|UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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 28, 2003


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

For the transition period from _______ to _______

Commission File Number 001-15019


PEPSIAMERICAS, INC.(Exact name of registrant as specified in its charter)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Delaware                                                                       |  | 13-6167838                                             
|------------------------------------------------------------------------------ |  | -------------------------------------------------------
|(State or other jurisdiction of
                incorporation or organization) |  | (I.R.S. Employer
                Identification Number)

|4000 Dain Rauscher Plaza,
                60 South Sixth Street
                Minneapolis, Minnesota |  | 55402     
|------------------------------------------------------------------------------------------------------ |  | ----------
|(Address of principal executive offices)                                                               |  | (Zip Code)

|Registrant's telephone number, including area code (612) 661-4000


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 | / / | 
|--- | --- | -- | --- | 

|Indicate by check mark whether the registrant
is an accelerated filer (as defined in Exchange Act Rule 12b-2).
|--------------------------------------------------------------------------------------------------------------

|YES | /x/ | NO | / / | 
|--- | --- | -- | --- | 

|As of July 26, 2003 the Registrant
had 144,074,423 outstanding  shares
of common  stock,  par value  $0.01 per  share,  the
Registrant's only class of common stock.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|PEPSIAMERICAS, INC.FORM 10-QSECOND QUARTER 2003
|-----------------------------------------------

|TABLE OF CONTENTS
|-----------------

|              |  |                       |                                                                                            |     
|------------- |  | --------------------- | ------------------------------------------------------------------------------------------ | ----
|              |  |                       |                                                                                            | Page
|              |  |                       |                                                                                            |     
|PART I        |  | FINANCIAL INFORMATION
|             
|              |  | Item 1.               | Financial Statements                                                                       |     
|              |  |                       | Condensed Consolidated Statements of Income                                                | 2   
|              |  |                       | Condensed Consolidated Balance Sheets                                                      | 3   
|              |  |                       | Condensed Consolidated Statements of Cash Flows                                            | 4   
|              |  |                       | Notes to Condensed Consolidated Financial Statements                                       | 5   
|             
|              |  | Item 2.               | Managements Discussion and Analysis of Financial Condition
     and Results of Operations | 15  
|             
|              |  | Item 3.               | Quantitative and Qualitative Disclosures About Market Risk                                 | 24  
|             
|              |  | Item 4.               | Controls and Procedures                                                                    | 25  
|             
|PART II       |  | OTHER INFORMATION    
|             
|              |  | Item 1.               | Legal Proceedings                                                                          | 26  
|             
|              |  | Item 4.               | Submission of Matters to a Vote of Security Holders                                        | 26  
|             
|              |  | Item 6.               | Exhibits and Reports on Form 8-K                                                           | 27  
|             
|SIGNATURE     |  |                       |                                                                                            | 28  
|             
|EXHIBIT INDEX |  |                       |                                                                                            | 29  

|1
|-

---

|CONDENSED CONSOLIDATED STATEMENTS OF INCOME(unaudited
and in millions, except per share data)
|---------------------------------------------------------------------------------------------

|                                                                          | Second Quarter |        | First Half |  
|------------------------------------------------------------------------- | -------------- | ------ | ---------- | -
|                                                                          |                |        |            |  
|                                                                          | 2003           |        | 2002       |  
|                                                                          |                |        |            |  
|                                                                          |                |        |            |  
|Net sales                                                                 | $              | 870.9  |            | $
|Cost of goods sold                                                        |                | 510.6  |            |  
|                                                                          |                |        |            |  
|Gross profit                                                              |                | 360.3  |            |  
|Selling, delivery and administrative expenses                             |                | 255.0  |            |  
|Amortization expense                                                      |                | 0.1    |            |  
|Special charges                                                           |                | 1.1    |            |  
|                                                                          |                |        |            |  
|Operating income                                                          |                | 104.1  |            |  
|Interest expense, net                                                     |                | ( 18.2 | )          |  
|Other income (expense), net                                               |                | 0.6    |            |  
|                                                                          |                |        |            |  
|Income from continuing operations before
                    income taxes |                | 86.5   |            |  
|Income taxes                                                              |                | 33.3   |            |  
|                                                                          |                |        |            |  
|Income from
                continuing operations                         |                | 53.2   |            |  
|Loss from discontinued operations,
                after taxes            |                |       |            |  
|                                                                          |                |        |            |  
|Net income                                                                | $              | 53.2   |            | $
|                                                                          |                |        |            |  
|                                                                          |                |        |            |  
|Weighted average common shares:                                           |                |        |            |  
|Basic                                                                     |                | 142.8  |            |  
|Incremental effect of stock options and awards                            |                | 0.4    |            |  
|                                                                          |                |        |            |  
|Diluted                                                                   |                | 143.2  |            |  
|                                                                          |                |        |            |  
|                                                                          |                |        |            |  
|Income (loss) per share - basic:                                          |                |        |            |  
|Continuing operations                                                     | $              | 0.37   |            | $
|Discontinued operations                                                   |                |       |            |  
|                                                                          |                |        |            |  
|Net income                                                                | $              | 0.37   |            | $
|                                                                          |                |        |            |  
|                                                                          |                |        |            |  
|Income (loss) per share - diluted:                                        |                |        |            |  
|Continuing operations                                                     | $              | 0.37   |            | $
|Discontinued operations                                                   |                |       |            |  
|                                                                          |                |        |            |  
|Net income                                                                | $              | 0.37   |            | $
|                                                                          |                |        |            |  
|                                                                          |                |        |            |  
|                                                                          |                |        |            |  
|Cash dividends per share                                                  | $              |       |            | $
|                                                                          |                |        |            |  

|See accompanying notes to condensed
consolidated financial statements.
|----------------------------------------------------------------------

|2
|-

---

|CONDENSED CONSOLIDATED BALANCE SHEETS
            (in millions, except per share data)
|--------------------------------------------------------------------------------------

|                                                                                                                              |   | End ofSecond Quarter2003 |   |   | End ofFiscal Year2002 |  
|----------------------------------------------------------------------------------------------------------------------------- | - | ------------------------ | - | - | --------------------- | -
|                                                                                                                              |   |                          |   |  
|                                                                                                                              |   | (unaudited)              |   |   |                       |  
|ASSETS:                                                                                                                       |   |                          |   |   |                       |  
|Current assets:                                                                                                               |   |                          |   |   |                       |  
|Cash and equivalents                                                                                                          | $ | 72.6                     |   | $ | 113.8                 |  
|Receivables                                                                                                                   |   | 202.2                    |   |   | 202.6                 |  
|Inventories                                                                                                                   |   | 199.3                    |   |   | 170.2                 |  
|Other current assets                                                                                                          |   | 79.3                     |   |   | 63.3                  |  
|                                                                                                                              |   |                          |   |  
|Total current assets                                                                                                          |   | 553.4                    |   |   | 549.9                 |  
|Property (at cost)                                                                                                            |   | 2,023.8                  |   |   | 1,977.8               |  
|Accumulated depreciation                                                                                                      |   | ( 911.3                  | ) |   | ( 847.0               | )
|                                                                                                                              |   |                          |   |  
|Net property                                                                                                                  |   | 1,112.5                  |   |   | 1,130.8               |  
|Intangible assets, net                                                                                                        |   | 1,759.3                  |   |   | 1,757.7               |  
|Other assets                                                                                                                  |   | 111.4                    |   |   | 124.2                 |  
|                                                                                                                              |   |                          |   |  
|Total assets                                                                                                                  | $ | 3,536.6                  |   | $ | 3,562.6               |  
|                                                                                                                              |   |                          |   |  
|                                                                                                                              |   |                          |   |   |                       |  
|LIABILITIES AND SHAREHOLDERS'
                EQUITY:                                                                         |   |                          |   |   |                       |  
|Current liabilities:                                                                                                          |   |                          |   |   |                       |  
|Short-term debt, including current maturities of long-term debt                                                               | $ | 268.5                    |   | $ | 303.1                 |  
|Payables                                                                                                                      |   | 223.6                    |   |   | 197.9                 |  
|Other current liabilities                                                                                                     |   | 170.1                    |   |   | 197.0                 |  
|                                                                                                                              |   |                          |   |  
|Total current liabilities                                                                                                     |   | 662.2                    |   |   | 698.0                 |  
|                                                                                                                              |   |                          |   |  
|Long-term debt                                                                                                                |   | 1,073.6                  |   |   | 1,080.7               |  
|Deferred income taxes                                                                                                         |   | 101.4                    |   |   | 82.2                  |  
|Other liabilities                                                                                                             |   | 242.5                    |   |   | 253.1                 |  
|Shareholders' equity:                                                                                                         |   |                          |   |   |                       |  
|Preferred stock ($0.01 par value, 12.5 million shares authorized;   
                no shares issued)                        |   |                         |   |   |                      |  
|Common stock ($0.01 par value, 350 million shares authorized;   
                167.6 million shares issued - 2003 and 2002) |   | 1,535.4                  |   |   | 1,538.7               |  
|Retained income                                                                                                               |   | 340.3                    |   |   | 288.0                 |  
|Unearned stock-based compensation                                                                                             |   | ( 11.1                   | ) |   | ( 8.6                 | )
|Accumulated other comprehensive loss:                                                                                         |   |                          |   |   |                       |  
|Cumulative translation adjustment                                                                                             |   | ( 8.5                    | ) |   | ( 9.2                 | )
|Net unrealized investment and hedging losses                                                                                  |   | ( 4.0                    | ) |   | ( 9.8                 | )
|Minimum pension liability                                                                                                     |   | ( 27.9                   | ) |   | ( 27.9                | )
|                                                                                                                              |   |                          |   |  
|Accumulated other comprehensive loss                                                                                          |   | ( 40.4                   | ) |   | ( 46.9                | )
|Treasury stock (23.5 million shares - 2003 and 20 million   
                shares - 2002)                                   |   | ( 367.3                  | ) |   | ( 322.6               | )
|                                                                                                                              |   |                          |   |  
|Total shareholders' equity                                                                                                    |   | 1,456.9                  |   |   | 1,448.6               |  
|                                                                                                                              |   |                          |   |  
|Total liabilities and shareholders' equity                                                                                    | $ | 3,536.6                  |   | $ | 3,562.6               |  
|                                                                                                                              |   |                          |   |  

|See accompanying notes to condensed
consolidated financial statements.
|----------------------------------------------------------------------

|3
|-

---

|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
|---------------------------------------------------------------------------

