<PAGE>   1
===============================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

(Mark One)

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

      For the quarterly period ended July 3, 1999

/ /   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

                              WHITMAN CORPORATION
             (Exact name of registrant as specified in its charter)

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


3501 ALGONQUIN ROAD, ROLLING MEADOWS, ILLINOIS                     60008
    (Address of principal executive offices)                      (Zip Code)

       Registrant's telephone number, including area code (847) 818-5000


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

                                                  YES   /x/     NO   / /

As of July 31, 1999, the Registrant had 141,762,799 outstanding shares
(excluding treasury shares) of common stock, par value $0.01 per share, the
Registrant's only class of common stock.

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

<PAGE>   2
                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999



                                    CONTENTS

<TABLE>
<S>        <C>                                                                           <C>
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                                           11
           Item 3.    Quantitative and Qualitative Disclosures About Market Risk         17

PART II    OTHER INFORMATION
           Item 4.    Submission of Matters to a Vote of Security Holders                18
           Item 6.    Exhibits and Reports on Form 8-K                                   18

SIGNATURE                                                                                20
</TABLE>


                                       1
<PAGE>   3

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                 Second Quarter                       First Half
                                                            ------------------------           ------------------------
                                                              1999           1998                1999            1998
                                                            ---------       --------           ---------       --------
                                                                       (in millions, except per share data)
<S>                                                         <C>             <C>                <C>             <C>
Sales                                                       $   510.7       $  410.4           $   885.5       $  758.9
Cost of goods sold                                              298.1          242.3               517.8          448.6
                                                            ---------       --------           ---------       --------
   Gross profit                                                 212.6          168.1               367.7          310.3
Selling, general and administrative expenses                    146.9          110.9               266.9          213.9
Amortization expense                                              5.5            4.0                 9.4            7.9
Special charges (Note 6)                                         23.4             --                23.4             --
                                                            ---------       --------           ---------       --------
    Operating income                                             36.8           53.2                68.0           88.5
Interest expense, net (Note 10)                                 (14.2)          (8.5)              (25.5)         (17.8)
Other expense, net (Notes 3 and 7)                              (54.4)          (5.2)              (47.8)         (10.1)
                                                            ---------       --------           ----------      --------
    Income (loss) before income taxes                           (31.8)          39.5                (5.3)          60.6
Income taxes                                                    (24.2)          17.7               (15.9)          27.2
                                                            ---------       --------           ----------      --------
    Income (loss) from continuing operations
      before minority interest                                   (7.6)          21.8                10.6           33.4
Minority interest                                                 2.7            5.4                 6.6            8.9
                                                            ---------       --------           ---------       --------
Income (loss) from continuing operations                        (10.3)          16.4                 4.0           24.5
Loss from discontinued operations after
   taxes (Note 5)                                               (27.2)            --               (27.2)          (0.5)
Extraordinary loss on early extinguishment of
   debt after taxes (Note 8)                                       --             --                  --          (18.3)
                                                            ---------       --------           ---------       --------
Net income (loss)                                           $   (37.5)      $   16.4           $   (23.2)      $    5.7
                                                            =========       ========           =========       ========

WEIGHTED AVERAGE COMMON SHARES:
   Basic                                                        114.9          101.4               105.5          101.2
   Incremental effect of stock options (Note 16)                   --            1.8                 1.2            1.9
                                                            ---------       --------           ---------       --------
   Diluted                                                      114.9          103.2               106.7          103.1
                                                            =========       ========           =========       ========

INCOME (LOSS) PER SHARE - BASIC:
   Continuing operations                                    $   (0.09)      $   0.16           $    0.04       $   0.24
   Discontinued operations                                      (0.24)            --               (0.26)            --
   Extraordinary loss on early extinguishment of debt              --             --                  --          (0.18)
                                                            ---------       --------           ---------       --------
   Net income (loss)                                        $   (0.33)      $   0.16           $   (0.22)      $   0.06
                                                            =========       ========           =========       ========

INCOME (LOSS) PER SHARE - DILUTED:
   Continuing operations                                    $   (0.09)      $   0.16           $    0.04       $   0.24
   Discontinued operations                                      (0.24)            --               (0.26)            --
   Extraordinary loss on early extinguishment of debt              --             --                  --          (0.18)
                                                            ---------       --------           ---------       --------
   Net income (loss)                                        $   (0.33)      $   0.16           $   (0.22)      $   0.06
                                                            =========       ========           =========       ========

CASH DIVIDENDS PER SHARE                                    $    0.01       $   0.05           $    0.06       $   0.10
                                                            =========       ========           =========       ========
</TABLE>


    See accompanying notes to condensed consolidated financial statements.


                                       2
<PAGE>   4

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)

<TABLE>
<CAPTION>

                                                                         July 3,     January 2,

                                                                           1999          1999
                                                                         --------     ---------
                                                                             (in millions)
<S>                                                                      <C>         <C>
ASSETS:
Current assets:
     Cash and equivalents                                                $  123.8    $  147.6
     Receivables                                                            270.0       170.7
     Inventories                                                            119.0        80.0
     Other current assets                                                    35.3        30.8
                                                                         --------    --------
         Total current assets                                               548.1       429.1
Investments                                                                  59.8       160.0
Property (at cost)                                                        1,343.8     1,006.5
Accumulated depreciation and amortization                                  (508.0)     (507.2)
                                                                         --------    --------
     Net property                                                           835.8       499.3
                                                                         --------    --------
Intangible assets, net                                                    1,397.5       447.0
Other assets                                                                 38.6        33.9
                                                                         --------    --------
Total assets                                                             $2,879.8    $1,569.3
                                                                         ========    ========

LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
     Short-term debt, including current maturities of long-term debt     $  121.5    $     --
     Notes payable to PepsiCo (Note 3)                                      241.8          --
     Accounts and dividends payable                                         201.8       133.0
     Other current liabilities                                              200.7       100.2
                                                                         --------    --------
         Total current liabilities                                          765.8       233.2
                                                                         --------    --------
Long-term debt                                                              802.9       603.6
Deferred income taxes                                                        51.5        99.1
Other liabilities                                                            84.2        73.3
Minority interest                                                              --       233.7
Shareholders' equity:
     Preferred stock ($0.01 par value, 12.5 million shares authorized;
         no shares issued)                                                     --          --
     Common stock ($0.01 par value, 350.0 million shares authorized;
         167.3 million shares issued at July 3, 1999 and 113.3 million
         shares issued at January 2, 1999)                                1,633.8       499.8
     Retained income                                                         65.1        94.3
     Accumulated other comprehensive loss:
         Cumulative translation adjustment                                  (17.4)      (12.0)
         Unrealized investment gain                                           3.5         3.4
                                                                         --------    --------
         Accumulated other comprehensive loss                               (13.9)       (8.6)
                                                                         --------    --------
     Treasury stock (25.6 million shares at July 3, 1999
         and 12.3 million shares at January 2, 1999)                       (509.6)     (259.1)
                                                                         --------    --------

Total shareholders' equity                                                1,175.4       326.4
                                                                         --------    --------

Total liabilities and shareholders' equity                               $2,879.8    $1,569.3
                                                                         ========    ========
</TABLE>


