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 2221, ~~2008~~2009 (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 of Registrant as Specified in Its Charter)

Delaware		13-4042452
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)
One Pepsi Way, Somers, New York		10589
(Address of Principal Executive Offices)		(Zip Code)

914-767-6000

(Registrant’s Telephone Number, Including Area Code)

N/A

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o
		(Do not check if a smaller reporting company)

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.		~~Page No.~~
Part I	Financial Information	~~Financial Information~~
Item 1.	~~Item~~Financial 1.Statements	~~Financial Statements~~
		Condensed Consolidated Statements of Operations - 12 weeks ended March 22, 2008 and March 24, 2007			2
	Condensed Consolidated Statements of Operations — 12 weeks ended March 21, 2009 and March 22, 2008		2
		Condensed Consolidated Statements of Cash Flows - 12 weeks ended March 22, 2008 and March 24, 2007			3
	Condensed Consolidated Statements of Comprehensive (Loss) Income — 12 weeks ended March 21, 2009 and March 22, 2008		3
		Condensed Consolidated Balance Sheets - March 22, 2008 and December 29, 2007			4
	Condensed Consolidated Statements of Cash Flows — 12 weeks ended March 21, 2009 and March 22, 2008		4
		Notes to Condensed Consolidated Financial Statements			5-16
	Condensed Consolidated Balance Sheets — March 21, 2009 and December 27, 2008		5
	Item 2.	Management’s Financial Review			17-24
	Condensed Consolidated Statements of Changes in Equity — 12 weeks ended March 21, 2009 and March 22, 2008		6
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk			25
	Notes to Condensed Consolidated Financial Statements		7-20
	Item 4.	Controls and Procedures			25
Item 2.	Management’s Financial Review		21-29
Part II		Other Information
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		29
	Item 6.	Exhibits			26
Item 4.	Controls and Procedures		29
EX-31.1: CERTIFICATION
Part II	Other Information
EX-31.2: CERTIFICATION
Item 1.	Legal Proceedings		30
EX-32.1: CERTIFICATION
Item 1A.	Risk Factors		30
EX-32.2: CERTIFICATION
Item 6.	Exhibits		30
EX-99.1: THE PEPSI BOTTLING GROUP, INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 22, 2008
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I — FINANCIAL INFORMATION

Item 1.

Bottling Group, LLC

Condensed Consolidated Statements of Operations ~~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

in millions, unaudited


	12 Weeks Ended
	March			March
	21, 2009			22, 2008
Net revenues	$	2,507		$	2,651
Cost of sales		1,403			1,482


Gross profit		1,104			1,169
Selling, delivery and administrative expenses		989			1,063


Operating income		115			106
Interest expense		67			47
Interest income		26			41
Other non-operating expenses (income), net		7			(2	)


Income before income taxes		67			102
Income tax expense		3			7


Net income		64			95
Less: Net income attributable to noncontrolling interests		(3	)		(3	)


Net income attributable to Bottling LLC	$	67		$	98

See accompanying notes to Condensed Consolidated Financial Statements.

Bottling Group, LLC

Condensed Consolidated Statements of ~~Cash~~Comprehensive ~~Flows in~~(Loss) ~~millions, unaudited~~Income

	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

in millions, unaudited


	12 Weeks Ended
	March			March
	21, 2009			22, 2008
Net income	$	64		$	95
Net currency translation adjustment		(290	)		(13	)
Cash flow hedge adjustment		2			5
Pension and postretirement medical benefit plans adjustment		11			6

Comprehensive (loss) income		(213	)		93
Less: Comprehensive (loss) income attributable to noncontrolling interests		(79	)		6

Comprehensive (loss) income attributable to Bottling LLC	$	(134	)	$	87

See accompanying notes to Condensed Consolidated Financial Statements.

Bottling Group, LLC

Condensed Consolidated ~~Balance~~Statements ~~Sheets in~~of ~~millions~~Cash Flows

	(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

in millions, unaudited


	12 Weeks Ended
	March			March
	21, 2009			22, 2008
Cash Flows — Operations
Net income	$	64		$	95
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		136			144
Deferred income taxes		—			1
Share-based compensation		12			12
Net other non-cash charges and credits		49			41
Changes in operating working capital, excluding effects of acquisitions:
Accounts receivable, net		(49	)		(4	)
Inventories		(103	)		(88	)
Prepaid expenses and other current assets		98			(17	)
Accounts payable and other current liabilities		72			(42	)
Income taxes payable		(2	)		8

Net change in operating working capital		16			(143	)
Other, net		(16	)		(39	)

Net Cash Provided by Operations		261			111


Cash Flows — Investments
Capital expenditures		(95	)		(185	)
Acquisitions		(15	)		(6	)
Proceeds from sale of property, plant and equipment		1			2
Notes receivable from PBG, net		(64	)		8
Note receivable from PepsiCo		(92	)		—
Other investing activities, net		(1	)		—

Net Cash Used for Investments		(266	)		(181	)


Cash Flows — Financing
Short-term borrowings, net		86			29
Proceeds from long-term debt		741			—
Payments of long-term debt		(1,301	)		(2	)
Contributions from noncontrolling interest holder		33			—
Other financing activities		(7	)		—

Net Cash (Used for) Provided by Financing		(448	)		27


Effect of Exchange Rate Changes on Cash and Cash Equivalents		(16	)		(3	)

Net Decrease in Cash and Cash Equivalents		(469	)		(46	)
Cash and Cash Equivalents — Beginning of Period		786			459

Cash and Cash Equivalents — End of Period	$	317		$	413

See accompanying notes to Condensed Consolidated Financial Statements.

~~Note~~Bottling ~~1—Basis~~Group, ~~of Presentation~~LLC

~~Bottling~~Condensed ~~Group,~~Consolidated ~~LLC~~Balance is the principal operating subsidiary of 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. Sheets

~~We prepare our unaudited Condensed Consolidated Financial Statements~~ in conformity with accounting principles generally accepted in the United States of America, which requires us to make judgments, estimates and assumptions that affect the results of operations, financial position and cash flows of Bottling Group, LLC as well as the related footnote disclosures. Actual results could differ from these estimates. These interim financial statements have been prepared in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X. 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 conjunction with the audited consolidated financial statements for the fiscal year ended December 29, 2007 as presented in our Annual Report on Form 10-K. In the opinion of management, this interim information includes all material adjustments, which are of a normal and recurring nature, necessary for a fair presentation. millions

When used in these Condensed Consolidated Financial Statements, “Bottling LLC,” “we,” “our,” “us” and the “Company” each refers to Bottling Group, LLC.


	(Unaudited)
	March			December
	21, 2009			27, 2008
ASSETS
Current Assets
Cash and cash equivalents	$	317		$	786
Accounts receivable, net		1,408			1,371
Inventories		619			528
Prepaid expenses and other current assets		236			337

Total Current Assets		2,580			3,022
Property, plant and equipment, net		3,697			3,869
Other intangible assets, net		3,758			3,751
Goodwill		1,417			1,434
Investments in noncontrolled affiliates		511			619
Notes receivable from PBG		3,756			3,692
Other assets		158			108

Total Assets	$	15,877		$	16,495


LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and other current liabilities	$	1,548		$	1,529
Short-term borrowings		177			103
Current maturities of long-term debt		6			1,305

Total Current Liabilities		1,731			2,937
Long-term debt		4,526			3,789
Other liabilities		1,297			1,284
Deferred income taxes		276			279

Total Liabilities		7,830			8,289

Equity
Owners’ net investment		8,980			8,907
Accumulated other comprehensive loss		(1,574	)		(1,373	)

Total Owners’ Equity		7,406			7,534
Noncontrolling interests		641			672

Total Equity		8,047			8,206

Total Liabilities and Equity	$	15,877		$	16,495

~~Our~~See ~~U.S.~~accompanying ~~and~~notes ~~Canadian~~to ~~operations~~Condensed ~~report~~Consolidated ~~using~~Financial ~~a fiscal year that consists of fifty-two weeks, ending on the last Saturday in December~~Statements. ~~Every five or six years a fifty-third week is added.~~ ~~Fiscal years 2008 and 2007 consist of fifty-two weeks. 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

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.

We consolidate in our financial statements entities in which we have a controlling financial interest, as well as variable interest entities where we are the primary beneficiary. Minority interest in earnings and ownership has been recorded for the percentage 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 our products are seasonal, especially in our Europe segment where sales tend to be more sensitive to weather conditions. The seasonality of our operating results arises from higher sales in the second and third quarters versus the first and fourth quarters of the year, combined with the impact of fixed costs, such as depreciation and interest, which are not significantly impacted by business seasonality. From a cash flow perspective, the majority of our cash flow from operations is generated in the third and fourth quarters.

~~Note~~Bottling ~~3—New~~Group, ~~Accounting Standards~~LLC

~~SFAS~~Condensed ~~No. 157~~ Consolidated Statements of Changes in Equity

In12 ~~September 2006,~~Weeks ~~the~~Ended ~~Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No.~~March ~~157~~21, ~~“Fair~~2009 ~~Value~~and ~~Measurements” (“SFAS 157”)~~March 22, which establishes a framework for reporting fair value and expands disclosures about fair value measurements. The Company adopted the required provisions of SFAS 157 that became effective in our first quarter of 2008. The adoption of these provisions did 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.

In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”). FSP 157-2 delays the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except for certain items that are recognized or disclosed at fair value in ~~the financial statements on a recurring basis (at 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~~millions, ~~which will become effective beginning with our first quarter of 2009.~~ unaudited

SFAS No. 158


				Accumulated
				Other												Compre-
	Owners’			Compre-			Total			Non-						hensive
	Net			hensive			Owners’			controlling			Total			Income
	Investment			Loss			Equity			Interests			Equity			(Loss)
Balance at December 29, 2007	$	9,418		$	(189	)	$	9,229		$	379		$	9,608
Comprehensive income (loss):
Net income		98			—			98			(3	)		95		$	95
Net currency translation adjustment		—			(22	)		(22	)		9			(13	)		(13	)
Cash flow hedge adjustment, net of tax of $1		—			5			5			—			5			5
Pension and postretirement medical benefit plans adjustment		—			6			6			—			6			6

Total comprehensive income																$	93

SFAS 158 — measurement date adjustment		(27	)		36			9			—			9
Share-based compensation		12			—			12			—			12
Contributions from owners		22			—			22			3			25

Balance at March 22, 2008	$	9,523		$	(164	)	$	9,359		$	388		$	9,747


Balance at December 27, 2008	$	8,907		$	(1,373	)	$	7,534		$	672		$	8,206
Comprehensive income (loss):
Net income		67			—			67			(3	)		64		$	64
Net currency translation adjustment		—			(214	)		(214	)		(76	)		(290	)		(290	)
Cash flow hedge adjustment		—			2			2			—			2			2
Pension and postretirement medical benefit plans adjustment		—			11			11			—			11			11

Total comprehensive loss																$	(213	)

Tax benefit and withholding tax — equity awards		(5	)		—			(5	)		—			(5	)
Share-based compensation		12			—			12			—			12
Cash distributions to owner		(1	)		—			(1	)		—			(1	)
Contributions from noncontrolling interest holder		—			—			—			48			48

Balance at March 21, 2009	$	8,980		$	(1,574	)	$	7,406		$	641		$	8,047

InSee ~~September 2006,~~accompanying ~~the~~notes FASB issued SFAS No. 158, “Employers’ Accounting for 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~~Condensed ~~our~~Consolidated ~~fiscal~~Financial ~~year-end~~Statements. ~~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.