|                                                                                               | First Half |        
|---------------------------------------------------------------------------------------------- | ---------- | -------
|                                                                                               |            |        
|                                                                                               |            | 2003   
|                                                                                               |            |        
|                                                                                               |            |        
|CASH FLOWS FROM OPERATING
                ACTIVITIES:                                          |            |        
|Income from continuing operations                                                              | $          | 58.1   
|Adjustments to reconcile to net cash provided by operating activities:                         |            |        
|Depreciation and amortization                                                                  |            | 87.7   
|Deferred income taxes                                                                          |            | 17.4   
|Special charges                                                                                |            | 7.4    
|Gain on sale of investments                                                                    |            | ( 2.1  
|Cash outlays related to special charges                                                        |            | ( 5.3  
|Other                                                                                          |            | 4.9    
|Changes in assets and liabilities,
                exclusive of acquisitions and divestitures: |            |        
|Decrease (increase) in receivables                                                             |            | 0.4    
|Increase in inventories                                                                        |            | ( 29.1 
|Increase in payables                                                                           |            | 10.7   
|Net change in other assets and liabilities                                                     |            | ( 20.8 
|                                                                                               |            |        
|Net cash provided by operating activities                                                      |            | 129.3  
|                                                                                               |            |        
|                                                                                               |            |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                          |            |        
|Capital investments                                                                            |            | ( 72.5 
|Acquisitions and divestitures, net
                of cash required                            |            |       
|Proceeds from sales of investments                                                             |            |       
|Proceeds from sales of property                                                                |            | 1.0    
|                                                                                               |            |        
|Net cash used in investing activities                                                          |            | ( 71.5 
|                                                                                               |            |        
|                                                                                               |            |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                          |            |        
|Net borrowings of
                short-term debt                                              |            | 90.0   
|Proceeds from issuance of long-term debt                                                       |            | 146.3  
|Repayment of long-term debt                                                                    |            | ( 279.3
|Treasury stock purchases                                                                       |            | ( 56.0 
|Issuance of common stock                                                                       |            | 4.3    
|Cash dividends                                                                                 |            | ( 5.7  
|                                                                                               |            |        
|Net cash (used in) provided by financing activities                                            |            | ( 100.4
|                                                                                               |            |        
|                                                                                               |            |        
|Net cash provided by (used in)
                discontinued operations                         |            | 1.3    
|Effects of exchange rate changes
                on cash and equivalents                       |            | 0.1    
|                                                                                               |            |        
|Change in cash and equivalents                                                                 |            | ( 41.2 
|Cash and equivalents at
                beginning of year                                      |            | 113.8  
|                                                                                               |            |        
|Cash and equivalents at end
                of first half                                      | $          | 72.6   
|                                                                                               |            |        

|See accompanying notes
to condensed consolidated financial statements.
|----------------------------------------------------------------------

|4
|-

---

|NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(unaudited)
|---------------------------------------------------------------

|1. | Significant Accounting
                Policies
|-- | -----------------------------------------------

| | Quarterly reporting - The Condensed Consolidated Financial Statements included herein have
been prepared by PepsiAmericas, Inc. (the Company) without audit.  Certain information and
disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission, although the Company believes that the disclosures made are
adequate to make the information presented not misleading.  It is suggested that these Condensed Consolidated
Financial Statements be read in conjunction with the financial statements and notes thereto included in
the Companys Annual Report on Form 10-K for the fiscal year 2002.  In the opinion of management, the
information furnished herein reflects all adjustments (consisting only of normal, recurring adjustments)
necessary for a fair statement of results for the interim periods presented.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Companys fiscal year consists of 52 or 53 weeks ending on the Saturday closest to December 31; fiscal
2002 ended on December 28, 2002.  The Companys second quarters of 2003 and 2002 were based on the thirteen
weeks ended June 28, 2003 and June 29, 2002, respectively.  The Companys business is highly seasonal;
accordingly, the operating results of any individual quarter may not be indicative of a full years
operating results.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Net income per share - Basic net income per share is based upon the weighted-average number of
common shares outstanding.  Diluted net income per share assumes the exercise of all options, which are
dilutive, whether exercisable or not.  The dilutive effects of stock options are measured under the treasury
stock method.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Options to purchase the following shares were
not included in the computation of diluted net income per share because the exercise price was greater than the average
market price of the common shares during the related period:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                           | Second Quarter |            | First Half |  
| | ----------------------------------------- | -------------- | ---------- | ---------- | -
| |                                           |                |            |            |  
| |                                           | 2003           |            | 2002       |  
| |                                           |                |            |            |  
| |                                           |                |            |            |  
| | Shares under options outstanding          |                | 11,388,310 |            |  
| | Weighted-average exercise price per share | $              | 16.77      |            | $

| | Impact of Emerging Issues Task Force Issue No. 02-16 - In the first quarter of 2003, the Company
prospectively adopted Emerging Issues Task Force (EITF) Issue No. 02-16, Accounting by a
Customer (including a Reseller) for Certain Consideration Received from a Vendor.  EITF 02-16 concludes
that certain consideration received by a customer from a vendor is presumed to be a reduction of the price
of the vendors products, and therefore, should be recorded as a reduction of cost of goods sold when
recognized in the customers income statement, unless certain criteria are met.  This presumption is
overcome if the consideration paid to the customer is directly attributable (offsetting) to incremental and
separately identifiable expenses incurred elsewhere in the income statement.  Prior to the adoption of EITF
02-16, bottler incentives (marketing support programs) from brand owners were recognized as an increase to
net sales or as a reduction in selling, delivery and administrative expenses (SD&A) based
on the objectives of the programs and initiatives.  In accordance with EITF 02-16, the Company recorded certain
bottler incentives as a reduction of cost of goods sold beginning in the first quarter of 2003 to properly account for
new agreements.  Bottler incentives that are directly attributable to incremental expenses incurred
are reported as either an increase to net sales or a reduction to SD&A expenses, commensurate with the
recognition of the related expense.  All other bottler incentives are recognized as a reduction of cost of
goods sold when the related products are sold and shipped based on the agreements with vendors.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5
|-

---

| | The prospective adoption of EITF 02-16 had no material impact on our Condensed Consolidated Financial Statements in the
second quarter and first half of 2003.  Assuming that EITF 02-16 had been in place at the beginning of fiscal year 2002, the following adjustments
would have been made to our second quarter and first half 2002 reported results:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                       |   | SecondQuarterof 2002 |   |   | FirstHalfof 2002 |  
| | --------------------- | - | -------------------- | - | - | ---------------- | -
| |                       |   |                      |   |  
| | Net sales             |   |                      |   |   |                  |  
| | As reported           | $ | 877.3                |   | $ | 1,607.7          |  
| | EITF 02-16 adjustment |   | ( 18.4               | ) |   | ( 40.2           | )
| |                       |   |                      |   |   |                  |  
| | Adjusted comparisons  | $ | 858.9                |   | $ | 1,567.5          |  
| |                       |   |                      |   |  
| |                       |   |                      |   |   |                  |  
| | Cost of goods sold    |   |                      |   |   |                  |  
| | As reported           | $ | 524.3                |   | $ | 967.4            |  
| | EITF 02-16 adjustment |   | ( 32.4               | ) |   | ( 63.6           | )
| |                       |   |                      |   |  
| | Adjusted comparisons  | $ | 491.9                |   | $ | 903.8            |  
| |                       |   |                      |   |  
| | SD&A                  |   |                      |   |   |                  |  
| | As reported           | $ | 245.4                |   | $ | 473.6            |  
| | EITF 02-16 adjustment |   | 14.0                 |   |   | 23.4             |  
| |                       |   |                      |   |  
| | Adjusted comparisons  | $ | 259.4                |   | $ | 497.0            |  
| |                       |   |                      |   |  

| | Reclassifications  Certain amounts in the prior period Condensed Consolidated Financial
Statements have been reclassified to conform to the current year presentation.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Recently issued accounting pronouncements  The Financial Accounting Standards Board (FASB) issued SFAS No. 145, Recission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections in 2002.  Under SFAS No. 4, all gains and losses from extinguishment of debt were
required to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect.  This Statement
eliminates SFAS No. 4 and thus, the criteria in APB Opinion No. 30 should be applied to determine the classification of gains and
losses related to the extinguishment of debt.  The Statement is effective beginning in the first quarter of 2003.  As a result, the
loss on the early extinguishment of debt recorded in the first quarter of 2003 was recognized in Interest expense, net in the
Condensed Consolidated Income Statement, as the criteria in APB Opinion No. 30 were not met for extraordinary classification.  See
Debt note for further discussion.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which nullifies EITF 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring).  SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized
and measured at fair value when the liability is incurred, as opposed to the date management committed to an exit plan.  The special
charges in the fourth quarter of 2002, related to the marketing and distribution strategy changes in Central Europe, were recorded in
compliance with EITF 94-3, as the provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after
December 31, 2002.  The special charges in the first half of 2003 were recorded in compliance with SFAS No.
146.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6
|-

---

| | Stock-based compensation  The Company uses the intrinsic value method of
accounting for its stock-based compensation under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees.  No stock-based employee compensation cost for options is reflected in net income, as all
options granted had an exercise price equal to the market value of the underlying common stock on the date
of grant.  The following table illustrates the effect on net income and net income per share if the Company
had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, to stock-based employee compensation.  The table (in millions, except per share data)
is presented pursuant to
amended disclosure requirements of SFAS No. 148, Accounting for Stock-Based Compensation-
Transition and Disclosure.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                                      | Second Quarter |       | First Half |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | ----- | ---------- | -
|                                                                                                                                                                      |                |       |            |  
|                                                                                                                                                                      | 2003           |       | 2002       |  
|                                                                                                                                                                      |                |       |            |  
|                                                                                                                                                                      |                |       |            |  
|Net income, as reported                                                                                                                                               | $              | 53.2  |            | $
|Deduct:  total stockbased employee
                   compensation expense determined under   fair value based method for all options,
                   net of tax |                | ( 0.9 | )          |  
|                                                                                                                                                                      |                |       |            |  
|Pro forma net income                                                                                                                                                  | $              | 52.3  |            | $
|                                                                                                                                                                      |                |       |            |  
|Basic:     As reported                                                                                                                                                | $              | 0.37  |            | $
|                                                                                                                                                                      |                |       |            |  
|Pro forma                                                                                                                                                             | $              | 0.37  |            | $
|                                                                                                                                                                      |                |       |            |  
|Diluted:  As reported                                                                                                                                                 | $              | 0.37  |            | $
|                                                                                                                                                                      |                |       |            |  
|Pro forma                                                                                                                                                             | $              | 0.37  |            | $
|                                                                                                                                                                      |                |       |            |  

| | The Black-Scholes model and the assumptions presented in the following table were used to estimate the fair values of the options
granted for the second quarters and first halves of 2002 and 2003.  The weighted-average estimated fair values at the dates of grant of options in the second quarter
of 2003 and the second quarter of 2002 were $3.28 and $4.89, respectively.  In the first half of 2003 and 2002, the weightedaverage
estimated fair values at the dates of grant of options were $3.28 and $3.89, respectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                       |  |  | 2003 |  | 2002  | 
| | ------------------------------------- |  |  | ---- |  | ----- | 
| |                                       |  |  |      |  |       | 
| | Risk-free interest rate               |  |  |      |  | 2.8%  | 
| | Expected dividend yield               |  |  |      |  | 0.3%  | 
| | Expected volatility                   |  |  |      |  | 26.0% | 
| | Estimated lives of options (in years) |  |  |      |  | 5.0   | 

