts to hedge portions of our forecasted U.S. dollar purchases in our Canadian business. The fair value of these cash flow hedges is primarily based on the forward curves of the specific indices upon which settlement is based.

~~Note~~Interest 9Rate ~~— Pension and Postretirement Medical Benefit Plans~~Swaps

~~Pension~~We ~~Benefits~~finance a portion of our operations through fixed-rate debt instruments. We effectively converted $550 million of our senior notes to floating-rate debt through the use of interest rate swaps. The fair value of our interest rate swaps is primarily based on the LIBOR index.

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

~~Nearly~~In ~~all of our U.S. employees are also eligible to participate in PBG’s 401(k) savings plans~~2007, ~~which~~we ~~are~~entered ~~voluntary~~into ~~defined~~forward ~~contribution~~exchange ~~plans.~~contracts ~~We make matching contributions~~ to ~~the~~economically ~~401(k) savings~~hedge ~~plans on behalf of participants eligible to receive such contributions. If~~ a ~~participant has~~portion ~~one or more but less than 10 years~~ of ~~eligible service, our match will equal $0.50 for each~~ ~~dollar~~intercompany ~~the~~receivable ~~participant~~balances ~~elects~~that toare ~~defer~~denominated upin toMexican ~~4% of the participant’s pay~~pesos. IfThe ~~the~~fair ~~participant~~value ~~has 10 or more years~~ of ~~eligible service,~~ our forward ~~match~~exchange ~~will~~contracts ~~equal~~is ~~$1.00~~primarily ~~for~~based ~~each~~on ~~dollar~~observable ~~the~~forward ~~participant elects~~foreign toexchange ~~defer up to 4% of the participant’s pay~~rates.

Unfunded Deferred Compensation Liability

Our unfunded deferred compensation liability is subject to changes in PBG’s stock price as well as price changes in other equity and fixed-income investments. Employees’ deferred compensation amounts are not directly invested in these investment vehicles. We track the performance of each employee’s investment selections and adjust the deferred compensation account accordingly. The fair value of the unfunded deferred compensation liability is primarily based on the market indices corresponding to the employees’ investment selections.

We use prepaid forward contracts to hedge the portion of our deferred compensation liability that is based on PBG stock price. At March 22, 2008, we had a prepaid forward contract for 610,000 of PBG shares, which was accounted for as an economic hedge. The fair value of this forward contract is primarily based on the current value of PBG’s stock price.

~~Components~~Note of8—Pension ~~our U.S. pension expense for the 12 weeks ended March 25, 2006~~ and ~~March 19, 2005~~Postretirement ~~are~~Medical asBenefit ~~follows:~~Plans

	12 Weeks Ended
	March			March
	25, 2006			19, 2005
Service cost	$	12		$	11
Interest cost		19			17
Expected return on plan assets		(22	)		(21	)
Amortization of prior service cost		2			2
Amortization of net loss		9			7
Net pension expense for the defined benefit plans		20			16
Defined contribution plans expense		5			4
Total U.S. pension expense recognized in the Condensed Consolidated Statements of Operations	$	25		$	20

Employee Benefit Plans

~~There~~We ~~were~~participate noin ~~contributions~~PBG ~~made~~sponsored topension ~~PBG’s~~and ~~U.S.~~other ~~pension~~postretirement medical benefit plans ~~for~~in various forms in the ~~12 weeks~~United ~~ended~~States ~~March 25~~and other similar pension plans in our international locations, ~~2006~~covering employees who meet specified eligibility requirements.

~~Postretirement~~The ~~Medical~~assets, ~~Benefits~~liabilities and expense associated with our international plans were not significant to our results of operations and our financial position and are not included in the tables and discussion presented below.

Defined Benefit Pension Plans

Our U.S. employees that were hired prior to January 1, 2007 participate in PBG’s non-contributory defined benefit pension plans, which cover full-time salaried employees, as well as hourly employees. Benefits generally are based on years of service and compensation, or stated amounts for each year of service. Effective January 1, 2007, newly hired salaried and non-union hourly employees are not eligible to participate in these plans. All of PBG’s qualified plans are funded and contributions are made in amounts not less than the minimum statutory funding requirements and not more than the maximum amount that can be deducted for U.S. income tax purposes.

Postretirement Medical Plans

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

Components of ~~our~~net ~~U.S.~~pension ~~postretirement benefits~~ expense ~~for the 12 weeks ended March 25, 2006~~ ~~and March 19, 2005 are as follows:~~

	12 Weeks Ended
	March			March
	25, 2006			19, 2005
	22, 2008			24, 2007
Service cost	$	112		$	113
Interest cost		523			521
Amortization of net loss		1			1
Expected return on plan assets — (income)		(27	)		(24	)
U.S. postretirement benefits expense recognized in the Condensed Consolidated Statements of Operations	$	7		$	7
Amortization of net loss		3			9
Amortization of prior service costs		2			1
Net pension expense for the defined benefit plans	$	13		$	20

There were no contributions made to PBG’s U.S. pension plans for the 12 weeks ended March 22, 2008.

Components of postretirement medical expense


	12 Weeks Ended
	March		March
	22, 2008		24, 2007
Service cost	$	1	$	1
Interest cost		5		5
Amortization of net loss		1		1

Total postretirement medical expense	$	7	$	7

~~Note~~Defined 10Contribution ~~—Segment Information~~Benefits

WeNearly ~~operate~~all of our U.S. employees are eligible to participate in ~~one~~PBG’s ~~industry~~401(k) plans, ~~carbonated~~which ~~soft~~are voluntary ~~drinks~~defined ~~and~~contribution ~~other~~savings ~~ready-to-drink~~plans. ~~beverages~~We ~~and~~make ~~all of~~matching ~~our~~contributions ~~segments~~to ~~derive~~the ~~revenue~~401(k) ~~from~~savings plans ~~these~~on ~~products.~~behalf Weof ~~conduct~~participants ~~business~~eligible into ~~all~~receive orsuch contributions. If a ~~portion~~participant ofhas ~~the~~less ~~United~~than ~~States,~~10 years ~~Mexico,~~of ~~Canada~~service, ~~Spain,~~our ~~Russia,~~match ~~Greece~~will ~~and~~equal ~~Turkey~~$0.50 ~~Beginning~~for ~~with~~each dollar the ~~fiscal~~participant ~~quarter~~elects to ~~ended~~defer ~~March 25,~~up ~~2006,~~to ~~Bottling~~four ~~LLC~~percent ~~changed~~of ~~its~~the ~~financial~~participant’s ~~reporting~~pay. ~~methodology~~If tothe ~~three~~participant ~~reportable~~has 10 or more years of ~~segments~~service, –our Umatch will equal $1.S.00 &for ~~Canada,~~each ~~Europe~~dollar ~~(which~~the ~~includes~~participant ~~Spain,~~elects ~~Russia,~~to ~~Greece~~defer ~~and~~up ~~Turkey)~~to ~~and~~four percent ~~Mexico~~of the participant’s pay. ~~The operating~~Salaried ~~segments~~and ofnon-union hourly employees hired in the U.S. ~~and~~on ~~Canada~~or after ~~are~~January 1, ~~aggregated~~2007 ~~into~~also areceive ~~single~~an ~~reportable~~additional ~~segment~~Company ~~due~~retirement contribution equal to two percent of their ~~economic~~compensation ~~similarity~~into astheir ~~well~~401(k) asaccount. ~~similarity~~Defined ~~across~~contribution ~~products,~~expense ~~manufacturing~~was $7 million and ~~distribution methods,~~$6 million ~~types~~for ofthe ~~customers~~12 weeks ended March 22, 2008 and ~~regulatory~~March 24, ~~environments~~2007, respectively.

~~Operationally,~~Note ~~Bottling~~9—Segment ~~LLC is organized along geographic lines with specific regional~~Information management teams having responsibility for the financial results in each geographic territory. Our Principal Executive Officer and Managing Director is responsible for monitoring and addressing our diverse geographic challenges and allocating resources to these segments. We evaluate the performance of these segments based on operating income or loss. Operating income or loss is exclusive of interest expense, interest income, foreign exchange gains and losses and income taxes.

