<PAGE>

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              --------------------

                                    FORM 10-Q


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

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

                         COMMISSION FILE NUMBER 1-13914

                     PEPSI-COLA PUERTO RICO BOTTLING COMPANY

             (Exact Name of Registrant as Specified in Its Charter)


            DELAWARE                                    ###-##-####
  (State or Other Jurisdiction              (I.R.S. Employer Identification No.)
of Incorporation or Organization)


                             CARRETERA #865, KM. 0.4
                            BARRIO CANDELARIA ARENAS
                           TOA BAJA, PUERTO RICO 00949
          (Address of Principal Executive Offices, including Zip Code)

                                 (787) 251-2000
              (Registrant's Telephone Number, including Area Code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes [X]  No [ ]

         As of August 16, 1999, there were 21,690,000 shares of Common Stock
issued and outstanding. This amount includes 5,000,000 shares of Class A Common
Stock and 16,690,000 shares of Class B Common Stock.

================================================================================
<PAGE>

                                TABLE OF CONTENTS



                                                                        PAGE NO.
                                                                        --------

PART I
    ITEM 1.   FINANCIAL STATEMENTS ........................................  2
    ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS ......................... 10
    ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .. 15

PART II.
    ITEM 1.   LEGAL PROCEEDINGS ........................................... 16
    ITEM 5.   OTHER INFORMATION............................................ 16
    ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K ............................ 17
<PAGE>

          CAUTIONARY STATEMENT UNDER THE SAFE HARBOR PROVISIONS OF THE
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in this Report include forward looking statements regarding
possible future events, including, the Company's proposed acquisition of Delta
Beverage Group, Inc. ("Delta") and Dakota Beverage Company, Inc. ("Dakota")
estimated capital expenditures, seasonality of the Company's business and the
Company's intentions with respect to dividend payments. Such forward looking
statements may involve factors that could cause the actual results of the
Company to differ materially from historical results or from any results implied
by such forward looking statements. The Company cautions the public not to place
undue reliance on forward looking statements, which may be based on assumptions
and anticipated events that do not materialize. Factors which could cause the
Company's actual results to differ from forward looking statements include
material changes in the relationship between the Company and PepsiCo, Inc.; any
material change to the proposed acquisition of Delta and Dakota; inability to
achieve additional cost savings and continued competitive pressures with respect
to pricing and volume in the Puerto Rico market, which could result in continued
erosion of market share; unexpected developments which prevent improved results
from the Company's marketing activities; and other factors, including economic,
climatic and political conditions in Puerto Rico, and the impact of such
conditions on consumer spending.
<PAGE>

                                     PART I

ITEM 1. FINANCIAL STATEMENTS

            PEPSI-COLA PUERTO RICO BOTTLING COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                          (U. S. Dollars in thousands)

<TABLE>
<CAPTION>
                                                                 June 30,   December 31,
                                                                   1999        1998
ASSETS                                                          (unaudited)
                                                                 --------    --------
<S>                                                              <C>         <C>
CURRENT ASSETS:
     Cash and cash equivalents                                   $  7,801    $ 19,418
     Receivables, net of allowance for doubtful
       accounts of $1,577 and $2,402
         Trade                                                     13,351      13,043
         Due from PepsiCo, Inc. and affiliated companies            2,376       2,008
         Other                                                      2,412       2,248
     Inventories                                                    3,308       2,505
     Bottles, cases and shells                                        820       1,409
     Deferred income taxes                                             32          49
     Prepaid expenses and other current assets                      4,820       4,422
                                                                 --------    --------
         Total current assets                                      34,920      45,102
                                                                 --------    --------

PROPERTY AND EQUIPMENT:
     Land and improvements                                          6,893       6,893
     Buildings and improvements                                    14,557      14,779
     Machinery, equipment and vehicles                             52,558      47,881
     Furniture and fixtures                                         1,739       1,809
     Construction in process                                         --         1,250
                                                                 --------    --------
                                                                   75,747      72,612
     Less accumulated depreciation                                (29,634)    (30,150)
                                                                 --------    --------
                                                                   46,113      42,462
                                                                 --------    --------

OTHER ASSETS:
     Deferred income taxes                                          1,221       1,221
     Long-lived assets for sale, principally land and building      2,615       2,615
     Intangible assets, net of accumulated amortization             1,112       1,259
     Note receivable                                                  379        --
     Other assets                                                     572         192
                                                                 --------    --------
                                                                    5,899       5,287
                                                                 --------    --------
         Total assets                                            $ 86,932    $ 92,851
                                                                 ========    ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       2
<PAGE>

            PEPSI-COLA PUERTO RICO BOTTLING COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Continued)

              (U. S. Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                              June 30,    December 31,
                                                                1999         1998
LIABILITIES AND SHAREHOLDERS' EQUITY                        (unaudited)
                                                             ---------    ---------
<S>                                                          <C>          <C>
CURRENT LIABILITIES:
     Current installments of long-term debt                  $   1,070    $   1,007
     Current installments of capital lease obligations              17           41
     Accounts payable                                            6,411        3,842
     Accrued expenses                                            7,571        9,455
                                                             ---------    ---------
         Total current liabilities                              15,069       14,345
                                                             ---------    ---------

LONG-TERM DEBT, excluding current installments                  20,823       22,073
CAPITAL LEASE OBLIGATIONS, excluding current installments         --              7
ACCRUED PENSION COST                                             1,558        1,805

SHAREHOLDERS' EQUITY:
     Class A common shares, $0.01 par value;
       authorized, issued and outstanding 5,000,000 shares          50           50

     Class B common shares, $0.01 par value;
       authorized 35,000,000 shares, issued and
       outstanding 16,690,000 shares                               167          167

     Additional paid-in capital                                127,516      127,516
     Accumulated deficit                                       (75,955)     (70,765)
     Deferred compensation                                        (406)        (457)
     Accumulated other comprehensive income (loss)              (1,890)      (1,890)
                                                             ---------    ---------

         Total shareholders' equity                             49,482       54,621
                                                             ---------    ---------

         Total liabilities and shareholders' equity          $  86,932    $  92,851
                                                             =========    =========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>

            PEPSI-COLA PUERTO RICO BOTTLING COMPANY AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                        FOR THE SIX MONTHS ENDED JUNE 30

                                    Unaudited

                 (U.S. Dollars in thousands, except share data)

                                                      1999        1998
                                                    --------    --------
OPERATIONS:
     Net sales                                      $ 50,075    $ 48,785
     Cost of sales                                    37,936      36,193
                                                    --------    --------
         Gross profit                                 12,139      12,592

     Selling, general and administrative expenses     15,760      16,982
     Fees related to combination of interests            692        --
     Losses on asset impairments                         267        --
                                                    --------    --------
         Loss from operations                         (4,580)     (4,390)
                                                    --------    --------

OTHER INCOME (EXPENSE):
     Interest expense                                   (860)     (1,239)
     Interest income                                     217         332
     Other, net                                          102         166
                                                    --------    --------
                                                        (541)       (741)
                                                    --------    --------

LOSS BEFORE INCOME TAXES                              (5,121)     (5,131)

INCOME TAX BENEFIT (EXPENSE)                             (69)        922
                                                    --------    --------

NET LOSS                                            $ (5,190)   $ (4,209)
                                                    ========    ========

COMPREHENSIVE INCOME (LOSS)                         $ (5,190)   $ (4,209)
                                                    ========    ========

NET LOSS PER COMMON SHARE                           $  (0.24)   $  (0.20)
                                                    ========    ========

NET LOSS PER COMMON SHARE-ASSUMING DILUTION         $  (0.24)   $  (0.20)
                                                    ========    ========

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (IN THOUSANDS)                            21,690      21,500
                                                    ========    ========



   The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>

            PEPSI-COLA PUERTO RICO BOTTLING COMPANY AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                       FOR THE THREE MONTHS ENDED JUNE 30

                                    Unaudited

                 (U.S. Dollars in thousands, except share data)

                                                      1999        1998
                                                    --------    --------
OPERATIONS:
     Net sales                                      $ 26,808    $ 25,842
     Cost of sales                                    19,939      19,261
                                                    --------    --------
         Gross profit                                  6,869       6,581

     Selling, general and administrative expenses      8,057       8,950
     Fees related to combination of interests            692        --
     Losses on asset impairments                        --          --
                                                    --------    --------
         Loss from operations                         (1,880)     (2,369)
                                                    --------    --------

OTHER INCOME (EXPENSE):
     Interest expense                                   (418)       (610)
     Interest income                                      54         176
     Other, net                                         --          (116)
                                                    --------    --------
                                                        (364)       (550)
                                                    --------    --------

LOSS BEFORE INCOME TAXES                              (2,244)     (2,919)

INCOME TAX BENEFIT (EXPENSE)                             (52)       (139)
                                                    --------    --------

NET LOSS                                            $ (2,296)   $ (3,058)
                                                    ========    ========

COMPREHENSIVE INCOME (LOSS)                         $ (2,296)   $ (3,058)
                                                    ========    ========

NET LOSS PER COMMON SHARE                           $  (0.11)   $  (0.14)
                                                    ========    ========

NET LOSS PER COMMON SHARE-ASSUMING DILUTION         $  (0.11)   $  (0.14)
                                                    ========    ========

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (IN THOUSANDS)                            21,690      21,500
                                                    ========    ========


   The accompanying notes are an integral part of these financial statements.