|7
|-

---

|2. | Special Charges
|-- | ---------------

| | In the first half of 2003, the Company recorded special charges of $7.4 million ($4.6 million after tax).
In the U.S., the Company recorded special charges of $5.8 million ($3.6 million after tax), which consisted
mainly of severance related costs associated with the Companys announced reduction of its U.S.
workforce.  The Central Europe special charge of $0.8 million ($0.5 million after tax), consisting mainly
of asset write-downs, related to the modification of the distribution method in Poland, the Czech Republic
and Republic of Slovakia.  The Caribbean special charge of $0.8 million ($0.5 million after tax) consisted mainly
of asset write-downs related to the shutdown of the Barbados manufacturing facility.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In the fourth quarter of 2002, the Company recorded special charges totaling $5.7 million ($3.5 million
after tax), primarily for severance costs and other costs related to changing the Companys marketing and
distribution strategy in Poland, the Czech Republic and Republic of Slovakia.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The following table summarizes activity associated with the special charges (in millions):
| | ------------------------------------------------------------------------------------------

| |                                                                                                                                             | 2003Charge |       | 2002Charge |   | 2001Charge |   | Total |      
| | ------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | ----- | ---------- | - | ---------- | - | ----- | -----
| |                                                                                                                                             |            |       |            |   |            |   |       |      
| |                                                                                                                                             |            |       |            |   |            |   |       |      
| | Accrued liabilities as of
                fiscal year end 2002    (employee-related, lease cancellation and
                   other costs) | $          |      |            | $ | 4.3        |   | $     | 0.3  
| | U.S. special charges                                                                                                                        |            | 5.8   |            |   |           |   |       |     
| | Central Europe special
                charges                                                                                              |            | 0.8   |            |   |           |   |       |     
| | Caribbean special charges                                                                                                                   |            | 0.8   |            |   |           |   |       |     
| | Asset write-downs                                                                                                                           |            | ( 1.6 | )          |   |           |   |       |     
| | Acceleration of
                stock awards vesting                                                                                        |            | ( 0.3 | )          |   |           |   |       |     
| | Expenditures for
                employee-related and other costs                                                                           |            | ( 4.5 | )          |   | ( 0.5      | ) |       | ( 0.1
| | Expenditures for lease terminations                                                                                                         |            |      |            |   | ( 0.1      | ) |       |     
| |                                                                                                                                             |            |       |            |   |            |   |       |      
| | Accrued liabilities at the
                end of the second quarter of 2003                                                                | $          | 1.0   |            | $ | 3.7        |   | $     | 0.2  
| |                                                                                                                                             |            |       |            |   |            |   |       |      

| | The 2003 and 2002 special charges affected approximately 712 employees, of which approximately 322 remain as
of the end of the second quarter of 2003.  The accrued liabilities remaining as of the end of the second
quarter of 2003 are comprised of deferred severance payments and certain employee benefits, lease
cancellation costs and other costs.   The Company expects to pay a significant portion of the $4.9 million
using cash from operations during the next twelve months; accordingly, such amounts are classified as other
current liabilities.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8
|-

---

|3. | Interest Expense, Net
|-- | ---------------------

| | Interest expense, net, is comprised of the following (in millions):
| | -------------------------------------------------------------------

| |                       | Second Quarter |        | First Half |  
| | --------------------- | -------------- | ------ | ---------- | -
| |                       |                |        |            |  
| |                       | 2003           |        | 2002       |  
| |                       |                |        |            |  
| |                       |                |        |            |  
| | Interest expense      | $              | ( 18.3 | )          | $
| | Interest income       |                | 0.1    |            |  
| |                       |                |        |            |  
| | Interest expense, net | $              | ( 18.2 | )          | $
| |                       |                |        |            |  

| | In the first half of 2003, interest expense included $8.8 million related to the loss on the
early extinguishment
of debt, which occurred in the first quarter of 2003. See the Debt note for further discussion.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Interest income in the first half of 2003 included $6.4 million related to the Employee Stock Ownership
Plan (ESOP) tax case settlement, which occurred in the first quarter of 2003.  See the Income Taxes note for further discussion.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | Income Taxes
|-- | ------------

| | In the first quarter of 2003, the
Company favorably settled a tax refund case for $12.4 million with the U.S. Government that arose from the 1990 termination of
the Companys ESOP and, as a result, recorded a receivable of $12.8 million in "Other current assets."
The tax settlement consisted of $6.4 million of interest income ($4.0 million after taxes) and
a tax benefit of $6 million recorded in "Income taxes."  The Company also
recorded additional tax accruals of $4.3 million for liabilities arising in the first half of 2003.
Excluding the additional accruals, as well as the ESOP settlement tax benefit, the effective income tax rate
for the first half of 2003 was 38.5 percent, compared to the prior year first half effective tax rate
of 39 percent.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | Comprehensive Income
|-- | --------------------

| | The Companys comprehensive income
was as follows (in millions):
| | ----------------------------------------------------------------

| |                                                                         | Second Quarter |      | First Half | 
| | ----------------------------------------------------------------------- | -------------- | ---- | ---------- | 
| |                                                                         |                |      |            | 
| |                                                                         | 2003           |      | 2002       | 
| |                                                                         |                |      |            | 
| |                                                                         |                |      |            | 
| | Net income                                                              |                | 53.2 |            | 
| | Foreign currency translation adjustment                                 |                | 5.7  |            | 
| | Net unrealized investment and hedging
                   gains (losses) |                | 0.1  |            | 
| |                                                                         |                |      |            | 
| | Comprehensive income                                                    |                | 59.0 |            | 
| |                                                                         |                |      |            | 

|9
|-

---

| | Net unrealized investment and hedging gains (losses) are presented net of tax benefit of
$0.9 million in the second quarter of 2003 and net of tax expense of $2.0 million in the first half of
2003, respectively, and net of tax benefit of $1.6 million in the second quarter of
2002 and $2.7 million in the first half of 2002, respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | Inventory
|-- | ---------

| | As of the end of the second quarter
of 2003, inventory was approximately 44 percent comprised of raw materials and supplies and 56 percent
comprised of finished goods.  This mix is relatively consistent with the mix of inventory at the end of fiscal year 2002.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | Intangible Assets and Goodwill
|-- | ------------------------------

| | The changes in the carrying value
of goodwill by geographic segment for the first half of 2003 were as follows (in millions):
| | -----------------------------------------------------------------------------------------------------------------------------

| |                                                          | U.S. |         | CentralEurope |   | Caribbean |  | Total |      
| | -------------------------------------------------------- | ---- | ------- | ------------- | - | --------- |  | ----- | -----
| |                                                          |      |         |               |   |           |  |       |      
| |                                                          |      |         |               |   |           |  |       |      
| | Balance at end of year
                2002              | $    | 1,706.6 |               | $ | 28.2      |  | $     | 17.1 
| | Cumulative translation adjustment                        |      |        |               |   | 2.0       |  |       | ( 0.2
| |                                                          |      |         |               |   |           |  |       |      
| | Balance at end of second
                quarter of 2003 | $    | 1,706.6 |               | $ | 30.2      |  | $     | 16.9 
| |                                                          |      |         |               |   |           |  |       |      

| |                                       | End of Second Quarter 2003 |    
| | ------------------------------------- | -------------------------- | ---
| |                                       |                            |    
| |                                       | GrossCarryingAmount        |    
| |                                       |                            |    
| | Amortized intangible assets:          |                            |    
| | Non-compete agreements                | $                          | 1.0
| | Franchise and distribution agreements |                            | 3.7
| |                                       |                            |    
| | Total                                 | $                          | 4.7
| |                                       |                            |    
| | Unamortized intangible asset:         |                            |    
| | Pension intangible asset              | $                          | 2.1
| |                                       |                            |    
| | Total                                 | $                          | 6.8
| |                                       |                            |    

|8. | Investments
|-- | -----------

| | In the second quarter of 2002, the Company recorded a $3.5 million gain related to the sale of its interest in a parcel of land in
downtown Chicago.  The gain is reflected in "Other income (expense), net."  The Company received $26.5 million in cash and a $12
million promissory note collateralized by a subordinated mortgage related to the sale.  An additional $1.4 million, otherwise payable
to the Company, was held back in escrow, a portion of which is expected to be recovered when certain conditions are met related to
existing environmental matters. The promissory note and escrow balance were recorded at their estimated realizable value, net of
allowances of approximately $6.5 million.  In addition, the Company recorded $2.5 million of liabilities, net, for certain
indemnifications made pursuant to the sale agreement.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10
|--

---

| | In the second quarter of 2003, the Company recorded an additional $2.1 million gain related to the land sale, as certain
indemnification accruals were reduced due to the favorable resolution of related contingencies.  The gain is reflected in "Other income (expense),
net."
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | All other investments in real estate are carried at cost, which management believes is lower than the net realizable value.
Investments in real estate are included in other assets on the Condensed Consolidated Balance Sheets.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9. | Debt
|-- | ----

| | On March 6, 2003, the Company
issued $150 million of notes with a coupon rate of 4.5 percent and a maturity date of March 2013.
These notes are included in long-term debt in the Condensed Consolidated Balance Sheets.  The proceeds
were used to redeem the $150 million face value 5.79 percent notes issued in March 2001.  In anticipation of
the issuance of the notes in the first quarter of 2003, the Company entered into a
treasury rate lock agreement.  See the Financial Instruments note for further discussion of this
transaction.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During the first
quarter of 2003, the investors in $150 million of notes notified the Company that they
would exercise their option to purchase and resell the notes pursuant to the remarketing agreement, unless
the Company elected to redeem the notes.  In March 2003, the Company elected to redeem the notes, and
repurchased the 5.79 percent notes with a principal amount of $150 million.  The Company paid total premiums of $17.7 million
in connection with the repurchase.  The net remaining unamortized premium, including the
value of the option, and issue costs related to the repurchased notes was $5.7 million.
In addition, the Company settled a treasury rate lock agreement related to the repurchased notes and received $3.2 million.  See the
Financial Instruments note for further discussion of this transaction.   As a result, the Company recorded a loss on the early
extinguishment of debt of $8.8 million in Interest expense, net in the first quarter of 2003.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10. | Financial Instruments
|--- | ---------------------