	12 Weeks Ended
	March		March
Net Revenues	25, 2006		19, 2005
U.S. & Canada	$	2,036	$	1,849
Europe		148		145
Mexico		183		153
Worldwide net revenues	$	2,367	$	2,147

We operate in one industry, carbonated soft drinks and other ready-to-drink beverages, and all of our segments derive revenue from these products. We conduct business in all or a portion of the U.S., Mexico, Canada, Spain, Russia, Greece and Turkey. Bottling LLC manages and reports operating results through three reportable segments — U.S. & Canada, Europe (which includes Spain, Russia, Greece and Turkey) and Mexico. The operating segments of the U.S. and Canada are aggregated into a single reportable segment due to their economic similarity as well as similarity across products, manufacturing and distribution methods, types of customers and regulatory environments.

	12 Weeks Ended
	March			March
Operating Income (Loss)	25, 2006			19, 2005
U.S. & Canada	$	139		$	141
Europe		(22	)		(16	)
Mexico		2			(6	)
Worldwide operating income		119			119
Interest expense		45			40
Interest income		29			13
Income before income taxes	$	103		$	92

Operationally, the Company is organized along geographic lines with specific regional management teams having responsibility for the financial results in each reportable segment. We evaluate the performance of these segments based on operating income or loss. Operating income or loss is exclusive of net interest expense, minority interest, foreign exchange gains and losses and income taxes.

~~For the 12 weeks ended March 25, 2006, operating income includes the impact of adopting SFAS 123R.~~ The ~~comparable~~following ~~quarter~~tables insummarize ~~2005~~select ~~has~~financial ~~not~~information ~~been~~related ~~restated~~to asour ~~described in Note 3.~~reportable segments:

	March			December
	12 Weeks Ended
Total Assets	25, 2006			31, 2005
	March			March
U.S. & Canada	$	11,291		$	11,090
	22, 2008			24, 2007
Europe		857			894
Net Revenues
Mexico		1,760			1,761
U.S. & Canada	$	2,207		$	2,102
Worldwide total assets	$	13,908		$	13,745
Europe		236			176
Mexico		208			188
Worldwide net revenues	$	2,651		$	2,466
Operating Income (Loss)
U.S. & Canada	$	134		$	142
Europe		(31	)		(25	)
Mexico		3			2
Worldwide operating income		106			119
Interest expense		47			53
Interest income		41			44
Other non-operating (income) expenses, net		(2	)		1
Minority interest		(3	)		1
Income before income taxes	$	105		$	108

Note 11 — Comprehensive Income


	March		December
	22, 2008		29, 2007
Total Assets
U.S. & Canada	$	13,329	$	13,334
Europe		1,754		1,671
Mexico		1,692		1,707

Worldwide total assets	$	16,775	$	16,712

	12 Weeks Ended
	March		March
	25, 2006		19, 2005
Net income	$	98	$	88
Net currency translation adjustment		26		15
Cash flow hedge adjustment (a)		13		(2	)
Comprehensive income	$	137	$	101

Note 10—Comprehensive Income

(a) Net of taxes of $1 million and $0 million for the 12 weeks ended March 25, 2006 and March 19, 2005, respectively.


	12 Weeks Ended
	March			March
	22, 2008			24, 2007
Net income	$	98		$	102
Net currency translation adjustment		(22	)		(34	)
Cash flow hedge adjustment (a)		5			1
Amortization of prior service cost and net loss in net periodic pension/postretirement cost to expense		6			11
Pension liability adjustment (b)		—			5

Comprehensive income	$	87		$	85

Note 12 — Contingencies


(a)		Net of taxes of $1 million and $0 million for the 12 weeks ended March 22, 2008 and March 24, 2007, respectively.

(b)		Net of taxes of $3 million for the 12 weeks ended March 24, 2007.

WeNote ~~are~~11—Restructuring ~~subject~~Charges ~~to various claims~~ and ~~contingencies~~Full ~~related~~Service toVending ~~lawsuits, taxes and~~Rationalization environmental and other matters arising out of the normal course of business. We believe that the ultimate liability arising from such claims or contingencies, if any, in excess of amounts already recognized is not likely to have a material adverse effect on our results of operations, financial condition or liquidity.

~~Note~~Restructuring ~~13 — Guarantees~~Charges

~~PBG~~In ~~has~~the athird ~~commercial~~quarter ~~paper~~of ~~program~~2007, ~~that~~we isannounced ~~supported~~a byrestructuring ~~two~~program ~~credit~~(the ~~facilities, which are~~“Organizational ~~guaranteed~~Realignment”) byto ~~us.~~realign ~~PBG~~the Company’s ~~$450 million~~organization ~~credit~~to ~~facility,~~adapt ~~which~~to ~~was~~changes ~~executed~~ in ~~March 2006~~the marketplace, ~~expires in~~improve ~~March 2011.~~operating ~~PBG~~efficiencies and enhance the growth potential of the Company’s ~~existing~~product ~~credit~~portfolio. ~~facility~~During the ~~was~~first ~~increased~~quarter ~~from~~of ~~$500 million~~2008, towe ~~$550 million~~substantially ~~and expires~~completed inthe ~~April 2009.~~Organizational ~~PBG~~Realignment, ~~has~~which resulted ~~used~~in ~~these~~the ~~credit~~elimination ~~facilities~~of toapproximately ~~support~~800 ~~its~~positions ~~commercial~~to ~~paper program~~date inacross ~~2006~~all ~~and~~of ~~2005~~our reporting segments.

OnThe ~~March 8,~~Organizational ~~1999,~~Realignment ~~PBG~~will ~~issued~~cost approximately $130 ~~billion~~million ofover 7%the ~~senior~~course ~~notes~~of ~~due 2029~~the program, which ~~are~~is ~~guaranteed~~primarily ~~by us.~~for Weseverance, ~~also~~relocation ~~guarantee,~~and ~~that~~other toemployee-related costs. Since the inception ~~extent~~of ~~there~~the isprogram ~~available~~and ~~cash~~through March 22, 2008, we ~~will~~have ~~distribute~~recognized ~~pro~~approximately ~~rata to~~$28 million ~~all~~of ~~owners~~this ~~sufficient~~cost ~~cash~~including ~~such~~a ~~that~~pre-tax ~~aggregate~~ cash ~~distributed~~charge toof ~~PBG~~approximately ~~will~~$2 million ~~enable~~being ~~PBG~~recorded toin ~~pay its~~the ~~taxes~~first ~~and~~quarter ~~make~~of ~~interest~~2008 ~~payments~~primarily onrelated ~~the~~to ~~$1 billion~~relocation 7%expenses ~~senior~~in ~~notes~~our ~~due~~U.S. ~~2029~~& Canada segment.

Note 14 — Subsequent Event

On March 30, 2006, we issued $800 million of 5.50% senior notes due 2016 (the “Notes”). The Notes were issued pursuant to an Indenture, dated as of March 30, 2006, between us and JPMorgan Chase Bank, N.A., as Trustee. The Notes have been registered under the Securities Act of 1933 pursuant to a registration statement on Form S-3 previously filed with the Securities and Exchange Commission.

The net proceeds received, after deducting the underwriting discount, but before offering expenses, were approximately $794 million. We distributed $356 million of the net proceeds to PBG to repay their outstanding commercial paper balance. The balance of the proceeds is currently invested in short-term investments and will be used to repay certain outstanding senior notes.

The Notes are general unsecured obligations and rank on an equal basis with all of our other existing and future unsecured indebtedness and are senior to all future subordinated indebtedness. The Indenture contains covenants that are similar to those contained under existing senior notes.