                                       5
<PAGE>

            PEPSI-COLA PUERTO RICO BOTTLING COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE SIX MONTHS ENDED JUNE 30

                                    Unaudited

                           (U.S. Dollars in thousands)

<TABLE>
<CAPTION>
                                                                   1999        1998
                                                                 --------    --------
<S>                                                              <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                    $ (5,190)   $ (4,209)
     Adjustments to reconcile net loss to net cash
       used in operating activities-
         Losses on asset impairments                                  267        --
         Depreciation and amortization                              2,474       2,646
         Deferred income taxes                                         17        --
         Amortization of deferred compensation                         51        --
         Fees related to combination of interests, net of payments    600        --
         Changes in current assets and liabilities:
              Receivables                                          (1,665)       (971)
              Inventories                                            (818)       (843)
              Bottles, cases and shells                               (63)       --
              Prepaid expenses and other current assets              (325)     (1,358)
              Accounts payable                                      2,690       2,910
              Accrued expenses                                     (2,202)        595
         Other, net                                                  (178)       (273)
                                                                 --------    --------
         Net cash used in operating activities                     (4,342)     (1,503)
                                                                 --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures                                          (6,793)     (1,053)
     Proceeds from sales of property and equipment                   --           316
     Proceeds from sale of business                                   700        --
                                                                 --------    --------
         Net cash used in investing activities                     (6,093)       (737)
                                                                 --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Repayments of short-term debt                                   --          (266)
     Borrowings (repayments) of long-term debt                     (1,159)        282
     Repayment of capital lease obligations                           (23)       (632)
                                                                 --------    --------
         Net cash used in financing activities                     (1,182)       (616)
                                                                 --------    --------

NET CHANGE IN CASH AND CASH EQUIVALENTS                           (11,617)     (2,856)
CASH AND CASH EQUIVALENTS, beginning of period                     19,418      13,814
                                                                 --------    --------
CASH AND CASH EQUIVALENTS, end of period                         $  7,801    $ 10,958
                                                                 ========    ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       6
<PAGE>

            PEPSI-COLA PUERTO RICO BOTTLING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           (U.S. Dollars in thousands)

                                    Unaudited

1.   BASIS OF PRESENTATION:

The accompanying unaudited consolidated financial statements of Pepsi-Cola
Puerto Rico Bottling Company and Subsidiaries (the "Company") have been prepared
in accordance with generally accepted accounting principles for interim
financial information and, in the opinion of management, include all adjustments
(consisting of normal and recurring adjustments) which are considered necessary
for a fair presentation of financial position, results of operations and cash
flows as of June 30, 1999, and for all interim periods presented. These
condensed interim financial statements do not include all of the financial
information and disclosures required by generally accepted accounting principles
for complete financial statements, and should be read in conjunction with the
Company's audited consolidated financial statements and related notes thereto
for the three months ended December 31, 1998. Also, the results of operations
for the interim periods presented may not be indicative of the results for the
entire year.

2.   RECLASSIFICATIONS:

Certain prior year balances have been reclassified to conform to the current
year presentation.

3.   COMBINATION OF INTERESTS:

On June 28, 1999, the Company entered into share exchange agreements with the
shareholders of two related party entities, Delta Beverage Group, Inc. ("Delta")
and Dakota Beverage Company, Inc. ("Dakota"). The Company, Delta and Dakota
share common ownership and are under the common control of Pohlad Companies, the
principal partner in P-PR Transfer, LLP. Accordingly, the combination will be
accounted for as a merger of entities under common control. The combination is
subject to the approval of the Company's shareholders.

During the three months ended June 30, 1999, the Company incurred approximately
$1,120 in professional fees and other related costs related to the combination
of interests. Costs of approximately $692 attributable to combining the common
equity interests of the Company, Delta and Dakota have been expensed, while
remaining costs of approximately $428 attributable to the acquisition of Delta's
minority interests under the "purchase" method of accounting have been
capitalized as other long-term assets in the accompanying consolidated balance
sheet.

4.   SALE OF BUSINESS:

During the three months ended December 31, 1998, the Company agreed to sell
substantially all net assets relating to the bottling, sale and distribution of
potable water under the "Cristalia" tradename to Cristalia Acquisition Corp.
(the "purchaser"), and recorded a $250 non-cash charge for the estimated
impairment of the net assets. The noncash charge was reflected as a writedown of
Cristalia's long-lived assets in the December 31, 1998 consolidated balance
sheet.

The sale was finalized in April 1999 and resulted in an additional impairment
charge of $267. This charge was recorded during the three months ended March 31,
1999. The sales price of $1,200 consisted of $700 cash and a $500 note
receivable due in four annual installments beginning March 31, 2000. The note
receivable bears interest at the Treasury Rate, as defined (approximately 6% as
of June 30, 1999) and is unsecured. Current installments on the note receivable
of approximately $121 are included in prepaid expenses and other current assets
in the accompanying consolidated balance sheet.

                                       7
<PAGE>

5.   LONG TERM DEBT:

The Company maintains a credit agreement with Banco Popular which provides for a
term loan of $25,000, payable with 120 principal payments and a balloon payment
at maturity on April 1, 2007 of $11,800. The credit agreement also includes a
$5,000 revolving credit facility. There were no borrowings outstanding under the
revolving credit facility, as of June 30, 1999 or December 31, 1998. In
connection with the sale of the business described in Note 4, the Company made
an additional $650 principal payment on outstanding long-term debt.

6.   RESTRUCTURING CHARGE:

In July 1998, a restructuring charge of $1,728 was established under a plan to
improve the Company's performance. The charge included approximately $679 of
severance and related charges, $224 of accruals for future payments to exit
activities, including canceling lease agreements, and $825 of asset writedowns
related to the elimination of certain product lines and exiting certain other
business strategies. During 1998, severance payments and payments relating to
other exit activities approximated $456 and $224, respectively. Severance
payments during the six month period ended June 30, 1999 approximated $171.

7.   INVENTORIES:

Inventories include the following:

                                   June 30,     December 31,
                                    1999           1998
                                   ------         ------

            Raw materials          $1,540         $1,074
            Finished goods          1,768          1,431
                                   ------         ------
                                   $3,308         $2,505
                                   ======         ======

8.   INSURANCE PROCEEDS FROM BUSINESS INTERRUPTION LOSSES:

In 1998, the Company incurred business interruption and other losses resulting
from Hurricane Georges. As the collection of a claim filed under the Company's
business interruption insurance policy was probable, the Company recorded $1,655
in anticipated recoveries attributable to business interruption and other
losses. During the six months ended June 30, 1999, the Company collected the
anticipated amount of insurance recoveries.

9.   STOCK OPTION PLANS:

The Company maintains two stock option plans pursuant to which the Company's
Board of Directors may grant stock options to certain employees and directors of
the Company and its affiliates. One of these stock option plans is not a
qualified plan. Stock options under this plan may have an exercise price below
the stock's fair market value at the date of grant ("below market options"). In
accordance with the APB Opinion No. 25, deferred compensation is recorded to
reflect any difference between the exercise price and market value of shares
granted under the plan for below market options, and is expensed over the
vesting period of the options. In 1998, the Company granted below market options
to acquire 452,500 shares of the Company's Class B stock, which vest over five
years. During the six months ended June 30, 1999, deferred compensation expense
of $51 was recorded related to this grant.

10.  EARNINGS PER SHARE:

The Company presents basic and diluted earnings per share in accordance with the
provisions of Statement of Financial Accounting Standards No. 128, "Earnings Per
Share." Accordingly, the Company's net loss per common share is computed by
dividing the net loss by the weighted average number of common shares
outstanding. Net loss per common share-assuming dilution does not include the
Company's potentially dilutive securities because to do so would be
antidilutive.

                                       8
<PAGE>

11.  SUBSEQUENT EVENT:

On July 30, 1999, the Company entered into a contract rights release agreement
with Seven-UP/RC Bottling Company of Puerto Rico, Inc. ("Seven-UP") pursuant to
which Seven-UP released its exclusive rights for the production and distribution
of the "Seven-UP," "Sunkist," "Welch's" and "Schweppes" brands in Puerto Rico.
The purchase price consisted of $12,000 cash. The Company obtained such releases
as a precondition to its entry into franchise agreements with each respective
franchisor. On July 30, 1999 the Company amended their note with Banco Popular
De Puerto Rico to $40,000. The additional increase was used to fund the Seven-UP
acquisition.

                                       9
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL OVERVIEW.

The following discussion of the financial condition and results of operations of
the Company should be read in conjunction with this overview and the unaudited
Condensed Consolidated Financial Statements of the Company, and the Notes
thereto, as of June 30, 1999 and December 31, 1998, and for the six month
periods ended June 30, 1999 and June 30, 1998 and for the three month periods
ended June 30, 1999 and June 30, 1998. Certain prior year balances have been
reclassified to conform to the current year presentation.

CHANGE IN FISCAL YEAR.

During 1998, the Company changed its fiscal year end from September 30 to
December 31. A transition report on Form 10-K was filed for the period from
October 1, 1998 through December 31, 1998. This report on Form 10-Q includes
information for the six month and three month periods ended June 30, 1999 and
June 30, 1998.

CHANGE IN CONTROL.

On July 17, 1998, P-PR Transfer, LLP, a Delaware registered limited liability
partnership (the "Partnership") and V. Suarez & Co., Inc., a Puerto Rico
corporation ("Suarez"), purchased an aggregate of 5,000,000 shares of the Class
A common stock, par value $.01 per share (the "Class A Shares"), and 6,210,429
shares of the Class B common stock, par value $.01 per share (the "Class B
Shares"), of the Company. The Partnership is a joint venture between Pohlad
Companies, a holding company including independent Pepsi-Cola bottlers, and
PepsiCo, Inc. The Company in a current report on Form 8-K previously disclosed
the transactions filed with the Securities and Exchange Commission on July 31,
1998

In connection with the change in control, the Company issued warrants to the
Partnership and Suarez dated July 17, 1998 for the purchase of 1,360,000 Class B
Shares and 340,000 Class B Shares, respectively, exercisable at $6.875 per share
at any time during a period of seven years and six months after the date of the
warrants. The warrants may be transferred and give the holders one demand and
unlimited piggyback registration rights.