| | The Company uses financial instruments to hedge against volatility in future cash flows on anticipated aluminum can
purchases, the prices of which are indexed to aluminum market prices.  Realized gains and losses on aluminum hedge contracts are
deferred until the related finished products are sold.  See Quantitative and Qualitative Disclosures About Market Risk.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Company has hedged a portion of its anticipated aluminum
can purchases through November 2004.  As of the end of the second quarter
      of 2003, the Company had deferred $2.1 million ($1.3 million net of tax) of aluminum hedging losses in Accumulated other
      comprehensive loss, a majority of which will be reclassified into cost of goods sold during the next 18 months.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During the third quarter of 2001,
the Company entered into swap contracts with an aggregate notional amount of $200 million to convert a
portion of its fixed rate debt to floating rate debt, with the objective of reducing overall borrowing costs.
These swaps are accounted for as fair value hedges, since they hedge against the fair value of fixed rate
debt resulting from fluctuations in interest rates.  The fair value of the interest rate swaps as of the
second quarter of 2003 was $20.7 million (net of $5.2 million interest receivable), which is reflected in
Other long-term assets on the Condensed Consolidated Balance Sheets, with a corresponding
increase in Long-term debt representing the change in fair value of the fixed rate debt.  The
fair value adjustment had no earnings impact since the swaps are considered highly effective in eliminating
the interest rate risk of the fixed rate debt they are hedging.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In anticipation of the long-term
debt issuances in the third quarter of 2002 and in the first quarter of 2003, the Company entered into a
series of treasury rate locks with an aggregate notional amount of  $250 million and $150 million,
respectively.  These treasury rate locks are accounted for as cash flow hedges, as the treasury rate locks
hedged against the variability of interest payments on the forecasted issuance of fixed-rate debt
attributable to changes in the interest rates. The treasury rate locks were settled for $2.5 million and
$1.2 million, concurrent with the debt issuances in the third quarter of 2002 and in the first quarter of
2003, respectively. At the end of the second quarter of 2003, the Company had deferred approximately $2.9 million
of losses (net of $1.2 million in deferred income taxes) in Accumulated other comprehensive loss in the
Condensed Consolidated Balance Sheet, as the treasury rate locks were considered highly effective in eliminating the
interest rate risk on the forecasted debt issuances. Amounts included in other comprehensive loss are
reclassified into earnings commensurate with the recognition of the interest expense on the newly issued
debt.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11
|--

---

| | In addition, in anticipation of
the early extinguishment of $150 million of notes in the first quarter of 2003, the Company
entered into a reverse treasury rate lock agreement.  The reverse treasury rate lock was accounted for as a
cash flow hedge, as the reverse treasury rate lock hedged against the
variability of interest rates related to the forecasted extinguishment of debt.  The reverse treasury rate
lock was settled and a
payment was received in the first quarter of 2003 for $3.2 million, and recognized in Interest expense, net in the income
statement as a reduction in the loss
on the early extinguishment of debt.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11. | Stock Options and Awards
|--- | ------------------------

| | In February 2003, the Company
granted 453,100 restricted shares at a weighted-average fair value (at the date of grant) of $12.01 to key
members of management under the Companys Stock Incentive Plan (the Plan).  The Company
recognized compensation expense of $1.5 million and $1.1 million in the second quarter of 2003 and second quarter of 2002, respectively,
related to this grant and previous grants in 2002 and 2001.  In the first half of 2003 and 2002, the Company recognized compensation expense
of $2.8 million and $1.5 million, respectively for such grants.  At the end of second quarter 2003,
there were 1,184,081 nonvested restricted shares outstanding under the Plan.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12. | Supplemental Cash Flow Information
|--- | ----------------------------------

| | Net cash provided by operating
activities reflected cash payments and receipts for interest and income taxes as follows (in millions):
| | --------------------------------------------------------------------------------------------------------------------------------------

| |                                              | First Half |     
| | -------------------------------------------- | ---------- | ----
| |                                              |            |     
| |                                              | 2003       |     
| |                                              |            |     
| |                                              |            |     
| |                                              |            |     
| | Interest paid, including debt extinguishment | $          | 54.1
| | Interest received                            |            | 6.2 
| | Income taxes paid, net of refunds            |            | 4.1 

|13. | Environmental and Other
                Commitments and Contingencies
|--- | ---------------------------------------------------------------------

| | The Company maintains a continuous program in its operations to facilitate compliance with federal, state and local laws and
       regulations relating to management of wastes and to the discharge or emission of materials used in production, and such other
       laws and regulations relating to the protection of the environment.  The capital costs of such management and compliance,
       including the costs of the modification of existing plants and the installation of new manufacturing processes incorporating
       pollution control technology, are not material to continuing operations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Indemnification obligations related to discontinued operations.  Under the agreement pursuant to which the Company sold its
       subsidiaries, Abex Corporation and Pneumo Abex Corporation, in 1988 and a subsequent settlement agreement entered into in
       September 1991, the Company has assumed indemnification obligations for certain environmental liabilities of Pneumo Abex, net
       of any insurance recoveries.  Pneumo Abex has been and is subject to a number of environmental cleanup proceedings, including
       proceedings under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 regarding disposal of wastes
       at on-site and off-site locations.  In some proceedings, federal, state and local government agencies are involved and other
       major corporations have been named as potentially responsible parties.  Pneumo Abex also has been and is subject to private
       claims and lawsuits for remediation of properties currently or previously owned by Pneumo Abex or certain other entities.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12
|--

---

| | There is an inherent uncertainty in determining the Companys potential expenses for complying with its indemnification obligations,
and in particular, in assessing the total cost of remediating a given site and in determining any individual party's share in that
cost.  This is because of the nature of the remediation and allocation process and due to the fact that the liabilities are at
different stages in terms of their ultimate resolution, and any assessment and determination are inherently speculative during the
early stages, depending upon a number of variables beyond the control of any party. Furthermore, there are often timing
considerations in that a portion of the expense incurred by Pneumo Abex, and any resulting obligation of the Company to indemnify
Pneumo Abex, may not occur for a number of years.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During the second quarter of 2000, proceeds of a settlement of insurance policies issued to a prior subsidiary were placed in a
      trust (the Trust).  The Trust documents specify that funds in the Trust would be used to pay future liabilities of the prior
      subsidiaries.  Monies paid by the Trust thereby would reduce the indemnification obligations of the Company.  At fiscal year end
      2001, the Company had $131.2 million accrued (net of the responsive Trust amount) to cover potential indemnification
      obligations.  As a result of the establishment of the Trust, the
      Company removed from its Consolidated Balance Sheet the portion of its liabilities to which the Trust was responsive, and the
      Trust held $34.3 million as of fiscal year end 2001.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In the latter part of 2001, the Company decided to investigate the use of insurance products to mitigate risks related to its
indemnification obligations under the 1988 agreement, as amended.  As a prerequisite to receiving bids for such insurance, the
insurance carriers required that the Company employ an outside consultant to perform a comprehensive review of all former facilities
related to the discontinued operations, regardless of whether any disputes had arisen with respect to a particular former site or
facility.  This comprehensive review was possible because of advances in the business of retrospective evaluation of the risk posed
by particular types of sites and the increased experience (and therefore available data) at the Companys former facilities.  The
consultants review was completed in the fourth quarter of 2001.  It provided a contingent indemnification liability for all known
sites operated or impacted by Pneumo Abex and resulted in the $111 million charge, or $71.2 million net of tax, recorded in the
fourth quarter of 2001.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During the second  quarter of 2002,  as part of a  comprehensive  program  concerning  environmental  liabilities  related to the
      former Whitman  Corporation  subsidiaries,  the Company  purchased new insurance  coverage  related to the known sites previously
      owned and  operated  or  impacted by Pneumo  Abex and its  subsidiaries,  along with other sites which  Pneumo Abex or one of its
      subsidiaries  may have owned or operated or impacted.  In addition,  the Trust purchased  insurance  coverage and funded coverage
      for remedial and other costs ("finite  funding")  related to the sites  previously  owned and operated or impacted by Pneumo Abex
      and its  subsidiaries.  In  conjunction  with  the  purchase  of the  insurance  policies,  the  Company  recorded  a  charge  to
      discontinued  operations of $9.8 million,  or $6 million after tax. This charge represented amounts expended by the Company and a
      reduction  of funds in the  Trust  available  to pay  expenses  related  to sites  for  which  the  Company  has  indemnification
      obligations.  These actions were taken to fund costs  associated  with the sites  previously  owned and operated or impacted
      by Pneumo Abex and its subsidiaries and to protect against  additional future costs in excess of a self-insured  retention of the
      Company.  The amount of  self-insured  retention  (the amount the Company must pay before the  insurance  carrier is obligated to
      commence  payments)  is $114  million.  The Company had accrued  $90  million at the end of fiscal year 2001 for  remediation  costs,  which was its best
      estimate of the  contingent  liabilities  related only to such  environmental  matters.  The finite funding of $26 million may be
      used to pay a portion of the $90  million,  which the  Company  had  accrued,  along with  previously  incurred  expenses  of the
      Company.  Essentially  all of the assets of the Trust were expended by the Trust in connection with the purchase of the insurance
      coverage and the finite funding and related expenses.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Because payments by the Trust for finite funding reduce cash required to be paid by the Company for the environmental sites for which
the Company has indemnification obligations, the Company recorded the finite funding in Investments
and other assets.  The finite funding amounts recorded were $24.5 million and $26 million at the end
of the second quarter 2003 and fiscal year 2002, respectively, which amounts included $15.8 million and $16.6 million recorded
in current assets at the end of the second quarter 2003 and fiscal year 2002, respectively.
At the end of the second quarter 2003, the Company had $133.7 million accrued to cover
potential indemnification obligations, compared to $138.1 million recorded at the end of fiscal year 2002.
Of the total amount accrued, $25.5 million was classified as current liabilities at the end of the second quarter 2003 and at the end of
fiscal year 2002.  These amounts exclude possible insurance recoveries under policies that were in place
prior to insurance policies purchased in the second quarter of 2002, and are determined on an undiscounted cash flow basis.
These estimated indemnification liabilities include expenses for the remediation of identified sites,
payments to third parties for claims and expenses (including product liability and toxic tort claims),
administrative expenses, and the expenses of on-going evaluations and litigation.  The Company expects a
significant portion of the accrued liabilities will be disbursed during the next 10 years.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13
|--