    See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>   5
                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                              First Half
                                                                         -------------------
                                                                           1999       1998
                                                                         --------   --------
                                                                            (in millions)
<S>                                                                      <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations                                        $  4.0     $ 24.5
Adjustments to reconcile to net cash provided by continuing operations:
     Depreciation and amortization                                         47.1       38.6
     Deferred income taxes                                                (50.1)       7.8
     Gain on sale of franchises                                            (8.0)        --
     Special charges (Notes 6 and 7)                                       79.7         --
     Cash outlays related to special charges (Note 6)                      (6.3)     (17.9)
     Other                                                                  7.0        8.8
Changes in assets and liabilities, exclusive of acquisitions:
   Increase in receivables                                                (58.4)     (36.9)
   Increase in inventories                                                 (2.6)      (9.2)
   Increase in payables                                                    37.8       46.2
   Net change in other assets and liabilities                             (15.9)      (2.9)
                                                                         ------     ------
Net cash provided by continuing operations                                 34.3       59.0
                                                                         ------     ------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of franchises, net of cash divested (Note 3)           113.6         --
Franchises acquired, net of cash acquired (Note 3)                       (105.7)        --
Dividends from and settlement of intercompany indebtedness with
   Hussmann and Midas prior to spin-offs                                     --      434.3
Capital investments, net                                                  (79.2)     (57.8)
Net activity with joint ventures                                            1.2        1.8
Purchases of investments                                                     --       (9.5)
Proceeds from sales of investments                                          5.9        7.9
                                                                         ------     ------
   Net cash (used in) provided by investing activities                    (64.2)     376.7
                                                                         ------     ------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings of short-term debt                                          11.5        4.0
Proceeds from issuance of long-term debt                                  298.0         --
Repayment of long-term debt                                               (30.8)    (311.2)
Common dividends                                                           (6.0)     (10.1)
Treasury stock purchases                                                 (251.9)     (23.6)
Issuance of common stock                                                    1.4       19.6
                                                                         ------     ------
   Net cash provided by (used in) financing activities                     22.2     (321.3)
                                                                         ------     ------
Net cash used in discontinued operations                                  (15.5)      (7.6)
Effect of exchange rate changes on cash and equivalents                    (0.6)        --
                                                                         ------     ------
Change in cash and equivalents                                            (23.8)     106.8
Cash and equivalents at beginning of first half                           147.6       52.4
                                                                         ------     ------
Cash and equivalents at end of first half                                $123.8     $159.2
                                                                         ======     ======
</TABLE>


    See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>   6

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.    The condensed consolidated financial statements included herein have been
      prepared, without audit, by New Whitman (as defined below).  The financial
      statements include the results of operations of the former Whitman
      Corporation ("Old Whitman"), which was merged with and into Heartland
      Territories Holdings, Inc. ("Heartland") on May 20, 1999 (the "Merger"),
      following which Heartland changed its name to Whitman Corporation ("New
      Whitman"). Unless the context dictates otherwise, the use of the terms
      "Whitman" or "the Company" herein shall include the results of operations
      of both Old Whitman and New Whitman. Certain information and footnote
      disclosures normally included in financial statements prepared in
      accordance with generally accepted accounting principles 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 Old Whitman's Annual Report on Form 10-K/A for the
      fiscal year ended January 2, 1999. 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. Certain prior year amounts have been
      reclassified to conform to the current year presentation.

2.    Effective at the end of 1998, Old Whitman changed its fiscal year from a
      calendar year to a year consisting of 52 or 53 weeks ending on the
      Saturday closest to December 31. Old Whitman's first and second quarters
      of 1999 commenced January 3, 1999 and April 4, 1999, respectively, and
      the Company's second quarter of 1999 ended July 3, 1999. In the second
      quarter of 1999, the Company eliminated the two-month reporting lag in
      consolidating results of its existing international territories,
      resulting in additional sales of $11.6 million and operating losses of
      $0.6 million.

3.    On January 25, 1999, Old Whitman announced that its Board of Directors
      had approved a new business relationship with PepsiCo, Inc. ("PepsiCo").
      The new relationship was approved by Old Whitman's shareholders on May
      20, 1999. As part of the Contribution and Merger Agreement (the
      "Agreement") with PepsiCo and New Whitman, on May 20, 1999 PepsiCo
      contributed certain assets of several domestic franchise territories to
      New Whitman and Old Whitman merged into New Whitman. Contributed
      territories included Cleveland, Ohio, Dayton, Ohio, Indianapolis,
      Indiana, St. Louis, Missouri and southern Indiana. Pepsi-Cola General
      Bottlers, Inc. ("Pepsi General"), a wholly owned subsidiary of Old
      Whitman prior to the Merger and a wholly owned subsidiary of the Company
      following the merger, acquired PepsiCo's international operations in
      Hungary, the Czech Republic, Slovakia and the balance of Poland on May
      31, 1999. In exchange for the territories acquired/contributed from
      PepsiCo and the elimination of PepsiCo's 20 percent minority interest in
      Pepsi General, New Whitman issued 54 million shares of common stock to
      PepsiCo. In addition, New Whitman paid PepsiCo cash totaling $133.7
      million and assumed bank debt of $42.3 million, and assumed $241.8
      million of notes payable to PepsiCo, due August 31, 1999. As part of the
      Agreement, the Company agreed to repurchase up to 16 million shares, or
      $400 million of its common stock, whichever is less, during the 12-month
      period following the close of the transaction. The Company repurchased
      approximately 13.4 million shares of its common stock in the first half
      of 1999, at a total cost of $251.9 million. PepsiCo has agreed that such
      repurchases may be used to reduce New Whitman's repurchase commitment.

      The Agreement provided for Pepsi General to sell to PepsiCo its operations
      in Marion, Virginia, Princeton, West Virginia and the St. Petersburg area
      of Russia. On March 19, 1999, Pepsi General completed the sale to PepsiCo
      of the franchises in Marion, Virginia and Princeton, West Virginia. The
      sale of the franchise in Russia was completed on March 31, 1999. Proceeds
      from these sales were $117.8 million and the Company recorded a pretax
      gain of $11.4 million ($8.0 million after tax and minority interest),
      which is reflected in other expense, net, on the Condensed Consolidated
      Statements of Income.  In accordance with the terms of the Agreement, this
      gain is subject to adjustment pending a final determination of closing
      date working capital of the territories sold.


                                       5
<PAGE>   7

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


      Details of domestic and Central European territories acquired from
      PepsiCo in the second quarter of 1999 are as follows (in millions):

<TABLE>
<S>                                                   <C>
Fair value of assets acquired, including
  intangible assets of $1,009.0 million                $1,410.7
Liabilities assumed                                      (165.6)
                                                       --------
Cost of acquisition                                     1,245.1
Common stock issued to PepsiCo (54.0 million shares)   (1,134.0)
Notes issued to PepsiCo                                  (241.8)
Elimination of PepsiCo's 20 percent minority
  interest in Pepsi General                               243.2
Cash and equivalents acquired                              (6.8)
                                                       --------
Net cash paid for acquired territories                 $  105.7
                                                       ========
</TABLE>

      The acquisitions of the domestic and Central European territories have
      been accounted for under the purchase method; accordingly, the results of
      operations of the acquired territories have been included in the Company's
      consolidated financial statements since the dates of acquisition. The
      excess of the aggregate purchase price over the fair value of net assets
      acquired is being amortized on a straight-line basis over 40 years. The
      principal factors considered in determining the use of a 40-year
      amortization period include: 1) the franchise agreements with PepsiCo are
      granted in perpetuity and provide the exclusive right to manufacture and
      sell PepsiCo branded products within the territories prescribed in the
      agreements, and 2) the existing and projected cash flows are adequate to
      support the carrying values of intangible assets. The portion of the
      excess purchase cost allocated to property is based on preliminary
      appraisals.  The allocation is subject to refinement when the final
      appraisals are completed.  The Company anticipates that the final
      appraisals will not differ significantly from the preliminary appraisals.