Also, in connection with the change in control, six of the Company's seven
directors resigned on July 17, 1998. Effective July 18, 1998, the size of the
Board of Directors was increased to eight members and seven new directors were
appointed, each of whom were designated by the Partnership. Also effective July
18, 1998, certain of the Company's officers resigned.

RESTRUCTURING CHARGE.

During the fiscal year ended September 30, 1998, a restructuring charge of $1.7
million was established under a plan to improve the Company's performance. The
charge includes approximately $0.7 million of severance and related charges for
the elimination of 17 administrative personnel, $0.2 million of accruals for
future payments to exit activities, including canceling lease agreements, and
$0.8 million of asset writedowns related to the elimination of certain product
lines and exiting certain other business strategies. Management anticipates the
restructuring plan will provide savings beginning in 1999. Severance payments in
the six month period ended June 30, 1999 totaled approximately $0.2 million.

SEASONALITY.

The historical results of operations of the Company have not been significantly
seasonal. However the Company anticipates that its results of operations in the
future may become more seasonal, with higher demand in the summer and holiday
seasons.

PENDING ACQUISITION OF DELTA AND DAKOTA.

During the second quarter of 1999, the Company announced an agreement in
principle to combine with two related Pepsi-Cola bottlers, Delta Beverage Group,
Inc. and Dakota Beverage Company, Inc. The three companies generated

                                       10
<PAGE>

combined revenues in 1998 of approximately $530 million. PepsiCo, Inc. (NYSE:
PEP) will hold a 24% equity interest in the combined company, which will be
PepsiCo's third largest anchor bottler. The Company filed copies of the exchange
agreements, pursuant to which it will acquire Delta and Dakota, as exhibits to
its report on Form 8-K filed on July 15, 1999. All three companies have been
under common management since Pohlad Companies of Minneapolis, Minnesota,
purchased a controlling interest in the Company in July 1998, through a joint
venture with PepsiCo. Pohlad Companies also holds a controlling interest in
Delta and Dakota. Completion of the transaction is subject to a number of
conditions, including the approval of the Company's shareholders and franchisor
consents.

THE COMPANY

GENERAL.

The following table sets forth certain financial information as a percentage of
net sales for the Company for the periods indicated.

                                           Six Months Ended   Three Months Ended
                                              June 30,             June 30
                                           ---------------    ------------------
                                            1999      1998      1999      1998
                                           -----     -----     -----     -----
         Net Sales                         100.0%    100.0%    100.0%    100.0%
         Cost of Sales                      75.8      74.2      74.4      74.5
         Gross Profit                       24.2      25.8      25.6      25.5
         Selling, General and
           Administrative Expenses          31.5      34.8      30.1      34.6
         Special Charges                     1.9       --        2.6       --
         Income (Loss) from Operations      (9.1)     (9.0)     (7.0)     (9.2)
                                           =====     =====     =====     =====

QUARTER ENDED JUNE 30, 1999 COMPARED TO QUARTER ENDED JUNE 30, 1998.

NET SALES. For the quarter ended June 30, 1999, net sales for the Company
increased $1.0 million to $26.8 million, a 3.7% increase over the quarter ended
June 30, 1998. The sales increase for the quarter was driven by a 7.0% increase
in case volume sales. Case volume gains reflected higher sales through
supermarkets of packages with lower unit selling prices, but more favorable
margins, during the quarter.

COST OF SALES. Cost of sales for the Company increased $0.7 million, or 3.5%, to
$19.9 million for the quarter ended June 30, 1999, in comparison to the quarter
ended June 30, 1998. This increase was due primarily to the increased sales
volume. The effect of those increases in costs were reduced by the effect of a
modest shift in product mix towards cans which have a lower cost than plastic
bottles.

GROSS PROFIT. As a result of the above factors, gross profit for the Company
increased $0.3 million, or 4.4%, to $6.9 million for the quarter ended June 30,
1999, as compared to the same period in 1998.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. The Company has a number of
marketing arrangements with PepsiCo pursuant to which the Company is required to
make certain investments in marketing, new products, packaging introductions and
certain capital goods. The Company receives reimbursements from PepsiCo for a
portion of such expenditures, which it is able to use to offset traditional
marketing expenses or to acquire fixed assets. The Company's selling and
marketing expenses are shown net of all such reimbursements from PepsiCo.

Selling, general and administrative expenses for the Company decreased by $0.9
million, or 10.0%, to $8.1 million for the quarter ended June 30, 1999, as
compared to the quarter ended June 30, 1998. The Company's provision for bad
debt allowance was decreased by $1.0 million in the quarter ended June 30, 1999.

INCOME (LOSS) FROM OPERATIONS. As a result of the above factors, income (loss)
from operations for the Company decreased to $(1.9) million in the quarter ended
June 30, 1999, from $(2.4) million in the quarter ended June 30, 1998.

SPECIAL CHARGES. During the quarter ended June 30, 1999, the Company incurred
approximately $1.1 million in professional fees and other related costs related
to the combination of interests. Costs of approximately $0.7 million
attributable to combining the common equity interests of the Company, Delta and
Dakota have been expensed, while remaining costs of approximately $0.4 million
attributable to the acquisition of Delta's minority interests under the
"purchase" method of accounting have been capitalized as other long-term assets
in the accompanying consolidated balance sheet.

NET INCOME (LOSS). Net income (loss) decreased to $(2.3) million in the quarter
ended June 30, 1999, from $(3.1) million during the quarter ended June 30, 1998.
This decrease is the result of higher operating income and an decreased interest
and income tax expense.

                                       11
<PAGE>

SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998.

NET SALES. Net sales for the Company increased $1.3 million, or 2.6%, to $50.1
million for the six months ended June 30, 1999, as compared to the six months
ended June 30, 1998. Case volume sales increased 7.9% during the six months
ended June 30, 1999, as compared to the same six months in 1998. However, the
effect of this increase was reduced by reductions in revenue from the sale of
fountain products and home delivered bulk water. Net sales in the six months
ended June 30, 1998 included $1.5 million received in settlement of franchise
company marketing support claims from prior periods.

COST OF SALES. Cost of sales for the Company increased $1.7 million, or 4.8%,
for the six months ended June 30, 1999, as compared to the six months ended June
30, 1998. This increase was due primarily to the increased sales volume but also
reflected expenses for repair and maintenance of production lines that were $0.5
million higher than the six months ended June 30, 1998. The effect of those
increases in costs were reduced by the effect of a modest shift in product mix
towards cans which have a lower cost than plastic bottles.

GROSS PROFIT. As a result of the above factors, gross profit for the Company
decreased $0.5 million, or 3.6%, to $12.1 million for the six months ended June
30, 1999, as compared to the same period in 1998.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. The Company has a number of
marketing arrangements with PepsiCo pursuant to which the Company is required to
make certain investments in marketing, new products, packaging introductions and
certain capital goods. The Company receives reimbursements from PepsiCo for a
portion of such expenditures, which it is able to use to offset traditional
marketing expenses or to acquire fixed assets. The Company's selling and
marketing expenses are shown net of all such reimbursements from PepsiCo.

Selling, general and administrative expenses for the Company decreased by $1.2
million, or 7.2%, to $15.8 million for the six months ended June 30, 1999, as
compared to the six months ended June 30, 1998. The decrease reflects a $0.3
million reduction in fleet costs achieved through buy-out of a full-service
lease for certain delivery vehicles. In addition, marketing and other operating
costs were reduced. There continues to be a reduction in administrative staffing
and expenditures for outside professional services during the six months ended
June 30, 1999, as compared to the same period in 1998.

SPECIAL CHARGES. During the six months ended June 30, 1999, the Company incurred
approximately $1.1 million in professional fees and other related costs related
to the combination of interests. Costs of approximately $0.7 million
attributable to combining the common equity interests of the Company, Delta and
Dakota have been expensed, while remaining costs of approximately $0.4 million
attributable to the acquisition of Delta's minority interests under the
"purchase" method of accounting have been capitalized as other long-term assets
in the accompanying consolidated balance sheet. In the six months ended June 30,
1999, the Company reduced the carrying value of assets related to its Cristalia
water division by $0.3 million. This adjustment reflects the effect of the sale
of this division for $1.2 million in April 1999.

INCOME (LOSS) FROM OPERATIONS. As a result of the above factors, the Company had
a loss from operations for the six months ended June 30, 1999 of $(4.6) million,
compared to a loss of $(4.4) million for the same period in 1998.

INTEREST EXPENSE. Interest expense for the six months ended June 30, 1999 was
$0.9 million, compared to $1.2 million for the same period in 1998. This is a
result of reductions of long-term debt.

NET INCOME (LOSS). Net income (loss) increased to $(5.2) million in the six
months ended June 30, 1999, from $(4.2) million during the six months ended June
30, 1998. This increase is the result of lower operating income and an increased
income tax expense. In the six months ended June 30, 1998, the Company
recognized the effect of a carryback to prior income tax periods of expenses
incurred in settlement of litigation.

LIQUIDITY AND CAPITAL RESOURCES. At June 30, 1999, the Company had $7.8 million
of cash and cash equivalents. Indebtedness for borrowed money, including
short-term and long-term borrowings and capital lease obligations at June 30,
1999 totaled $21.9 million, which included $1.1 million of current and
short-term obligations.

Net cash used in operating activities for the Company was $4.3 million for the
six months ended June 30, 1999, as compared with $1.5 million for the same
period in 1998.