---

| | In addition, the Company had $15.1 million and $20.6 million
of receivables for future probable amounts to be received from insurance companies and other responsible parties as of the end of the
second quarter 2003 and fiscal year 2002, respectively.  These amounts are recorded as follows:  $4.5 million and $5.3 million were
included in "Other current assets" at the end of the second quarter 2003 and fiscal year 2002, respectively, with the remaining $10.6 million and $15.3
million recorded in "Other assets" in the Condensed Consolidated Balance Sheets as of the end of the second quarter 2003 and fiscal year 2002,
respectively.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Company also has certain
indemnification obligations related to product liability and toxic tort claims, which emanate out
of the 1988 agreement with Pneumo Abex.  The sites and product liability and toxic tort claims
included in the aggregate accrued liabilities the Company has recorded are described more fully in the
Companys Annual Report on Form 10-K for the fiscal year 2002.  No significant changes in the status
of those sites or claims occurred and no significant new sites or claims were discovered or made during
the first half of 2003.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Although the Company has certain indemnification obligations for environmental liabilities at a number of other sites, including
      several superfund sites, it is not anticipated that the additional expense involved at any specific site would have a material
      effect on the Company.  In the case of some of the other sites, the volumetric contribution for which the Company has an
      obligation has in most cases been estimated and other large, financially viable parties are responsible for substantial portions
      of the remainder.  In the opinion of management, based upon information currently available, the ultimate resolution of these
      claims and litigation, including potential environmental exposures, and considering amounts already accrued, should not have a
      material effect on the Companys financial condition, although amounts recorded in a given period could be material to the
      results of operations or cash flows for that period.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14. | Segment Reporting
|--- | -----------------

| | The Company operates in
three geographic areas  the United States (U.S.), Central Europe and the Caribbean.  The Company does business in 18 states
      in the U.S., and, outside the U.S., the Company does business in Poland, Hungary, the Czech Republic, Republic of Slovakia,
      Puerto Rico, Jamaica, Barbados, the Bahamas and Trinidad and Tobago.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The following tables present net sales
and operating income (loss) of the Companys geographic segments for the second quarter and first half of 2003 and
      2002 (in millions).  The net sales are as reported and are not adjusted for the impact of EITF 02-16 in fiscal year 2002.  See the "Significant
Accounting Policies" note for further discussion.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                | Second Quarter
| | -------------- | --------------
| |                |               
| |                | Net sales     
| |                |               
| |                | 2003          
| |                |               
| |                |               
| | U.S.           | $             
| | Central Europe |               
| | Caribbean      |               
| |                |               
| | Total          | $             
| |                |               

|14
|--

---

| |                | First Half
| | -------------- | ----------
| |                |           
| |                | Net sales 
| |                |           
| |                | 2003      
| |                |           
| |                |           
| | U.S.           | $         
| | Central Europe |           
| | Caribbean      |           
| |                |           
| | Total          | $         
| |                |           

| | There were no material changes in
total assets by geographic segment since the end of fiscal year 2002.
| | -------------------------------------------------------------------------------------------------------

|15. | Related Party Transactions
|--- | --------------------------

| | The Company is the number-two
anchor bottler in the Pepsi system.  The Company manufactures, packages, sells and distributes carbonated and non-carbonated Pepsi-Cola beverages and a variety of
      other beverages in the United States, Central Europe and the Caribbean.  The Company operates under exclusive franchise agreements
      with soft drink concentrate producers, including master bottling and fountain syrup agreements with PepsiCo, Inc. (PepsiCo)
      for the manufacture, packaging, sale and distribution of PepsiCo branded products.  PepsiCo holds a 39.8 percent equity interest
      in the Company.  See additional discussion of the Companys related party transactions in the Companys Annual Report on Form
      10-K for the fiscal year 2002.  There are similar agreements with Cadbury Schweppes and other brand owners.  The franchise
      agreements exist in perpetuity and contain operating and marketing commitments and conditions for termination.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 2.      Management's Discussion and Analysis of
Financial Condition and Results of Operations.
|---------------------------------------------------------------------------------------------------

|CRITICAL ACCOUNTING POLICIES
|----------------------------

|The preparation of the Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the
United States requires management to use estimates.  These estimates are made using managements best judgment and the information
available at the time these estimates are made, including the advice of outside experts.  For a better understanding of our
significant accounting policies used in preparation of the Condensed Consolidated Financial Statements, please refer to our Annual
Report on Form 10-K for the fiscal year 2002.  We focus your attention on the following
critical accounting policies:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Goodwill Impairment.  Goodwill is tested for impairment at least annually, using
a two-step approach at the reporting unit level:  U.S., Central Europe and the Caribbean.  First, we
estimate the fair value of the reporting units primarily using discounted estimated future cash flows.  If
the carrying value exceeds the fair value of the reporting unit, the second step of the goodwill impairment
test is performed to measure the amount of the potential loss.  Goodwill impairment is measured by
comparing the implied fair value of goodwill with its carrying amount.  We will estimate the
fair value of all assets in determining the implied fair value of goodwill.  The impairment
evaluation requires the use of considerable management judgment to determine the fair value of the
reporting units using discounted future cash flows, including estimates and assumptions regarding
amount and timing of cash flows, cost of capital and growth rates.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|15
|--

---

| | Environmental Liabilities.  We continue to be subject to certain indemnification
obligations under agreements related to previously sold subsidiaries, including potential environmental
liabilities (see Environmental and Other Commitments and Contingencies note to the Condensed
Consolidated Financial Statements).  We have recorded our best estimate of
our probable liability under those indemnification obligations, with the assistance of outside consultants
and other professionals.  Such estimates and the recorded liabilities are subject to various factors,
including possible insurance recoveries, the allocation of liabilities among other potentially responsible
parties, the advancement of technology for means of remediation, possible changes in the scope of work at
the contaminated sites, as well as possible changes in related laws, regulations, and agency requirements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Income Taxes.  Our effective income tax rate and the tax bases of our assets and
liabilities reflect managements best estimate of the outcome of future tax audits.  We have
established valuation allowances using managements best judgment where expected results do
not support the realization of deferred tax assets.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Bottler Incentives.  Certain bottler incentives are earned only if a
specified level of annual sales volume growth, or growth index, is achieved.  We record such bottler
incentives during the interim periods based on our growth index achieved on a year-to-date basis compared
to our targets or specified levels of growth indices.  The amounts are recorded as a reduction of cost of goods sold based on the actual sales volume
during the interim period.  If actual sales volume
differs from management estimates, gross margin and operating income could be adversely affected.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Customer discounts and allowances.  Certain customer discounts and allowances are earned and payable to customers if a specified level of annual sales volume is met.  We
record such customer discounts and allowances based on the estimated and probable sales volume for the annual period.  The amounts are
recorded as a reduction of net sales based on the actual customers sales volume during the interim period.  If actual annual sales
volume differs from management estimates, gross margin and operating income could be adversely affected.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|RESULTS OF OPERATIONS2003 SECOND QUARTER COMPARED WITH 2002 SECOND QUARTER
|--------------------------------------------------------------------------

|In the discussions of our results of operations below, the number of cases sold is referred
to as volume.  Net pricing is net sales
divided by the number of cases and gallons sold for our core businesses, which include bottles and cans (including vending bottles
and cans) as well as food service.  Changes in net pricing include the impact of sales price (or rate) changes, as well as the impact
of brand, package and geographic mix.  Net pricing and reported volume amounts exclude contract, commissary, private label,
concentrate, and vending (other than bottles and cans) revenue and volume.  Contract sales represent sales of manufactured product to
other franchise bottlers and typically decline as excess manufacturing capacity is utilized.  Cost of goods sold per unit is the cost
of goods sold for our core businesses divided by the related number of cases and gallons sold.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Our business is highly seasonal; accordingly, the operating results of any individual quarter may not be indicative of a full years
operating results.
|-------------------------------------------------------------------------------------------------------------------------------------------------------

|In addition, the discussion that follows includes both reported results, as well as
adjusted comparison results, which assume that EITF 02-16
had been in effect beginning in the first quarter of 2002.  See the Significant Accounting Policies
note to the Condensed Consolidated
Financial Statements for the adjustments and further discussion of the impact of EITF 02-16.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Volume
|------

|Second quarter 2003 worldwide volume decreased 1.5 percent.  The decline in worldwide volume was attributed to our
slowing volume decline in the U.S. of 3.5 percent due, in part, to the soft
retail environment, offset, in part by our strong international volume growth of 4.4 percent.  Central Europe achieved volume growth
of 2.8 percent in the second quarter of 2003, while Caribbean volume grew 10.7 percent.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|16
|--

---

|The decline in U.S. volume of 3.5 percent in the second quarter of 2003 reflected continued softness across all channels,
despite the benefit of the later timing of the Easter holiday that
offset approximately 1.3 percent of the decline. Trademark Pepsi decreased in
the mid single digits despite growth in Diet Pepsi.    Trademark Mountain Dew volumes
were up in the low single digits, driven mainly by the successful introduction of Mountain Dew LiveWire in both take home and single
serve packages.
Trademark Pepsi and trademark Mountain Dew account for nearly 80 percent of our volume.  Our continued successful launch of Sierra
Mist drove strong double-digit growth in the brand, while Aquafina volumes declined in the mid single digits this quarter for the
first time, as we lapped the introduction of the half-liter take home package in the second quarter of 2002.   We expect the strong marketing
calendar and product innovation scheduled for the later part of 2003, including the launch of Pepsi Vanilla, to improve our volume
trends, in particular in trademark Pepsi.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Total volume in Central Europe increased 2.8 percent in the second quarter of 2003, driven, in part,
by the later timing of the Easter holiday and reflecting strong growth in carbonated soft drinks and water. Volumes in the Caribbean
increased 10.7 percent compared to the same period last year primarily reflecting
strong volume growth in Puerto Rico and Jamaica.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Net Sales
|---------

|Net sales decreased $6.4 million, or 0.7 percent, to $870.9 million in the second quarter of
2003 compared to $877.3 million
the second quarter of 2002.  On a comparable
basis, assuming that EITF 02-16 had been in effect during 2002, net sales would have increased $12.0 million, or 1.4 percent, in the second
quarter of 2003, compared to the prior year, primarily reflecting increased net pricing in the U.S., strong international volume growth,
and favorable foreign exchange rates in Central Europe, offset, in part, by the decline in U.S. volume.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|U.S. net sales for the second quarter of 2003, decreased $21.8 million to $724.4 million from
$746.2 million in the prior year. On a comparable basis, assuming that EITF 02-16 had been in effect during
2002,  net sales would have decreased $3.4 million.  The decline
in U.S. net sales was the result of lower volumes, which were the result of operating in a soft retail environment and
lapping strong product innovation in the prior year second quarter. The impact of the volume decline in the second quarter of 2003 was
offset, in part, by a 3.1 percent increase in net
pricing.  The improvement in net pricing was driven by price increases of 2.1 percent and package mix contribution of 1.0 percent.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The increase in Central Europe net sales of $11.7 million, or 13.4 percent, to $98.7 million in the second quarter
of 2003 from
$87.0 million in the prior year resulted from a 2.8 percent increase in volume and favorable foreign
exchange rates, offset by a decline in net pricing.  The favorable foreign exchange rates contributed approximately $11.3
million to
Central Europes net sales in the second quarter of 2003.  Net pricing decreased
approximately 2.6 percent, excluding the impact of foreign exchange rates, due primarily to declines in Poland related
to competitive pressures.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Caribbean net sales increased 8.4 percent in the second quarter of 2003 to $47.8 million from $44.1 million
in the prior year second quarter.  The increase in net sales resulted from volume growth of 10.7 percent reflecting growth in all
territories, and strong contributions from Puerto Rico and Jamaica.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Cost of Goods Sold
|------------------

|Cost of goods sold decreased $13.7 million, or 2.6 percent, to $510.6 million in the second quarter of 2003 from
$524.3 million in
the prior year.  Assuming that EITF 02-16 had been in effect during 2002, cost of goods sold would have increased $18.7 million, or 3.8
percent.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In the U.S., cost of goods sold decreased $23.3 million, to $417.5 million in the second quarter of 2003 from
$440.8 million
in the prior year.  On a comparable basis, assuming that EITF 02-16 had been in effect during 2002, costs of goods sold would have
increased $8.1 million, or 2.0 percent.   The increase in cost of goods sold can be attributed primarily to the increase in the
cost of goods sold per unit.  The increase in cost of goods sold
per unit in the U.S. primarily reflected higher concentrate costs as well as decreases in brand owner funding as a result of the decline
in volumes.  Concentrate costs in 2003 will continue to be higher, as PepsiCo concentrate prices increased
by approximately 2 percent, effective for one year, beginning February 2003.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|17
|--