~~Item 2.~~ The following table summarizes the nature of and activity related to pre-tax costs and cash payments associated with the Organizational Realignment:

Management’s Financial Review Tabular dollars in millions


				Severance &			Enhanced
				Related			Pension		Relocation
	Total			Benefits			Benefits		& Other
Costs incurred through December 29, 2007	$	26		$	15		$	4	$	7
Cash payments		(13	)		(7	)		—		(6	)
Non-cash settlements		(1	)		—			—		(1	)

Remaining costs accrued at December 29, 2007	$	12		$	8		$	4	$	—
Costs incurred		2			—			—		2
Cash payments		(3	)		(1	)		—		(2	)

Remaining costs accrued at March 22, 2008	$	11		$	7		$	4	$	—

~~OVERVIEW~~Full Service Vending Rationalization

~~Bottling~~During ~~Group~~2007, ~~LLC~~we ~~(collectively~~adopted ~~referred~~a toFull asService ~~“Bottling~~Vending ~~LLC,”~~ (“~~we,~~FSV”) ~~“our”~~Rationalization ~~and~~plan, ~~“us”)~~which iswe ~~the~~expect ~~principal~~to ~~operating~~substantially ~~subsidiary~~complete ofby ~~The~~the ~~Pepsi~~end ~~Bottling~~of ~~Group~~the ~~(“PBG”)~~second ~~and~~quarter ~~consists~~ of ~~substantially all~~2008, ofto ~~the~~rationalize ~~operations~~our ~~and~~vending asset ~~assets~~base ofin ~~PBG~~our U.S. We& ~~have~~Canada ~~the~~segment ~~exclusive~~by ~~right~~disposing toolder ~~manufacture,~~underperforming ~~sell~~assets and redeploying ~~distribute~~certain ~~Pepsi-Cola~~assets ~~beverages~~to inhigher ~~all~~return oraccounts. aOur ~~portion~~FSV ofbusiness ~~the~~portfolio ~~United States, Mexico, Canada and Europe, which~~ consists of ~~operations~~accounts inwhereby we ~~Spain,~~stock ~~Greece,~~and ~~Russia~~service ~~and~~vending ~~Turkey~~equipment.

~~Bottling~~Over ~~LLC~~the ~~operates~~course inof ~~one~~the ~~industry,~~FSV ~~carbonated~~Rationalization ~~soft~~plan, ~~drinks~~we ~~and~~will ~~other~~incur ~~ready~~a pre-tax charge of $30 to~~-drink~~ $35 ~~beverages~~million, ~~and~~the ~~all~~majority of ~~our~~which ~~segments~~is ~~derive~~non-cash, ~~revenue~~including ~~from~~costs ~~these~~associated ~~products.~~with ~~Since~~the ~~PBG’s~~removal ~~Initial~~of ~~Public~~these ~~Offering~~assets infrom ~~March 1999~~service, wedisposal ~~have~~costs ~~operated~~ and ~~reported~~redeployment ~~under~~expenses. ~~one~~Since ~~reportable~~the ~~segment~~inception ~~and,~~of ~~where~~the program ~~material~~and tothrough ~~our~~March 22, ~~overall results~~2008, ~~provided~~we ~~both~~incurred ~~performance~~a ~~results~~pre-tax ~~and~~charge ~~expected~~of ~~trends~~approximately ~~for~~$24 million ~~volume,~~with a ~~net~~pre-tax ~~revenues,~~cash ~~cost~~charge of ~~sales,~~$1 million ~~selling,~~being ~~delivery~~recorded ~~and~~in ~~administrative~~the ~~expenses~~first ~~and~~quarter ~~operating~~of ~~income~~2008. ~~for each~~This ofpre-tax ~~our~~charge is ~~geographic~~recorded ~~territories~~in ~~(U.S.~~selling, ~~Canada,~~delivery ~~Europe~~ and ~~Mexico)~~administrative ~~and components thereof~~expenses.

Beginning with the fiscal quarter ended March 25, 2006, Bottling LLC changed its financial reporting methodology to three reportable segments – U.S. & Canada, Europe and Mexico. Operationally, the Company is organized along geographic lines with specific regional management teams having responsibility for the financial results in each geographic territory with our Principal Executive Officer and Managing Director monitoring and addressing diverse geographic challenges. See Note ~~10 of our Condensed Consolidated Financial Statements for further discussion~~12—Contingencies ~~on our segments.~~

~~Management’s~~We ~~Financial~~are ~~Review~~subject ~~should~~to bevarious ~~read~~claims inand ~~conjunction~~contingencies ~~with~~related ~~the~~to ~~accompanying~~lawsuits, ~~unaudited~~environmental and ~~financial~~other ~~statements~~matters ~~and~~arising ~~our~~from ~~Annual~~the ~~Report~~normal oncourse ~~Form~~of ~~10-K~~business. ~~for~~We believe that the ~~fiscal~~ultimate ~~year~~liability arising ~~ended~~from ~~December 31~~such claims or contingencies, ~~2005~~ if any, ~~which~~in ~~include~~excess ~~additional~~of ~~information~~amounts ~~about~~already ~~our~~recognized ~~accounting~~is ~~policies,~~not likely ~~practices~~to ~~and~~have ~~the transactions~~a ~~that~~material ~~underlie~~adverse effect on our results of operations, financial ~~results~~condition or liquidity.

~~CRITICAL~~Note ~~ACCOUNTING~~13—Supplemental ~~POLICIES~~Cash Flow Information

The ~~preparation~~table ofbelow ~~our~~presents ~~consolidated financial statements in conformity with U.S. GAAP often requires us to make judgments, estimates and assumptions regarding uncertainties that affect~~ the ~~results~~ ofCompany’s ~~operations,~~supplemental ~~financial position and~~ cash ~~flows~~flow ~~of the Company, as well as the related~~information: footnote disclosures. Management bases its estimates on knowledge of our operations, markets in which we operate, historical trends, and other assumptions. Actual results could differ from these estimates under different assumptions or conditions.

As discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, management considers the Company’s policies on Allowance for Doubtful Accounts, Recoverability of Goodwill and Intangible Assets with Indefinite Lives, Pension and Postretirement Medical Benefit Plans and Income Taxes to be the most important to the portrayal of Bottling LLC’s financial condition and results of operations because they require the use of estimates, assumptions and the application of judgment.


	12 Weeks Ended
	March			March
	22, 2008			24, 2007
Interest paid	$	34		$	38
Income taxes (received) / paid		(1	)		12
Non-cash investing and financing activities:
Decrease in accounts payable related to capital expenditures		(49	)		(30	)
Capital lease additions		1			2
Contribution of acquired entity by PBG		21			—

Effective January 1, 2006, the Company adopted Financial Accounting Standards Board (“FASB”) Statement No. 123 (revised), “Share-Based Payment” (“SFAS 123R”). With the adoption of SFAS 123R, Bottling LLC has added “Share-Based Compensation” as a critical accounting policy.

~~Share-Based~~Note ~~Compensation~~14—Guarantees

~~Among~~PBG ~~its~~has ~~provisions,~~a ~~SFAS~~committed ~~123R~~revolving ~~requires~~credit ~~the~~facility ~~Company~~of to$1.2 billion ~~recognize~~which ~~compensation~~expires ~~expense~~in ~~for PBG~~October 2012. ~~equity~~This ~~awards~~committed ~~over~~credit ~~the~~facility ~~vesting~~is ~~period~~guaranteed ~~based~~by onus ~~their~~and ~~grant-date~~supports ~~fair~~PBG’s ~~value~~$1.2 billion ~~The~~commercial ~~compensation~~paper ~~expense~~program. isPBG ~~recognized~~had ~~only~~$362 million ~~for share-based payments expected to vest~~ and we$50 million ~~estimate forfeitures at the date~~ of ~~grant~~outstanding ~~based~~commercial onpaper ~~the~~at ~~Company’s~~March 22, ~~historical~~2008 ~~experience~~ and December 29, ~~future~~2007, ~~expectations~~respectively.

~~The~~In ~~Company uses the Black-Scholes-Merton option-valuation model to value PBG stock options~~March 1999, ~~which~~ ~~requires the input of subjective assumptions. These assumptions include the length of time employees will retain their vested~~ PBG ~~stock~~issued ~~options~~$1 billion ~~before exercising them (“expected term”), the estimated volatility~~ of ~~PBG’s~~7% ~~stock~~senior ~~price,~~notes ~~risk-free~~due ~~interest rate~~2029, ~~PBG’s~~which ~~expected~~are ~~dividend~~guaranteed ~~yield and~~by ~~PBG’s stock price~~us. ~~The expected term of PBG options is based on historical experience of~~ ~~similar~~We ~~awards,~~also ~~giving~~guarantee ~~consideration~~that to the ~~contractual~~extent ~~terms,~~there ~~vesting~~is ~~schedules~~available ~~and~~cash, ~~expectations of~~we ~~future~~will ~~employee~~distribute ~~behavior.~~pro ~~The~~rata ~~expected~~to ~~term determines the period for which the risk-free~~PBG ~~interest rate~~ and ~~volatility~~PepsiCo ~~must~~sufficient becash ~~applied.~~such ~~The~~that ~~risk-free interest rate is based on~~ the ~~expected U.S.~~aggregate ~~Treasury~~cash ~~rate~~distributed ~~over~~to ~~the~~PBG ~~expected~~will ~~term.~~enable ~~Expected~~PBG ~~stock~~to ~~price volatility is based on a~~pay ~~combination~~its oftaxes, ~~historical~~repurchase ~~volatility~~shares, ofdistribute ~~PBG’s~~dividends ~~stock price~~ and ~~the~~make ~~implied~~interest ~~volatility~~payments offor its ~~traded options.~~internal ~~Dividend~~and ~~yield is management’s long-term estimate of PBG’s annual dividends to be paid as~~external ~~a percentage of its share price~~debt.