                                       12
<PAGE>

Net cash used in investing activities for the Company was $6.1 million for the
six months ended June 30, 1999, as compared with $0.7 million for the same
period in 1998. The increase in cash used in investing activities reflects
purchases of equipment to buy-out a full service lease for delivery vehicles, to
acquire additional vehicles to expand the direct servicing of accounts
previously serviced by wholesalers and to place additional marketing equipment.

Cash flows used in financing activities for the Company were $1.1 million for
the six months ended June 30, 1999, as compared with $0.6 for the same period in
1998. During the six months ended June 30, 1998, the Company borrowed an
additional $0.8 million on a long term basis. Additional loans were not incurred
in the six months ended June 30, 1999.

In April 1999, the Company completed the sale of the Cristalia water business.
The sales price of $1.2 million was comprised of $0.7 million cash and $0.5
million note receivable. The majority of the cash proceeds were used to prepay
amounts due on long-term debt.

The Company's long-term debt is due in the twelve months following June 30,
1999, under the terms of the Third Restated Credit Agreement. The Company may
prepay certain of the loans subject to the terms and conditions of the Third
Restated Credit Agreement with Banco Popular de Puerto Rico.

Under the terms of the Third Restated Credit Agreement, the Company must
maintain a minimum tangible net worth (as defined in the Third Restated Credit
Agreement) of $26.0 million on September 30, 1999, $24.5 million, at December
31, 1999, and $23.5 million through April 25, 2000. In addition, under certain
circumstances, the Company may be required to prepay a portion of the debt.
Specifically, net proceeds of capital asset dispositions over $0.25 million per
year, insurance recoveries other than for business interruption not promptly
applied toward repair or replacement, and a portion of excess cash flow (as
defined in the Third Restated Credit Agreement), must be applied toward early
repayment of the amounts outstanding under this agreement. The entire principal
amount of loans outstanding under the Third Restated Credit Agreement becomes
immediately due and payable if the Company violates any of these financial
restrictions. Furthermore, the Company may not pay dividends without the consent
of Banco Popular under the Third Restated Credit Agreement.

The Company believes that as of August 16, 1999 it is in full compliance with
the terms of the Third Restated Credit Agreement.

Pursuant to the Third Restated Credit Agreement, the Company has granted Banco
Popular a security interest in all its machinery and equipment, receivables,
inventory and the real property on which the Toa Baja Plant and the Rio Piedras
Plant are located.

                                       13
<PAGE>

YEAR 2000 COMPLIANCE

The Year 2000 problem concerns the ability of information systems and equipment
controlled by computer chips and systems to properly recognize and process
date-sensitive information on and beyond January 1, 2000. The risks from this
date change are both internal and external and can potentially affect the
Company's production, distribution and administrative systems and the Company's
customers, suppliers of raw materials, utilities and distribution services. Year
2000 related problems could prevent customers from accepting deliveries from the
Company or processing payments for amounts due to the Company. Suppliers may be
prevented from producing and supplying goods or services essential to the
Company's business.

Delta Beverage Group, Inc. ("Delta"), a company affiliated with P-PR Transfer,
LLP, provides information services to the Company, including the use of
information systems and technology, under an accounting services agreement
executed in fiscal year 1998. The Company completed its transition to Delta's
systems, hardware and software during the first quarter of 1999. Below is a
discussion of the Company's Year 2000 readiness and planning status, which has
been developed based upon Year 2000 planning.

The Company's production facility uses equipment that operates using computer
control systems based upon programmed logic controllers. The Company completed a
Year 2000 compliance evaluation of these systems. The Company also uses computer
systems to forecast demand, order raw materials, monitor inventory levels, ship
product and record shipments. The software that runs these processes is a
combination of commercially available software and internally developed
applications. The Company's initial assessment indicated that these applications
were Year 2000 compliant, and the Company, through Delta, completed the testing
of these applications. The Company relies on a supply chain to produce and
distribute its products from manufacturing facilities to distribution warehouses
and finally to customers. The Company's distribution centers use a common supply
chain management application that is Year 2000 compliant.

In order to assess the external risks to the Company, Delta distributed Year
2000 readiness surveys to the Company's suppliers and key customers. The Company
is waiting for the responses from suppliers and customers to complete the
assessment.

The Company has not incurred material incremental costs associated with its Year
2000 plan. This is due in part to the recent conversion to systems provided by
Delta. Within the last 18 months, Delta has replaced most software applications
in use before 1993 with systems that are Year 2000 compliant. The Company
believes that the remaining costs associated with addressing Year 2000
compliance issues will not be material.

The Company's most likely potential risk with regard to Year 2000 issues is the
temporary inability of suppliers to provide supplies of raw materials to the
Company. The inability of the Company's suppliers to be Year 2000 ready could
result in delays in product manufacturing and delivery, thereby adversely
affecting the business or operations of the Company. The Company believes,
however, that in a worst case scenario any disruption in supply materials can be
minimized by relying on inventories or shifting production to unaffected plants
with some increase in distribution costs.

The Company recognizes the need for Year 2000 contingency plans in the event
that remediation is not fully successful or that the remediation efforts of its
vendors and suppliers are not timely completed. The Company plans to address
contingency planning during calendar 1999. Such plans will include building
inventories of raw materials and finished goods in advance of January 1, 2000 to
protect against supply and production disruptions. To the extent that the
Company's vendors and suppliers are unable to provide sufficient evidence of
Year 2000 readiness by September 30, 1999, the Company will seek to arrange for
their replacement. Additionally, the Company is developing manual processes to
replace electronic applications in the event of their failure.

                                       14
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company uses financial instruments, primarily variable rate debt, to finance
operations, for capital expenditures and for general corporate purposes. The
Company's exposure to market risk for changes in interest rates relates
primarily to investments, and short- and long-term debt obligations. The Company
places its investments in high-quality securities with major financial
institutions while limiting exposure to any one issuer. The Company does not use
derivative financial instruments or engage in trading activities. There have
been no significant changes in the Company's exposure to market risk for changes
in interest rates during the six months ended June 30, 1999.

                                       15
<PAGE>

PART II

ITEM 1. LEGAL PROCEEDINGS

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material effect on the Company's
consolidated financial position, results of operation or liquidity.

ITEM 5. OTHER INFORMATION

On July 30, 1999, the Company entered into a contract rights agreement with
Seven-Up/RC Bottling Company of Puerto Rico, Inc ("Seven-UP") pursuant to which
Seven-UP released its exclusive rights for the production and distribution of
the "Seven-UP," "Sunkist," "Welch's" and "Schweppes" brands in Puerto Rico. In
exchange for these releases, the Company used working capital to pay Seven-UP
$12.0 million in cash. The purchase price was based on negotiations between the
Company and Seven-UP. The Company obtained such releases as a precondition to
its expected entry into franchise agreements with each respective franchisor.
With the addition of these brands, the Company expects to increase its case
volume production by approximately 20%.

On August 3, 1999, the Company entered into an asset purchase agreement with
Seven-UP pursuant to which the Company acquired from Seven-UP certain customer
information, owned vehicles, equipment and leased vehicle contracts. In exchange
for these assets, the Company used working capital to pay Seven-UP $30,300 in
cash and to pay unrelated third party lessors $468,597 in cash. Seven-UP used
the assets in connection with its production and distribution of the "Seven-UP,"
"Sunkist," "Welch's" and "Schweppes" brands in Puerto Rico. If the Company
enters franchise agreements with each respective franchisor, the Company expects
to use the assets for the same purpose.

The Company has filed the contract rights release agreement and the asset
purchase agreement as exhibits to this report.

                                       16
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)    Exhibit 10.1 - Contract Rights Release Agreement, dated July 30,
                              1999, between Seven-UP/RC Bottling Company of
                              Puerto Rico, Inc. and Pepsi-Cola Puerto Rico
                              Bottling Company.

               Exhibit 10.2 - Asset Purchase Agreement, dated August 3, 1999,
                              between Seven-UP/RC Bottling Company of Puerto
                              Rico, Inc. and Pepsi-Cola Puerto Rico Bottling
                              Company.

               Exhibit 27.1 - Financial Data Schedule.

        (b)    The Company filed the following report on Form 8-K with the SEC
               during the quarter for which this report is filed:

                    1. The Company's Current Report on Form 8-K, filed on June
                       28, 1999, relating to the agreements in principle to
                       acquire Delta Beverage Group, Inc. and Dakota Beverage
                       Company, Inc.

                                       17
<PAGE>

                                   SIGNATURES

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

Date:  August 16, 1999

                                         PEPSI-COLA PUERTO RICO BOTTLING COMPANY

                                                    /s/ Robert C. Pohlad
                                             -----------------------------------
                                          By:       Name: Robert C. Pohlad
                                                Title: Chief Executive Officer



     Signature                          Title                         Date
---------------------- ---------------------------------------- ----------------
                           Chief Financial Officer and Vice
/s/  John F. Bierbaum   President (Principal Financial Officer)  August 16, 1999
----------------------
  John F. Bierbaum

                                       18
<PAGE>

EXHIBIT INDEX

Exhibit 10.1    Contract Rights Release Agreement, dated July 30, 1999, between
                Seven-UP/RC Bottling Company of Puerto Rico, Inc. and Pepsi-Cola
                Puerto Rico Bottling Company.

Exhibit 10.2    Asset Purchase Agreement, dated August 3, 1999, between
                Seven-UP/RC Bottling Company of Puerto Rico, Inc. and Pepsi-Cola
                Puerto Rico Bottling Company.