SFAS No. 159

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”), which allows entities to choose to measure financial instruments and certain other items at fair value. SFAS 159 became effective beginning with our first quarter of 2008. We have currently chosen not to adopt the provisions of SFAS 159 for our existing financial instruments.

SFAS No. 141(R)

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS 141(R)”), which addresses the recognition and accounting for identifiable assets acquired, liabilities assumed, and noncontrolling interests in business combinations. SFAS 141(R) also establishes expanded disclosure requirements for business combinations. SFAS 141(R) will become effective beginning with our first quarter of 2009. We are currently evaluating the impact of this standard on our Consolidated Financial Statements.

Notes to Condensed Consolidated Financial Statements
Tabular dollars in millions

Note 1—Basis of Presentation

Bottling Group, LLC (referred to as “Bottling LLC,” “we,” “our,” “us” and the “Company”) is the principal operating subsidiary of The Pepsi Bottling Group, Inc. (“PBG”) and consists of substantially all of the operations and assets of PBG. PBG is the world’s largest manufacturer, seller and distributor of Pepsi-Cola beverages. We have the exclusive right to manufacture, sell and distribute Pepsi-Cola beverages, in all or a portion of the United States, Mexico, Canada, Spain, Russia, Greece and Turkey.

We prepare our unaudited Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America, which requires us to make judgments, estimates and assumptions that affect the results of operations, financial position and cash flows, as well as the related footnote disclosures. We evaluate our estimates on an on-going basis using our historical experience as well as other factors we believe appropriate under the circumstances, such as current economic conditions, and adjust or revise our estimates as circumstances change. As future events and their effect cannot be determined with precision, actual results may differ from these estimates.

These interim financial statements have been prepared in conformity with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. 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 conjunction with the audited consolidated financial statements for the fiscal year ended December 27, 2008 as presented in our Annual Report on Form 10-K. In the opinion of management, this interim information includes all material adjustments, which are of a normal and recurring nature, necessary for a fair presentation.

Our U.S. and Canadian operations report using a fiscal year that consists of 52 weeks, ending on the last Saturday in December. Every five or six years a 53rd week is added. Fiscal years 2009 and 2008 consist of 52 weeks. 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

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 percent of Bottling LLC and PepsiCo owns the remaining 6.6 percent as of March 21, 2009. In addition, PepsiCo has a 40 percent ownership interest in our Russian venture, PR Beverages Limited.

We consolidate in our financial statements entities in which we have a controlling financial interest, as well as variable interest entities for which we are the primary beneficiary. Noncontrolling interest in earnings and ownership has been recorded for the percentage 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 our products are seasonal. The seasonality of our operating results arises from higher sales in the second and third quarters versus the first and fourth quarters of the year, combined with the impact of fixed costs, such as depreciation and interest, which are not significantly impacted by business seasonality. From a cash flow perspective, the majority of our cash flow from operations is generated in the third and fourth quarters.

Note 3—New Accounting Standards

SFAS No. 141(R) as amended

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141(revised 2007), “Business Combinations” (“SFAS 141(R)”), which addresses the accounting and disclosure for identifiable assets acquired, liabilities assumed, and noncontrolling interests in a business combination. In April 2009, the FASB issued FASB Staff Position No. FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies” (“FSP FAS 141(R)-1”), which amended certain provisions of SFAS 141(R) related to the recognition, measurement, and disclosure of assets acquired and liabilities assumed in a business combination that arise from contingencies. SFAS 141(R) and FSP FAS 141(R)-1 became effective in the first quarter of 2009, and did not have a material impact on our Condensed Consolidated Financial Statements.

SFAS No. 160

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~~noncontrolling interests by a parent company. SFAS 160 also addresses ~~disclosure~~ disclosure requirements to distinguish between interests of the parent and interests of the ~~noncontrolling~~ noncontrolling owners of a subsidiary. SFAS 160 ~~will~~became ~~become~~ effective ~~beginning~~in ~~with~~the ~~our~~ first quarter of 2009., which Weresulted in reporting noncontrolling interest as a component of equity in our Condensed ~~are~~Consolidated ~~currently~~Balance ~~evaluating~~Sheets and below income tax expense in our Condensed Consolidated Statements of Operations. In addition, the ~~impact~~provisions of ~~this~~SFAS ~~standard~~160 onrequire that minority interest be renamed noncontrolling interests and that a company present a consolidated net income measure that includes the amount attributable to such noncontrolling interests for all periods presented. As required by SFAS 160, we have retrospectively applied the presentation to our prior year balances in our Condensed Consolidated Financial Statements.

SFAS No. 161

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS 161”), which requires enhanced disclosures for derivative and hedging activities. SFAS 161 ~~will~~became ~~become~~ effective ~~beginning~~in ~~with our~~the first quarter of 2009. ~~Early~~See ~~adoption~~Note is8 ~~permitted.~~for Werequired ~~are currently evaluating the impact of this standard on our Consolidated Financial Statements~~disclosure.

~~EITF~~FSP ~~Issue~~FAS ~~No. 06~~132(R)-111

In ~~June~~December ~~2007~~2008, the FASB ~~ratified~~issued ~~Emerging~~FASB ~~Issues~~Staff ~~Task~~Position ~~Force Issue~~ No. 06SFAS 132(revised 2003)-111, “~~Accounting~~Employers’ ~~for Income~~Disclosures ~~Tax~~about ~~Benefits~~Postretirement ofBenefit ~~Dividends~~Plan ~~on Share-Based Payment Awards~~Assets” (“~~EITF~~FSP 06FAS 132(R)-111”), which ~~requires~~ ~~income~~requires ~~tax~~employers ~~benefits~~to ~~from~~disclose ~~dividends~~information orabout ~~dividend~~fair ~~equivalents~~value ~~that~~measurements ~~are~~of ~~charged~~plan toassets ~~retained~~that ~~earnings~~are ~~and~~similar ~~are~~to ~~paid~~the todisclosures ~~employees~~about ~~for~~fair ~~equity~~value ~~classified~~measurements ~~nonvested~~required ~~equity~~by ~~shares~~SFAS No. 157, ~~nonvested~~“Fair ~~equity share~~Value ~~units~~Measurements” ~~and~~(“SFAS ~~outstanding~~157”). ~~equity~~FSP ~~share~~FAS ~~options to be recognized as an increase in additional paid~~132(R)-~~in capital~~1 ~~and~~will tobecome beeffective ~~included~~for inour ~~the~~annual ~~pool of excess tax benefits available to absorb potential future~~financial ~~tax~~statements ~~deficiencies~~for ~~on share-based payment awards~~2009. ~~The~~We ~~adoption~~are ofcurrently ~~EITF~~evaluating ~~06-11, which became effective in~~ the ~~first~~impact ~~quarter~~ of ~~2008,~~this ~~did~~standard ~~not have a material impact~~ on our Consolidated ~~Financial~~ Financial Statements.

~~EITF~~FSP ~~Issue~~FAS ~~No. 07~~107-1 and APB 28-1

In ~~December~~April ~~2007~~2009, the FASB ~~ratified~~issued ~~the~~FASB ~~EITF’s~~Staff ~~Consensus~~Position ~~for~~No. SFAS ~~Issue~~107-1 and APB No. 0728-1, “~~Accounting~~Disclosures ~~for Collaborative~~about ~~Arrangements~~the Fair Value of Financial Instruments” (“~~EITF~~FSP 07FAS 107-1 and APB 28-1”), which ~~defines collaborative arrangements and establishes~~ ~~reporting~~requires ~~requirements~~quarterly ~~for~~disclosure ~~transactions~~of ~~between~~information ~~participants~~about inthe afair ~~collaborative~~value ~~arrangement~~of ~~and between~~financial ~~participants~~instruments in within the ~~arrangement~~scope ~~and~~of ~~third~~FASB ~~parties~~Statement No. 107, ~~EITF~~“Disclosures ~~07-1~~about ~~will~~Fair ~~become~~Value ~~effective beginning with our first quarter~~ of ~~2009~~Financial Instruments.” WeFSP ~~are~~FAS ~~currently~~107-1 ~~evaluating~~and ~~the~~APB ~~impact, if any, of this~~28-1 ~~standard~~has ~~on our Consolidated Financial Statements.~~an

~~Note 4—Share-Based Compensation~~8

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.

~~During~~effective ~~each~~date ofrequiring adoption by the ~~12 week~~third ~~periods~~quarter ~~ended~~of ~~March 22,~~2009 ~~2008~~with ~~and~~early ~~March 24,~~adoption permitted. ~~2007,~~We weadopted ~~granted approximately~~the ~~1 million~~provisions ~~restricted~~of ~~stock~~FSP ~~units~~FAS at107-1 aand ~~weighted~~APB 28-~~average~~1 ~~fair~~in ~~value~~the first quarter of ~~$35~~2009.~~77 and~~ ~~$30.85,~~See ~~respectively~~Note 7 for required disclosures.

~~Unrecognized~~Note ~~compensation cost related to nonvested share~~4—Share-~~based~~Based ~~compensation arrangements~~Compensation ~~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.~~

The total impact of share-based compensation recognized in the Condensed Consolidated Statements of Operations was $12 million for the 12 week periods ended March 21, 2009 and March 22, 2008.

During each of the 12 weeks ended March 21, 2009 and March 22, 2008, we granted 5 million and 3 million PBG stock option awards at a weighted-average fair value of $4.46 and $7.06, respectively.

During each of the 12 weeks ended March 21, 2009 and March 22, 2008, we granted 2 million and 1 million PBG restricted stock unit awards at a weighted-average fair value of $18.72 and $35.77, respectively.

Unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the incentive plans amounted to $112 million as of March 21, 2009. That cost is expected to be recognized over a weighted-average period of 2.3 years.

Note 5—Balance Sheet Details

	March			December
	22, 2008			29, 2007
	21, 2009			27, 2008
Accounts Receivable
Accounts Receivable, net
Trade accounts receivable	$	1,~~341~~207		$	1,~~319~~208
Allowance for doubtful accounts		(5672	)		(5471	)
Accounts receivable from PepsiCo		~~173~~188			~~188~~154
Other receivables		69			67
Note receivable from PepsiCo		29			—
	$	1,527		$	1,520
Other receivables		56			80
	$	1,408		$	1,371
Inventories
Raw materials and supplies	$	~~221~~215		$	~~195~~185
Finished goods		~~445~~404			~~382~~343
	$	~~666~~619		$	~~577~~528
Prepaid Expenses and Other Current Assets
Prepaid expenses	$	194		$	187
Accrued interest receivable from PBG		15			118
Other current assets		27			32
	$	236		$	337
Property, Plant and Equipment, net
Land	$	~~323~~293		$	~~320~~300
Buildings and improvements		1,~~532~~533			1,~~484~~542
Manufacturing and distribution equipment		43,~~092~~887			43,~~091~~999
Marketing equipment		2,~~397~~168			2,~~389~~246
Capital leases		3621			3623
Other		~~147~~135			~~154~~139
		8,527			8,474
		8,037			8,249
Accumulated depreciation		(4,~~464~~340	)		(4,~~403~~380	)
	$	43,~~063~~697		$	43,~~071~~869

~~Industrial Revenue Bonds~~9

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.