      The following pro forma consolidated results of operations for the second
      quarter and first half of 1999 and 1998 assume the acquisitions occurred
      as of the beginning of fiscal 1998 (unaudited and in millions, except per
      share data):

<TABLE>
<CAPTION>
                                                Second Quarter           First Half
                                             --------------------   ----------------------
                                               1999        1998        1999         1998
                                             --------    --------   --------     ---------
<S>                                          <C>        <C>       <C>          <C>
Sales                                        $ 633.9     $ 589.1    $ 1,145.8    $ 1,068.2
Net income (loss)                              (43.8)       21.2        (34.4)         5.9
Net income (loss) per common share-basic       (0.32)       0.15        (0.25)        0.04
Net income (loss) per common share-diluted     (0.32)       0.15        (0.25)        0.04
</TABLE>

      The above pro forma information includes the $23.4 million of special
      charges ($16.2 million after taxes) recorded by Pepsi General in the
      second quarter of 1999 and the first quarter 1999 $8.0 million after tax
      gain on the sale of Marion, Princeton and Russia, as well as the $56.3
      million charge ($35.9 million after taxes) recorded in the second quarter
      of 1999 for the write-down of real estate held by the Company (see Note
      7). Absent these one-time items and adjusting 1998 sales for the change in
      the Company's reporting calendar, sales and income from continuing
      operations and related per share amounts are as follows (unaudited and in
      millions, except per share data):

<TABLE>
<CAPTION>
                                       Second Quarter           First Half
                                    ---------------------   ----------------------
                                      1999         1998        1999         1998
                                    --------    ---------   --------     ---------
<S>                                 <C>         <C>       <C>            <C>
Sales                               $  633.9    $  622.2    $ 1,145.8    $ 1,113.5
Income from continuing operations       24.6        21.2         30.8         24.7
Income from continuing operations
   per share - basic                    0.18        0.15         0.22         0.18
Income from continuing operations
   per share - diluted                  0.18        0.15         0.22         0.18
</TABLE>

4.    On January 30, 1998, the Company established Hussmann International, Inc.
      ("Hussmann") and Midas, Inc. ("Midas") as independent publicly-held
      companies through tax-free distributions (spin-offs) to Whitman
      shareholders. Whitman retained Pepsi General as its principal operating
      company. The financial information of Hussmann and Midas is reflected as
      discontinued operations.


                                       6
<PAGE>   8

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


5.    Loss from discontinued operations in the second quarter of 1999 includes
      a $12 million settlement of environmental litigation filed against Pneumo
      Abex, a former subsidiary of the Company, as well as an increase of $30.8
      million in accruals for other environmental matters related to Pneumo
      Abex. The loss from discontinued operations in 1998 includes the net
      losses of Hussmann and Midas through January 30, 1998, the date of the
      spin-offs. The losses have been reduced by income taxes of $15.6 million
      for the first half of 1999 and increased by $0.1 million for the first
      half of 1998.

6.    In the second quarter of 1999, Pepsi General recorded a special charge of
      $18.6 million ($11.4 million after tax) for staff reduction costs and
      non-cash asset write-downs, principally related to the acquisition of the
      domestic and international territories from PepsiCo. In addition, the
      Company announced it will seek the sale of the Baltics operations to a
      third party and has written down its investment by $4.8 million to the
      expected net realizable value.

      In 1997, the Company recorded special charges totaling $49.3 million,
      consisting of $14.8 million recorded by Pepsi General to consolidate a
      number of its domestic divisions, including reductions in staffing
      levels, and to write-down certain assets in its domestic and
      international operations, and $34.5 million recorded by Whitman relating
      to the severance of essentially all of the Whitman corporate management
      and staff and for expenses associated with the spin-offs.

      The following table summarizes the remaining accrued liabilities
      associated with the special charges at January 2, 1999, activity during
      the first half of 1999, and the remaining accrued liabilities at July 3,
      1999 (in millions):


<TABLE>
<CAPTION>
                                                     Pepsi   Whitman
                                                    General Corporate   Total
                                                    ------- --------- --------
<S>                                                 <C>       <C>     <C>
Accrued liabilities at January 2, 1999
   (all employee related costs)                      $ 1.5    $13.0    $14.5

Special charges:
   Asset write-downs associated with exit of
     plastic returnable bottle package in existing
     international territories                         7.6       --      7.6
   Other asset write-downs                             5.9       --      5.9
   Employee related costs                              5.1       --      5.1
   Write-down of Baltics operations                    4.8       --      4.8
                                                     -----    -----    -----

        Total special charges                         23.4       --     23.4
                                                     -----    -----    -----

Expenditures and asset write-downs:
   Asset write-downs                                 (18.3)      --    (18.3)
   Expenditures for employee related costs            (1.7)    (4.6)    (6.3)
                                                     -----    -----    -----

        Total expenditures and asset write-downs     (20.0)    (4.6)   (24.6)
                                                     -----    -----    -----

Accrued liabilities at July 3, 1999                  $ 4.9    $ 8.4    $13.3
                                                     =====    =====    =====
</TABLE>

      Employee related costs recorded in 1999 special charges include severance
      payments for the management and staff affected by the consolidation of
      international headquarters and operations in Poland and management
      changes in certain domestic markets. Employee related costs recorded in
      1997 special charges include severance payments for the management and
      staff affected by changes in the organizational structure, as well as
      other headcount reduction programs. The total number of employees
      affected by the 1999 charges is approximately 110, while the total number
      of employees affected by the 1997 charges was approximately 125 at Pepsi
      General and essentially all employees at Whitman Corporate. During the
      first half of 1999, approximately 6 positions were eliminated and
      approximately 12 positions are yet to be eliminated in relation to the
      1997 charges, while approximately 4 positions were eliminated and
      approximately 106 positions are yet to be eliminated in relation to the
      1999 charges.


                                       7
<PAGE>   9
                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999

      The accrued liabilities remaining at July 3, 1999 are comprised of
      deferred severance payments and certain employee benefits. The Company
      expects to pay a significant portion of the $13.3 million of employee
      related costs during the next twelve months; accordingly, such amounts are
      classified as other current liabilities.

7.    The Company entered into an agreement for the sale of property in downtown
      Chicago and recorded a charge of $56.3 million ($35.9 million after tax)
      in the second quarter of 1999 to reduce the book value of the property.
      This charge is reflected in other expense, net on the Condensed
      Consolidated Statements of Income. The close of the sale is subject to
      completion of certain due diligence and certain other conditions, and is
      expected to occur by the end of 1999.