Exhibit 27.1    Financial Data Schedule
[{"type": "10-Q", "sequence": "1", "description": "FORM 10-Q", "secsgml_size_bytes": 54447}]
{"company-data": {"conformed-name": "PEPSI COLA PUERTO RICO BOTTLING CO", "cik": "0000948086", "assigned-sic": "2086", "irs-number": "660433580", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-13914", "film-number": "99693350"}, "business-address": {"street1": "CARRETERA #865 KM 0.4", "street2": "BARRIO CANDELARIA ARENAS", "city": "TOA BAJA", "state": "PR", "zip": "00949", "phone": "7872512000"}, "mail-address": {"street1": "PO BOX 191709", "street2": "700 SOUTH FEDERAL HIGHWAY SUITE 200", "city": "SAN JUAN", "state": "PR", "zip": "00919-1709"}}
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              --------------------

                                    FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

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

                         COMMISSION FILE NUMBER 1-13914

                     PEPSI-COLA PUERTO RICO BOTTLING COMPANY

             (Exact Name of Registrant as Specified in Its Charter)

            DELAWARE                                    ###-##-####
  (State or Other Jurisdiction              (I.R.S. Employer Identification No.)
of Incorporation or Organization)

                             CARRETERA #865, KM. 0.4
                            BARRIO CANDELARIA ARENAS
                           TOA BAJA, PUERTO RICO 00949
          (Address of Principal Executive Offices, including Zip Code)

                                 (787) 251-2000
              (Registrant's Telephone Number, including Area Code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes [X]  No [ ]

         As of August 16, 1999, there were 21,690,000 shares of Common Stock
issued and outstanding. This amount includes 5,000,000 shares of Class A Common
Stock and 16,690,000 shares of Class B Common Stock.

================================================================================
TABLE OF CONTENTS

                                                                        PAGE NO.
                                                                        --------

PART I
    ITEM 1.   FINANCIAL STATEMENTS ........................................  2
    ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS ......................... 10
    ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .. 15

PART II.
    ITEM 1.   LEGAL PROCEEDINGS ........................................... 16
    ITEM 5.   OTHER INFORMATION............................................ 16
    ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K ............................ 17
CAUTIONARY STATEMENT UNDER THE SAFE HARBOR PROVISIONS OF THE
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in this Report include forward looking statements regarding
possible future events, including, the Company's proposed acquisition of Delta
Beverage Group, Inc. ("Delta") and Dakota Beverage Company, Inc. ("Dakota")
estimated capital expenditures, seasonality of the Company's business and the
Company's intentions with respect to dividend payments. Such forward looking
statements may involve factors that could cause the actual results of the
Company to differ materially from historical results or from any results implied
by such forward looking statements. The Company cautions the public not to place
undue reliance on forward looking statements, which may be based on assumptions
and anticipated events that do not materialize. Factors which could cause the
Company's actual results to differ from forward looking statements include
material changes in the relationship between the Company and PepsiCo, Inc.; any
material change to the proposed acquisition of Delta and Dakota; inability to
achieve additional cost savings and continued competitive pressures with respect
to pricing and volume in the Puerto Rico market, which could result in continued
erosion of market share; unexpected developments which prevent improved results
from the Company's marketing activities; and other factors, including economic,
climatic and political conditions in Puerto Rico, and the impact of such
conditions on consumer spending.
PART I

ITEM 1. FINANCIAL STATEMENTS

            PEPSI-COLA PUERTO RICO BOTTLING COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                          (U. S. Dollars in thousands)
June 30,   December 31,
                                                                   1999        1998
ASSETS                                                          (unaudited)
                                                                 --------    --------
CURRENT ASSETS:
     Cash and cash equivalents                                   $  7,801    $ 19,418
     Receivables, net of allowance for doubtful
       accounts of $1,577 and $2,402
         Trade                                                     13,351      13,043
         Due from PepsiCo, Inc. and affiliated companies            2,376       2,008
         Other                                                      2,412       2,248
     Inventories                                                    3,308       2,505
     Bottles, cases and shells                                        820       1,409
     Deferred income taxes                                             32          49
     Prepaid expenses and other current assets                      4,820       4,422
                                                                 --------    --------
         Total current assets                                      34,920      45,102
                                                                 --------    --------

PROPERTY AND EQUIPMENT:
     Land and improvements                                          6,893       6,893
     Buildings and improvements                                    14,557      14,779
     Machinery, equipment and vehicles                             52,558      47,881
     Furniture and fixtures                                         1,739       1,809
     Construction in process                                         --         1,250
                                                                 --------    --------
                                                                   75,747      72,612
     Less accumulated depreciation                                (29,634)    (30,150)
                                                                 --------    --------
                                                                   46,113      42,462
                                                                 --------    --------

OTHER ASSETS:
     Deferred income taxes                                          1,221       1,221
     Long-lived assets for sale, principally land and building      2,615       2,615
     Intangible assets, net of accumulated amortization             1,112       1,259
     Note receivable                                                  379        --
     Other assets                                                     572         192
                                                                 --------    --------
                                                                    5,899       5,287
                                                                 --------    --------
         Total assets                                            $ 86,932    $ 92,851
                                                                 ========    ========
The accompanying notes are an integral part of these financial statements.

                                       2
PEPSI-COLA PUERTO RICO BOTTLING COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Continued)

              (U. S. Dollars in thousands, except per share data)
June 30,    December 31,
                                                                1999         1998
LIABILITIES AND SHAREHOLDERS' EQUITY                        (unaudited)
                                                             ---------    ---------
CURRENT LIABILITIES:
     Current installments of long-term debt                  $   1,070    $   1,007
     Current installments of capital lease obligations              17           41
     Accounts payable                                            6,411        3,842
     Accrued expenses                                            7,571        9,455
                                                             ---------    ---------
         Total current liabilities                              15,069       14,345
                                                             ---------    ---------

LONG-TERM DEBT, excluding current installments                  20,823       22,073
CAPITAL LEASE OBLIGATIONS, excluding current installments         --              7
ACCRUED PENSION COST                                             1,558        1,805

SHAREHOLDERS' EQUITY:
     Class A common shares, $0.01 par value;
       authorized, issued and outstanding 5,000,000 shares          50           50

     Class B common shares, $0.01 par value;
       authorized 35,000,000 shares, issued and
       outstanding 16,690,000 shares                               167          167

     Additional paid-in capital                                127,516      127,516
     Accumulated deficit                                       (75,955)     (70,765)
     Deferred compensation                                        (406)        (457)
     Accumulated other comprehensive income (loss)              (1,890)      (1,890)
                                                             ---------    ---------

         Total shareholders' equity                             49,482       54,621
                                                             ---------    ---------

         Total liabilities and shareholders' equity          $  86,932    $  92,851
                                                             =========    =========
The accompanying notes are an integral part of these financial statements.

                                       3
PEPSI-COLA PUERTO RICO BOTTLING COMPANY AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                        FOR THE SIX MONTHS ENDED JUNE 30

                                    Unaudited

                 (U.S. Dollars in thousands, except share data)

                                                      1999        1998
                                                    --------    --------
OPERATIONS:
     Net sales                                      $ 50,075    $ 48,785
     Cost of sales                                    37,936      36,193
                                                    --------    --------
         Gross profit                                 12,139      12,592

     Selling, general and administrative expenses     15,760      16,982
     Fees related to combination of interests            692        --
     Losses on asset impairments                         267        --
                                                    --------    --------
         Loss from operations                         (4,580)     (4,390)
                                                    --------    --------

OTHER INCOME (EXPENSE):
     Interest expense                                   (860)     (1,239)
     Interest income                                     217         332
     Other, net                                          102         166
                                                    --------    --------
                                                        (541)       (741)
                                                    --------    --------

LOSS BEFORE INCOME TAXES                              (5,121)     (5,131)

INCOME TAX BENEFIT (EXPENSE)                             (69)        922
                                                    --------    --------

NET LOSS                                            $ (5,190)   $ (4,209)
                                                    ========    ========

COMPREHENSIVE INCOME (LOSS)                         $ (5,190)   $ (4,209)
                                                    ========    ========

NET LOSS PER COMMON SHARE                           $  (0.24)   $  (0.20)
                                                    ========    ========

NET LOSS PER COMMON SHARE-ASSUMING DILUTION         $  (0.24)   $  (0.20)
                                                    ========    ========

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (IN THOUSANDS)                            21,690      21,500
                                                    ========    ========

   The accompanying notes are an integral part of these financial statements.

                                       4
PEPSI-COLA PUERTO RICO BOTTLING COMPANY AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                       FOR THE THREE MONTHS ENDED JUNE 30

                                    Unaudited

                 (U.S. Dollars in thousands, except share data)

                                                      1999        1998
                                                    --------    --------
OPERATIONS:
     Net sales                                      $ 26,808    $ 25,842
     Cost of sales                                    19,939      19,261
                                                    --------    --------
         Gross profit                                  6,869       6,581

     Selling, general and administrative expenses      8,057       8,950
     Fees related to combination of interests            692        --
     Losses on asset impairments                        --          --
                                                    --------    --------
         Loss from operations                         (1,880)     (2,369)
                                                    --------    --------

OTHER INCOME (EXPENSE):
     Interest expense                                   (418)       (610)
     Interest income                                      54         176
     Other, net                                         --          (116)
                                                    --------    --------
                                                        (364)       (550)
                                                    --------    --------

LOSS BEFORE INCOME TAXES                              (2,244)     (2,919)

INCOME TAX BENEFIT (EXPENSE)                             (52)       (139)
                                                    --------    --------

NET LOSS                                            $ (2,296)   $ (3,058)
                                                    ========    ========

COMPREHENSIVE INCOME (LOSS)                         $ (2,296)   $ (3,058)
                                                    ========    ========

NET LOSS PER COMMON SHARE                           $  (0.11)   $  (0.14)
                                                    ========    ========

NET LOSS PER COMMON SHARE-ASSUMING DILUTION         $  (0.11)   $  (0.14)
                                                    ========    ========

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (IN THOUSANDS)                            21,690      21,500
                                                    ========    ========

   The accompanying notes are an integral part of these financial statements.