	March		December
	22, 2008		29, 2007
	21, 2009		27, 2008
Accounts Payable and Other Current Liabilities
Other Assets
Accounts payable	$	575	$	615
Note receivable from PepsiCo	$	58	$	—
Accounts payable to PepsiCo		329		255
Other assets		100		108
Trade incentives		183		235
	$	158	$	108
Accrued compensation and benefits		203		276
Other accrued taxes		110		139
Accrued interest		57		47
Other current liabilities		282		262
	$	1,739	$	1,829

Note Receivable from PepsiCo

During the first quarter of 2009, we issued a ruble-denominated 3-year note with an interest rate of 10.0 percent (“Note receivable from PepsiCo”) to JSC Lebedyansky (“Lebedyansky”), a consolidated subsidiary of PepsiCo and a noncontrolled affiliate of Bottling LLC, valued at $87 million on March 21, 2009. This funding was contemplated as part of the initial capitalization of the purchase of Lebedyansky between PepsiCo and us. This note receivable is recorded in accounts receivable, net and other assets in our Condensed Consolidated Balance Sheets.


	March		December
	21, 2009		27, 2008
Accounts Payable and Other Current Liabilities
Accounts payable	$	469	$	444
Accounts payable to PepsiCo		275		217
Trade incentives		155		189
Accrued compensation and benefits		197		240
Other accrued taxes		98		128
Accrued interest		58		62
Other current liabilities		296		249

	$	1,548	$	1,529

Note 6—Other Intangible Assets, net and Goodwill

Other intangible assets, net

The components of other intangible assets are as follows:

	March			December
	22, 2008			29, 2007
	21, 2009			27, 2008
Intangibles subject to amortization:
Intangibles subject to amortization
Gross carrying amount:
Gross carrying amount
Customer relationships and lists	$	5542		$	5445
Franchise and distribution rights		4674			4641
Other identified intangibles		3021			3034
		131			130
		137			120
Accumulated amortization:
Accumulated amortization
Customer relationships and lists		(1514	)		(15	)
Franchise and distribution rights		(3231	)		(31	)
Other identified intangibles		(188	)		(1721	)
		(65	)		(63	)
		(53	)		(67	)
Intangibles subject to amortization, net		6684			6753
Intangibles not subject to amortization:
Intangibles not subject to amortization
Carrying amount:
Carrying amount
Franchise rights		3,~~223~~231			3,~~235~~244
Licensing rights		315			315
Distribution rights		~~299~~46			~~294~~49
Trademarks		217			213
Brands		35			39
Other identified intangibles		5847			5751
Intangibles not subject to amortization		43,~~112~~674			43,~~114~~698
Total other intangible assets, net	$	43,~~178~~758		$	43,~~181~~751

Intangible asset amortization

Intangible asset amortization expense was $1 million and $2 million for the 12 weeks ended March 2221, ~~2008~~2009 and March 2422, ~~2007~~2008, respectively. Amortization expense for each of the next five years is estimated to be approximately $710 million or less.

9 During the first quarter of 2009, we acquired distribution rights for Rockstar energy drinks in the United States and Canada and Muscle Milk protein-enhanced functional beverages in the United States. As a result of these acquisitions, we recorded approximately $35 million of amortizable distribution rights.

Goodwill

The changes in the carrying value of goodwill by reportable segment for the 12 weeks ended March 2221, ~~2008~~2009 are as follows:

	U.S. & Canada			Europe		Mexico			Total
	U.S. &
Balance at December 29, 2007	$	1,290		$	17	$	226		$	1,533
	Canada			Europe		Mexico			Total
Unallocated purchase price relating to acquisition		21			—		—			21
Balance at December 27, 2008	$	1,235		$	26	$	173		$	1,434
Impact of foreign currency translation		(17	)		—		5			(12	)
Purchase price allocations relating to acquisitions		1			—		—			1
Balance at March 22, 2008	$	1,294		$	17	$	231		$	1,542
Impact of foreign currency translation		(4	)		—		(14	)		(18	)
Balance at March 21, 2009	$	1,232		$	26	$	159		$	1,417

~~During the first quarter, PBG acquired Pepsi-Cola Batavia Bottling Corp, which was contributed~~11 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

We adopted SFAS 157 ~~defines~~at ~~and~~the ~~establishes~~beginning aof ~~framework~~the ~~for~~2008 ~~measuring~~fiscal ~~fair~~year ~~value~~for ~~and~~all ~~expands~~financial ~~disclosures~~instruments ~~about~~valued ~~fair~~on ~~value~~a ~~measurements~~recurring basis, at least annually. InAdditionally, beginning in the first quarter of 2009, in accordance with ~~SFAS~~the provisions of FASB Staff Position No. 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”) we ~~have~~now ~~categorized~~apply ~~our~~SFAS 157 to financial ~~assets~~ and nonfinancial assets and liabilities,. ~~based~~FSP on157-2 delayed the ~~priority~~effective date of ~~the~~SFAS ~~inputs~~157 tofor nonfinancial assets and liabilities, except for certain items that are recognized or disclosed at fair value in the financial ~~valuation~~statements ~~technique~~on a recurring basis. In accordance with SFAS 157, we have categorized our assets and liabilities that are measured at fair value into a three-level fair value hierarchy as set forth below. If the inputs used to measure ~~the~~fair ~~financial instruments~~value fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement. The three levels of the ~~instrument.~~hierarchy are defined as follows:

~~Financial~~Level ~~assets~~1 ~~and~~— ~~liabilities~~Unadjusted ~~recorded~~quoted onprices ~~the~~in ~~Condensed~~active ~~Consolidated~~markets ~~Balance~~for ~~Sheets~~identical ~~are categorized~~assets ~~based~~or ~~on the inputs to the valuation techniques as follows:~~liabilities.

Level 12 — ~~Financial~~Observable ~~assets~~inputs ~~and~~other ~~liabilities~~than ~~whose~~quoted ~~values~~prices ~~are~~included ~~based~~in onLevel ~~unadjusted~~1, such as quoted prices for identical assets orand liabilities in an non-active ~~market~~markets, ~~that~~quoted ~~the~~prices ~~company~~for ~~has the ability~~similar toassets ~~access~~or atliabilities ~~the~~in ~~measurement date (examples include~~ active ~~exchange-traded~~markets ~~equity~~and ~~securities, listed~~inputs ~~derivatives,~~other ~~and~~than ~~most~~quoted ~~U.S.~~prices ~~Government~~that ~~and~~are ~~agency securities).~~observable Wefor ~~currently~~substantially dothe ~~not~~full ~~have~~term ~~any~~of ~~Level 1~~the ~~financial~~asset ~~assets~~ or ~~liabilities~~ liability.

Level 23 — ~~Financial~~Unobservable ~~assets~~inputs ~~and~~reflecting ~~liabilities~~management’s ~~whose~~own ~~values~~assumptions ~~are~~about ~~based~~the oninput ~~quoted prices in~~used ~~markets~~in ~~where~~pricing ~~trading~~the ~~occurs~~asset ~~infrequently~~ or ~~whose values are based on quoted prices of instruments with similar attributes in active markets~~liability. ~~Level 2 inputs include the following:~~

• The ~~Quoted~~following ~~prices~~table ~~for~~summarizes ~~identical~~the orfinancial ~~similar~~ assets orand liabilities inwe ~~non-active~~measure ~~markets~~at ~~(examples~~fair ~~include~~value on ~~corporate~~a ~~and~~recurring ~~municipal~~basis ~~bonds~~as ~~which trade infrequently); • Inputs other than quoted prices that are observable for substantially the full term~~ of ~~the~~March 21, ~~asset~~2009 ~~or liability (examples include interest rate~~ and ~~currency~~December 27, 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).2008:

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.


	Level 2
	March		December
	21, 2009		27, 2008
Financial Assets
Foreign currency ⁽¹⁾	$	5	$	13
Deferred compensation ⁽²⁾		11		13
Interest-rate swaps ⁽³⁾		4		8

Total	$	20	$	34


Financial Liabilities
Commodity ⁽¹⁾	$	58	$	57
Foreign currency ⁽¹⁾		7		6
Interest-rate swaps ⁽³⁾		5		1

Total	$	70	$	64


⁽¹⁾		Based primarily on the forward rates of the specific indices upon which the contract settlement is based.

⁽²⁾		Based primarily on the value of PBG’s stock price.

⁽³⁾		Based primarily on the London Inter-Bank Offer Rate (“LIBOR”) index.

Other Financial Assets and Liabilities

Financial assets with carrying values approximating fair value include cash and cash equivalents and accounts receivable. Financial liabilities with carrying values approximating fair value include accounts payable and other accrued liabilities and short-term debt. The carrying value of these financial assets and liabilities approximates fair value due to their short maturities and since interest rates approximate current market rates for short-term debt.

Long-term debt, which includes the current maturities of long-term debt, at March 21, 2009, had a carrying value and fair value of $4.5 billion and $4.8 billion, respectively, and at December 27, 2008, had a carrying value and fair value of $5.1 billion and $5.3 billion, respectively. The fair value is based on interest rates that are currently available to us for issuance of debt with similar terms and remaining maturities.

~~The~~Note ~~following~~8—Financial ~~table~~Instruments ~~presents the financial assets~~ and ~~liabilities~~Risk ~~we measure at fair value on~~Management ~~a recurring basis, based on the fair value hierarchy as of March 22, 2008:~~

	Level 2
Financial Assets:
Cash flow hedges	$	12
Interest rate swaps		7
Prepaid forward contracts		21
Total	$	40
Financial Liabilities:
Unfunded deferred compensation liability	$	78
Foreign currency hedges		2
Cash flow hedges		1
Total	$	81

We are subject to the risk of loss arising from adverse changes in commodity prices, foreign currency exchange rates, interest rates and PBG’s stock price. In the normal course of business, we manage these risks through a variety of strategies, including the use of derivatives. Our corporate policy prohibits the use of derivative instruments for trading or speculative purposes, and we have procedures in place to monitor and control their use.

All derivative instruments are recorded at fair value as either assets or liabilities in our Condensed Consolidated Balance Sheets. Derivative instruments are generally designated and accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”) as either a hedge of a recognized asset or liability (“fair value hedge”) or a hedge of a forecasted transaction (“cash flow hedge”). Certain of these derivatives are not designated as hedging instruments under SFAS 133 and are used as “economic hedges” to manage certain risks in our business.

Cash Flow Hedges

WeFor ~~use~~derivative ~~futures~~instruments ~~contracts~~that toare ~~hedge~~designated ~~the~~and ~~risk~~qualify ofas ~~adverse~~a ~~movements~~cash inflow ~~commodity~~hedge, ~~prices~~the ~~primarily~~effective ~~related~~portion ~~to anticipated purchases~~ of ~~raw~~the ~~materials~~change ~~and~~in ~~energy~~the ~~used~~fair invalue ~~our~~of ~~operations.~~a Wederivative ~~also~~instrument ~~enter into~~is ~~forward~~deferred ~~exchange~~in ~~contracts~~accumulated toother comprehensive ~~hedge~~loss ~~portions~~(“AOCL”) ofuntil ~~our~~the ~~forecasted~~underlying ~~U.S.~~hedged ~~dollar~~item ~~purchases~~is recognized in ~~our Canadian business~~earnings. The derivative’s ~~fair~~gain ~~value~~or ofloss ~~these~~recognized ~~cash~~in ~~flow~~earnings ~~hedges~~ is ~~primarily~~recorded ~~based~~consistent onwith the ~~forward~~expense ~~curves~~classification of the ~~specific~~underlying ~~indices~~hedged ~~upon~~item. ~~which~~The ~~settlement~~ineffective portion of a fair value change on a qualifying cash flow hedge is ~~based~~recognized in earnings immediately.