8.    In January, 1998, Whitman made a tender offer for any and all of its
      outstanding 7.625% and 8.25% notes maturing June 15, 2015, and February
      15, 2007, respectively. In connection with the tender offer, Whitman
      repurchased 7.625% and 8.25% notes with principal amounts of $91.0
      million and $88.5 million, respectively. The Company paid total premiums
      in connection with the tender offer of $26.4 million and the remaining
      unamortized discount and issue costs related to repurchased notes were
      $2.1 million. The Company also repaid a term loan and notes with
      principal amounts of $50.0 million scheduled to mature in 1998 and 1999,
      notes due in 2002 with principal amounts of $50.0 million and industrial
      revenue bonds of $5.0 million due 2013. Costs associated with these
      repayments and the remaining unamortized issue costs were not
      significant. The Company recorded an extraordinary charge of $18.3
      million, net of income tax benefits of $10.4 million, in the first
      quarter of 1998 related to these early extinguishments of debt.

9. The Company's comprehensive income (loss) was as follows:

<TABLE>
<CAPTION>
                                              Second Quarter           First Half
                                         ---------------------   ----------------------
                                           1999         1998        1999         1998
                                         --------    ---------   ---------    ---------
                                                           (in millions)
<S>                                       <C>         <C>        <C>          <C>
Net income (loss)                         $(37.5)     $16.4      $(23.2)        $ 5.7
Foreign currency translation adjustment     (4.2)       0.9        (5.4)          2.9
Unrealized gains on securities               1.4        4.6         0.1           5.5
                                          ------      -----      ------         -----

Comprehensive income (loss)               $(40.3)     $21.9      $(28.5)        $14.1
                                          ======      =====      ======         =====
</TABLE>

      Unrealized gains on securities are presented net of tax expense of $0.8
      million, $2.6 million, $0.1 million and $3.0 million, respectively.

      Prior to May 20, 1999, the Company classified PepsiCo's 20 percent share
      of Pepsi General's cumulative translation adjustment within minority
      interest. As a result of the elimination of PepsiCo's minority interest
      in Pepsi General, approximately $3.7 million of cumulative translation
      adjustment has been reclassified from minority interest to cumulative
      translation adjustment, and therefore has been included in comprehensive
      loss for the second quarter and first half of 1999.

10. Interest expense, net, is comprised of the following:

<TABLE>
<CAPTION>
                                             Second Quarter           First Half
                                        ---------------------   ----------------------
                                          1999        1998        1999         1998
                                        --------    ---------   ---------    ---------
                                                           (in millions)
<S>                                       <C>        <C>         <C>          <C>
Interest expense                         $(15.6)     $(10.9)     $(27.6)      $(23.5)
Interest income from Hussmann and Midas      --          --          --          1.6
Interest income                             1.4         2.4         2.1          4.1
                                         ------      ------      ------       ------

Interest expense, net                    $(14.2)     $ (8.5)     $(25.5)      $(17.8)
                                         ======      ======      ======       ======
</TABLE>

      Interest income from Hussmann and Midas related to intercompany loans and
      advances. The related interest expense recorded by Hussmann and Midas is
      included in loss from discontinued operations after taxes.


                                       8
<PAGE>   10

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


11.   Net cash provided by operating activities reflected cash payments and
      receipts for interest and income taxes as follows:

<TABLE>
<CAPTION>
                                                               First Half
                                                         ----------------------
                                                            1999         1998
                                                         ---------    ---------
                                                              (in millions)
                  <S>                                    <C>          <C>
                  Interest paid                          $   26.1     $    29.3
                  Interest received                           2.6           3.2
                  Income taxes paid, net of refunds          19.8           3.4
</TABLE>

      The increase in income taxes paid in the first half of 1999 versus the
      comparable period in 1998 was due primarily to the impact of the tax
      benefits arising from the extraordinary loss recorded during the first
      quarter of 1998 (see Note 8).

12.   As a result of the Central European territory acquisitions, the Company
      re-evaluated certain previous tax positions related to its international
      operations and eliminated $19.8 million of deferred tax liabilities
      recorded in prior periods. Beginning in the second quarter of 1999, the
      Company no longer defers the tax benefits on international losses.
      Excluding non-recurring items, the following table reconciles the income
      tax provision for continuing operations at the U.S. federal statutory
      rate to the Company's actual income tax (benefit) provision on continuing
      operations (dollars in millions):

<TABLE>
<CAPTION>
                                                             First Half of 1999   First Half of 1998
                                                             ------------------   ------------------
                                                             Amount        %       Amount       %
                                                             ------     ------    ------      ------
<S>                                                          <C>         <C>      <C>         <C>
Income taxes computed at the U.S. federal statutory rate      $22.1       35.0     $21.2       35.0
State income taxes, net of federal income tax benefit           3.1        4.9       2.8        4.6
Non-U.S. losses                                                 0.3        0.5       1.6        2.6
Non-deductible portion of amortization - intangibles            4.1        6.5       1.6        2.6
Other items, net                                                0.5        0.9        --        0.1
                                                             ------      -----     -----      -----
Income tax on continuing operations, excluding
  non-recurring items                                          30.1       47.8      27.2       44.9
                                                                         =====                =====

Tax benefit of special charges and elimination of
  deferred tax liabilities recorded in prior periods          (46.0)                  --
                                                             ------                -----
Income tax (benefit) expense on continuing operations        $(15.9)               $27.2
                                                             ======                =====
</TABLE>

13.   At July 3, 1999, the components of inventory were approximately: raw
      materials and supplies - 45 percent; finished goods - 55 percent.

14.   The Company continues to be subject to certain indemnification
      obligations under agreements with previously sold subsidiaries for
      potential environmental liabilities. There is significant uncertainty in
      assessing the Company's share of the potential liability for such claims.
      The assessment and determination for cleanup at the various sites
      involved is inherently difficult to estimate, and the Company's share of
      related costs is subject to various factors, including possible insurance
      recoveries and the allocation of liabilities among many other potentially
      responsible and financially viable parties.

      At July 3, 1999, the Company had accruals of $42.8 million to cover these
      potential liabilities, including $12.0 million classified as current
      liabilities. Such amounts are determined using estimated undiscounted
      future cash requirements, and have not been reduced by potential future
      insurance recoveries. These estimated liabilities include expenses for
      the remediation of identified sites, payments to third parties for claims
      and expenses, and the expenses of on-going evaluation and litigation. The
      estimates are based upon current technology and remediation techniques,
      and do not take into consideration any inflationary trends upon such
      claims or expenses, nor do they reflect the possible benefits of
      continuing improvements in remediation methods. The accruals also do not
      provide for any claims for environmental liabilities or other potential
      issues which may be filed against the Company in the future.


                                       9
<PAGE>   11
                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


      The Company also has other contingent liabilities from various pending
      claims and litigation on a number of matters, including indemnification
      claims under agreements with previously sold subsidiaries for product
      liability and toxic torts. The ultimate liability for these claims, if
      any, cannot be determined. In the opinion of management, and based upon
      information currently available, the ultimate resolution of these claims
      and litigation, including potential environmental exposures, and
      considering amounts already accrued, will not have a material effect on
      the Company's financial condition or the results of operations.
      Additional claims and liabilities may develop and may result in
      additional charges to income, principally through discontinued
      operations. Existing environmental liabilities associated with the
      Company's continuing operations are not material.