                                       5
PEPSI-COLA PUERTO RICO BOTTLING COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE SIX MONTHS ENDED JUNE 30

                                    Unaudited

                           (U.S. Dollars in thousands)
1999        1998
                                                                 --------    --------
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                    $ (5,190)   $ (4,209)
     Adjustments to reconcile net loss to net cash
       used in operating activities-
         Losses on asset impairments                                  267        --
         Depreciation and amortization                              2,474       2,646
         Deferred income taxes                                         17        --
         Amortization of deferred compensation                         51        --
         Fees related to combination of interests, net of payments    600        --
         Changes in current assets and liabilities:
              Receivables                                          (1,665)       (971)
              Inventories                                            (818)       (843)
              Bottles, cases and shells                               (63)       --
              Prepaid expenses and other current assets              (325)     (1,358)
              Accounts payable                                      2,690       2,910
              Accrued expenses                                     (2,202)        595
         Other, net                                                  (178)       (273)
                                                                 --------    --------
         Net cash used in operating activities                     (4,342)     (1,503)
                                                                 --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures                                          (6,793)     (1,053)
     Proceeds from sales of property and equipment                   --           316
     Proceeds from sale of business                                   700        --
                                                                 --------    --------
         Net cash used in investing activities                     (6,093)       (737)
                                                                 --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Repayments of short-term debt                                   --          (266)
     Borrowings (repayments) of long-term debt                     (1,159)        282
     Repayment of capital lease obligations                           (23)       (632)
                                                                 --------    --------
         Net cash used in financing activities                     (1,182)       (616)
                                                                 --------    --------

NET CHANGE IN CASH AND CASH EQUIVALENTS                           (11,617)     (2,856)
CASH AND CASH EQUIVALENTS, beginning of period                     19,418      13,814
                                                                 --------    --------
CASH AND CASH EQUIVALENTS, end of period                         $  7,801    $ 10,958
                                                                 ========    ========
The accompanying notes are an integral part of these financial statements.

                                       6
PEPSI-COLA PUERTO RICO BOTTLING COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           (U.S. Dollars in thousands)

                                    Unaudited

1.   BASIS OF PRESENTATION:

The accompanying unaudited consolidated financial statements of Pepsi-Cola
Puerto Rico Bottling Company and Subsidiaries (the "Company") have been prepared
in accordance with generally accepted accounting principles for interim
financial information and, in the opinion of management, include all adjustments
(consisting of normal and recurring adjustments) which are considered necessary
for a fair presentation of financial position, results of operations and cash
flows as of June 30, 1999, and for all interim periods presented. These
condensed interim financial statements do not include all of the financial
information and disclosures required by generally accepted accounting principles
for complete financial statements, and should be read in conjunction with the
Company's audited consolidated financial statements and related notes thereto
for the three months ended December 31, 1998. Also, the results of operations
for the interim periods presented may not be indicative of the results for the
entire year.

2.   RECLASSIFICATIONS:

Certain prior year balances have been reclassified to conform to the current
year presentation.

3.   COMBINATION OF INTERESTS:

On June 28, 1999, the Company entered into share exchange agreements with the
shareholders of two related party entities, Delta Beverage Group, Inc. ("Delta")
and Dakota Beverage Company, Inc. ("Dakota"). The Company, Delta and Dakota
share common ownership and are under the common control of Pohlad Companies, the
principal partner in P-PR Transfer, LLP. Accordingly, the combination will be
accounted for as a merger of entities under common control. The combination is
subject to the approval of the Company's shareholders.

During the three months ended June 30, 1999, the Company incurred approximately
$1,120 in professional fees and other related costs related to the combination
of interests. Costs of approximately $692 attributable to combining the common
equity interests of the Company, Delta and Dakota have been expensed, while
remaining costs of approximately $428 attributable to the acquisition of Delta's
minority interests under the "purchase" method of accounting have been
capitalized as other long-term assets in the accompanying consolidated balance
sheet.

4.   SALE OF BUSINESS:

During the three months ended December 31, 1998, the Company agreed to sell
substantially all net assets relating to the bottling, sale and distribution of
potable water under the "Cristalia" tradename to Cristalia Acquisition Corp.
(the "purchaser"), and recorded a $250 non-cash charge for the estimated
impairment of the net assets. The noncash charge was reflected as a writedown of
Cristalia's long-lived assets in the December 31, 1998 consolidated balance
sheet.

The sale was finalized in April 1999 and resulted in an additional impairment
charge of $267. This charge was recorded during the three months ended March 31,
1999. The sales price of $1,200 consisted of $700 cash and a $500 note
receivable due in four annual installments beginning March 31, 2000. The note
receivable bears interest at the Treasury Rate, as defined (approximately 6% as
of June 30, 1999) and is unsecured. Current installments on the note receivable
of approximately $121 are included in prepaid expenses and other current assets
in the accompanying consolidated balance sheet.

                                       7
5.   LONG TERM DEBT:

The Company maintains a credit agreement with Banco Popular which provides for a
term loan of $25,000, payable with 120 principal payments and a balloon payment
at maturity on April 1, 2007 of $11,800. The credit agreement also includes a
$5,000 revolving credit facility. There were no borrowings outstanding under the
revolving credit facility, as of June 30, 1999 or December 31, 1998. In
connection with the sale of the business described in Note 4, the Company made
an additional $650 principal payment on outstanding long-term debt.

6.   RESTRUCTURING CHARGE:

In July 1998, a restructuring charge of $1,728 was established under a plan to
improve the Company's performance. The charge included approximately $679 of
severance and related charges, $224 of accruals for future payments to exit
activities, including canceling lease agreements, and $825 of asset writedowns
related to the elimination of certain product lines and exiting certain other
business strategies. During 1998, severance payments and payments relating to
other exit activities approximated $456 and $224, respectively. Severance
payments during the six month period ended June 30, 1999 approximated $171.

7.   INVENTORIES:

Inventories include the following:

                                   June 30,     December 31,
                                    1999           1998
                                   ------         ------

            Raw materials          $1,540         $1,074
            Finished goods          1,768          1,431
                                   ------         ------
                                   $3,308         $2,505
                                   ======         ======

8.   INSURANCE PROCEEDS FROM BUSINESS INTERRUPTION LOSSES:

In 1998, the Company incurred business interruption and other losses resulting
from Hurricane Georges. As the collection of a claim filed under the Company's
business interruption insurance policy was probable, the Company recorded $1,655
in anticipated recoveries attributable to business interruption and other
losses. During the six months ended June 30, 1999, the Company collected the
anticipated amount of insurance recoveries.

9.   STOCK OPTION PLANS:

The Company maintains two stock option plans pursuant to which the Company's
Board of Directors may grant stock options to certain employees and directors of
the Company and its affiliates. One of these stock option plans is not a
qualified plan. Stock options under this plan may have an exercise price below
the stock's fair market value at the date of grant ("below market options"). In
accordance with the APB Opinion No. 25, deferred compensation is recorded to
reflect any difference between the exercise price and market value of shares
granted under the plan for below market options, and is expensed over the
vesting period of the options. In 1998, the Company granted below market options
to acquire 452,500 shares of the Company's Class B stock, which vest over five
years. During the six months ended June 30, 1999, deferred compensation expense
of $51 was recorded related to this grant.

10.  EARNINGS PER SHARE:

The Company presents basic and diluted earnings per share in accordance with the
provisions of Statement of Financial Accounting Standards No. 128, "Earnings Per
Share." Accordingly, the Company's net loss per common share is computed by
dividing the net loss by the weighted average number of common shares
outstanding. Net loss per common share-assuming dilution does not include the
Company's potentially dilutive securities because to do so would be
antidilutive.

                                       8
11.  SUBSEQUENT EVENT:

On July 30, 1999, the Company entered into a contract rights release agreement
with Seven-UP/RC Bottling Company of Puerto Rico, Inc. ("Seven-UP") pursuant to
which Seven-UP released its exclusive rights for the production and distribution
of the "Seven-UP," "Sunkist," "Welch's" and "Schweppes" brands in Puerto Rico.
The purchase price consisted of $12,000 cash. The Company obtained such releases
as a precondition to its entry into franchise agreements with each respective
franchisor. On July 30, 1999 the Company amended their note with Banco Popular
De Puerto Rico to $40,000. The additional increase was used to fund the Seven-UP
acquisition.

                                       9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL OVERVIEW.

The following discussion of the financial condition and results of operations of
the Company should be read in conjunction with this overview and the unaudited
Condensed Consolidated Financial Statements of the Company, and the Notes
thereto, as of June 30, 1999 and December 31, 1998, and for the six month
periods ended June 30, 1999 and June 30, 1998 and for the three month periods
ended June 30, 1999 and June 30, 1998. Certain prior year balances have been
reclassified to conform to the current year presentation.

CHANGE IN FISCAL YEAR.

During 1998, the Company changed its fiscal year end from September 30 to
December 31. A transition report on Form 10-K was filed for the period from
October 1, 1998 through December 31, 1998. This report on Form 10-Q includes
information for the six month and three month periods ended June 30, 1999 and
June 30, 1998.

CHANGE IN CONTROL.