For 2006, the impact of adopting SFAS 123R is expected to reduce our operating income by $70 million. Future changes in the subjective assumptions used in the Black-Scholes-Merton option-valuation model or estimates associated with forfeitures could materially affect the share-based compensation expense and consequently, the related amounts recognized in the Condensed Consolidated Statement of Operations.

FINANCIAL PERFORMANCE SUMMARY

	12 Weeks Ended
	March		March		%
	25, 2006		19, 2005		Change
Net revenues	$	2,367	$	2,147		10	%
Gross profit	$	1,114	$	1,031		8	%
Operating income	$	119	$	119		0	%
Net income	$	98	$	88		12	%

For the first quarter of 2006, net income increased 12 percent when compared with the similar period in the prior year. These results included a pre-tax charge of $16 million due to the adoption of SFAS 123R. Our results for the quarter reflected solid volume trends in each reportable segment, coupled with increases in net price per case, which helped drive double digit worldwide revenue growth and contribute to an eight-percent increase in worldwide gross profit. Operating income was flat for the quarter versus the first quarter of 2005 due to the 13-percent negative impact of the Company’s adoption of SFAS 123R.

Worldwide physical case volume increased six percent in the first quarter of 2006 versus the prior year reflecting solid growth across all reportable segments. In the U.S., total volume growth was seven percent primarily due to double-digit growth in our non-carbonated portfolio.

Worldwide net revenue per case grew by four percent during the first quarter of 2006 versus the prior year, driven predominantly by increases in rate, coupled with the favorable impact of foreign currency translation in Mexico. In the U.S., net revenue per case increased three percent due to the favorable pricing environment, which enabled us to implement and maintain a majority of our 2006 rate increases. In Mexico, net revenue per case grew 14Item ~~percent due to the rate increases implemented in the prior year and the favorable impact of foreign currency translation~~2.

~~Worldwide~~MANAGEMENT’S ~~cost~~FINANCIAL ~~of sales per case for the quarter increased six percent versus the prior year~~REVIEW ~~driven primarily by increases in raw material costs and mix shifts into our non-carbonated~~ ~~portfolio, coupled with increases in manufacturing overhead costs. We expect our raw material cost increases to be more pronounced in the first half of 2006.~~

WeTabular ~~were~~dollars ~~able to grow our gross profit per case by two percent~~ in ~~the quarter versus the prior~~millions ~~year, driven by our strong net revenue performance and the favorable impact of foreign currency translation, partially offset by increases in our cost of sales per case.~~

~~Our~~OUR ~~selling, delivery and administrative (“SD&A”) expenses increased nine percent in the first~~BUSINESS quarter versus the prior year, including a two-percent increase due to the adoption of SFAS 123R. In addition to the impact of SFAS 123R, increases in the Company’s SD&A expenses were driven primarily by strong volume growth and wage and benefit increases, coupled with rising fuel and pension costs and investments in high growth European markets.

~~Full~~ Bottling Group, LLC (referred to as “Bottling LLC,” “we,” “our,” “us” and “Company”) is the principal operating subsidiary of The Pepsi Bottling Group, Inc. (“PBG”) and consists of substantially all of the operations and the assets of PBG. We have the exclusive right to manufacture, sell and distribute Pepsi-~~Year~~Cola ~~2006~~beverages ~~Outlook~~in all or a portion of the U.S., Mexico, Canada, Spain, Russia, Greece and Turkey.

InWe ~~2006~~operate in one industry, ~~our~~carbonated ~~fiscal~~soft ~~year~~drinks ~~will~~and ~~consist~~other ofready-to-drink ~~52 weeks~~beverages, ~~while~~and ~~fiscal~~all of ~~year~~our ~~2005~~segments ~~consisted~~derive ofrevenue ~~53 weeks.~~from ~~Our~~these Uproducts.S. ~~and~~We ~~Canadian~~manage ~~operations~~and report onoperating aresults ~~fiscal year that consists of 52 weeks,~~through ~~ending~~three onreportable ~~the~~segments ~~last~~— ~~Saturday in December~~U.S. ~~Every~~& ~~five~~Canada, orEurope ~~six~~(which ~~years~~includes aSpain, ~~53rd~~Russia, ~~week~~Greece ~~is added.~~and ~~Our~~Turkey) ~~other~~and ~~countries~~Mexico. ~~report~~Operationally, onthe aCompany ~~calendar-year~~is ~~basis.~~organized Inalong ~~order~~geographic tolines ~~provide~~with ~~comparable guidance for~~specific ~~2006,~~regional wemanagement ~~have~~teams ~~identified~~having ~~the~~responsibility ~~impact~~for ~~that~~ the ~~53rd~~financial ~~week~~results in ~~2005~~each ~~has on our growth rates in the table~~reportable ~~below~~segment.

~~Additionally,~~Management’s asFinancial ~~discussed~~Review inshould ~~Note~~be 3read in conjunction with the ~~Notes~~unaudited toCondensed Consolidated Financial Statements and the accompanying notes and our Annual Report on Form 10-K for the fiscal year ended December 29, 2007, which include additional information about our accounting policies, practices and the transactions that underlie our financial results. The preparation of our Condensed Consolidated Financial Statements, ~~the~~in ~~Company~~conformity ~~adopted~~with ~~SFAS~~accounting ~~123R~~principles generally accepted in the ~~first~~United ~~quarter~~States of ~~2006~~America (“U.S. ~~SFAS~~GAAP”) ~~123R~~ requires ~~that~~us to make estimates and ~~all~~assumptions ~~stock-based~~that ~~payments~~affect bethe ~~expensed~~reported ~~based~~amounts onin our Condensed Consolidated Financial Statements and the ~~fair~~accompanying ~~value~~notes, including various claims and contingencies related to lawsuits, taxes, environmental and other matters arising out of the ~~awards~~normal course of business. InWe ~~accordance~~use ~~with~~our best ~~existing~~judgment, ~~accounting~~our ~~guidelines,~~knowledge ~~the~~of ~~Company~~existing ~~did~~facts ~~not~~and ~~recognize~~circumstances ~~compensation~~and ~~expense~~actions ~~for~~that ~~stock~~we may undertake in ~~options~~the ~~during~~future, ~~fiscal~~in ~~year~~determining ~~2005~~the estimates that affect our Condensed Consolidated Financial Statements.

~~Bottling~~OUR ~~LLC’s~~CRITICAL ~~full-year~~ACCOUNTING ~~2006 guidance is unchanged from its previous guidance discussed in~~POLICIES ~~our Annual Report on Form 10-K for the fiscal year ended December 31, 2005. The highlights of that discussion are described in the table below:~~

		Forecasted 2006 versus
		2005 growth
Worldwide Volume (1)		2%
U.S. Volume (1)		Flat to 1%
Operating Income (2)		(2%) to (4%)

The preparation of our consolidated financial statements in conformity with U.S. GAAP often requires management to make judgments, estimates and assumptions that affect a number of amounts included in our financial statements and related disclosures. We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and financial position and have based our estimates on historical experience and other assumptions that we believe are reasonable. Actual results may differ from these estimates.

(1)		The additional week of volume as a result of the 53rd week in 2005 reduced our worldwide and U.S. volume growth in 2006 by one percentage point.
(2)		The impact of adopting SFAS 123R will result in a seven percentage point reduction in our operating income.

As discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2007, management believes the following policies to be the most critical to the portrayal of Bottling LLC’s financial condition and results of operations and require the use of estimates, assumptions and the application of judgment:

•

Other Intangible Assets, net and Goodwill;

•

Pension and Postretirement Medical Benefit Plans; and

•

Income Taxes.