15.   During the first half of 1999, the Company entered into several
      derivative financial instruments to reduce the Company's exposure to
      adverse fluctuations in interest rates and commodity prices. These
      financial instruments were "over-the-counter" instruments and were
      designated at their inception as hedges of underlying exposures. The
      Company does not enter into derivative financial instruments for trading
      purposes.

      In March, 1999, the Company entered into forward contracts with an
      aggregate notional amount of $150 million to fix the interest rate on the
      April, 1999 issuance of $150 million of 6.375 percent notes due in 2009.
      In April, 1999, the Company entered into further contracts with an
      aggregate notional amount of $150 million to fix the interest rate on the
      April, 1999 issuance of $150 million of 6.0 percent notes due in 2004.
      All such contracts were settled upon issuance of the notes, resulting in
      net proceeds of $0.4 million.

      During the first quarter of 1999, the Company entered into several swap
      contracts to hedge future fluctuations in aluminum prices. Each contract
      hedges price fluctuations on a portion of the Company's aluminum can
      requirements over a specified future six-month period. Because of the
      high correlation between aluminum commodity prices and the Company's cost
      of aluminum cans, the Company considers these hedges to be highly
      effective. At July 3, 1999, the Company has hedged a portion of its
      future domestic aluminum requirements extending into the year 2000.
      Hedging gains and losses on these contracts at July 3, 1999 were not
      significant and will be recognized in income upon sale of the inventory
      containing the aluminum being hedged.

16.   Basic earnings per share are based upon the weighted-average number of
      common shares outstanding. Diluted earnings per share assume 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 2,680,700 shares and 261,000 shares at a
      weighted-average price of $22.36 and $19.74 per share, respectively, that
      were outstanding at the end of the first half of 1999 and the first half
      of 1998, respectively, were not included in the computation of diluted
      EPS because the exercise price was greater than the average market price
      of the common shares during the related period. Due to the loss from
      continuing operations in the second quarter of 1999, no potential common
      shares were included in the computation of average diluted shares. The
      effect of potential common shares, assuming they were not anti-dilutive,
      would have resulted in average diluted shares of 115.8 million.


                                      10
<PAGE>   12

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999

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

                             RESULTS OF OPERATIONS
             1999 SECOND QUARTER COMPARED WITH 1998 SECOND QUARTER

      Due to the 1999 transaction with PepsiCo that resulted in the divestiture
of certain of the Company's operations, as well as the acquisition of
significant domestic and Central European territories from PepsiCo, as more
fully described in Note 3 to the Condensed Consolidated Financial Statements,
the Company believes that comparable results provide a better indication of
current operating trends than reported results. Comparable operating results
are determined by adjusting, as of the beginning of each period, 1999 and 1998
results to exclude results of territories divested and include results of
territories acquired, and to adjust 1998 existing Whitman sales volumes and
sales dollars for the change in the Company's reporting calendar. In addition,
comparable operating results exclude the $23.4 million of special charges
incurred in the second quarter of 1999; the $4.5 million of charges incurred in
the first quarter of 1999 related to the settlement of insurance, severance and
legal matters; and the impact of eliminating the two-month reporting lag in
consolidating international results.

      Sales for the second quarter of 1999 and 1998 are summarized below (in
millions):

<TABLE>
<CAPTION>
                                   Reported                  %                    Comparable                 %
                           ------------------------                        ------------------------
                             1999            1998          Change             1999           1998          Change
                           ---------      ---------        ------          ---------      ---------        ------
     <S>                   <C>            <C>             <C>             <C>            <C>                <C>
      Domestic             $  467.4       $   390.6         19.7           $   568.5      $   548.2          3.7
      International            43.3            19.8        118.7                65.4           74.0        -11.6
                           --------       ---------                        ---------      ---------

      Total Sales          $  510.7       $   410.4         24.4           $   633.9      $   622.2          1.9
                           ========       =========                        =========      =========
</TABLE>

      On a reported basis, domestic sales increased $76.8 million, or 19.7
percent, in the second quarter of 1999 compared to 1998, reflecting sales
contributed by the acquired territories and increased volumes and improved
pricing in existing territories. In 8-ounce equivalent cases including
foodservice, volume increased 18.0 percent over the second quarter of 1998.
Reported volume included Fourth of July holiday sales in existing Whitman
markets in the second quarter of 1999, whereas such sales were reported in the
third quarter of 1998.

     On a comparable basis, domestic sales increased $20.3 million, or 3.7%,
reflecting a 2.7 percent increase in 8-ounce equivalent case volume and improved
pricing. Sales growth was driven primarily by the vending, convenience and gas
and mass merchandising channels. Volume growth was led primarily by improved
demand for the Mountain Dew and Dr Pepper brands, continued strong growth in the
water brands Aquafina and Avalon, and sales of Storm and Pepsi One, which were
introduced in the third and fourth quarters of 1998, respectively. Growth of
20-ounce non-returnable ("NR") package sales continued, aided by the increased
investment in the cold drink initiative, which includes increasing points of
access through investment in vending, coolers, and fountain equipment.

      Reported international sales increased significantly due to sales
contributed by the newly acquired Central European territories and as a result
of eliminating the two-month reporting lag in consolidating international
results. However, on a comparable basis, sales decreased by $8.6 million, or
11.6 percent, primarily due to lower sales in Poland, as Easter holiday sales
occurred in the first quarter of 1999 versus the second quarter of 1998. In
addition, sales decreased in Poland due to poor weather conditions and year
over year currency depreciation.

      The consolidated gross profit margin on a reported basis increased to
41.6 percent of sales in the second quarter of 1999, compared with 41.0 percent
of sales in the comparable period of 1998. This increase was due to improved
international margins in Poland and the Baltics, as well as the absence of
Russian operations in the second quarter of 1999. The reported domestic margin
decreased slightly, reflecting the lower margin channel and package mix of the
acquired territories, partially offset by reduced packaging costs.

      Reported selling, general and administrative ("S,G&A") expenses
represented 28.8 percent of sales in the second quarter of 1999, compared with
27.0 percent in the comparable period of 1998. This increase is due, in part,
to higher depreciation and other costs to support the Company's cold drink
initiative, which was not fully implemented until the latter half of 1998. In
addition, incremental Year 2000 costs and expenses associated with the
integrated enterprise-wide resource planning ("ERP") system implementation in
the second quarter of 1999 amounted to approximately $0.6 million. Amortization
expense increased due to the transaction with PepsiCo.


                                       11
<PAGE>   13

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


      In the second quarter of 1999, Pepsi General recorded a special charge of
$18.6 million ($11.4 million after tax) for staff reduction costs and non-cash
asset write-downs, principally related to the acquisition of the domestic and
international territories from PepsiCo. In addition, the Company announced it
will seek the sale of the Baltics operations to a third party and has written
down its investment by $4.8 million to the expected net realizable value.

     As a result of the actions taken leading to the 1999 special charges of
$18.6 million, the Company expects to realize approximately $10 million in
annual pretax savings, resulting principally from employee related costs. Such
savings will not likely be fully realized until the year 2000. In fiscal 1998
and the first half of 1999, the Baltics had sales of $5.4 million and $3.1
million, respectively, and incurred operating losses of $3.5 million and $0.8
million, respectively.