On July 17, 1998, P-PR Transfer, LLP, a Delaware registered limited liability
partnership (the "Partnership") and V. Suarez & Co., Inc., a Puerto Rico
corporation ("Suarez"), purchased an aggregate of 5,000,000 shares of the Class
A common stock, par value $.01 per share (the "Class A Shares"), and 6,210,429
shares of the Class B common stock, par value $.01 per share (the "Class B
Shares"), of the Company. The Partnership is a joint venture between Pohlad
Companies, a holding company including independent Pepsi-Cola bottlers, and
PepsiCo, Inc. The Company in a current report on Form 8-K previously disclosed
the transactions filed with the Securities and Exchange Commission on July 31,
1998

In connection with the change in control, the Company issued warrants to the
Partnership and Suarez dated July 17, 1998 for the purchase of 1,360,000 Class B
Shares and 340,000 Class B Shares, respectively, exercisable at $6.875 per share
at any time during a period of seven years and six months after the date of the
warrants. The warrants may be transferred and give the holders one demand and
unlimited piggyback registration rights.

Also, in connection with the change in control, six of the Company's seven
directors resigned on July 17, 1998. Effective July 18, 1998, the size of the
Board of Directors was increased to eight members and seven new directors were
appointed, each of whom were designated by the Partnership. Also effective July
18, 1998, certain of the Company's officers resigned.

RESTRUCTURING CHARGE.

During the fiscal year ended September 30, 1998, a restructuring charge of $1.7
million was established under a plan to improve the Company's performance. The
charge includes approximately $0.7 million of severance and related charges for
the elimination of 17 administrative personnel, $0.2 million of accruals for
future payments to exit activities, including canceling lease agreements, and
$0.8 million of asset writedowns related to the elimination of certain product
lines and exiting certain other business strategies. Management anticipates the
restructuring plan will provide savings beginning in 1999. Severance payments in
the six month period ended June 30, 1999 totaled approximately $0.2 million.

SEASONALITY.

The historical results of operations of the Company have not been significantly
seasonal. However the Company anticipates that its results of operations in the
future may become more seasonal, with higher demand in the summer and holiday
seasons.

PENDING ACQUISITION OF DELTA AND DAKOTA.

During the second quarter of 1999, the Company announced an agreement in
principle to combine with two related Pepsi-Cola bottlers, Delta Beverage Group,
Inc. and Dakota Beverage Company, Inc. The three companies generated

                                       10
combined revenues in 1998 of approximately $530 million. PepsiCo, Inc. (NYSE:
PEP) will hold a 24% equity interest in the combined company, which will be
PepsiCo's third largest anchor bottler. The Company filed copies of the exchange
agreements, pursuant to which it will acquire Delta and Dakota, as exhibits to
its report on Form 8-K filed on July 15, 1999. All three companies have been
under common management since Pohlad Companies of Minneapolis, Minnesota,
purchased a controlling interest in the Company in July 1998, through a joint
venture with PepsiCo. Pohlad Companies also holds a controlling interest in
Delta and Dakota. Completion of the transaction is subject to a number of
conditions, including the approval of the Company's shareholders and franchisor
consents.

THE COMPANY

GENERAL.

The following table sets forth certain financial information as a percentage of
net sales for the Company for the periods indicated.

                                           Six Months Ended   Three Months Ended
                                              June 30,             June 30
                                           ---------------    ------------------
                                            1999      1998      1999      1998
                                           -----     -----     -----     -----
         Net Sales                         100.0%    100.0%    100.0%    100.0%
         Cost of Sales                      75.8      74.2      74.4      74.5
         Gross Profit                       24.2      25.8      25.6      25.5
         Selling, General and
           Administrative Expenses          31.5      34.8      30.1      34.6
         Special Charges                     1.9       --        2.6       --
         Income (Loss) from Operations      (9.1)     (9.0)     (7.0)     (9.2)
                                           =====     =====     =====     =====

QUARTER ENDED JUNE 30, 1999 COMPARED TO QUARTER ENDED JUNE 30, 1998.

NET SALES. For the quarter ended June 30, 1999, net sales for the Company
increased $1.0 million to $26.8 million, a 3.7% increase over the quarter ended
June 30, 1998. The sales increase for the quarter was driven by a 7.0% increase
in case volume sales. Case volume gains reflected higher sales through
supermarkets of packages with lower unit selling prices, but more favorable
margins, during the quarter.

COST OF SALES. Cost of sales for the Company increased $0.7 million, or 3.5%, to
$19.9 million for the quarter ended June 30, 1999, in comparison to the quarter
ended June 30, 1998. This increase was due primarily to the increased sales
volume. The effect of those increases in costs were reduced by the effect of a
modest shift in product mix towards cans which have a lower cost than plastic
bottles.

GROSS PROFIT. As a result of the above factors, gross profit for the Company
increased $0.3 million, or 4.4%, to $6.9 million for the quarter ended June 30,
1999, as compared to the same period in 1998.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. The Company has a number of
marketing arrangements with PepsiCo pursuant to which the Company is required to
make certain investments in marketing, new products, packaging introductions and
certain capital goods. The Company receives reimbursements from PepsiCo for a
portion of such expenditures, which it is able to use to offset traditional
marketing expenses or to acquire fixed assets. The Company's selling and
marketing expenses are shown net of all such reimbursements from PepsiCo.

Selling, general and administrative expenses for the Company decreased by $0.9
million, or 10.0%, to $8.1 million for the quarter ended June 30, 1999, as
compared to the quarter ended June 30, 1998. The Company's provision for bad
debt allowance was decreased by $1.0 million in the quarter ended June 30, 1999.

INCOME (LOSS) FROM OPERATIONS. As a result of the above factors, income (loss)
from operations for the Company decreased to $(1.9) million in the quarter ended
June 30, 1999, from $(2.4) million in the quarter ended June 30, 1998.

SPECIAL CHARGES. During the quarter ended June 30, 1999, the Company incurred
approximately $1.1 million in professional fees and other related costs related
to the combination of interests. Costs of approximately $0.7 million
attributable to combining the common equity interests of the Company, Delta and
Dakota have been expensed, while remaining costs of approximately $0.4 million
attributable to the acquisition of Delta's minority interests under the
"purchase" method of accounting have been capitalized as other long-term assets
in the accompanying consolidated balance sheet.

NET INCOME (LOSS). Net income (loss) decreased to $(2.3) million in the quarter
ended June 30, 1999, from $(3.1) million during the quarter ended June 30, 1998.
This decrease is the result of higher operating income and an decreased interest
and income tax expense.

                                       11
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998.

NET SALES. Net sales for the Company increased $1.3 million, or 2.6%, to $50.1
million for the six months ended June 30, 1999, as compared to the six months
ended June 30, 1998. Case volume sales increased 7.9% during the six months
ended June 30, 1999, as compared to the same six months in 1998. However, the
effect of this increase was reduced by reductions in revenue from the sale of
fountain products and home delivered bulk water. Net sales in the six months
ended June 30, 1998 included $1.5 million received in settlement of franchise
company marketing support claims from prior periods.

COST OF SALES. Cost of sales for the Company increased $1.7 million, or 4.8%,
for the six months ended June 30, 1999, as compared to the six months ended June
30, 1998. This increase was due primarily to the increased sales volume but also
reflected expenses for repair and maintenance of production lines that were $0.5
million higher than the six months ended June 30, 1998. The effect of those
increases in costs were reduced by the effect of a modest shift in product mix
towards cans which have a lower cost than plastic bottles.

GROSS PROFIT. As a result of the above factors, gross profit for the Company
decreased $0.5 million, or 3.6%, to $12.1 million for the six months ended June
30, 1999, as compared to the same period in 1998.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. The Company has a number of
marketing arrangements with PepsiCo pursuant to which the Company is required to
make certain investments in marketing, new products, packaging introductions and
certain capital goods. The Company receives reimbursements from PepsiCo for a
portion of such expenditures, which it is able to use to offset traditional
marketing expenses or to acquire fixed assets. The Company's selling and
marketing expenses are shown net of all such reimbursements from PepsiCo.

Selling, general and administrative expenses for the Company decreased by $1.2
million, or 7.2%, to $15.8 million for the six months ended June 30, 1999, as
compared to the six months ended June 30, 1998. The decrease reflects a $0.3
million reduction in fleet costs achieved through buy-out of a full-service
lease for certain delivery vehicles. In addition, marketing and other operating
costs were reduced. There continues to be a reduction in administrative staffing
and expenditures for outside professional services during the six months ended
June 30, 1999, as compared to the same period in 1998.

SPECIAL CHARGES. During the six months ended June 30, 1999, the Company incurred
approximately $1.1 million in professional fees and other related costs related
to the combination of interests. Costs of approximately $0.7 million
attributable to combining the common equity interests of the Company, Delta and
Dakota have been expensed, while remaining costs of approximately $0.4 million
attributable to the acquisition of Delta's minority interests under the
"purchase" method of accounting have been capitalized as other long-term assets
in the accompanying consolidated balance sheet. In the six months ended June 30,
1999, the Company reduced the carrying value of assets related to its Cristalia
water division by $0.3 million. This adjustment reflects the effect of the sale
of this division for $1.2 million in April 1999.

INCOME (LOSS) FROM OPERATIONS. As a result of the above factors, the Company had
a loss from operations for the six months ended June 30, 1999 of $(4.6) million,
compared to a loss of $(4.4) million for the same period in 1998.

INTEREST EXPENSE. Interest expense for the six months ended June 30, 1999 was
$0.9 million, compared to $1.2 million for the same period in 1998. This is a
result of reductions of long-term debt.

NET INCOME (LOSS). Net income (loss) increased to $(5.2) million in the six
months ended June 30, 1999, from $(4.2) million during the six months ended June
30, 1998. This increase is the result of lower operating income and an increased
income tax expense. In the six months ended June 30, 1998, the Company
recognized the effect of a carryback to prior income tax periods of expenses
incurred in settlement of litigation.

LIQUIDITY AND CAPITAL RESOURCES. At June 30, 1999, the Company had $7.8 million
of cash and cash equivalents. Indebtedness for borrowed money, including
short-term and long-term borrowings and capital lease obligations at June 30,
1999 totaled $21.9 million, which included $1.1 million of current and
short-term obligations.