~~Interest~~ The ~~Rate~~Company ~~Swaps~~hedges the following types of items that qualify for cash flow hedge accounting under SFAS 133:

Commodity — We ~~finance~~use aforward ~~portion~~and ofoption ~~our~~contracts ~~operations~~to ~~through~~hedge ~~fixed-rate~~the ~~debt~~risk ~~instruments.~~of Weadverse ~~effectively~~movements in ~~converted~~commodity ~~$550 million~~prices ofrelated ~~our~~primarily ~~senior~~to ~~notes~~anticipated topurchases ~~floating-rate~~of ~~debt~~raw ~~through~~materials ~~the~~and ~~use~~energy ofused ~~interest~~in ~~rate~~our ~~swaps~~operations. ~~The~~These ~~fair~~contracts ~~value~~generally ofrange ~~our~~from ~~interest~~one ~~rate~~to ~~swaps~~24 months isin ~~primarily~~duration and as of March 21, 2009, have a notional value, based on the ~~LIBOR~~contract ~~index~~price, of $351 million.

Foreign Currency ~~Hedges~~— We are subject to foreign currency transactional risks in certain of our international territories primarily for the purchase of commodities that are denominated in currencies that are different from their functional currency. We enter into forward contract agreements to hedge a portion of this foreign currency risk. These contracts generally range from one to 12 months in duration and as of March 21, 2009, have a notional value, based on the contract price, of $64 million.

InInterest ~~2007,~~— weWe have entered into ~~forward~~treasury ~~exchange~~rate ~~contracts~~lock agreements to ~~economically~~ hedge aagainst ~~portion~~adverse interest ofrate changes on certain debt financing arrangements. Gains and losses from these treasury ~~intercompany~~rate ~~receivable~~lock ~~balances~~agreements that are ~~denominated~~considered effective are deferred in ~~Mexican~~AOCL ~~pesos~~and amortized to interest expense over the duration of the debt term. The ~~fair~~Company ~~value~~has ofa ~~our~~$3 million net deferred gain in ~~forward~~AOCL, ~~exchange~~which ~~contracts~~will isbe ~~primarily~~amortized ~~based~~over ona ~~observable~~maximum ~~forward~~of ~~foreign~~7 years. ~~exchange~~For ~~rates~~the quarter ended March 21, 2009, we recognized a loss of $0.2 million in interest expense.

~~Unfunded~~Fair ~~Deferred~~Value ~~Compensation Liability~~Hedges

~~Our~~Interest ~~unfunded~~Rate ~~deferred~~Swaps ~~compensation~~— ~~liability~~We iseffectively ~~subject~~converted to$750 million ~~changes~~of inour ~~PBG’s~~fixed-rate ~~stock~~debt ~~price as~~to ~~well~~floating-rate asdebt ~~price~~through ~~changes~~the inuse ~~other~~of ~~equity~~interest-rate ~~and~~swaps ~~fixed-income~~with ~~investments.~~the ~~Employees’~~objective ~~deferred~~of reducing our ~~compensation~~overall ~~amounts~~borrowing ~~are~~costs. ~~not~~These ~~directly~~interest ~~invested~~rate inswaps ~~these~~meet ~~investment~~the ~~vehicles.~~criteria Wefor ~~track~~fair ~~the~~value hedge ~~performance~~accounting ofand ~~each~~are ~~employee’s~~assumed ~~investment~~to ~~selections~~be ~~and~~100 percent ~~adjust~~effective in eliminating the ~~deferred~~market-rate ~~compensation~~risk ~~account~~inherent ~~accordingly~~in our long-term debt. ~~The~~Accordingly, ~~fair~~any ~~value~~gain ofor ~~the~~loss ~~unfunded~~associated ~~deferred~~with ~~compensation~~these ~~liability~~swaps is ~~primarily~~fully ~~based on~~offset by the opposite market ~~indices~~impact ~~corresponding~~on to the ~~employees’~~related ~~investment~~debt ~~selections~~and recognized currently in earnings.

WeEconomic ~~use prepaid forward contracts to hedge the portion of our deferred compensation liability~~Hedges 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.

11 As part of our risk management strategy, we enter into derivative instruments that are not designated as hedging instruments under SFAS 133, but are used as economic hedges to manage certain risks in our business. These derivative instruments are marked to market on a periodic basis and recognized currently in earnings consistent with the expense classification of the underlying hedged item. The Company has the following types of economic hedges:

~~Note~~ Foreign 8Currency Hedges —~~Pension~~ We entered into forward exchange contracts to economically hedge a portion of our intercompany receivable balances that are denominated in Mexican pesos. These contracts generally range from one to 12 months in duration and ~~Postretirement~~as ~~Medical~~of ~~Benefit~~March 21, ~~Plans~~2009, have a notional value, based on the contract price, of $50 million.

Additionally, we fair value certain vendor and customer contracts that have embedded foreign currency derivative components. These contracts generally range from one year to four years and have a notional value, based on the contract price, of $16 million.

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. We use prepaid forward contracts to hedge the portion of our deferred compensation liability that is based on PBG’s stock price. At March 21, 2009, we had a prepaid forward contract for 585,000 shares of PBG’s stock.

Balance Sheet Classification

The following summarizes the fair values and location in our Condensed Consolidated Balance Sheet of all derivatives held by the Company as of March 21, 2009.


Derivatives Designated as Hedging		Fair
Instruments under SFAS 133	Balance Sheet Classification	Value
Assets
Foreign currency	Prepaid expenses and other current assets	$	4
Interest-rate swaps	Other assets		4
Commodity	Accounts payable and other current liabilities		1
Commodity	Other liabilities		2

		$	11


Liabilities
Foreign currency	Prepaid expenses and other current assets	$	1
Commodity	Accounts payable and other current liabilities		51
Commodity	Other liabilities		10
Interest-rate swaps	Other liabilities		5

		$	67


Derivatives Not Designated as Hedging		Fair
Instruments under SFAS 133	Balance Sheet Classification	Value
Assets
Foreign currency	Prepaid expenses and other current assets	$	3
Deferred compensation	Prepaid expenses and other current assets		11

		$	14


Liabilities
Foreign currency	Prepaid expenses and other current assets	$	1
Foreign currency	Accounts payable and other current liabilities		5
Foreign currency	Other liabilities		2

		$	8

Cash Flow Hedge Gains (Losses) Recognition

The following summarizes the gains (losses) recognized in the Condensed Consolidated Statement of Operations and AOCL of derivatives designated and qualifying as cash flow hedges for the quarter ended March 21, 2009.


Derivatives in SFAS	Amount of				Amount of Gain (Loss)
133 Cash Flow	Gain (Loss)			Location of Gain (Loss)	Reclassified
Hedging	recognized in			Reclassified from AOCL into	from AOCL into
Relationships	OCL			Income	Income
Foreign currency	$	—		Cost of goods sold	$	3
Commodity		(7	)	Cost of goods sold		(3	)
Commodity		(5	)	Selling, delivery and administrative expenses		(14	)
Treasury rate lock		—		Interest expense, net		—

	$	(12	)		$	(14	)

The ineffective portion of the change in fair value of our cash flow hedges was not material to our results for the quarter ended March 21, 2009. Assuming no change in the commodity prices and foreign currency rates as measured on March 21, 2009, $42 million of unrealized losses will be reclassified from AOCL and recognized in earnings over the next 12 months.

Other Derivatives Gains (Losses) Recognition

The following summarizes the gains (losses) and the location in the Condensed Consolidated Statement of Operations of derivatives designated and qualifying as fair value hedges and derivatives not designated as hedging instruments for the quarter ended March 21, 2009:


		Amount of
		Gain (Loss)
		Recognized in
	Location of Gain (Loss) Recognized in	Income on
	Income on Derivative	Derivative
Derivatives in SFAS 133 Fair Value Hedging Relationship
Interest-rate swaps	Interest expense, net	$	4

Derivatives Not Designated as Hedging Instruments under SFAS 133
Deferred compensation	Selling, delivery and administrative expenses	$	(1	)
Foreign currency	Other non-operating expenses (income), net		(5	)

		$	(6	)

The Company has recorded $7 million of foreign currency transactional losses in other non-operating expenses (income), net in the Condensed Consolidated Statement of Operations for the quarter ended March 21, 2009.

Note 9—Pension and Postretirement Medical Benefit Plans

Employee Benefit Plans

We participate in PBG sponsored pension and other postretirement medical benefit plans in various forms in the United States and other similar pension plans in our international locations, covering employees who meet specified eligibility requirements. The assets, 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.

The assets, 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~~In the U.S. ~~employees~~we ~~that were hired prior to January 1, 2007~~ participate in PBG’s non-contributory defined benefit pension plans, ~~which~~for ~~cover~~ certain full-time salaried ~~employees,~~and ~~as well as~~ hourly employees. Benefits ~~generally~~ are generally 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~~Additionally, ~~and~~effective ~~contributions~~April 1, ~~are~~2009, ~~made~~we inno ~~amounts~~longer ~~not~~accrue ~~less~~benefits ~~than~~for ~~the~~certain ~~minimum~~of ~~statutory~~our ~~funding requirements~~salaried and non-union ~~not~~employees ~~more than the maximum amount~~ that ~~can~~do benot ~~deducted~~meet ~~for~~age ~~U.S.~~and ~~income~~service ~~tax purposes~~requirements.

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 ~~net~~Net ~~pension~~Pension ~~expense~~Expense

	12 Weeks Ended
	March			March
	22, 2008			24, 2007
	21, 2009			22, 2008
Service cost	$	1214		$	1312
Interest cost		2325			2123
Expected return on plan assets — (income)		(2728	)		(2427	)
Amortization of net loss		38			93
Amortization of prior service costs		2			12
Net pension expense for the defined benefit plans	$	1321		$	2013

~~There~~On ~~were~~March 31, no2009, ~~contributions~~we made a contribution of $70 million to ~~PBG’s~~the U.S. ~~pension~~defined ~~plans~~benefit ~~for the 12 weeks ended March 22,~~pension ~~2008~~trust.

Components of ~~postretirement~~Postretirement ~~medical~~Medical ~~expense~~Expense

	12 Weeks Ended
	March		March
	22, 2008		24, 2007
	21, 2009		22, 2008
Service cost	$	1	$	1
Interest cost		5		5
Amortization of net loss		1—		1
Total postretirement medical expense	$	76	$	7

1216

Defined Contribution Benefits

Nearly all of our U.S. employees are eligible to participate in PBG’s ~~401(k)~~defined contribution plans, which are voluntary defined contribution savings plans. We make matching contributions to the ~~401(k)~~defined contribution savings plans on behalf of participants eligible to receive such contributions. ~~If a participant has less than 10 years of service~~Additionally, ~~our match will equal $0~~U.50S. ~~for~~employees ~~each~~not ~~dollar~~eligible ~~the participant elects~~ to ~~defer~~ upparticipate toin ~~four percent of~~ the ~~participant’s~~defined ~~pay. If the participant has 10 or more years of~~benefit ~~service,~~pension ~~our~~plans ~~match will equal $1.00 for each dollar the participant elects to defer up to four percent of the participant’s pay. Salaried~~ and ~~non-union~~whose ~~hourly~~benefits ~~employees~~are ~~hired~~discontinued inwill ~~the U.S. on or after January 1, 2007 also~~ receive an additional Company retirement ~~contribution equal to two~~ ~~percent~~contributions ofunder ~~their~~the ~~compensation~~defined ~~into~~contribution ~~their 401(k) account~~plans. Defined contribution expense was $7 8 million and $67 million for the 12 weeks ended March 2221, ~~2008~~2009 and March 2422, ~~2007~~2008, respectively.