---

|In Central Europe, cost of goods sold increased $6.9 million, or 13.8 percent, to $56.8 million in the second quarter of 2003,
compared to $49.9 million in the prior year.  Assuming that EITF 02-16 had been in effect during 2002, Central Europe cost
of goods sold increased $7.9 million in the second quarter of 2003, compared to the prior year.  Cost of goods sold
increased mainly due to the impact of foreign exchange rates, as the increase in cost of goods sold due to volume was approximately
offset by a reduction in ingredients and packaging costs.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In the Caribbean, cost of goods sold increased $2.7 million, or 8 percent, to $36.3 million in the second
quarter of 2003,
compared to $33.6 million in the second quarter of 2002, driven mainly by the increase in volume of 10.7 percent.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Selling, Delivery and Administrative
                Expenses
|-------------------------------------------------------------

|In the second quarter of 2003, SD&A expenses increased $9.6 million, or 3.9 percent, to $255.0 million
from $245.4 million
in the comparable period of the previous year.  SD&A expenses as a percentage of net sales increased to 29.3 percent in the second
quarter of 2003 from 28.0 percent in the second quarter of 2002.  On a comparable basis, assuming that EITF 02-16 had been in effect
in 2002, SD&A decreased
$4.4 million, or 1.7 percent and, as a percentage of net sales, SD&A expenses decreased to 29.3 percent in the second quarter of 2003,
compared to 30.2 percent in the prior year second quarter.  The decrease in SD&A expenses was primarily attributed to the lower
operating costs achieved in the U.S.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In the U.S., SD&A expenses increased $10.0 million to $207.3 million in the second quarter of 2003, compared to $197.3 million in the
prior year second quarter.  On a comparable basis, assuming that EITF 02-16 had been in effect in 2002, SD&A expenses decreased $3.1
million or 1.5 percent.  As a percentage of net sales and on a comparable basis, SD&A expenses decreased to approximately 28.6 percent,
compared to 28.9 percent.  The decline in SD&A expenses was primarily attributed to lower labor costs based on the realization of our
cost containment initiatives.  We expect this lower SD&A percentage of net sales to
continue through the balance of 2003.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In Central Europe, SD&A expenses increased $0.7 million, or 2.0 percent, to
$36.5 million from $35.8 million.  Excluding the $3.4 million unfavorable impact of foreign
currency translation and the $1.0 million unfavorable impact of the adoption of EITF 02-16 in 2003, SD&A expenses
declined $3.7 million in the second quarter of 2003, compared to the prior year second quarter.
The lower SD&A costs can be mainly attributed to the successful rationalization of the Central Europe operations through the use of
an alternative distribution method in certain markets.  SD&A expenses in the Caribbean decreased $1.0 million to $11.2 million in
the second quarter of 2003, and improved as a percentage of net sales.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Special Charges
|---------------

|In the second quarter of 2003, we recorded special charges of $1.1 million, representing special charges of $0.8 million
in the Caribbean and
$0.3 million in Central Europe.  The Caribbean special charge of $0.8 million ($0.5 million after taxes) consisted mainly of asset
write-downs and severance costs
related to the shutdown of the Barbados manufacturing facility.  Similar to the changes we are making in Central Europe, we have rationalized our operation in Barbados, and are now outsourcing our
distribution to a local partner, and sourcing production from a different already existing location.  The Central Europe special
charge of $0.3 million related to the continued modification of its distribution method.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Operating Income
|----------------

|Operating income decreased $3.3 million, or 3.1 percent, to $104.1 million in the second quarter of 2003, compared to $107.4
million
in the prior year, driven mainly by the decrease in operating income in the U.S. of $8.3 million.  The decline in operating income in the
U.S. was primarily attributed to lower gross margins, due mainly to volume declines, offset by lower SD&A expenses as a percentage of net sales.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|18
|--

---

|Operating income in Central Europe increased $3.8 million to $5.1 million in the second quarter of 2003, compared to
$1.3 million in
the prior year, due mainly to volume growth, lower SD&A expenses, and the favorable impact of foreign exchange rates of approximately
$2.3 million, and offset by the special charge of $0.3 million recorded in the second quarter of 2003.  Operational performance in the
Caribbean improved, as operating losses in
the Caribbean of $0.5 million in the second quarter of 2003 were $1.2 million lower than the operating losses of $1.7
million in the prior year, despite the $0.8 million special charge recorded in the second quarter of 2003.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Interest and Other Expenses
|---------------------------

|Net interest expense decreased $1 million in the second quarter of 2003 to $18.2 million,
compared to $19.2 million in the prior year
second quarter, due mainly to the overall lower interest rates benefiting our borrowing costs on short-term borrowings and our floating rate
long-term debt.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|We recorded other income of $0.6 million in the second quarter of 2003 compared to other income of $1.6 million reported in the
second quarter of 2002.  Included in other income in the second quarter of 2002 was the pre-tax gain of $3.5 million resulting from the sale of a parcel of
land in downtown Chicago.  In the second quarter of 2003, we recorded an additional gain on the land sale of $2.1 million related to
the reduction of certain accruals due to the favorable resolution of related contingencies.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Income Taxes
|------------

|The effective income tax rate, which is income tax expense expressed as a percentage of income from continuing operations before
income taxes, was 38.5 percent for the second quarter of 2003, compared to 39 percent in the second quarter of 2002.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Income from Continuing Operations
|---------------------------------

|Income from continuing operations decreased $1.6 million to $53.2 million in the second quarter of 2003, compared to $54.8 million in
the second quarter of 2002.   The decline can mainly be attributed to the unfavorable impact of the special charges of $1.1 million
($0.7 million after taxes), as well as the $3.5 million gain ($2.1 million after taxes) on the land sale in the second quarter of
2002, compared to the additional $2.1 million gain ($1.3 million after taxes) included in the second quarter of 2003 related to the
land sale.
Operational factors impacting income from continuing operations were previously discussed.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Discontinued Operations
|-----------------------

|Loss from discontinued operations after taxes of $6 million in 2002 represented a $9.8 million charge for the purchase of certain
insurances policies concerning the environmental liabilities related to previously sold subsidiaries.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Net Income
|----------

|Net income increased $4.4 million to $53.2 million in the second quarter of 2003, compared to $48.8 million in the second quarter of
2002.  The improvement in net income was due to the discontinued operations charge of $6.0 million in the second quarter of 2002, as income
from continuing operations declined $1.6 million.  The factors that impacted both continuing and discontinued operations were
discussed previously.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|19
|--

---

|RESULTS OF OPERATIONS2003 FIRST HALF COMPARED WITH 2002 FIRST HALF
|------------------------------------------------------------------

|Volume
|------

|First half 2003 worldwide volume decreased 4.8 percent, which included volume declines of 5.3 percent in the
U.S. and 6.2 percent in
Central Europe, offset by an increase in Caribbean volume of 7.3 percent.  The decrease in worldwide volumes in the first half was mainly
due to the lapping of strong volumes from product innovation last year,
operating in a soft retail environment, and consumers initial reaction to our effort to
maintain pricing discipline in
the U.S. markets, particularly in the first quarter of 2003.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The decline in the U.S. volume of 5.3 percent in the first half of 2003 reflected the lapping of strong volume driven
by product innovation in the first half of
last year, as well as the initial effect on consumer demand of the net pricing increases.  We experienced softness across all
channels, including continued volume declines in the small format channel.  From a brand perspective, the decline in U.S. volume included high single-digit declines in trademark Pepsi and low single-digit
declines in trademark Mountain Dew, which were partly offset by increases in Aquafina and Lipton, as well as the continued
successful rollout of Sierra Mist.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Total volume in Central Europe decreased 6.2 percent in the first half of 2003,
due mainly to
poor weather conditions in the first quarter, continued
softness in the retail and consumer products industry, and continued competitive pressures in Poland.  Central Europe continued the December 2002 introduction and rollout of
Tropicana product, and we anticipate that this volume will continue to increase during the year.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Volumes in the Caribbean increased 7.3 percent compared to the same period last year primarily reflecting
improvements in Puerto Rico and Jamaica.
|--------------------------------------------------------------------------------------------------------------------------------------------------

|Net Sales
|---------

|Net sales decreased $54.7 million, or 3.4 percent, to $1,553.0 million compared to $1,607.7 million
the first half of 2002.  On a comparable
basis, assuming that EITF 02-16 had been in effect during 2002, net sales decreased $14.5 million, or 0.9 percent, in the first half
of 2003, compared to the prior year, primarily reflecting decreased volumes in both the U.S. and Central Europe markets offset, in part, by increased net
pricing in the U.S., increased volumes in the Caribbean, and favorable foreign exchange rates in Central Europe.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|U.S. net sales for the first half of 2003 decreased $66.2 million to $1,314.5 million from
$1,380.7 million in the prior year. On a comparable basis, assuming that EITF 02-16 had been in effect during
2002,  net sales decreased $26.0 million.  The decline
in U.S. net sales was the result of lower volumes, which were negatively impacted by price increases that were taken during the first
quarter of 2003 and strong new product growth present in the first half of 2002, as discussed
above, as well as operating in a soft retail environment.   The impact of the volume decline in the first half of 2003 was offset, in part,
by a 3.1 percent increase in net
pricing.  The improvement in net pricing was driven by price increases of 1.9 percent, driven by our pricing discipline initiatives
in the U.S., and package mix contribution of 1.2 percent.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Net sales in Central Europe increased $7.0 million, or 4.8 percent, to $151.6 million in the first half of 2003 from $144.6 million
in the prior year.  The increase can mainly be attributed to the favorable impact of foreign exchange rates of $18.3 million, offset,
in part, by lower volumes and the decline in net pricing, due mainly to the competitive pricing pressures in Poland.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Caribbean net sales increased 5.5 percent in the first half of 2003 to $86.9 million from $82.4 million in the prior year
first half.  The increase in net sales resulted mainly from volume growth of 7.3 percent, primarily driven by growth in Puerto Rico and
Jamaica.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|20
|--