Net cash used in operating activities for the Company was $4.3 million for the
six months ended June 30, 1999, as compared with $1.5 million for the same
period in 1998.

                                       12
Net cash used in investing activities for the Company was $6.1 million for the
six months ended June 30, 1999, as compared with $0.7 million for the same
period in 1998. The increase in cash used in investing activities reflects
purchases of equipment to buy-out a full service lease for delivery vehicles, to
acquire additional vehicles to expand the direct servicing of accounts
previously serviced by wholesalers and to place additional marketing equipment.

Cash flows used in financing activities for the Company were $1.1 million for
the six months ended June 30, 1999, as compared with $0.6 for the same period in
1998. During the six months ended June 30, 1998, the Company borrowed an
additional $0.8 million on a long term basis. Additional loans were not incurred
in the six months ended June 30, 1999.

In April 1999, the Company completed the sale of the Cristalia water business.
The sales price of $1.2 million was comprised of $0.7 million cash and $0.5
million note receivable. The majority of the cash proceeds were used to prepay
amounts due on long-term debt.

The Company's long-term debt is due in the twelve months following June 30,
1999, under the terms of the Third Restated Credit Agreement. The Company may
prepay certain of the loans subject to the terms and conditions of the Third
Restated Credit Agreement with Banco Popular de Puerto Rico.

Under the terms of the Third Restated Credit Agreement, the Company must
maintain a minimum tangible net worth (as defined in the Third Restated Credit
Agreement) of $26.0 million on September 30, 1999, $24.5 million, at December
31, 1999, and $23.5 million through April 25, 2000. In addition, under certain
circumstances, the Company may be required to prepay a portion of the debt.
Specifically, net proceeds of capital asset dispositions over $0.25 million per
year, insurance recoveries other than for business interruption not promptly
applied toward repair or replacement, and a portion of excess cash flow (as
defined in the Third Restated Credit Agreement), must be applied toward early
repayment of the amounts outstanding under this agreement. The entire principal
amount of loans outstanding under the Third Restated Credit Agreement becomes
immediately due and payable if the Company violates any of these financial
restrictions. Furthermore, the Company may not pay dividends without the consent
of Banco Popular under the Third Restated Credit Agreement.

The Company believes that as of August 16, 1999 it is in full compliance with
the terms of the Third Restated Credit Agreement.

Pursuant to the Third Restated Credit Agreement, the Company has granted Banco
Popular a security interest in all its machinery and equipment, receivables,
inventory and the real property on which the Toa Baja Plant and the Rio Piedras
Plant are located.

                                       13
YEAR 2000 COMPLIANCE

The Year 2000 problem concerns the ability of information systems and equipment
controlled by computer chips and systems to properly recognize and process
date-sensitive information on and beyond January 1, 2000. The risks from this
date change are both internal and external and can potentially affect the
Company's production, distribution and administrative systems and the Company's
customers, suppliers of raw materials, utilities and distribution services. Year
2000 related problems could prevent customers from accepting deliveries from the
Company or processing payments for amounts due to the Company. Suppliers may be
prevented from producing and supplying goods or services essential to the
Company's business.

Delta Beverage Group, Inc. ("Delta"), a company affiliated with P-PR Transfer,
LLP, provides information services to the Company, including the use of
information systems and technology, under an accounting services agreement
executed in fiscal year 1998. The Company completed its transition to Delta's
systems, hardware and software during the first quarter of 1999. Below is a
discussion of the Company's Year 2000 readiness and planning status, which has
been developed based upon Year 2000 planning.

The Company's production facility uses equipment that operates using computer
control systems based upon programmed logic controllers. The Company completed a
Year 2000 compliance evaluation of these systems. The Company also uses computer
systems to forecast demand, order raw materials, monitor inventory levels, ship
product and record shipments. The software that runs these processes is a
combination of commercially available software and internally developed
applications. The Company's initial assessment indicated that these applications
were Year 2000 compliant, and the Company, through Delta, completed the testing
of these applications. The Company relies on a supply chain to produce and
distribute its products from manufacturing facilities to distribution warehouses
and finally to customers. The Company's distribution centers use a common supply
chain management application that is Year 2000 compliant.

In order to assess the external risks to the Company, Delta distributed Year
2000 readiness surveys to the Company's suppliers and key customers. The Company
is waiting for the responses from suppliers and customers to complete the
assessment.

The Company has not incurred material incremental costs associated with its Year
2000 plan. This is due in part to the recent conversion to systems provided by
Delta. Within the last 18 months, Delta has replaced most software applications
in use before 1993 with systems that are Year 2000 compliant. The Company
believes that the remaining costs associated with addressing Year 2000
compliance issues will not be material.

The Company's most likely potential risk with regard to Year 2000 issues is the
temporary inability of suppliers to provide supplies of raw materials to the
Company. The inability of the Company's suppliers to be Year 2000 ready could
result in delays in product manufacturing and delivery, thereby adversely
affecting the business or operations of the Company. The Company believes,
however, that in a worst case scenario any disruption in supply materials can be
minimized by relying on inventories or shifting production to unaffected plants
with some increase in distribution costs.

The Company recognizes the need for Year 2000 contingency plans in the event
that remediation is not fully successful or that the remediation efforts of its
vendors and suppliers are not timely completed. The Company plans to address
contingency planning during calendar 1999. Such plans will include building
inventories of raw materials and finished goods in advance of January 1, 2000 to
protect against supply and production disruptions. To the extent that the
Company's vendors and suppliers are unable to provide sufficient evidence of
Year 2000 readiness by September 30, 1999, the Company will seek to arrange for
their replacement. Additionally, the Company is developing manual processes to
replace electronic applications in the event of their failure.

                                       14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company uses financial instruments, primarily variable rate debt, to finance
operations, for capital expenditures and for general corporate purposes. The
Company's exposure to market risk for changes in interest rates relates
primarily to investments, and short- and long-term debt obligations. The Company
places its investments in high-quality securities with major financial
institutions while limiting exposure to any one issuer. The Company does not use
derivative financial instruments or engage in trading activities. There have
been no significant changes in the Company's exposure to market risk for changes
in interest rates during the six months ended June 30, 1999.

                                       15
PART II

ITEM 1. LEGAL PROCEEDINGS

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material effect on the Company's
consolidated financial position, results of operation or liquidity.

ITEM 5. OTHER INFORMATION

On July 30, 1999, the Company entered into a contract rights agreement with
Seven-Up/RC Bottling Company of Puerto Rico, Inc ("Seven-UP") pursuant to which
Seven-UP released its exclusive rights for the production and distribution of
the "Seven-UP," "Sunkist," "Welch's" and "Schweppes" brands in Puerto Rico. In
exchange for these releases, the Company used working capital to pay Seven-UP
$12.0 million in cash. The purchase price was based on negotiations between the
Company and Seven-UP. The Company obtained such releases as a precondition to
its expected entry into franchise agreements with each respective franchisor.
With the addition of these brands, the Company expects to increase its case
volume production by approximately 20%.

On August 3, 1999, the Company entered into an asset purchase agreement with
Seven-UP pursuant to which the Company acquired from Seven-UP certain customer
information, owned vehicles, equipment and leased vehicle contracts. In exchange
for these assets, the Company used working capital to pay Seven-UP $30,300 in
cash and to pay unrelated third party lessors $468,597 in cash. Seven-UP used
the assets in connection with its production and distribution of the "Seven-UP,"
"Sunkist," "Welch's" and "Schweppes" brands in Puerto Rico. If the Company
enters franchise agreements with each respective franchisor, the Company expects
to use the assets for the same purpose.

The Company has filed the contract rights release agreement and the asset
purchase agreement as exhibits to this report.

                                       16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)    Exhibit 10.1 - Contract Rights Release Agreement, dated July 30,
                              1999, between Seven-UP/RC Bottling Company of
                              Puerto Rico, Inc. and Pepsi-Cola Puerto Rico
                              Bottling Company.

               Exhibit 10.2 - Asset Purchase Agreement, dated August 3, 1999,
                              between Seven-UP/RC Bottling Company of Puerto
                              Rico, Inc. and Pepsi-Cola Puerto Rico Bottling
                              Company.

               Exhibit 27.1 - Financial Data Schedule.

        (b)    The Company filed the following report on Form 8-K with the SEC
               during the quarter for which this report is filed:

                    1. The Company's Current Report on Form 8-K, filed on June
                       28, 1999, relating to the agreements in principle to
                       acquire Delta Beverage Group, Inc. and Dakota Beverage
                       Company, Inc.

                                       17
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.

Date:  August 16, 1999

                                         PEPSI-COLA PUERTO RICO BOTTLING COMPANY

                                                    /s/ Robert C. Pohlad
                                             -----------------------------------
                                          By:       Name: Robert C. Pohlad
                                                Title: Chief Executive Officer

     Signature                          Title                         Date
---------------------- ---------------------------------------- ----------------
                           Chief Financial Officer and Vice
/s/  John F. Bierbaum   President (Principal Financial Officer)  August 16, 1999
----------------------
  John F. Bierbaum

                                       18
EXHIBIT INDEX

Exhibit 10.1    Contract Rights Release Agreement, dated July 30, 1999, between
                Seven-UP/RC Bottling Company of Puerto Rico, Inc. and Pepsi-Cola
                Puerto Rico Bottling Company.

Exhibit 10.2    Asset Purchase Agreement, dated August 3, 1999, between
                Seven-UP/RC Bottling Company of Puerto Rico, Inc. and Pepsi-Cola
                Puerto Rico Bottling Company.

Exhibit 27.1    Financial Data Schedule