Note 910—~~Segment~~Income ~~Information~~Taxes

We ~~operate~~currently inhave ~~one~~on-going ~~industry,~~income ~~carbonated~~tax ~~soft~~audits ~~drinks~~in ~~and~~our ~~other~~major ~~ready-to-drink~~tax ~~beverages~~jurisdictions, ~~and~~where ~~all~~issues such ofas ~~our~~deductibility ~~segments~~of ~~derive~~certain ~~revenue~~expenses ~~from~~have ~~these~~been ~~products~~raised. WeDuring ~~conduct~~the ~~business~~second inquarter ~~all~~of or2009, we reached a ~~portion~~settlement ofwith the Canadian tax authorities ~~U.S.,~~related ~~Mexico,~~to ~~Canada,~~an ~~Spain,~~issue ~~Russia,~~that ~~Greece~~was ~~and~~in ~~Turkey~~dispute for our 1999-2005 tax years. ~~Bottling~~We ~~LLC~~believe ~~manages~~that ~~and~~it ~~reports~~is ~~operating~~reasonably possible ~~results~~that ~~through~~our ~~three~~worldwide ~~reportable~~reserves ~~segments~~for —uncertain ~~U.S.~~tax &benefits ~~Canada,~~could ~~Europe~~decrease ~~(which~~in ~~includes~~the ~~Spain,~~range ~~Russia,~~of $10 million ~~Greece~~to ~~and~~$50 million ~~Turkey)~~within ~~and~~the ~~Mexico.~~next ~~The~~12 months ~~operating~~as ~~segments~~a result of the ~~U.S.~~completion of audits in various jurisdictions and ~~Canada~~the ~~are~~expiration ~~aggregated~~of ~~into~~statute of limitations. The reductions in our tax reserves could result in a combination of additional tax payments, the adjustment of certain deferred taxes ~~single~~or ~~reportable~~the ~~segment~~recognition ~~due~~of totax ~~their~~benefits ~~economic~~in ~~similarity~~our asConsolidated ~~well~~Statements asof ~~similarity~~Operations. ~~across~~In ~~products,~~the event that ~~manufacturing~~we ~~and~~cannot ~~distribution~~reach ~~methods,~~settlement ~~types~~of some of ~~customers~~these ~~and~~audits, ~~regulatory~~our ~~environments~~tax reserves may increase, although we cannot estimate such potential increases at this time.

~~Operationally,~~Note ~~the~~11—Segment ~~Company is organized along geographic lines with specific regional~~Information 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.

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 United States, Mexico, Canada, Spain, Russia, Greece and Turkey. We manage and report operating results through three reportable segments — U.S. & Canada, Europe (which includes Spain, Russia, Greece and Turkey) and Mexico.

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, noncontrolling interest, foreign exchange gains and losses and income taxes.

The following tables summarize select financial information related to our reportable segments:

	12 Weeks Ended
	March			March
	22, 2008			24, 2007
	21, 2009			22, 2008
Net Revenues
U.S. & Canada	$	2,~~207~~177		$	2,~~102~~207
Europe		~~236~~174			~~176~~236
Mexico		~~208~~156			~~188~~208
Worldwide net revenues	$	2,~~651~~507		$	2,~~466~~651
Operating Income (Loss)
U.S. & Canada	$	~~134~~142		$	~~142~~134
Europe		(3125	)		(2531	)
Mexico		3(2	)		23
Worldwide operating income		~~106~~115			~~119~~106
Interest expense		4767			5347
Interest income		4126			4441
Other non-operating (income) expenses, net		(2	)		1
Other non-operating expenses (income), net		7			(2	)
Minority interest		(3	)		1
Income before income taxes	$	67		$	102
Income before income taxes	$	105		$	108


	March		December
	21, 2009		27, 2008
Total Assets
U.S. & Canada	$	13,029	$	13,328
Europe		1,999		2,222
Mexico		849		945

Worldwide total assets	$	15,877	$	16,495

Note 12—Restructuring Charges

In the fourth quarter of 2008, we announced a restructuring program to enhance the Company’s operating capabilities in each of our reporting segments with the objective to strengthen customer service and selling effectiveness; simplify decision making and streamline the organization; drive greater cost productivity to adapt to current macroeconomic challenges; and rationalize the Company’s supply chain infrastructure. As part of the restructuring program, approximately 3,600 positions will be eliminated across all reporting segments, four facilities will be closed in the United States, three plants and about 30 distribution centers will be closed in Mexico and about 700 routes will be eliminated in Mexico. In addition, PBG modified its U.S. defined benefit pension plans, which will generate long-term savings and significantly reduce future financial obligations.

The Company expects to record pre-tax charges of $140 million to $170 million in selling, delivery and administrative expenses over the course of the restructuring program, which are primarily for severance and related benefits, pension and other employee-related costs and other charges, including employee relocation and asset disposal costs. The program is expected to be substantially completed by the end of 2009. Since the inception of the program and through March 21, 2009, we eliminated approximately 1,700 positions across all reporting segments and closed four facilities in the United States, two plants in Mexico and eliminated 326 routes in Mexico.

The Company expects to incur approximately $130 million in pre-tax cash expenditures from these restructuring actions, of which $35 million was paid since the inception of the program, with the balance expected to occur in 2009 and 2010. This includes $2 million of employee benefit payments pursuant to existing unfunded termination indemnity plans. These benefit payments have been accrued for in previous periods, and therefore, are not included in our estimated cost for this program or the tables below.

	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

The following tables summarize the pre-tax costs associated with the restructuring program.

~~Note~~By ~~10—Comprehensive~~Reportable ~~Income~~Segment

	12 Weeks Ended
				U.S. &
	March			March
	Worldwide			Canada			Mexico		Europe
	22, 2008			24, 2007
Costs incurred through December 27, 2008	$	83		$	53		$	3	$	27
Net income	$	98		$	102
Costs incurred during the first quarter ended March 21, 2009		5			3			2		—
Net currency translation adjustment		(22	)		(34	)
Costs expected to be incurred through December 26, 2009		52-82			33-44			18-33		1-5
Cash flow hedge adjustment (a)		5			1
Total costs expected to be incurred	$	140-$170		$	89-$100		$	23-$38	$	28-$32
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

(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.

By Activity

Note 11—Restructuring Charges and Full Service Vending Rationalization


										Asset
							Pension &			Disposal,
				Severance			Other			Employee
				& Related			Related			Relocation
	Total			Benefits			Costs			& Other
Costs incurred through December 27, 2008	$	83		$	47		$	29		$	7
Cash payments		(11	)		(10	)		—			(1	)
Non-cash settlements		(30	)		(1	)		(23	)		(6	)

Remaining costs accrued at December 27, 2008		42			36			6			—
Costs incurred during the first quarter ended March 21, 2009		5			1			1			3
Cash payments		(22	)		(18	)		(2	)		(2	)
Non-cash settlements		(2	)		—			(1	)		(1	)

Remaining costs accrued at March 21, 2009	$	23		$	19		$	4		$	—

Restructuring Charges

In the third quarter of 2007, we announced a restructuring program (the “Organizational Realignment”) to realign the Company’s organization to adapt to changes in the marketplace, improve operating efficiencies and enhance the growth potential of the Company’s product portfolio. During the first quarter of 2008, we substantially completed the Organizational Realignment, which resulted in the elimination of approximately 800 positions to date across all of our reporting segments.

The Organizational Realignment will cost approximately $30 million over the course of the program, which is primarily for severance, relocation and other employee-related costs. Since the inception of the program and through March 22, 2008, we have recognized approximately $28 million of this cost including a pre-tax cash charge of approximately $2 million being recorded in the first quarter of 2008 primarily related to relocation expenses in our U.S. & Canada segment.

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

				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	$	—

Full Service Vending Rationalization

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. Since the inception of the program and through March 22, 2008, we incurred a pre-tax charge of approximately $24 million with a pre-tax cash charge of $1 million being recorded in the first quarter of 2008. This pre-tax charge is recorded in selling, delivery and administrative expenses.

Note 12—Contingencies

We are subject to various claims and contingencies related to lawsuits, environmental and other matters arising from 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 13—Supplemental Cash Flow Information

The table below presents the Company’s supplemental cash flow information:

	12 Weeks Ended
	March			March
	22, 2008			24, 2007
	21, 2009			22, 2008
Interest paid	$	3466		$	3834
Income taxes (received) / paid		(1	)		12
Income taxes paid (received)	$	6		$	(1	)
Non-cash investing and financing activities:
Decrease in accounts payable related to capital expenditures	$	(10	)	$	(49	)
Decrease in accounts payable related to capital expenditures		(49	)		(30	)
Capital lease additions		1			2
Contribution of acquired entity by PBG		21			—

15Note 14—Contingencies

Note 1415—Guarantees

PBG has a committed revolving credit facility of $1.2 billion ~~which~~and ~~expires~~an inuncommitted ~~October~~credit facility of $500 ~~2012~~million. ~~This~~ ~~committed~~Both of these credit ~~facility~~facilities isare guaranteed by us and ~~supports~~will be used to support PBG’s ~~$1.2 billion~~ commercial paper program and our working capital requirements. PBG had $~~362~~129 million and $500 million of outstanding commercial paper at March 2221, ~~2008~~2009 and December 2927, ~~2007~~2008, respectively.

In March 1999, PBG issued $1 billion of 7% percent senior notes due 2029, which are guaranteed by us. We also guarantee that to the extent there is available cash, we will distribute pro rata to PBG and PepsiCo sufficient cash such that the aggregate cash distributed to PBG will enable PBG to pay its taxes, ~~repurchase~~share ~~shares~~repurchases, ~~distribute~~ dividends and make interest payments for its internal and ~~external~~ external debt.

Note 16—Subsequent Event

On April 19, 2009, PBG received an unsolicited, non-binding proposal from PepsiCo to acquire all of the outstanding shares of PBG’s common stock not already owned by PepsiCo for $29.50 per share. The tender offer consists of $14.75 in cash plus 0.283 shares of PepsiCo common stock for each share of PBG common stock. PBG’s Board of Directors will evaluate the proposal and respond in due course.

Item 2.

MANAGEMENT’S FINANCIAL REVIEW

Tabular dollars in millions

OUR BUSINESS

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-Cola beverages in all or a portion of the U.S., Mexico, Canada, Spain, Russia, Greece and Turkey.

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 manage and report operating results through three reportable segments — U.S. & Canada, Europe (which includes Spain, Russia, Greece and Turkey) and Mexico. Operationally, the Company is organized along geographic lines with specific regional management teams having responsibility for the financial results in each reportable segment.

Management’s Financial Review should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and the accompanying notes and our Annual Report on Form 10-K for the fiscal year ended December 2927, ~~2007~~2008, 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 in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires us to make estimates and assumptions that affect the reported amounts in our Condensed Consolidated Financial Statements and the accompanying notes, including various claims and contingencies related to lawsuits, taxes, environmental and other matters arising out of the normal course of business. We ~~use~~apply our best judgment, our knowledge of existing facts and circumstances and actions that we may undertake in the future, in determining the estimates that affect our Condensed Consolidated Financial Statements. We evaluate our estimates on an on-going basis using our historical experience as well as other factors we believe appropriate under the circumstances, such as current economic conditions, and adjust or revise our estimates as circumstances change. As future events and their effect cannot be determined with precision, actual results may differ from these estimates.