~~First~~OUR ~~Quarter~~FINANCIAL ~~2006 Results~~RESULTS

~~Volume~~ITEMS AFFECTING COMPARABILITY OF OUR FINANCIAL RESULTS

				12 Weeks Ended
				March 25, 2006 vs.
				March 19, 2005
	World-			U.S. &
	wide			Canada			Europe			Mexico
Base volume		5	%		6	%		4	%		5	%
Acquisitions		1	%		1	%		0	%		0	%
Total Volume change		6	%		7	%		4	%		5	%

The year-over-year comparisons of our financial results are affected by the following items included in our reported results for the 12 weeks ended:

Our reported worldwide physical case volume increased six percent in the first quarter of 2006 versus the prior year, driven by strong growth across all of our reportable segments.


	March
Income/(Expense)	22, 2008
Gross profit
PR Beverages	$	(4	)
Operating income
PR Beverages		(4	)
Restructuring and Full Service Vending Rationalization charges		(3	)

In2008 ~~our U.S. & Canada segment, volume increased seven percent.~~Items

~~Excluding~~PR ~~the~~Beverages ~~impact~~Limited of(“PR ~~acquisitions, volume in the U.S. increased six percent versus the~~Beverages”) ~~prior year, reflecting a six-percent increase in both our take-home channel and our cold drink~~ channel. Volume increases in our take-home channel were attributable to strong results across our large format businesses. Increases in our cold drink channel were driven by strong results in both our convenience and gas business and our foodservice businesses.

~~From~~On aMarch 1, ~~brand perspective~~2007, ~~our~~together ~~carbonated~~with ~~soft~~PepsiCo ~~drink~~we ~~(“CSD”)~~formed ~~portfolio~~PR inBeverages, ~~the~~a ~~U.S.~~venture ~~grew~~that will enable us ~~approximately~~to ~~one~~strategically ~~percent~~invest ~~due~~in ~~primarily~~Russia to accelerate our ~~flavored~~growth. ~~CSD~~Bottling ~~portfolio~~LLC ~~which~~contributed ~~included~~its abusiness in ~~seven-percent~~Russia ~~increase~~to inPR ~~Trademark~~Beverages ~~Mountain~~and ~~Dew.~~PepsiCo Inentered ~~addition,~~into ~~our~~bottling ~~diet~~agreements ~~CSD~~with ~~portfolio~~PR ~~increased~~Beverages for ~~three~~PepsiCo ~~percent~~beverage products sold in ~~the~~Russia ~~quarter.~~on ~~Our~~the ~~non-carbonated~~same ~~portfolio~~terms as in ~~the~~effect ~~U.S.~~for ~~grew~~Bottling ~~approximately 30~~LLC ~~percent,~~immediately ~~driven~~prior byto ~~broad-based~~the ~~growth~~venture. ~~across~~PepsiCo ~~the~~also ~~category~~granted ~~including~~PR ~~growth~~Beverages inan ~~Aquafina, Lipton,~~exclusive ~~Tropicana~~license to manufacture and ~~Frappuccino~~sell the concentrate for such products.

InWe ~~Canada,~~fully ~~overall~~consolidate ~~volume~~PR ~~growth~~Beverages ofinto ~~four~~our ~~percent~~financial ~~versus~~statements ~~the~~and ~~prior~~record ~~year~~minority ~~was driven primarily by~~interest ~~strong~~for ~~growth~~PepsiCo’s in40 percent ~~the~~ownership ~~cold~~interest. ~~drink~~Increases ~~channel~~or ~~and~~decreases ~~positive~~in ~~volume~~operating inresults resulting from the ~~take-home~~consolidation ~~channel.~~of ~~These results~~the ~~were~~venture ~~driven~~are ~~largely~~offset by ~~double-digit~~minority ~~growth~~interest inrelated ~~Trademark~~to ~~Aquafina,~~PepsiCo’s ownership ~~coupled~~interest. ~~with growth~~Minority ininterest ~~other~~is ~~non-carbonated~~recorded ~~brands~~below operating income.

InRestructuring ~~our Europe segment, overall volume grew four percent versus the prior year, driven~~Charges ~~primarily by strong increases in Russia, which was generated primarily by growth in Trademark Pepsi and in our bottled water brand, Aqua Minerale.~~

In ~~our~~the ~~Mexico~~third ~~segment~~quarter of 2007, ~~overall~~we ~~volume~~announced ~~increased~~a ~~five~~restructuring ~~percent~~program ~~versus~~(the “Organizational Realignment”) to realign the ~~prior~~Company’s ~~year,~~organization ~~driven~~to ~~by gains~~adapt into ~~our~~changes ~~water~~in ~~business~~the marketplace, ~~coupled~~improve operating ~~with~~efficiencies ~~positive~~and ~~improvement~~enhance inthe ~~our~~growth ~~CSD~~potential of the Company’s product portfolio. ~~Volume~~During the ~~growth~~first quarter of 2008, we substantially completed the Organizational Realignment, which resulted in ~~our~~the ~~water~~elimination ~~business~~of ~~included~~approximately ~~jug~~800 ~~water~~positions ~~growth~~to date across all of ~~five~~our ~~percent~~reporting segments. ~~and~~We ~~growth~~expect to recognize annual cost savings of 20approximately $30 ~~percent~~million ~~in our~~as ~~bottled~~a ~~water~~result ~~brand,~~of the ~~Epura~~program.

Substantially all costs associated with the Organizational Realignment required or will require cash payments. The total cash expenditures, including payments made pursuant to existing unfunded indemnity plans, are expected to be approximately $31 million, of which $20 million has been recognized since the inception of the program and through March 22, 2008.

Full Service Vending Rationalization

During 2007, we adopted a Full Service Vending (“FSV”) Rationalization plan, which we expect to substantially complete by the end of the second quarter of 2008, to rationalize our vending asset base in our U.S. & Canada segment by disposing older underperforming assets and redeploying certain assets to higher return accounts. Our FSV business portfolio consists of accounts whereby we stock and service vending equipment. Over the course of the FSV Rationalization plan, we will incur a pre-tax charge of $30 to $35 million, the majority of which is non-cash, including costs associated with the removal of these assets from service, disposal costs and redeployment expenses. This plan is part of the Company’s broader initiative designed to improve operating income margins of our FSV business.

~~Net~~ During ~~Revenues~~the first quarter of 2008, we incurred a pre-tax charge of approximately $1 million associated with the FSV Rationalization plan, which is recorded in selling, delivery and administrative expenses.

				12 Weeks Ended
				March 25, 2006 vs.
				March 19, 2005
	World-			U.S. &
	wide			Canada			Europe			Mexico
Volume impact		5	%		6	%		4	%		5	%
Net price per case impact (rate/mix)		3	%		3	%		2	%		7	%
Acquisitions		1	%		1	%		0	%		0	%
Currency translation		1	%		0	%		(4	)%		7	%
Total Net Revenues change		10	%		10	%		2	%		19	%

For further information about our restructuring charges and FSV Rationalization see Note 11 in the Notes to Condensed Consolidated Financial Statements.

~~Net~~FINANCIAL ~~revenues~~PERFORMANCE ~~were~~SUMMARY ~~$2.4 billion~~AND ~~for~~WORLDWIDE ~~the~~FINANCIAL ~~first quarter of 2006, a 10-percent increase over the~~HIGHLIGHTS similar period in the prior year. The increase in net revenues for the quarter was driven primarily by volume growth and increases in net price per case, coupled with acquisitions and the favorable impact of foreign currency translation. In the first quarter of 2006, our U.S. & Canada segment generated the majority of our revenues, at approximately 86 percent of our worldwide revenues. Our Europe segment generated six percent of our revenues and Mexico generated the remaining eight percent.

In the U.S. & Canada segment, net revenues increased 10 percent in the first quarter of 2006 versus the prior year, reflecting strong volume growth and increases in net price per case, driven primarily by rate improvements.