      Operating income (loss) for the second quarter of 1999 and 1998 is
summarized below (in millions):

<TABLE>
<CAPTION>
                                   Reported                  %                    Comparable                 %
                           ------------------------                        ------------------------
                             1999            1998          Change             1999           1998          Change
                           ---------      ---------        ------          ---------      ---------        ------
     <S>                   <C>            <C>              <C>             <C>            <C>              <C>
      Domestic             $   61.5       $    58.1          5.9           $    69.8      $    64.6          8.0
      International           (24.7)           (4.9)         N/M                (7.5)          (8.9)        15.8
                           --------       ---------                        ---------      ---------

      Total Operating
        Income             $   36.8       $    53.2        -30.8           $    62.3      $    55.7         11.8
                           ========       =========                        =========      =========
</TABLE>

      In the second quarter of 1999, reported domestic operating income
increased $3.4 million, or 5.9 percent. Included in second quarter 1999
domestic operating income are $2.8 million of special charges, resulting from
management changes in certain domestic markets (see Note 6 to the Condensed
Consolidated Financial Statements). Excluding these charges, reported operating
income increased $6.2 million, or 10.7 percent, to $64.3 million in the second
quarter of 1999, reflecting higher operating income from the inclusion of 1999
Fourth of July holiday sales in existing Whitman markets and operating income
contributed by the acquired territories.

      On a comparable basis, domestic operating income increased $5.2 million,
or 8.0 percent, reflecting the benefit of 1999 Fourth of July holiday sales.
Excluding certain one-time credits passed back by PepsiCo to the newly acquired
territories in 1998, comparable operating income growth was 10.6 percent. The
domestic operating margin for the second quarter of 1999, at 12.3 percent, was
essentially unchanged from a year ago.

      Included in the second quarter 1999 international operating losses are
$20.6 million of special charges resulting principally from the acquisition of
Central European territories from PepsiCo (see Note 6 to the Condensed
Consolidated Financial Statements). Excluding these charges, reported operating
losses decreased $0.8 million, or 16.3 percent, to $4.1 million in the second
quarter of 1999. This decrease was principally attributable to improved results
in Poland and the Baltics. On a comparable basis, international operating
losses decreased by $1.4 million from the second quarter of 1998, primarily due
to cost savings realized in the existing Poland and Baltics territories, as
well as improved results in Hungary and the Czech Republic.

      Net interest expense increased $5.7 million to $14.2 million. The
increase was due principally to an increase in average quarterly outstanding
net debt due to the acquisitions of domestic and Central European territories
from PepsiCo and related share repurchases.

      Other expense, net, increased to $54.4 million in the second quarter of
1999 compared with $5.2 million in the second quarter of 1998, primarily due to
the $56.3 million write-down of non-operating real estate. See Note 7 to the
Condensed Consolidated Financial Statements. Absent this charge, non-operating
income was $1.9 million in the quarter. The reduced non-operating expenses are
attributable, in part, to the termination of the management fee paid to PepsiCo
and reduced real estate taxes on non-operating land.


                                       12
<PAGE>   14

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


                             RESULTS OF OPERATIONS
                 1999 FIRST HALF COMPARED WITH 1998 FIRST HALF

      See "Results of Operations - 1999 Second Quarter Compared with 1998
Second Quarter" for discussion of the basis used below for determining
comparable results of operations.

      Sales for the first half of 1999 and first half of 1998 are summarized
below (in millions):

<TABLE>
<CAPTION>
                                   Reported                  %                    Comparable                 %
                           ------------------------                        ------------------------
                             1999            1998          Change             1999           1998          Change
                           ---------      ---------        ------          ---------      ---------        ------
     <S>                   <C>            <C>               <C>            <C>            <C>             <C>
      Domestic             $  828.7       $   723.3         14.6           $ 1,034.3      $   995.5          3.9
      International            56.8            35.6         59.6               111.5          118.0         -5.5
                           --------       ---------                        ---------      ---------

      Total Sales          $  885.5       $   758.9         16.7           $ 1,145.8      $ 1,113.5          2.9
                           ========       =========                        =========      =========
</TABLE>

      Reported domestic sales increased $105.4 million, or 14.6 percent, in the
first half of 1999 compared with the same period of 1998, reflecting sales
contributed by the acquired territories and improved pricing and increased
volumes in existing territories. Reported volume including foodservice, in
8-ounce equivalent cases, increased 12.6 percent, reflecting volume contributed
by the acquired territories and the inclusion of 1999 Fourth of July holiday
sales in existing Whitman markets which were reported in the third quarter of
1998.

      On a comparable basis, domestic sales increased $38.8 million, or 3.9%,
reflecting a 3.3 percent increase in 8-ounce equivalent case volume, including
foodservice, and improved pricing.

      Reported international sales increased significantly in the first half of
1999 due to sales contributed by the newly acquired Central European
territories and as a result of eliminating the two-month reporting lag in
consolidating international results. On a comparable basis, sales decreased by
$6.5 million to $111.5 million, reflecting lower sales in Poland due to poor
weather conditions and year over year currency depreciation.

      The consolidated gross profit margin on a reported basis increased from
40.9 percent of sales to 41.5 percent of sales, due to decreased domestic
packaging costs, and higher international margins attributable to improvements
in Poland and the Baltics.

      Reported S,G&A expenses, excluding first half charges related to the
settlement of insurance, severance and legal matters, represented 29.6 percent
of sales in the first half of 1999, compared with 28.2 percent in the
comparable period of 1998. This increase is due, in part, to higher
depreciation and other costs to support the Company's cold drink initiative,
which was not fully implemented until the latter half of 1998. In addition,
incremental Year 2000 costs and expenses associated with the ERP system
implementation in the first half of 1999 amounted to approximately $1.5
million. Amortization expense increased due to the transaction with PepsiCo.

See "Results of Operations - 1999 Second Quarter Compared with 1998 Second
Quarter" for discussion of special charges incurred in the first half of 1999.

      Operating income (loss) for the first half of 1999 and first half of 1998
is summarized below (in millions):

<TABLE>
<CAPTION>

                                   Reported                  %                    Comparable                 %
                           ------------------------                        ------------------------
                             1999            1998          Change             1999           1998          Change
                           ---------      ---------        ------          ---------      ---------        ------
     <S>                   <C>            <C>                <C>           <C>            <C>             <C>
      Domestic             $  100.1       $    99.3          0.8           $   112.5      $   105.6          6.5
      International           (32.1)          (10.8)         N/M               (21.6)         (27.7)        22.0
                           --------       ---------                        ---------      ---------

      Total Operating
        Income             $   68.0       $    88.5        -23.2           $    90.9      $    77.9         16.7
                           ========       =========                        =========      =========
</TABLE>


                                       13
<PAGE>   15

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


      Excluding first half charges, reported domestic operating income
increased $8.1 million, or 8.2 percent, to $107.4 million. This increase
reflects higher sales volumes resulting from the inclusion of 1999 Fourth of
July holiday sales and operating income contributed by the acquired
territories, partially offset by increased amortization expense of $1.5
million.