OUR CRITICAL ACCOUNTING POLICIES

~~The~~As ~~preparation~~discussed ofin ~~our~~the ~~consolidated~~Company’s ~~financial~~Annual ~~statements~~Report inon ~~conformity~~Form ~~with~~10-K ~~U.S.~~for ~~GAAP~~the ~~often requires~~fiscal ~~management~~year toended ~~make~~December 27, ~~judgments~~2008, ~~estimates~~management ~~and~~believes ~~assumptions~~the ~~that~~following ~~affect~~policies, awhich ~~number~~require the use of ~~amounts~~estimates, ~~included~~assumptions ~~in our financial statements~~ and ~~related~~the ~~disclosures.~~application Weof ~~have~~judgment, ~~chosen~~to ~~accounting~~be ~~policies that~~the wemost ~~believe~~critical ~~are appropriate~~ to ~~report~~the ~~accurately~~portrayal ~~and~~of ~~fairly~~Bottling LLC’s ~~our operating results and~~ financial ~~position~~ ~~and~~condition ~~have based our estimates on historical experience~~ and ~~other assumptions that we believe are reasonable. Actual~~ results ~~may~~of ~~differ from these estimates.~~operations:

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.

1721

OUR FINANCIAL RESULTS

ITEMS AFFECTING COMPARABILITY OF OUR FINANCIAL RESULTS

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~~:

	March
	12 Weeks Ended
Income/(Expense)	22, 2008
	March			March
Gross profit
Income/(Expense)	21, 2009			22, 2008
PR Beverages	$	(4	)
Operating Income
Operating income
2008 Restructuring Charges	$	(5	)	$	—
PR Beverages		(4	)
2007 Restructuring and Asset Disposal Charges		—			(3	)
Restructuring and Full Service Vending Rationalization charges		(3	)
Total Operating Income Impact	$	(5	)	$	(3	)
Net Income Attributable to Bottling LLC
2008 Restructuring Charges	$	(5	)	$	—
2007 Restructuring and Asset Disposal Charges		—			(3	)
Total Net Income Attributable to Bottling LLC Impact	$	(5	)	$	(3	)

2009 Items

2008 Restructuring Charges

In the fourth quarter of 2008, we announced a restructuring program to enhance the Company’s operating capabilities in each of our reportable segments. We anticipate the program to be substantially complete by the end of 2009 and the program is expected to result in annual pre-tax savings of approximately $150 million to $160 million. The Company expects to record pre-tax charges of $140 million to $170 million over the course of the restructuring program. These charges are primarily for severance and related benefits, pension and other employee-related costs and other charges, including employee relocation and asset disposal costs. As part of the restructuring program, approximately 3,600 positions will be eliminated including 800 positions in the U.S. & Canada, 600 positions in Europe and 2,200 positions in Mexico.

Since the inception of the program, the Company incurred pre-tax charges of $88 million. Of this amount, we recorded $5 million in the first quarter of 2009, of which $3 million was recorded in our U.S. & Canada segment and $2 million was recorded in our Mexico segment.

The Company expects to incur approximately $130 million in pre-tax cash expenditures from these restructuring actions, of which $35 million was paid since the inception of the program, with the balance expected to occur in 2009 and 2010. During the first quarter of 2009, we paid $22 million in pre-tax cash expenditures from these restructuring actions.

For further information about our restructuring charges see Note 12 in the Notes to Condensed Consolidated Financial Statements.

2008 Items

PR2007 ~~Beverages~~Restructuring ~~Limited (“PR Beverages”)~~Charges

OnIn ~~March 1,~~the ~~2007,~~third ~~together~~quarter ~~with~~of ~~PepsiCo~~2007, we ~~formed~~announced ~~PR Beverages,~~ a ~~venture~~restructuring ~~that~~program ~~will~~to ~~enable~~realign usthe Company’s organization to ~~strategically~~adapt ~~invest~~to changes in ~~Russia~~the tomarketplace, ~~accelerate~~improve ~~our~~operating efficiencies and enhance the growth potential of the Company’s product portfolio. ~~Bottling~~During ~~LLC~~the ~~contributed~~first ~~its~~quarter ~~business~~of 2008, we substantially completed the organizational realignment, which resulted in ~~Russia~~the toelimination PRof approximately ~~Beverages~~800 ~~and~~positions. ~~PepsiCo~~Annual ~~entered~~cost ~~into~~savings ~~bottling~~from ~~agreements~~this ~~with~~restructuring PRprogram ~~Beverages~~are ~~for~~approximately ~~PepsiCo~~$30 million. ~~beverage~~Over ~~products~~the ~~sold~~course inof ~~Russia~~the onprogram ~~the~~we ~~same~~incurred ~~terms~~a aspre-tax incharge ~~effect~~of ~~for~~$29 million. ~~Bottling~~Of ~~LLC~~this ~~immediately~~amount, ~~prior~~we torecorded ~~the~~$2 million ~~venture.~~in ~~PepsiCo~~the ~~also~~first ~~granted~~quarter PRof ~~Beverages~~2008, anprimarily ~~exclusive~~relating ~~license~~ to relocation ~~manufacture~~expenses ~~and~~in ~~sell~~our ~~the~~U.S. ~~concentrate~~& ~~for~~Canada ~~such products~~segment.

~~We fully consolidate PR Beverages into our financial statements and record minority interest~~22 for PepsiCo’s 40 percent ownership interest. Increases or decreases in operating results resulting from the consolidation of the venture are offset by minority interest related to PepsiCo’s ownership interest. Minority interest is recorded below operating income.

Restructuring Charges

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.

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

~~For~~In ~~further~~the ~~information~~fourth ~~about~~quarter ~~our~~of ~~restructuring~~2007, ~~charges~~we ~~and~~adopted a Full Service Vending (“FSV”) Rationalization ~~see~~plan to ~~Note~~rationalize 11our vending asset base in our U.S. & Canada segment by disposing of older underperforming assets and redeploying certain assets to higher return accounts. Our FSV business portfolio consists of accounts where we stock and service vending equipment. This plan, which we completed in the ~~Notes~~second quarter of 2008, was part of the Company’s broader initiative designed to improve ~~Condensed~~operating ~~Consolidated~~income ~~Financial~~margins ~~Statements~~of our FSV business. Over the course of the FSV Rationalization plan, we incurred a pre-tax charge of $25 million, the majority of which was non-cash, including costs associated with the removal of these assets from service, disposal costs and redeployment expenses. Of this amount, we incurred a pre-tax charge of $1 million associated with the FSV Rationalization plan in the first quarter of 2008. This charge was recorded in selling, delivery and administrative expenses.

FINANCIAL PERFORMANCE SUMMARY AND WORLDWIDE FINANCIAL HIGHLIGHTS

	12 Weeks Ended
	March		March		% Change
	22, 2008		24, 2007		Change
	21, 2009		22, 2008		Better/(Worse)
Net revenues	$	2,~~651~~507	$	2,~~466~~651		7(5	)%
Cost of sales	$	1,~~482~~403	$	1,~~343~~482		105	%
Gross profit	$	1,~~169~~104	$	1,~~123~~169		4(6	)%
Selling, delivery, and administrative expenses		1,063		1,004		6
Selling, delivery and administrative expenses	$	989	$	1,063		7	%
Operating income	$	~~106~~115	$	~~119~~106		~~(11~~9	)%
Net income		98		102		(5	)
Net income attributable to Bottling LLC	$	67	$	98		(32	)%

Foreign currency impact — The impact of foreign currency translation, driven by ~~the~~weakening foreign ~~strength~~functional ofcurrencies, ~~all~~reduced ~~our~~worldwide ~~foreign functional~~net ~~currencies,~~revenues ~~contributed~~and gross profit growth by approximately ~~three~~five percentage points. ofWeakening ~~growth~~currencies inalso ~~worldwide~~reduced ~~net revenues,~~growth in cost of sales and selling, delivery and administrative expenses ~~and~~by ~~contributed~~approximately ~~two~~ six percentage points ~~to gross profit~~. ~~Foreign~~Operating income ~~currency~~was ~~translation~~favorably ~~decreased~~impacted ~~worldwide~~by ~~operating income~~a bynet ~~approximately~~increase ~~three~~of five percentage points due to foreign currency translation.

~~Net~~The ~~revenues~~benefit —from ~~Growth~~foreign ofcurrency ~~seven~~translation ~~percent~~was ~~reflected~~offset ~~positive~~by ~~growth~~a ~~across~~significant ~~all~~increase ~~segments~~in ~~driven~~foreign currency transactional costs for our U.S. dollar and euro denominated purchases in Europe and Mexico. Negative foreign currency transactional costs increased cost of sales growth by approximately ~~volume~~$27 million and ~~rate~~other ~~increases~~non-operating expenses (income), net by an additional $9 million, for the quarter.

~~Cost~~Volume — Decrease of ~~sales~~five —percent ~~Increase~~was driven by declines in each of ~~10 percent~~our ~~primarily~~segments ~~attributable~~due to ~~higher~~the soft ~~raw~~economic ~~material~~conditions ~~costs~~globally, which have negatively impacted the liquid refreshment beverage category. Additionally, worldwide volume was negatively impacted by two percentage points due to the shift of the Easter holiday from the first quarter in 2008 to the second quarter in 2009 (“Easter Shift”).

~~Gross~~Net ~~profit~~revenues — ~~Growth~~Reported ofnet ~~four~~revenues declined five percent ~~reflected~~driven by a decrease in worldwide volume growth and ~~rate~~the ~~increases~~negative ~~which~~impact ~~were~~from foreign currency translation. This decline was partially offset by a ~~mix~~five ~~shift~~percentage ~~into~~point ~~lower~~increase ~~margin~~in ~~packages~~net revenue per case on a currency neutral basis driven primarily by rate increases in ~~the~~each Uof our segments.S. &Reported ~~Canada~~net ~~segment~~revenue ~~and~~per ~~higher~~case ~~raw~~declined ~~material~~one ~~costs~~percent ~~worldwide~~versus the prior year, which includes a five percentage point negative impact from foreign currency translation.

~~Selling,~~Cost ~~delivery~~of ~~and~~sales ~~administrative~~— ~~(“SD&A”)~~Reported ~~expenses~~cost —of ~~Increase~~sales ofdeclined ~~six~~five percent ~~includes~~due to foreign currency ~~investment~~translation and lower volume in ~~our~~the ~~operating~~quarter. ~~infrastructure~~These indeclines ~~Europe~~were ~~mitigated~~partially offset by ~~continued~~a five percentage point increase in cost ~~productivity~~of sales per case on a currency neutral basis due to higher raw ~~improvements~~material costs coupled with the negative impact of foreign currency transactional costs in Europe and ~~disciplined~~Mexico. Reported cost ~~management~~of sales per case was flat versus the prior year, which includes a six percentage point benefit from foreign currency translation.

~~Operating~~Gross ~~income~~profit — ~~Decrease~~Reported ofgross ~~11 percent~~profit ~~includes~~declined aby ~~four~~six ~~percentage~~percent ~~point~~driven ~~negative~~by ~~impact~~volume declines and ~~from~~foreign ~~the~~currency ~~consolidation~~translation. ofThis PRwas ~~Beverages,~~partially offset by a ~~three~~five percentage point ~~negative~~improvement ~~impact~~in gross ~~from~~profit ~~foreign~~per ~~currency~~case ~~translation~~on ~~and~~ a ~~two~~currency ~~percentage~~neutral ~~point~~basis ~~negative~~where ~~impact~~rate ~~from~~gains ~~the~~more ~~restructuring~~than ~~and~~offset ~~FSV Rationalization~~higher ~~charges.~~raw ~~Negative~~material ~~mix~~costs. Reported ~~shifts~~gross inprofit ~~the~~per ~~U.S.~~case &declined ~~Canada~~one ~~segment~~percent ~~primarily~~versus ~~drove~~ the ~~remaining~~ ~~decrease~~prior ~~partially~~year, ~~offset~~which byincludes ~~volume~~a ~~and~~five percentage ~~rate~~point ~~increases~~negative ~~and~~impact ~~cost~~from ~~productivity~~foreign ~~improvements across~~currency ~~all segments~~translation.