	12 Weeks Ended
	March		March		%
	22, 2008		24, 2007		Change
Net revenues	$	2,651	$	2,466		7	%
Cost of sales		1,482		1,343		10
Gross profit		1,169		1,123		4
Selling, delivery, and administrative expenses		1,063		1,004		6
Operating income		106		119		(11	)
Net income		98		102		(5	)

InThe ~~Europe~~impact of foreign currency translation, ~~strong~~driven ~~volume~~by ~~growth~~the ~~and~~strength ~~increases~~of inall ~~net~~our ~~price~~foreign functional ~~per~~currencies, ~~case~~contributed ~~were~~approximately ~~partially~~three ~~offset~~percentage ~~by the~~points ~~negative~~of ~~impact~~growth in worldwide net revenues, cost of ~~foreign~~sales ~~currency~~and ~~translation~~selling, ~~for~~delivery ~~the~~and ~~first~~administrative ~~quarter~~expenses ofand ~~2006~~contributed ~~when~~two percentage ~~compared~~points to gross profit. Foreign currency translation decreased worldwide operating ~~the~~income ~~prior~~by ~~year~~approximately three percentage points.

Net revenues in— ~~Mexico~~Growth ~~grew~~of ~~approximately~~seven 19 percent inreflected ~~the~~positive ~~first~~growth ~~quarter~~across ofall ~~2006~~segments ~~versus the prior year~~ driven ~~primarily~~ by ~~net price per case increases,~~ volume ~~growth~~ and ~~the favorable impact of foreign currency translation. Increases in net price per case were driven predominantly by~~ rate ~~increases~~ ~~implemented in the latter part of the prior year~~increases.

Cost of sales — Increase of 10 percent primarily attributable to higher raw material costs.

Gross profit — Growth of four percent reflected volume and rate increases which were partially offset by a mix shift into lower margin packages in the U.S. & Canada segment and higher raw material costs worldwide.

Selling, delivery and administrative (“SD&A”) expenses — Increase of six percent includes investment in our operating infrastructure in Europe mitigated by continued cost productivity improvements and disciplined cost management.

Operating income — Decrease of 11 percent includes a four percentage point negative impact from the consolidation of PR Beverages, a three percentage point negative impact from foreign currency translation and a two percentage point negative impact from the restructuring and FSV Rationalization charges. Negative mix shifts in the U.S. & Canada segment primarily drove the remaining decrease partially offset by volume and rate increases and cost productivity improvements across all segments.

Net income — Decrease of five percent reflected lower operating income, partially offset by lower interest expense.

~~Cost~~2008 ofRESULTS ~~Sales~~OF OPERATIONS

	12 Weeks Ended
	March 25, 2006 vs.
	March 19, 2005
	Worldwide
Volume impact		5	%
Cost per case impact		5	%
Acquisitions		1	%
Currency translation		1	%
Total Cost of Sales change		12	%

Tables and discussion are presented as compared to the similar periods in the prior year. Growth rates are rounded to the nearest whole percentage.

~~Cost of sales was $1.3 billion in the first quarter of 2006, a 12-percent increase over the~~Volume prior year. The growth in cost of sales was driven primarily by volume growth and cost per case increases, coupled with contributions from our prior year acquisitions and the negative impact of foreign currency translation.

In the U.S. & Canada segment, cost of sales increased 13 percent when compared to the prior year driven primarily by volume growth and increases in cost per case. The increases in cost per case resulted from rate increases in packaging and ingredients, coupled with the impact of mix shifts into higher cost products and the negative impact of foreign currency translation.


	12 Weeks Ended
	March 22, 2008 vs. March 24, 2007
	Worldwide			U.S. & Canada			Europe			Mexico
Total volume change		2	%		2	%		7	%		2	%

InOur ~~Europe,~~worldwide ~~cost~~physical ofcase ~~sales~~volume ~~grew~~increased ~~modestly~~two ~~over~~percent in the ~~prior~~first ~~year,~~quarter ~~reflecting~~primarily ~~volume~~due ~~growth~~to the ~~and~~shift ~~cost per~~of ~~case~~the ~~increases,~~Easter ~~partially~~holiday ~~offset~~into bythe first quarter in 2008 versus the ~~favorable~~second ~~impact~~quarter ofin ~~foreign~~2007 (“Easter ~~currency~~shift”) ~~translation~~in our U.S. & Canada segment.

In ~~Mexico,~~our ~~cost~~U.S. of& ~~sales~~Canada ~~increased~~segment, ~~versus~~volume ~~the~~increased ~~prior~~two ~~year,~~percentage points driven by ~~cost~~the ~~per~~Easter shift. ~~case~~The ~~increases~~Easter shift particularly benefited our take home channel which increased four percent, ~~strong~~driven ~~volume~~primarily by growth in supermarkets, supercenters and mass merchandisers. This increase was offset by a two percent decline in the ~~negative~~cold ~~impact~~drink ofchannel, ~~foreign~~partially ~~currency~~due ~~translation~~to declines in our foodservice channel, including restaurants, travel and leisure, and workplace, which has been particularly impacted by the economic downturn in the U.S. ~~Cost~~Cold ~~per~~drink ~~case~~volume was also negatively ~~increases~~impacted ~~were~~by ~~primarily~~the ~~due~~actions we took to ~~higher~~eliminate ~~manufacturing~~low-returning ~~overhead~~assets ~~costs~~in our full service vending business. These actions lowered our cold drink volume by about one percentage point.

In our Europe segment, overall volume grew seven percent as a result of solid growth in all countries. Russia continued to lead Europe with volume growth of 13 percent reflecting strong performance in CSDs and non-carbonated beverages.

In our Mexico segment, the two percentage point growth reflected a strong performance in our CSD and bottled water portfolios, partially offset by declines in non-carbonated beverage and jugs volume.

Net Revenues


	12 Weeks Ended
	March 22, 2008 vs. March 24, 2007
	Worldwide			U.S. & Canada			Europe			Mexico
Volume impact		2	%		2	%		7	%		2	%
Net price per case impact		2			1			12			7
Currency translation		3			2			15			1

Total Net Revenues change		7	%		5	%		34	%		10	%

Worldwide net revenues were $2.7 billion in the first quarter, increasing seven percent. The increase reflected growth in volume, net price per case and foreign currency translation.

In our U.S. & Canada segment, increases in net revenues were driven by net price per case improvement of three percentage points which includes a two percentage point impact from foreign currency translation. The improvement of net price per case was partially offset by a negative mix shift into our lower margin take home channel as a result of the Easter shift and declines in the cold drink channel.

In our Europe segment, growth across all countries in net revenues reflected strong increases in net price per case, volume and the positive impact of foreign currency translation. Growth in Europe was led by strong double-digit growth in Russia and Turkey.

In our Mexico segment, growth in net revenues reflected strong increases in net rate per case and improving volume trends.

In the first quarter, our U.S. & Canada segment generated approximately 83 percent of our worldwide net revenues. Our Europe segment generated nine percent of our net revenues and Mexico generated the remaining eight percent.

Cost of Sales


	12 Weeks Ended
	March 22, 2008 vs.
	March 24, 2007
	Worldwide
Volume impact		2	%
Cost per case impact		5
Currency translation		3

Total Cost of Sales change		10	%

Worldwide cost of sales was $1.5 billion in the first quarter of 2008, increasing 10 percent. The increase in cost of sales across all segments was mainly due to cost per case increases resulting from higher raw material costs and the negative impact of foreign currency translation.

Selling, Delivery and Administrative Expenses

	12 Weeks Ended
	March 25, 2006 vs.
	March 22, 2008 vs.
	March 19, 2005
	March 24, 2007
	Worldwide
Cost impact		63	%
Adoption of SFAS 123R		2	%
Restructuring and Full Service Vending Rationalization charges		0
Acquisitions		0	%
Currency translation		3
Currency translation		1	%
Total SD&A change		6	%
Total SD&A change		9	%

Worldwide SD&A expenses were $~~995~~1.1 ~~million~~billion in the first quarter of ~~2006~~2008, aincreasing ~~nine-percent~~six ~~increase~~percent. ~~over~~Increases ~~the~~in ~~prior~~worldwide ~~year.~~SD&A ~~Across~~expenses ~~all~~reflect ~~segments,~~investment ~~increases~~in our operating infrastructure in Europe ~~SD&A~~and ~~expenses~~the impact of foreign currency translation. These increases were ~~driven primarily~~partially offset by cost ~~strong~~productivity ~~volume~~improvements ~~growth~~and ~~which~~disciplined ~~impacted~~cost ~~the~~management. ~~variable~~The ~~components~~restructuring ofand FSV Rationalization charges added less than one percentage point to our total SD&A expenses~~, higher~~. ~~wage~~In ~~and~~the U.S. ~~benefit~~& ~~costs~~Canada ~~and~~segment, ~~the~~SD&A ~~impact~~expenses ofincreased ~~SFAS~~three ~~123R.~~percentage ~~These~~points ~~increases~~compared ~~were~~to ~~coupled~~the ~~with~~same period ~~higher~~last ~~pension~~year, ~~and~~driven ~~fuel~~primarily ~~costs~~by ~~and~~foreign ~~planned~~currency ~~investment~~translation ~~spending~~and reflects incontinued ~~high~~cost ~~growth~~productivity ~~European~~improvements ~~markets~~and disciplined cost management.