---

|Cost of Goods Sold
|------------------

|Cost of goods sold decreased $60.2 million, or 6.2 percent, to $907.2 million in the first half of 2003 from $967.4 million in
the prior year.  Assuming that EITF 02-16 had been in effect during 2002, cost of goods sold increased $3.4 million, or 0.4
percent.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In the U.S., cost of goods sold decreased $66.1 million, to $753.1 million in the first half of 2003 from $819.2 million
in the prior year.  On a comparable basis, assuming that EITF 02-16 had been in effect during 2002, costs of goods sold
decreased $4.5 million, or 0.6 percent.   The decrease in cost of goods sold can be attributed primarily to the decline in U.S.
volume of 5.3 percent, offset, in part, by an increase in the cost of goods sold per unit.  The increase in cost of goods sold
per unit in the U.S. reflected higher concentrate costs as well as decreases in brand owner funding as a result of the declines in volumes.
Concentrate costs in 2003 will continue to be higher, as PepsiCo concentrate prices increased
by approximately 2 percent, effective for one year, beginning February 2003.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In Central Europe, cost of goods sold increased $1.8 million, or 2.1 percent, to $87.7 million in the first half of 2003,
compared to $85.9 million in the prior year.  Assuming that EITF 02-16 had been in effect during 2002, Central Europe cost
of goods sold increased $3.8 million in the first half of 2003, compared to the prior year, due primarily to the unfavorable impact of foreign exchange rates of $9.2 million.  Excluding the impact of foreign exchange rates
and on a comparable basis, cost of goods sold decreased $5.3 million, or 6.3 percent, which can be primarily attributed to the volume
decline of 6.2 percent for the first half of 2003.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In the Caribbean, cost of goods sold increased $4.0 million, or 6.4 percent, to $66.4 million in the first half of 2003,
compared to $62.4 million in the first half of 2002, driven mainly by the increase in volume of 7.3 percent.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Selling, Delivery and Administrative
                Expenses
|-------------------------------------------------------------

|In the first half of 2003, SD&A expenses increased $33.8 million, or 7.1 percent, to $507.4 million from
$473.6 million
in the comparable period of the previous year.  SD&A expenses as a percentage of net sales increased to 32.7 percent in the first
half of 2003 from 29.5 percent in the first half of 2002.  On a comparable basis, assuming that EITF 02-16 had been in effect
in 2002, SD&A increased
$10.4 million, or 2.1 percent and, as a percentage of net sales, SD&A expenses increased to 32.7 percent in the first half of 2003,
compared to 31.7 percent in the prior year first half.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In the U.S., SD&A expenses increased $32.4 million to $415.8 million in the first half of 2003, compared to $383.4 million in the
prior year first half.  On a comparable basis, assuming that EITF 02-16 had been in effect in 2002, SD&A expenses increased $11.0
million or 2.7 percent.  As a percentage of net sales and on a comparable basis, SD&A expenses increased to approximately 31.6 percent,
compared to 30.2 percent.  The increase in SD&A expenses was primarily attributed to increased fuel and insurance costs and compensation benefits; however, this
trend was slowed in the second quarter of 2003, as we began to realize our cost containment initiatives mainly through reduced labor
costs.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In Central Europe, SD&A expenses increased $3.0 million, or 4.5 percent, to
$69.1 million from $66.1 million.  Excluding the $6.3 million unfavorable impact of foreign
currency translation and the 2.0 milion unfavorable impact of the adoption of EITF 02-16 in 2003, SD&A expenses declined $5.3 million
in the first half of 2003, compared to the prior year
first half.
SD&A expenses in the Caribbean decreased $1.6 million to $22.5 million in the first half of 2003, and improved as a percentage of
net sales.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Special Charges
|---------------

|In the first half of 2003, we recorded special charges of $7.4 million, representing special charges of $5.8 million in
the U.S.,
$0.8 million in Central Europe and $0.8 million in the Caribbean.  The U.S. special charge of $5.8 million ($3.6 million after taxes) consisted mainly of severance
related costs associated with our announced reduction in our U.S. workforce in the first half of 2003.
The Central Europe special charges of $0.8 million ($0.5 million after tax) consisted mainly of asset write-downs, and
related to the modification of the distribution method in Poland, the Czech Republic and Republic of Slovakia.  The Caribbean special charge
of $0.8 million ($0.5 million after tax) consisted mainly of asset write-downs related to the shutdown of the Barbados manufacturing facility.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|21
|--

---

|Operating Income
|----------------

|Operating income decreased $35.6 million, or 21.4 percent, to $130.8 million in the first half of 2003, compared to $166.4 million
in the prior year, driven mainly by the decrease in operating income in the U.S. of $38.3 million.  The U.S. operating
income in the first half of 2003 included a special charge of $5.8 million related to the reduction in the U.S. workforce.  The remaining decline in operating income in the U.S. was primarily attributed to the volume declines of 5.3 percent and the higher
SD&A expenses as a percentage of net sales for the first half of 2003, as the improvement in net pricing was offset by higher costs
of goods sold per unit.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Operating losses in Central Europe decreased $1.4 million to $6.0 million in the first half of 2003, compared to $7.4 million in the
prior year.  The $1.4 million of operating income improvement in the first half of 2003 can be mainly attributed to the favorable impact
of foreign exchange rates of $3.0 million and lower SD&A expenses, offset, in part, by the approximately $2.9 million unfavorable impact of
volume declines and the special charges of $0.8 million.  In the Caribbean, operating losses decreased to $2.8 million in the first half of 2003,
compared to $4.0 million in the prior year.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Interest and Other Expenses
|---------------------------

|Net interest expense in the first half of 2003 was $37.4 million, compared to the same amount in the prior year.  Included in net
interest expense in the first half of 2003 was a loss on the early extinguishment of debt of $8.8 million, offset, in part, by a $6.4
million increase in interest income due to the favorable resolution of a tax refund case related to the ESOP, both recorded in the
first quarter.  In addition, our borrowing costs have benefited from overall lower interest rates.  See the Debt and Income taxes
notes to the Condensed Consolidated Financial Statements for further discussion.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|We recorded other expense, net, of $1.7 million in the first half of 2003 compared to other expense, net, of $0.8 million
reported in the first half of 2002.  Included in other expense, net, in the first half of 2002 was the pre-tax gain of $3.5 million resulting from the sale of a parcel of
land in downtown Chicago.  In the first half of 2003, we recorded an additional gain on the land sale of $2.1 million related to the
reduction of certain accruals due to the favorable resolution of related contingencies.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Income Taxes
|------------

|The effective income tax rate, which is income tax expense expressed as a percentage of income from continuing operations before
income taxes, was 36.6 percent for the first half of 2003.   Excluding the additional tax accruals recorded of $4.3 million, as
well as the tax benefit recorded of $6 million related to the favorable tax settlement that arose from the 1990 termination of our ESOP,
the effective tax rate for the first
half of 2003 was 38.5 percent, compared to 39 percent in the first half of 2002. See the Income taxes note to the
Condensed Consolidated Financial Statements for further discussion of the significant items recorded in Income taxes.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Income from Continuing Operations
|---------------------------------

|Income from continuing operations decreased $20.1 million to $58.1 million in the first half of 2003, compared to $78.2 million in
the first half of 2002.   The decline can mainly be attributed to the decline in the U.S. operating performance, as previously
discussed, as well as the unfavorable impact of the special charges of $7.4 million ($4.6 million after taxes) recorded during the first
half of 2003.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Income from Discontinued Operations
|-----------------------------------

|Loss from discontinued operations after taxes of $6 million in 2002 represented a $9.8 million charge for the purchase of certain
insurances policies concerning the environmental liabilities related to previously sold subsidiaries.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|22
|--

---

|Net Income
|----------

|Net income decreased $14.1 million to $58.1 million in the first half of 2003, compared to $72.2 million in the first half of
2002.  The decrease in net income primarily reflected the decline in the operating performance of the U.S. markets, as well as the
special charges recorded in the first half of 2003 of $7.4 million.  See the previously discussed additional factors impacting net
income.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|LIQUIDITY AND CAPITAL RESOURCES
|-------------------------------

|Net cash provided by operating activities increased by $27.4 million to $129.3 million in the first half of 2003,
compared to the first half of 2002.  The increase in net cash provided by operating activities in the first half of 2003 can be mainly attributed to the decrease in
receivables, due in part, to the improved days of credit sales outstanding and the timing of cash receipts.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Investing activities in the first half of 2003 included capital investments of $72.5 million, compared to $112.3
million in the first half of 2002.   The decline in capital expenditures was primarily due to planned lower spending on machinery
and equipment and vending.  We expect our capital spending to be in the range of $160 million to $180 million for the full year 2003.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Our total debt decreased $41.7 million to $1,342.1 million at the end of the second quarter
of 2003, from $1,383.8 million at the end of fiscal year 2002.   In the first quarter of 2003, we
issued $150 million of notes due in March 2013 with a coupon rate of 4.5 percent.  Net proceeds from
these notes were $146.3 million, which included a discount and issuance costs totaling $2.6 million, and a
treasury rate lock settlement payment of $1.1 million.  The proceeds were used to redeem $150 million
of notes that were issued in March 2001.  In February 2003, the investors of the $150 million of notes issued in
March 2001 notified us that they wanted to exercise their option to purchase and remarket the notes
pursuant to the remarketing agreement, unless we elected to redeem the notes.  In March 2003, we
redeemed the notes pursuant to the agreement.  We paid approximately $164.5 million for the fair value
of the debt to be extinguished, net of the reverse treasury rate lock settlement of $3.2 million.  In addition,
we repaid
$125 million of 7.25 percent
notes that came due during the first quarter of 2003.  During
the first half of 2003, we repurchased approximately 4.3 million shares of our common stock for
$56.0 million, compared to 0.2 million shares for $3.0 million during the prior year first half.  The issuance of common stock from treasury
shares for the exercise of stock options resulted in cash inflows of $4.3 million in the first half of
2003, compared to $4.0 million in the first half of 2002.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|We have a revolving credit agreement with maximum borrowings of $500 million, which acts as
a back-up for our $500 million
commercial paper program; accordingly, we have a total of $500 million available under the commercial paper program and revolving
credit facility combined.  Total commercial paper borrowings were $87 million at the end of the second quarter of 2003.  There were no
commercial paper borrowings at the end of fiscal year 2002.  See the Annual Report on Form 10-K from
fiscal year 2002 for a summary of our contractual obligations as of the end of fiscal year 2002.  There were no
significant changes to such contractual obligations in the first half of 2003.  We believe that with our existing operating cash flows,
available lines of credit, and the potential for additional debt and equity offerings, we will have sufficient resources to fund our
future growth and expansion.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|RELATED PARTY TRANSACTIONS
|--------------------------

|We purchase concentrate from PepsiCo to be used in the production of Pepsi carbonated soft drinks and other non-alcoholic beverages.
PepsiCo also provides us with various forms of bottler incentives (marketing support programs) to promote Pepsis brands.  These
bottler incentives cover a variety of initiatives, including marketplace support, equipment-related programs, and shared media and
advertising support, and are recorded pursuant to EITF 02-16.  See the Significant Accounting
Policies note to the Condensed
Consolidated Financial Statements for further discussion of bottler incentives.  There are no conditions or requirements, which could
result in the repayment of any support payments received by us.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|We are a licensed producer and distributor of Pepsi carbonated soft drinks and other non-alcoholic beverages.  We purchase
concentrate from PepsiCo to be used in the production of these carbonated soft drinks and other non-alcoholic beverages.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|23
|--