~~Net income — Decrease of five percent reflected lower operating income, partially offset by~~23 ~~lower interest expense.~~

~~2008~~ Selling, ~~RESULTS~~delivery OFand ~~OPERATIONS~~administrative (“SD&A”) expenses — Reported SD&A expenses declined by seven percent driven by foreign currency translation and lower operating costs due to continued productivity improvements across all segments coupled with volume declines.

Operating income — Reported operating income grew nine percent driven primarily by cost and productivity improvements, strong pricing actions and the positive impact from acquisitions and foreign currency translation. Operating income growth was reduced by volume declines and a two percentage point negative impact from the restructuring charges discussed above.

Net income attributable to Bottling LLC — Decline for the quarter reflects higher interest expense on third party loans and lower interest income generated from loans made to PBG coupled with the negative impact of foreign currency transactional losses in 2009. This was partially offset by an increase in operating income and lower income tax expense.

2009 RESULTS OF OPERATIONS

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

Volume

	12 Weeks Ended
	March 22, 2008 vs. March 24, 2007
	March 21, 2009 vs. March 22, 2008
	Worldwide			U.S. & Canada			Europe			Mexico
				U.S. &
Total volume change		2	%		2	%		7	%		2	%
	Worldwide			Canada			Europe			Mexico
Base volume		(6	)%		(5	)%		(16	)%		(7	)%
Acquisitions		1			2			—			—
Total volume change		(5	)%		(3	)%		(16	)%		(7	)%

Our worldwide physical case volume increased two percent in the first quarter primarily due to the shift of the Easter holiday into the first quarter in 2008 versus the second quarter in 2007 (“Easter shift”) in our U.S. & Canada ~~segment.~~

In our U.S. & Canada segment, volume ~~increased~~decreased ~~two~~three ~~percentage~~percent ~~points~~due ~~driven~~primarily byto the ~~Easter~~ ~~shift.~~macroeconomic ~~The~~factors ~~Easter~~negatively ~~shift~~impacting ~~particularly~~the ~~benefited~~liquid ~~our~~refreshment ~~take~~beverage ~~home~~category ~~channel~~and ~~which~~the ~~increased four percent,~~Easter ~~driven~~Shift. ~~primarily~~The byEaster ~~growth~~Shift incontributed ~~supermarkets,~~two ~~supercenters~~percentage ~~and~~points ~~mass~~to ~~merchandisers.~~the ~~This~~decline ~~increase~~for ~~was offset~~the byquarter. ~~a two percent~~ This decline in ~~the~~volume ~~cold~~was ~~drink channel,~~ partially ~~due~~offset toby ~~declines~~a intwo ~~our foodservice~~percentage ~~channel,~~point ~~including~~increase ~~restaurants,~~from ~~travel~~our ~~and~~acquisition ~~leisure,~~of Lane ~~and~~Affiliated ~~workplace~~Companies, ~~which~~Inc. ~~has~~(“Lane”) ~~been particularly impacted by the economic downturn~~ in the ~~U.S.~~fourth ~~Cold~~quarter ~~drink~~of ~~volume~~2008, ~~was~~coupled ~~also~~with ~~negatively~~incremental ~~impacted~~volume byfrom ~~the~~our ~~actions~~newly weacquired ~~took~~rights to ~~eliminate~~distribute ~~low-returning~~Crush ~~assets~~and inMuscle ~~our~~Milk ~~full~~in ~~service~~the ~~vending business~~U.S., ~~These~~which contributed ~~actions~~an ~~lowered~~additional ~~our~~two ~~cold~~percentage ~~drink~~points ~~volume~~of bygrowth ~~about~~to ~~one~~the ~~percentage point~~quarter.

InTake-home ~~our~~and ~~Europe~~cold ~~segment,~~drink ~~overall~~channels ~~volume~~declined ~~grew~~by ~~seven~~four percent asand aseven ~~result~~percent, ofrespectively, for ~~solid~~the ~~growth~~quarter. The decline in ~~all~~the take-home channel for the quarter was driven primarily by our ~~countries.~~large ~~Russia~~format ~~continued~~stores due to ~~lead~~the ~~Europe~~overall ~~with~~slow ~~volume~~down ~~growth~~in ofthe ~~13 percent~~economy ~~reflecting~~and ~~strong~~the negative impact from the ~~performance~~Easter Shift. Declines in ~~CSDs~~the cold drink channel were driven by our foodservice channel, including restaurants, travel and ~~non-carbonated~~leisure ~~beverages~~and workplace, which have been particularly impacted by the economic downturn in the United States.

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

In our Europe segment, volume declined by 16 percent for the quarter. Soft volume performance reflected the overall weak macroeconomic environment and category softness throughout Europe, which resulted in double digit declines in Russia, Spain and Turkey.

Mexico

In our Mexico segment, volume decreased seven percent for the quarter driven by slower economic growth coupled with pricing actions taken by the Company to drive improved margins across its portfolio. This drove single digit declines in our carbonated soft drink (“CSD”) and bottled water categories and double digit declines in jug water and single serve packages.

Net Revenues

	12 Weeks Ended
	March 22, 2008 vs. March 24, 2007
	March 21, 2009 vs. March 22, 2008
	Worldwide			U.S. & Canada			Europe			Mexico
				U.S. &
Volume impact		2	%		2	%		7	%		2	%
	Worldwide			Canada			Europe			Mexico
Net price per case impact		2			1			12			7
2009 Net revenues	$	2,507		$	2,177		$	174		$	156
Currency translation		3			2			15			1
2008 Net revenues	$	2,651		$	2,207		$	236		$	208
Total Net Revenues change		7	%		5	%		34	%		10	%
% Impact of:
Volume impact		(6	)%		(5	)%		(16	)%		(7	)%
Net price per case impact (rate/mix)		5			4			10			5
Acquisitions		1			1			—			—
Currency translation		(5	)		(2	)		(20	)		(23	)
Total net revenues change		(5	)%		(1)	%*		(26	)%		(25	)%

~~Worldwide~~* ~~net~~Does ~~revenues~~not ~~were~~add ~~$2.7 billion~~due into ~~the~~rounding ~~first~~to ~~quarter,~~the ~~increasing~~whole ~~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~~U.S. & Canada segment, ~~growth~~net ~~across~~revenues ~~all~~declined ~~countries~~one percent in ~~net~~the ~~revenues~~quarter ~~reflected~~driven ~~strong~~by volume ~~increases~~declines and currency translation. These decreases were partially offset by a four percent improvement in net ~~price~~revenue per case, ~~volume~~on ~~and~~a ~~the~~currency ~~positive~~neutral ~~impact~~basis ofdriven ~~foreign~~by ~~currency~~rate ~~translation.~~increases ~~Growth~~on inthe ~~Europe~~majority ~~was~~of ~~led~~our bypackages ~~strong~~taken ~~double-digit~~to ~~growth~~offset inrising ~~Russia~~raw material costs and ~~Turkey~~improve profitability coupled with incremental revenue from our prior year acquisition of Lane.

20Europe

In our Europe segment, net revenues declined 26 percent in the quarter due primarily to the negative impact of foreign currency translation and volume declines. Growth in net revenue per case on a currency neutral basis was driven primarily by rate actions and disciplined promotional spending in Russia.

Mexico

In our Mexico segment, declines in net revenues of 25 percent in the quarter reflect the negative impact of foreign currency translation and lower volume. Net revenue per case grew five percent on a currency neutral basis primarily due to rate increases taken on our CSD and bottled water categories to drive margin improvement.

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 22, 2008 vs.
	March 24, 2007
	Worldwide
Cost impact		3	%
Restructuring and Full Service Vending Rationalization charges		0
Currency translation		3
Total SD&A change		6	%

Worldwide SD&A expenses were $1.1 billion in the first quarter of 2008, increasing six percent. Increases in worldwide SD&A expenses reflect investment in our operating infrastructure in Europe and the impact of foreign currency translation. These increases were partially offset by cost productivity improvements and disciplined cost management. The restructuring and FSV Rationalization charges added less than one percentage point to our total SD&A expenses. In the U.S. & Canada segment, SD&A expenses increased three percentage points compared to the same period last year, driven primarily by foreign currency translation and reflects continued cost productivity improvements and disciplined cost management.

Operating Income

Worldwide operating income was $106 million in the first quarter of 2008, decreasing 11 percent compared to the similar period last year. Decreases in worldwide operating income primarily reflect 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.


	12 Weeks Ended
	March 21, 2009 vs. March 22, 2008
				U.S. &
	Worldwide			Canada			Europe			Mexico
2009 Operating income (loss)	$	115		$	142		$	(25	)	$	(2	)
2008 Operating income (loss)	$	106		$	134		$	(31	)	$	3

% Impact of:
Operations		3	%		7	%		(8	)%		(147	)%
Currency translation		5			(2	)		26			29
2008 Restructuring charges		(4	)		(2	)		—			(62	)
2007 Restructuring and asset disposal charges		2			2			—			—
Acquisitions		3			2			—			—

Total operating income change		9	%		7	%		17	%*		(180	)%

In* ~~our~~Does ~~U.S.~~not &add ~~Canada segment, operating income decreased six percent primarily~~ due to ~~cost~~rounding ~~per case~~to ~~increases resulting from higher raw material costs, a negative mix shift into our lower margin take home channel as a result of~~ the ~~Easter~~whole ~~shift, declines in the cold drink channel and a two~~ percent.

21U.S. & Canada

In our U.S. & Canada segment, operating income increased seven percent for the quarter. Increase in operating income for the quarter was primarily due to cost and productivity improvements, increases in gross profit per case and the positive impact from our acquisition of Lane. These increases were partially offset by lower income due to volume declines and the negative impact of foreign currency translation.

Reported gross profit per case improved two percent for the quarter in our U.S. & Canada segment which includes a two percentage point negative impact from foreign currency translation. The remaining four percent improvement in gross profit per case on a currency neutral basis was driven by growth in net revenue per case, which more than offset higher raw material costs. Reported cost of sales per case increased two percent versus the prior year, which includes a two percentage point benefit from foreign currency translation.

SD&A expenses improved three percent for the quarter in our U.S. & Canada segment due to lower costs resulting from productivity initiatives and volume declines coupled with a three percentage point positive impact from foreign currency. These declines were partially offset by rising costs in labor and benefits and the impact of our prior year acquisition.

Europe

In our Europe segment, reported operating income increased 17 percent for the quarter which includes a 26 percentage point benefit from foreign currency translation. The remaining eight percent decrease in operating income on a currency neutral basis was due to lower volume, partially offset by improvements in gross profit per case and cost and productivity improvements.

Reported gross profit per case in Europe declined 14 percent for the quarter which includes a 22 percentage point negative impact from foreign currency translation. The remaining eight percent improvement in gross profit per case on a currency neutral basis was driven by strong rate increases which offset higher raw material costs. Increases in raw material costs in Europe were primarily due to the negative impact of foreign currency transactional costs resulting from U.S. dollar and Euro purchases in this segment.