Operating Income

Worldwide operating income ofwas $~~119~~106 million in the first quarter of ~~2006~~2008, ~~was~~decreasing ~~unchanged when~~11 percent compared to athe ~~comparable~~similar period inlast ~~2005~~year. ~~Our~~Decreases ~~results~~in ~~were~~worldwide ~~driven~~operating byincome ~~strong~~primarily ~~gross~~reflect ~~profit~~a infour ~~our~~percentage ~~U.S.~~point &negative ~~Canada~~impact ~~and~~from ~~Mexico~~the ~~segments~~consolidation ~~mainly~~of ~~due~~PR Beverages, a three topercentage ~~double-digit~~point ~~revenue~~negative ~~growth,~~impact ~~offset~~from byforeign ~~the~~currency ~~13-percent~~translation ~~negative~~and a two percentage point negative impact offrom ~~adopting~~the ~~SFAS~~restructuring ~~123R~~ and ~~higher~~FSV ~~SD&A~~Rationalization ~~expenses~~charges. Negative mix shifts in ~~our~~the U.S. ~~Europe~~& Canada segment ~~attributable~~primarily todrove ~~higher~~the ~~investment~~remaining decrease partially offset by volume and rate ~~spending~~increases and cost productivity improvements across all segments.

In our U.S. & Canada segment, operating income decreased six percent primarily due to cost per case increases resulting from higher raw material costs, a negative mix shift into our lower margin take home channel as a result of the Easter shift, declines in the cold drink channel and a two

percentage point impact from the restructuring and FSV Rationalization charges, partially offset by cost productivity improvements.

In our Europe segment, operating loss increased 23 percent primarily due to the negative impact of consolidating PR Beverages, foreign currency translation and investment activity which drove higher losses in the quarter due to the seasonality of our business in this segment.

In our Mexico segment, operating income increased $1 million, due primarily to strong gross profit improvement.

Interest Expense

Interest expense ~~increased~~decreased approximately $56 million ~~in the first quarter of 2006 versus the prior year,~~ largely due to ~~higher~~lower effective interest rates ~~from~~on ~~interest rate swaps, which convert our fixed~~long-~~rate~~term debt due to ~~variable-~~interest rate ~~debt~~swaps.

Interest Income

Interest income ~~increased~~decreased approximately $163 million, ~~driven~~largely ~~primarily~~due byto ~~higher~~lower effective interest rates ~~coupled~~on ~~with additional~~ loans made to PBG.

Other Non-operating (Income) Expenses, net

Other net non-operating income was $2 million in the first quarter of 2008 as compared to $1 million of net non-operating expenses in the first quarter of 2007. Income in 2008 was primarily a result of foreign exchange gains due to the strength of the Russian ruble and Mexico peso.

Minority Interest

In 2008, minority interest primarily reflects PepsiCo’s 40 percent ownership in the PR Beverages venture. The remaining balance represents minority interest for entities consolidated by Bottling LLC.

Income Tax Expense

~~Bottling~~We ~~LLC~~are is a limited liability company, classified as a partnership for U.S. tax purposes and, as such, generally ~~pays~~will nopay limited U.S. federal, or state and local income taxes. ~~The~~Our federal and state distributive shares of income, deductions and credits ~~of Bottling LLC~~ are allocated to ~~Bottling LLC’s~~our owners based on their percentage ~~ownership~~of ~~in Bottling LLC~~ownership. However, certain domestic and foreign affiliates pay ~~income~~ taxes in their respective jurisdictions. ~~Such~~and ~~amounts~~record ~~are~~related ~~reflected in~~deferred ~~our~~income ~~Consolidated Statements of Operations. Our effective~~ tax ~~rate~~assets ~~for~~and ~~the 12 weeks ended March~~liabilities. ~~25,~~

21 Our effective tax rate for the 12 weeks ended March 22, 2008 was 7.1%, compared with our effective tax rate of 5.8% for the 12 weeks ended March 24, 2007. The increase in our effective tax rate in the first quarter is primarily driven by the timing of recording discrete items.

~~Table~~LIQUIDITY ofAND ~~Contents~~FINANCIAL CONDITION

2006 and March 19, 2005 was 4.9% and 4.5%, respectively. The increase in our effective tax rate versus the prior year is due largely to an increase in withholding taxes associated with our international transactions.

Liquidity and Financial Condition

Cash Flows

In the first quarter of ~~2006,~~2008 Bottling LLC generated $~~216~~111 million of net cash ~~provided~~from by operations, a ~~which~~decrease ~~was~~of $97123 million ~~higher~~from ~~than the cash generated in the comparable period in 2005~~2007. The ~~increase~~decrease in net cash provided by operations was driven primarily by ~~strong~~lower ~~operating~~interest ~~profits~~income ~~before non-cash~~received ~~charges~~from ~~and credits~~PBG, ~~coupled~~lower ~~with~~profits ~~higher~~and ~~interest~~investment ~~income~~in ~~received~~our ~~from~~hydration strategy, ~~PBG~~partially ~~and~~offset ~~the~~by timing of ~~pension~~inventory ~~contributions~~purchases and lower tax payments.

InNet ~~the first quarter of 2006,~~ cash used for investments was $~~367~~181 million, ~~which~~a isdecrease of $~~156~~ 130 million ~~higher~~from ~~than the cash used for investments in the comparable period in 2005~~2007. The ~~increase~~ decrease in cash used for investments reflects anhigher ~~increase~~net inissuances of notes receivable from PBG ~~and higher capital~~in ~~spending,~~the ~~primarily~~prior asyear aand ~~result~~lower ofacquisition ~~timing~~payments, ofpartially ~~our~~offset ~~fleet~~by ~~spending~~higher inpayments ~~the~~for Ucapital expenditures.S.

InNet ~~the~~cash ~~first~~provided ~~quarter~~by offinancing ~~2006,~~activities wewas ~~used~~ $527 million, ~~for~~an ~~financing~~increase ~~activities as compared with a source~~ of $4923 million inversus prior ~~the comparable period of 2005~~year. This ~~decrease~~increase in cash from financing ~~is driven~~reflects ~~primarily by the repayment of our Turkish debt and the lapping of the 2005 debt issuance in Turkey, partially offset by~~ higher short- term borrowings.

~~For~~22 ~~the full year 2006, we expect capital expenditures to be approximately $735 million.~~

Liquidity and Capital Resources

WeOur ~~believe~~principal ~~that~~sources ~~our~~of ~~future~~ cash ~~flows~~come from ~~operations~~our operating activities and ~~borrowing~~the ~~capacity~~issuance of debt and bank borrowings. We believe that these cash inflows will be sufficient to fund capital expenditures, benefit plan contributions, acquisitions and working capital requirements for PBG and us for the foreseeable future. Our liquidity has not been materially impacted by the current credit environment.