      On a comparable basis, domestic operating income increased $6.9 million,
or 6.5 percent, in the first half of 1999, reflecting the benefit of 1999
Fourth of July holiday sales. Excluding certain one-time credits passed back by
PepsiCo to the newly acquired territories in 1998, comparable operating income
growth was 8.6 percent. The domestic operating margin for the first half of
1999, at 10.9 percent, was essentially unchanged from the first half of 1998.

      Included in 1999 first half international losses are $20.6 million of
special charges recorded in the second quarter of 1999 (see "Results of
Operations - 1999 Second Quarter Compared with 1998 Second Quarter"). Excluding
these charges, reported operating losses increased $0.7 million, or 6.5
percent, to $11.5 million in the first half of 1999. This increase is due
primarily to the second quarter 1999 elimination of the two-month lag in
reporting international results and the additional operating losses from the
newly acquired territories, partially offset by improved results in the
Baltics. On a comparable basis, 1999 first half international operating losses
decreased by $6.1 million from the first half of 1998, primarily due to
improvements in the Poland, Baltics and Czech Republic territories.

      Net interest expense increased $7.7 million to $25.5 million. This
increase was due principally to an increase in average outstanding net debt due
to the acquisitions of domestic and Central European territories and to the
related share repurchases, as well as the loss of interest income received from
Midas and Hussmann in the first quarter of 1998.

      Other expense, net, of $47.8 million in the first half of 1999 includes
the $56.3 million write-down of non-operating real estate and the $11.4 million
pre-tax gain related to the sale of the Company's operations in Marion,
Princeton, and Russia. Absent these items, non-operating expense was $2.9
million in the first half of 1999, compared to 10.1 million in the first half of
1998. This decrease is due, in part, to the termination of the management fee
paid to PepsiCo and reduced real estate taxes on non-operating land.

                        LIQUIDITY AND CAPITAL RESOURCES

      Net cash provided by continuing operations decreased by $24.7 million to
$34.3 million in the first half of 1999. Income from continuing operations in
the first half of 1999 decreased by $20.5 million, principally due to the
non-recurring items, including special charges and the real estate investment
write-down, discussed in the Notes to the Condensed Consolidated Financial
Statements. The $50.1 million decrease in deferred taxes resulted primarily from
the reversal of $19.8 million of deferred tax liabilities related to
international operations (see Note 12 to the Condensed Consolidated Financial
Statements) and the recording of deferred tax assets attributable to
non-recurring items recorded in the second quarter of 1999 (see Notes 6 and 7 to
the Condensed Consolidated Financial Statements). Increases in primary working
capital (defined as receivables and inventories less payables), principally due
to the operations of the acquired territories, were $23.2 million in the first
half of 1999 compared with decreases of $0.1 million in the prior year. The net
change in other assets and liabilities required net cash of $15.9 million in the
first half of 1999 compared with $2.9 million in the comparable period of 1998.
This decrease in cash was primarily due to the following factors: the
extraordinary loss recorded in the first quarter of 1998 provided a current tax
benefit of $10.4 million; reductions in reserves at the Company's insurance
subsidiary due to claim payments associated with coverage for previously
discontinued operations; and various payments of operating liabilities.

      Investing activities in the first half of 1999 included $113.6 million of
net proceeds received from the sale of the Marion, Princeton and Russia
franchise territories, as well as $105.7 million of net cash paid for the
domestic and Central European franchises acquired from PepsiCo. Investing
activities in the first half of 1998 included $434.3 million received in
January, 1998, from Hussmann and Midas prior to their spin-offs to settle
intercompany indebtedness and to pay special dividends. The Company made capital
investments of $79.2 million, net of proceeds from dispositions, in its
operations in the first half of 1999 compared with $57.8 million in the first
half of 1998, with increased spending principally attributable to investment in
the cold drink initiative, spending by the newly acquired territories, and
increased spending on fleet vehicles to support the Company's growth. Cash
received, net of investments made, from the Company's joint venture in Poland
was $1.2 million in the first half of 1999 compared to $1.8 million in the first
half of 1998.

      Purchases and sales of investments principally relate to the Company's
insurance subsidiary, which provides certain levels of insurance for Pepsi
General and the operations of Hussmann and Midas up to the date of the
spin-offs. Funds are invested by the insurance subsidiary and proceeds from the
sale of investments are used by the insurance subsidiary to pay claims and other
expenses. A substantial portion of such investments are reinvested as they
mature.

                                       14
<PAGE>   16
      The Company's total debt increased $562.6 million to $1,166.2 million at
July 3, 1999, from $603.6 million at January 2, 1999. This increase is primarily
attributable to the April, 1999 issuance of $150 million of 6.0 percent notes
due in 2004 and $150 million of 6.375 percent notes due in 2009, as well as the
May, 1999 assumption of $241.8 million of notes payable to PepsiCo, which mature
on August 31, 1999 and bear interest at a rate of 5.05 percent. The Company
repurchased approximately 13.4 million shares and 1.3 million shares of its
common stock for $251.9 million and $23.6 million in the first half of 1999 and
the first half of 1998, respectively. The Company paid dividends of $6.0 million
in the first half of 1999, based on quarterly cash dividend rates of $0.05 and
$0.01 per common share in the first and second quarters of 1999, respectively,
compared with $10.1 million in the first half of 1998, based on a quarterly cash
dividend rate of $0.05 per common share. The issuance of common stock, including
treasury shares, for the exercise of stock options resulted in cash inflows of
$1.4 million in the first half of 1999, compared with $19.6 million in the first
half of 1998.

      The Company has a five-year revolving credit agreement with maximum
borrowings of $500 million. In April 1999, the Company increased its commercial
paper program to $500 million. The revolving credit facility acts as a back-up
for the commercial paper program; accordingly, the Company has a total of $500
million available under the commercial paper program and revolving credit
facility combined. Total commercial paper borrowings were $35 million at July 3,
1999. The Company believes that with its existing operating cash flows,
available lines of credit, and the potential for additional debt and equity
offerings, the Company will have sufficient resources to fund its future growth
and expansion, including potential domestic franchise acquisitions.

                              YEAR 2000 READINESS

      The Year 2000 ("Y2K") issue relates to computer applications being
designed using only two digits, rather than four, to represent a year. As a
result, computer applications could fail or create erroneous results by
recognizing "00" as the year 1900 rather than the year 2000. The Company
considers Y2K readiness as the ability to manage and process date-related
information without materially abnormal or incorrect outcomes beyond January 1,
2000.

      Beginning in 1997, the Company initiated a company-wide effort to address
the Y2K issues that affect its operations and to minimize service interruptions.
This effort consists of five phases: (1) inventory, (2) assessment, (3)
remediation, (4) testing and (5) developing contingency plans. The contingency
plans will include addressing issues associated with any non-compliant suppliers
and key customers in order to minimize the potential material adverse effects of
any Y2K problems. During 1998, the Company designated one of its senior managers
as its Vice President - Y2K Planning and Compliance. This position is
responsible for coordinating all facets of the Company's Y2K initiative,
including coordinating efforts and responsibilities between corporate
Information Technology ("IT") and non-IT personnel and local division management
to identify, evaluate and implement changes to centralized and non-centralized
computer systems, applications and equipment necessary to achieve Y2K readiness.
Local management has identified and evaluated major areas of potential business
impact, including critical suppliers and customers, to enable proper monitoring
of Y2K conversion efforts on a centralized basis.