SD&A expenses in Europe improved 25 percent which includes a 20 percentage point benefit from foreign currency translation. The remaining five percentage points of improvement were driven by lower volume and cost and productivity initiatives throughout Europe, partially offset by higher operating costs due to the increased investment in Russia.

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

In our ~~Europe~~Mexico segment, operating ~~loss~~income ~~increased~~decreased ~~23 percent~~in ~~primarily~~the quarter due to ~~the~~volume ~~negative~~declines, ~~impact~~partially ofoffset ~~consolidating~~by PRimproved ~~Beverages,~~pricing ~~foreign~~actions ~~currency translation~~ and ~~investment~~lower ~~activity~~costs ~~which drove~~resulting ~~higher~~from ~~losses in the quarter due to the seasonality of our business in this segment~~productivity initiatives.

InReported ~~our~~gross ~~Mexico~~profit ~~segment,~~per ~~operating~~case ~~income~~declined ~~increased~~21 percent $1which includes a 24 ~~million,~~percent negative impact from foreign currency translation. The remaining three percent improvement in gross profit per case on a currency neutral basis was due ~~primarily~~to solid revenue and margin management which offset rising raw material costs due to ~~strong~~higher ~~gross~~foreign currency transactional costs relating to our U.S. dollar ~~profit~~denominated ~~improvement~~purchases in Mexico.

SD&A expenses improved 22 percent which includes a 25 percent benefit from foreign currency translation and a two percentage point negative impact from restructuring charges. The remaining one percent increase was due to inflation, partially offset by lower costs associated with volume declines and reduced operating costs attributable to improved route productivity.

Interest Expense

Interest expense ~~decreased~~increased ~~approximately~~ $620 million ~~largely~~ due to ~~lower~~higher ~~effective~~debt ~~interest~~levels associated with the issuance ~~rates~~of on$750 million ~~long~~of senior notes in January 2009 and the pre-~~term~~funding ~~debt~~of ~~due~~our toFebruary 2009 ~~interest~~$1.3 billion ~~rate~~debt ~~swaps~~maturity.

Interest Income

Interest income decreased ~~approximately~~ $315 million ~~largely~~driven ~~due~~primarily toby lower effective interest rates on on loans made to PBG.

Other Non-operating Expenses (Income) ~~Expenses~~, net

Other net non-operating ~~income~~expense was $27 million in the first quarter of ~~2008~~2009 as compared to $12 million of net non-operating ~~expenses~~income in the first quarter of ~~2007~~2008. ~~Income~~Foreign currency transactional losses in ~~2008~~2009 ~~was~~resulted primarily ~~a result~~from ofour ~~foreign~~U.S. ~~exchange~~dollar ~~gains~~and ~~due~~euro todenominated purchases in Mexico and Russia, reflecting the ~~strength~~impact of the ~~Russian~~weakening ~~ruble~~peso and ~~Mexico peso~~ruble.

~~Minority~~Net ~~Interest~~Income Attributable to Noncontrolling Interests

InNet ~~2008,~~income ~~minority~~attributable ~~interest~~to noncontrolling interests was flat versus the prior year, primarily ~~reflects~~reflecting 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

We are a limited liability company, classified as a partnership for U.S. tax purposes and, as such, generally will pay limited U.S. federal, state and local income taxes. Our federal and state distributive shares of income, deductions and credits are allocated to our owners based on their percentage of ownership. However, certain domestic and foreign affiliates pay taxes in their respective jurisdictions and record related deferred income tax assets and liabilities.

Our effective tax rate for the 12 weeks ended March 2221, ~~2008~~2009 was 75.1%, percent compared with our effective tax rate of 57.8%3 percent for the 12 weeks ended March 2422, ~~2007~~2008. The ~~increase~~decrease in our 2009 effective tax rate inwas ~~the~~primarily ~~first~~driven ~~quarter~~by iscertain ~~primarily~~tax ~~driven~~planning bystrategies ~~the~~that ~~timing~~are offavorably impacting ~~recording~~our ~~discrete~~tax ~~items~~provision.

LIQUIDITY AND FINANCIAL CONDITION

Cash Flows

In12 ~~the~~Weeks ~~first~~Ended ~~quarter of 2008 Bottling LLC generated $111~~March ~~million of net cash from operations~~21, a ~~decrease~~2009 ~~of $123 million from 2007~~vs. ~~The decrease in net cash provided by operations was driven primarily by lower interest income received from PBG~~March 22, ~~lower profits and investment in our hydration~~2008 ~~strategy, partially offset by timing of inventory purchases and lower tax payments.~~

~~Net~~Bottling ~~cash~~LLC ~~used~~generated ~~for investments was~~ $~~181~~261 million of net cash from operations, aan ~~decrease~~increase of $~~130~~150 million from ~~2007~~2008. The ~~decrease~~ increase in net cash ~~used~~provided ~~for~~by ~~investments~~operations ~~reflects~~was ~~higher~~driven ~~net~~primarily ~~issuances~~by ofhigher ~~notes~~interest payments ~~receivable~~received from PBG ~~in the prior year~~ and ~~lower~~the ~~acquisition~~timing ~~payments,~~of ~~partially~~accounts ~~offset~~payable ~~by higher payments for capital expenditures~~disbursements.

Net cash ~~provided~~used byfor ~~financing~~investments ~~activities~~ was $27266 million, an increase of $2385 million ~~versus prior~~from ~~year~~2008. ~~This~~ The increase in cash used for investments was driven primarily by a loan made to our Lebedyansky non-controlled affiliate contemplated as part of the initial capitalization of the purchase of Lebedyansky between PepsiCo and us, and an increase in notes receivable from ~~financing~~PBG, ~~reflects~~partially ~~higher~~offset by ~~short~~lower ~~term~~capital ~~borrowings~~expenditures.

22 Net cash used for financing activities was $448 million, an increase of $475 million from 2008. This increase in cash used for financing reflects the repayment of our $1.3 billion bond, partially offset by the issuance of a $750 million bond.

Liquidity and Capital Resources

Our principal sources of cash ~~come~~include cash from our operating activities and the 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.~~

~~Our~~The ~~$1.3 billion~~recent and extraordinary disruption in the world credit markets has had a significant adverse impact on a number of 5financial institutions.~~63 percent~~ ~~senior~~At ~~notes~~this point in time, the Company’s liquidity has not been materially impacted by the current credit environment and management does not expect that it will ~~become~~be ~~due~~materially impacted in ~~February 2009~~the near-future. WeManagement ~~plan~~will continue to ~~refinance~~closely ~~these~~monitor ~~notes~~the Company’s liquidity and the credit markets. However, management cannot predict with any certainty the impact to the Company of any further disruption in the credit environment.

OnDuring ~~March 20,~~the ~~2008,~~first ~~together~~quarter ~~with~~of ~~PepsiCo~~2009, we ~~announced~~issued ~~the joint acquisition of 75.5~~$750 ~~percent~~ million in ~~Russia’s~~senior ~~leading~~notes, ~~branded~~with ~~juice~~a ~~company~~coupon ~~JSC~~rate of ~~Lebedyansky (“Lebedyansky”) for $1~~5.4125 ~~billion~~percent, ~~excluding~~ ~~the~~maturing ~~company’s~~in ~~baby food and mineral water business~~2019. AsThe ~~announced,~~net ~~PepsiCo~~proceeds ~~will acquire 75 percent and PBG will acquire 25 percent~~ of the ~~75.5 percent~~offering, ~~stake.~~together Wewith ~~plan~~a toportion ~~fund~~ of the ~~acquisition using~~proceeds ~~money loaned~~ from ~~PBG’s~~the ~~commercial~~offering ~~paper~~of ~~program~~our ~~and~~senior ~~cash~~notes ~~provided~~issued byin ~~operations. The acquisition is expected to be completed during~~ the ~~second~~fourth ~~half~~quarter of ~~our fiscal year~~ 2008, ~~and~~were isused ~~subject~~ to ~~normal~~repay ~~local~~our ~~regulatory~~senior ~~approvals~~notes ~~and~~due ~~the~~at ~~demerger~~their ofscheduled ~~the baby~~maturity ~~food~~on ~~business. Additionally~~February 17, ~~together with PepsiCo, we expect to tender for the remaining 24~~2009.~~5 percent~~ ~~ownership~~The ~~of Lebedyansky’s juice business. PBG and PepsiCo’s~~next ~~tender~~significant ~~for~~scheduled ~~Lebedyansky’s~~debt ~~remaining~~maturity ~~shares~~is ~~will~~not ~~continue~~until ~~to be purchased 25 percent and 75 percent, respectively~~2012.

On March 31, 2009, we made a contribution of $70 million to the U.S. defined benefit pension trust.

Contractual Obligations

As of March 2221, ~~2008~~2009, 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 2927, ~~2007~~2008, under the caption “Contractual Obligations”.

Off-Balance Sheet Arrangements

For information about our off-balance sheet arrangements see Note 1415 in the Notes to Condensed Consolidated Financial Statements.

CAUTIONARY STATEMENTS

Except for the historical information and discussions contained herein, statements contained in this Form 10-Q may constitute forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on currently available competitive, financial and economic data and our operating plans. These statements involve a ~~number~~ 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 increase our costs; • material changes from expectations in the cost or availability of raw materials, ingredients or packaging materials; • limitations on the availability of water or obtaining water rights; • an inability to achieve cost savings; • material changes in capital investment for infrastructure and an inability to achieve the expected timing for returns on cold-drink equipment and related infrastructure expenditures; • decreased demand for our product resulting from changes in consumers’ preferences; • an inability to achieve volume growth through product and packaging initiatives; • impact of competitive activities on our business; • impact of customer consolidations on our business; • changes in product category consumption; • unfavorable weather conditions in our markets; • an inability to successfully integrate acquired businesses or to meet projections for performance in newly acquired territories; • loss of business from a significant customer; • loss of key members of management; • failure or inability to comply with laws and regulations; • changes in laws, regulations and industry guidelines governing the manufacture and sale of food and beverages, including restrictions on the sale of carbonated soft drinks in schools; • litigation, other claims and negative publicity relating to alleged unhealthy properties of soft drinks; • changes in laws and regulations governing the environment, transportation, employee safety, labor and government contracts; • changes in accounting standards and taxation requirements (including unfavorable outcomes from audits performed by various tax authorities); • unforeseen social, economic and political changes; • possible recalls of our products; • interruptions of operations due to labor disagreements; • limitations on our ability to invest in our business as a result of our repayment obligations under our existing indebtedness; • changes in our debt ratings; • material changes in expected interest and currency exchange rates and unfavorable market performance of assets in PBG sponsored pension plans; and • an inability to achieve strategic business plan targets that could result in a non-cash intangible asset impairment charge.28

Cautionary statements included in Management’s Discussion and Analysis and in Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 27, 2008 should be considered when evaluating our trends and future results.

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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 2927, ~~2007~~2008.

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.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We are party to a variety of legal proceedings arising in the normal course of business. While the results of proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our Consolidated Financial Statements, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes with respect to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 27, 2008.

Item 6.

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

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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 (Registrant)
Date: April 28, 2008	/s/ Thomas M. Lardieri
Date: April 27, 2009	/s/ Thomas M. Lardieri
	Thomas M. Lardieri
	Principal Accounting Officer and Managing Director
Date: April 28, 2008	/s/ Alfred H. Drewes
Date: April 27, 2009	/s/ Alfred H. Drewes
	Alfred H. Drewes
	Principal Financial Officer

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Filing Compare · BOTTLING GROUP LLC