InOur ~~March 2006, PBG entered into a~~ $450 million committed revolving credit facility (“2006 Agreement”) which expires in March 2011 and increased their existing facility, which expires in April 2009, from $500 million to $550 million. PBG’s $1.3 billion of ~~committed credit facilities, are guaranteed by us and support PBG’s $1~~5.63 ~~billion~~percent ~~commercial~~senior ~~paper~~notes ~~program.~~will ~~Subject~~become todue ~~certain conditions stated~~ in ~~the 2006 Agreement, PBG may borrow, prepay and reborrow amounts under the 2006 Agreement at any time during the term of the 2006 Agreement~~February 2009. ~~Funds~~We ~~borrowed~~plan ~~may be used for~~to ~~general~~refinance ~~corporate~~these ~~purposes, including supporting the commercial paper program~~notes. ~~The 2006 Agreement~~ ~~also provides that standby letters of credit may be issued on behalf of PBG up to $250 million.~~

~~The~~On ~~2006~~March 20, ~~Agreement~~2008, ~~contains~~together ~~customary~~with ~~representations~~PepsiCo, ~~warranties~~we ~~and~~announced ~~events~~the ofjoint ~~default~~acquisition of 75.5 percent in Russia’s leading branded juice company JSC Lebedyansky (“Lebedyansky”) for $1.4 billion, ~~addition~~excluding the company’s baby food and mineral water business. As announced, PepsiCo will acquire 75 percent and PBG will acquire 25 percent of the 75.5 percent stake. We plan to ~~certain~~fund ~~financial~~the ~~covenants~~acquisition using money loaned from PBG’s commercial paper program and cash provided by operations. The acquisition ~~2006~~is ~~Agreement~~expected to be completed during the second half of our fiscal year 2008 and is subject ~~attached~~to normal local regulatory approvals and the demerger of the baby food business. Additionally, together with PepsiCo, we expect to tender ~~this~~for ~~Form~~the ~~10-Q~~remaining 24.5 percent ownership of Lebedyansky’s juice business. PBG and PepsiCo’s tender for Lebedyansky’s remaining shares will continue to be purchased 25 percent and 75 percent, respectively.

PBG had $405 million and $355 million outstanding in commercial paper, at March 25, 2006 and December 31, 2005, respectively.

Contractual Obligations

As of March 2522, ~~2006~~2008, there have been no material changes outside the normal course of business in the contractual obligations disclosed in Item 7 to our Annual Report on Form 10-K for the fiscal year ended December 3129, ~~2005~~2007, under the caption “Contractual Obligations.”.

22Off-Balance Sheet Arrangements

For information about our off-balance sheet arrangements see Note 14 in the Notes to Condensed Consolidated Financial Statements.

~~Cautionary~~CAUTIONARY ~~Statements~~ STATEMENTS

Except for the historical information and discussions contained herein, statements contained in this Form 10-Q may constitute forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on currently available competitive, financial and economic data and our operating plans. These statements involve a number of risks, uncertainties and other factors that could cause actual results to be materially different. Among the events and uncertainties that could adversely affect future periods are:

• changes in our relationship with PepsiCo; • PepsiCo’s ability to affect matters concerning us through its equity ownership of PBG and Bottling LLC, representation on PBG’s 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 ~~have~~increase aour costs; • material ~~adverse~~changes ~~effect~~from expectations in the cost or availability of raw materials, ingredients or packaging materials; • limitations on ~~our~~the ~~long-term~~availability of water or obtaining water rights; • an inability to achieve cost savings; • material changes in capital investment for infrastructure and ~~short~~an inability to achieve the expected timing for returns on cold-~~term~~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 ~~financial~~regulations; ~~results~~• 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 PBG sponsored pension plans; and • an inability to achieve strategic business plan targets that could result in a non-cash intangible asset impairment charge.

~~• material changes in expected levels of bottler incentive payments from PepsiCo;~~24

• restrictions imposed by PepsiCo on our raw material suppliers that could increase our costs;

• material changes from expectations in the cost or availability of raw materials, ingredients or packaging materials;

• limitations on the availability of water or obtaining water rights;

• an inability to achieve cost savings;

• material changes in capital investment for infrastructure and an inability to achieve the expected timing for returns on cold-drink equipment and related infrastructure expenditures;

• decreased demand for our product resulting from changes in consumers’ preferences;

• an inability to achieve volume growth through product and packaging initiatives;

• impact of competitive activities on our business;

• impact of customer consolidations on our business;

• changes in product category consumption;

• unfavorable weather conditions in our markets;

• an inability to meet projections for performance in newly acquired territories;

• loss of business from a significant customer;

• failure or inability to comply with laws and regulations;

• changes in laws, regulations and industry guidelines governing the manufacture and sale of food and beverages, including restrictions on the sale of carbonated soft drinks in schools;

• litigation, other claims and negative publicity relating to the alleged unhealthy properties of soft drinks;

• changes in laws and regulations governing the environment, transportation, employee safety, labor and government contracts;

• changes in accounting standards and taxation requirements (including unfavorable outcomes from audits performed by various tax authorities);

• unforeseen economic and political changes;

• possible recalls of our products;

• interruptions of operations due to labor disagreements;

• changes in our debt ratings;

• material changes in expected interest and currency exchange rates and unfavorable market performance of PBG’s pension plan assets; and

• an inability to achieve strategic business plan targets that could result in an intangible asset impairment charge.

Item 3. ~~Quantitative and Qualitative Disclosures About Market Risk~~

~~The~~QUANTITATIVE ~~overall~~AND ~~risks~~QUALITATIVE toDISCLOSURES ~~our~~ABOUT ~~international~~MARKET ~~businesses include changes in foreign governmental~~RISK ~~policies and other political or economic developments. These developments may lead to new product~~ pricing, tax or other policies and monetary fluctuations, which may adversely impact our business. In addition, our results of operations and the value of our foreign assets are affected by fluctuations in foreign currency exchange rates. Foreign currency gains and losses reflect transaction gains and losses as well as translation gains and losses arising from the re-measurement into U.S. dollars of the net monetary assets of businesses in highly inflationary countries. There have been no material changes to our market risks as disclosed in Item 7 to our Annual Report on Form 10-K for the year ended December 31, 2005.

There have been no material changes to our market risks as disclosed in Item 4.7 to our Annual ~~Controls~~Report ~~and~~on ~~Procedures~~Form 10-K for the year ended December 29, 2007.

Item 4.

CONTROLS AND PROCEDURES

Bottling LLC’s management carried out an evaluation, as required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), with the participation of our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of our disclosure controls and procedures, as of the end of our last fiscal quarter. Based upon this evaluation, the Principal Executive Officer and the Principal Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q, such that the information relating to Bottling LLC and its consolidated subsidiaries required to be disclosed in our Exchange Act reports filed with the SEC (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to Bottling LLC’s management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In addition, Bottling LLC’s management carried out an evaluation, as required by Rule 13a-15(d) of the Exchange Act, with the participation of our Principal Executive Officer and our Principal Financial Officer, of changes in Bottling LLC’s internal control over financial reporting. Based on this evaluation, the Principal Executive Officer and the Principal Financial Officer concluded that there were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2425

PART II — OTHER INFORMATION

Item 6. ~~Exhibits~~

Exhibit No.
4.1		Indenture, dated as of March 30, 2006 by and between Bottling Group, LLC, as Obligor and JPMorgan Chase Bank, N.A., as Trustee relating to $800,000,000 5.50% Senior Notes due April 1, 2016.
4.2		Form of Note for the $800,000,000 5.50% Senior Notes due April 1, 2016.
10.1		$450,000,000 5-Year Credit Agreement dated as of March 22, 2006 among, The Pepsi Bottling Group, Inc., Bottling Group, LLC, Citibank, N.A., as Agent, Citigroup Global Markets Inc and HSBC Securities (USA) Inc., as joint lead arrangers and joint book managers; HSBC Bank USA, N.A., as syndication agent; and Lehman Brothers Bank, FSB, Deutsche Bank AG New York Branch, and JPMorgan Chase Bank, National Association, as co-documentation agents.
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		Financial statements of PBG, which are incorporated herein by reference to PBG’s Quarterly Report on Form 10-Q for the quarter ended March 25, 2006, as required by the SEC as a result of our guarantee of up to $1,000,000,000 aggregate principal amount of our 7% Senior Notes due in 2029.

EXHIBITS


EXHIBIT NO.		DESCRIPTION OF EXHIBIT
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. Form 10-Q for the quarterly period ended March 22, 2008, as required by the SEC as a result of our guarantee of up to $1,000,000,000 aggregate principal amount of PBG’s 7% Senior Notes due in 2029

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		BOTTLING GROUP, LLC
	BOTTLING GROUP, LLC (Registrant)
		(Registrant)
Date: April 28, 2008	/s/ Thomas M. Lardieri
Date: April 28, 2006			/s/ Andrea L. Forster
	Thomas M. Lardieri
			Andrea L. Forster
	Principal Accounting Officer and Managing Director
			Principal Accounting Officer
Date: April 28, 2008	/s/ Alfred H. Drewes
Date: April 28, 2006			/s/ Alfred H. Drewes
	Alfred H. Drewes
			Alfred H. Drewes
	Principal Financial Officer
			Senior Vice President and
			Principal Financial Officer

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