---

|We manufacture and distribute fountain products and provide fountain equipment service to PepsiCo customers in certain territories
in accordance with various agreements.  There are other products that we produce and/or distribute through various arrangements with
PepsiCo or partners of PepsiCo.   We also purchase finished beverage products from PepsiCo and certain of its affiliates including
tea, concentrate and finished beverage products from a Pepsi/Lipton partnership, as well as finished beverage products from a
Pepsi/Starbucks partnership.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|In addition, we have entered into various transactions with Pohlad Companies.  Robert C. Pohlad, our Chairman and Chief Executive
Officer, is the President and owner of approximately 33 percent of the capital stock of Pohlad Companies.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|See the Annual Report on Form 10-K for fiscal year 2002 for further discussion of related party transactions.
|-------------------------------------------------------------------------------------------------------------

|FORWARD-LOOKING STATEMENTS
|--------------------------

|This quarterly report on Form 10-Q contains certain forward-looking statements of expected future developments, as defined in the
Private Securities Litigation Reform Act of 1995.  The forward-looking statements in this Form 10-Q refer to the expectations
regarding continuing operating improvement and other matters.  These forward-looking statements reflect our expectations and are
based on currently available data; however, actual results are subject to future risks and uncertainties, which could materially
affect actual performance.  Risks and uncertainties that could affect such future performance include, but are not limited to, the
following:  competition, including product and pricing pressures; changing trends in consumer tastes; changes in the Companys
relationship and/or support programs with PepsiCo and other brand owners; market acceptance of new product offerings; weather
conditions; cost and availability of raw materials; availability of capital; labor and employee benefit costs; unfavorable interest
rate and currency fluctuations; costs of legal proceedings; outcomes of environmental claims and litigation; and changes in legislation and
general economic, business and political conditions in the countries and territories where the Company operates.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|These events and uncertainties are difficult or impossible to predict accurately and many are
beyond our control.  We assume no obligation to publicly release the result of any
revisions that may be made to any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or unanticipated events.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 3.      Quantitative and Qualitative Disclosures
About Market Risk.
|------------------------------------------------------------------------

|We are subject to various market risks, including risks
from changes in commodity prices, interest rates and currency
exchange rates.
|-------------------------------------------------------------------------------------------------------------------------------------

|Commodity Prices
|----------------

|The risk from commodity price changes relates to our ability to
recover higher product costs through price increases to customers,
which may be limited due to the competitive pricing environment that exists in the soft drink business.
We use derivative financial instruments
to hedge price fluctuations for a portion of our aluminum requirements over a specified period of time.
Because of the high
correlation between commodity prices and our contractual cost of these products, we consider these hedges
to be highly effective.  As
of the end of the second quarter of 2003, we hedged a portion of our anticipated aluminum can purchases through November 2004.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Interest Rates
|--------------

|In the second quarter of 2003, the risk from changes in interest rates was not material to our operations because a significant
portion of our debt issues represented fixed rate obligations.  Our floating rate exposure relates to changes in the six month LIBOR
rate and the overnight Federal Funds rate.  Assuming consistent levels of floating rate debt with those held at the end of the second
quarter of 2003, a 50 basis point (0.5 percent) change in each of these rates would not have had a significant impact on our second
quarter and first half of 2003 interest expense.  We have entered into interest rate swaps to convert a portion of our fixed rate debt to floating rate
debt.  We had cash equivalents throughout the second quarter of 2003, principally invested in money market funds and commercial paper,
which were most closely tied to overnight Federal Funds rates.  Assuming a change of 50 basis points in the rate of interest
associated with our cash equivalents at the end of the second quarter of 2003, interest income for the second quarter and first half
of 2003 would not have changed by a significant
amount.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|24
|--

---

|Currency Exchange Rates
|-----------------------

|Because we operate in international franchise territories, we are
subject to exposure resulting from changes in currency exchange rates.  Currency exchange rates are
influenced by a variety of economic factors including local inflation, growth, interest rates and
governmental actions, as well as other factors.  We currently do not hedge the translation risks of investments in our international
operations.  Any positive cash flows generated by international operations have been reinvested in the operations, or used to repay
intercompany loans.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|International operations, based on net sales, represented approximately 17 percent and 15 percent of
our total operations in the second quarter and first half of
2003, respectively.  A significant portion of the net sales in the Caribbean markets, specifically Puerto Rico, are denominated in U.S. dollars,
which is Puerto Ricos functional currency.  Changes in currency exchange rates impact the translation of the results of certain international
operations from their local currencies into U.S. dollars.  If the currency exchange rates had changed by five percent in the second
quarter and first half of 2003, we estimate the impact on reported operating income for those periods would not have been significant.  Our estimate reflects the fact
that a portion of the international operations costs are denominated in U.S. dollars, including concentrate purchases.  This estimate
does not take into account the possibility that rates can move in opposite directions and that gains in one category may or may not
be offset by losses from another category.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 4.      Controls and Procedures.
|-------------------------------------

|We maintain a system of disclosure controls and procedures that is designed to provide reasonable assurance that information, which
is required to be disclosed, is accumulated and communicated to management timely.  Within the 90 days prior to the date of this
report, the Company carried out an evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting
them to material information relating to us required to be included in our periodic
SEC filings.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|There were no significant changes in our internal controls or in other factors that could significantly affect these internal
controls subsequent to the date of our most recent evaluation.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|25
|--

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|PART II-OTHER INFORMATION
|-------------------------

|Item 1.      Legal Proceedings.
|-------------------------------

|No material changes to be reported this quarter.
|------------------------------------------------

|Item 4.      Submission of Matters to a Vote of Security Holders.
|-----------------------------------------------------------------

|(a)      April 24, 2003 Annual Meeting of Shareholders
|------------------------------------------------------

|(b)      Election of Directors
|------------------------------

|The following persons were elected at the Annual Meeting of Shareholders held on April 24, 2003 to serve
as directors for the ensuing year:
|-------------------------------------------------------------------------------------------------------------------------------------------

| | Brenda C. Barnes  | Jarobin Gilbert, Jr. 
| | ----------------- | ---------------------
| | Herbert M. Baum   | Matthew M. McKenna   
| | Richard G. Cline  | Lionell L. Nowell III
| | Pierre S. du Pont | Robert C. Pohlad     
| | Archie R. Dykes   |                      

|(c)      Matters Voted Upon
|---------------------------

|Proposal 1:   Election of Directors
|-----------------------------------

| | The following votes were recorded with respect to this
proposal:
| | ----------------------------------------------------------------

| |                       | Votes For   |  | VotesWithheld | 
| | --------------------- | ----------- |  | ------------- | 
| |                       |             |  |               | 
| | Brenda C. Barnes      | 132,583,202 |  | 1,291,789     | 
| | Herbert M. Baum       | 132,726,813 |  | 1,148,178     | 
| | Richard G. Cline      | 133,212,813 |  | 662,178       | 
| | Pierre S. du Pont     | 132,693,325 |  | 1,181,666     | 
| | Archie R. Dykes       | 133,023,838 |  | 851,153       | 
| | Jarobin Gilbert, Jr.  | 132,546,899 |  | 1,328,092     | 
| | Matthew M. McKenna    | 133,242,759 |  | 632,232       | 
| | Lionell L. Nowell III | 133,234,951 |  | 640,040       | 
| | Robert C. Pohlad      | 132,735,887 |  | 1,139,104     | 

|Proposal 2:   Approval of Independent Public Accountants
|--------------------------------------------------------

| | The following votes were recorded with respect thereto:
| | -------------------------------------------------------

| | Votes for          | 131,362,670 | 
| | ------------------ | ----------- | 
| | Votes against      | 2,370,520   | 
| | Votes withheld     | 0           | 
| | Votes abstaining   | 141,801     | 
| |                    |             | 
| | Total shares voted | 133,874,991 | 
| |                    |             | 

|26
|--

---

|Proposal 3:   Shareholder Proposal
|----------------------------------

| | The following votes were recorded with respect thereto:
| | -------------------------------------------------------

| | Votes for          | 9,508,474   | 
| | ------------------ | ----------- | 
| | Votes against      | 116,744,402 | 
| | Votes withheld     | 7,284,864   | 
| | Votes abstaining   | 337,251     | 
| |                    |             | 
| | Total shares voted | 133,874,991 | 
| |                    |             | 

|Item 6.      Exhibits and Reports on Form 8-K
|---------------------------------------------

|(a).      Exhibits.
|-------------------

|See Exhibit Index.
|--------------------

|(b).      Reports on Form 8-K.
|------------------------------

| | On April 2, 2003, the Company filed a Current Report with regards to the Company's press release dated
April 1, 2003, "PepsiAmericas' Reiterates Expectations for Fiscal 2003; Announces Reduction in Workforce and Refines First Quarter
Expectations."
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On April 22, 2003, the Company filed a Current Report with regards to the Company's press release dated April 22, 2003,
"PepsiAmericas Reports Earnings Per Share (EPS) Consistent with Previously Announced Expectations."
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|27
|--

---

|SIGNATURE
|---------

|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.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | PEPSIAMERICAS, INC.
| |  | -------------------

|Dated: | August 11, 2003 | By: | /s/ G. MICHAEL DURKIN JR.                                        
|------ | --------------- | --- | -----------------------------------------------------------------
|       |                 |     |                                                                  
|       |                 |     | G. Michael Durkin Jr.                                            
|       |                 |     | Senior Vice President
                and Chief Financial Officer
|       |                 |     | (As Chief Accounting
                Officer and Duly            
|       |                 |     | Authorized Officer
                of PepsiAmericas, Inc.)       

|28
|--

---

|EXHIBIT INDEX
|-------------

|ExhibitNumber | Description of Exhibit
|------------- | ----------------------

|31.1 | Chief Executive Officer
        Certification pursuant to Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|31.2 | Chief Financial Officer
        Certification pursuant to Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|32.1 | Chief Executive Officer
        Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------

|32.2 | Chief Financial Officer
        Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------

|29
|--