      In the first quarter of 1998, the Company began implementation of an ERP
system. The ERP system will address the Company's financial applications during
the first phase of implementation and address manufacturing and distribution
systems during the second phase. The ERP project was begun with the goal of
expanding existing system capacity for future growth and improving processing
efficiencies, as well as addressing any Y2K compliance issues associated with
the Company's existing systems. The first phase of the ERP implementation was
implemented during January, 1999, except for the asset management and accounts
receivable modules. The asset management module was implemented during the first
quarter of 1999. The accounts receivable module will be implemented during the
fourth quarter of 1999. Phase two of the ERP project is expected to be completed
during the latter half of 1999 and first half of the Year 2000. The stages of
the second phase targeted for completion in the Year 2000 do not involve any Y2K
compliance issues. In conjunction with the implementation of the ERP system,
certain hardware and software components have been or will be upgraded to expand
existing capacity. Through the first half of 1999, costs incurred in the ERP
implementation totaled approximately $14.2 million.


                                      15
<PAGE>   17

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999

Implementation costs for the entire ERP project currently are expected to be $25
million to $30 million. These costs have been, and will be, funded through
operating cash flows. A majority of the costs, as they relate to purchased
hardware, software and the implementation thereof, will be capitalized.

     The Company has conducted an inventory of its IT systems and has corrected
substantially all of those critical-path systems that were found to have
date-related deficiencies, excluding the financial systems addressed by phase
one of the ERP implementation. In the case of non-IT systems (i.e., including
embedded chip technology), the Company conducted an inventory of its
facilities, which was completed, for the most part, by the end of 1998.
Correction of date-deficient systems and equipment was virtually complete by
the end of the second quarter of 1999. The Company is also surveying selected
third parties, including its principal suppliers and customers, as well as
governmental entities, to determine the status of their Y2K compliance
programs.

     The inventory, assessment, remediation and testing phases of the Y2K
project are in progress. As part of the Company's testing phase, it intends to
conduct verification testing of selected mainframe/network component upgrades
received from suppliers. In addition, selected critical components are
scheduled to undergo testing in a controlled environment that replicates the
current mainframe/network configuration to simulate the turn of the century and
leap year dates. In the event these efforts do not address all potential
systems problems, the Company is beginning the process of developing
contingency plans to ensure that it will be able to operate the critical areas
of its business. This process includes developing alternative plans to engage
in business activities with customers and suppliers should they or the Company
not be Y2K compliant, including resorting to paper records of certain
transactions presently handled electronically. Development of overall
contingency plans was deferred due to the acquisition of territories from
PepsiCo. Contingency plans are being developed for both international and
domestic operations, and will be finalized in the third quarter of 1999. The
ultimate implementation of contingency plans, if necessary, would be expected
during the fourth quarter of 1999.

     The Company is continuing its effort to address Y2K readiness at its
operations which were sold to PepsiCo in the first quarter of 1999. Likewise,
PepsiCo continued its Y2K project at the territories acquired in the second
quarter of 1999. The Company has been informed that PepsiCo's project, as it
relates to their bottling operations, is similar in scope and progress to the
Company's project.

     The Company's critical IT systems, except as specifically noted elsewhere,
were Y2K compliant at the end of the first quarter of 1999. Over 90 percent of
the Company's non-IT systems and equipment were compliant by June, 1999. It is
expected the balance of non-IT systems and equipment will be compliant by the
end of the third quarter of 1999. Incremental costs, over and above the
aforementioned ERP system project spending, related to the Y2K project are
being expensed as incurred and funded through operating cash flows. Through the
second quarter of 1999, the Company had expensed approximately $1.3 million of
such incremental costs. Total incremental costs to ensure Y2K compliance are
estimated to be $2 million to $5 million, with the majority of the costs being
incurred in 1999. This expectation assumes that the Company will not be
obligated to incur significant Y2K-related costs on behalf of its customers or
suppliers. The projection of Y2K-related costs is based on numerous assumptions
and estimates; consequently, actual costs could be materially greater than
anticipated. Plans will continue to be monitored for completion. Incomplete or
untimely resolution of the Y2K issue by the Company, by critically important
suppliers and customers of the Company, or by governmental entities, could have
a materially adverse impact on the Company's business operations or financial
condition in the future.

                           FORWARD-LOOKING STATEMENTS

      This quarterly report on Form 10-Q contains certain forward-looking
information that reflects management's expectations, estimates and assumptions,
based on information available at the time this Form 10-Q was prepared. When
used in this document, the words "anticipate," "believe," "estimate," "expect,"
"plan", "intend" and similar expressions are intended to identify
forward-looking statements. Such forward-looking statements involve risks,
uncertainties and other factors which may cause the actual performance or
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements, including, but 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; unexpected
costs associated with Year 2000 conversions or the business risks associated
with potential Year 2000 non-compliance by the Company, customers and/or
suppliers; costs of legal proceedings; and general economic, business and
political conditions in the countries and territories where the Company
operates.


                                      16
<PAGE>   18

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


      These events and uncertainties are difficult or impossible to predict
accurately and many are beyond the Company's control. The Company assumes 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

      The Company is subject to various market risks, including risks from
changes in commodity prices, interest rates and current exchange rates.

COMMODITY PRICES

      The risk from commodity price changes correlates to Pepsi General's
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. In 1999, the Company began to use swap contracts to
hedge against price fluctuations for a portion of its aluminum requirements.
See Note 15 to the Condensed Consolidated Financial Statements. Costs for other
raw material requirements are managed by entering into firm commitments for
materials used.

INTEREST RATES

      In the first half of 1999, the risk from changes in interest rates was
not material to the Company's operations because a significant portion of the
Company's debt issues were fixed rate obligations. Substantially all of the
Company's floating rate exposure related to changes in the six month LIBOR
rate. A 50 basis point (0.5 percent) change in the six month LIBOR rate would
have had an insignificant impact on the Company's first half 1999 interest
expense related to its floating rate obligations. In possible future issuances
of debt, the Company may be subject to additional floating rate interest
exposure and may manage those exposures using interest rate swaps. Thus far in
1999, the Company has entered into contracts to fix interest rates on $300
million of notes issued by the Company on April 30, 1999. See Note 15 to the
Condensed Consolidated Financial Statements. In the first half of 1999, the
Company had short-term investments throughout the first half of the year,
principally invested in money market funds and commercial paper, which were
most closely tied to three-month Treasury-bill rates. Assuming a change of 50
basis points in the rate of interest associated with the Company's short-term
investments, interest income would have changed by approximately $0.2 million.

CURRENCY EXCHANGE RATES

      Because the Company operates international franchise territories, it is
subject to exposure resulting from changes in currency exchange rates. Currency
exchange rates are established based on a variety of economic factors including
local inflation, growth, interest rates and governmental actions, as well as
other factors. The Company currently does not hedge the translation risks of
investments in its international operations. Any positive cash flows generated
have been reinvested in the operations, excluding loan repayments from the
manufacturing joint venture in Poland.

      Non-U.S. operations do not represent a significant portion of the
Company's total operations. Changes in currency exchange rates impact the
translation of the results of the international operations from their local
currencies into U.S. dollars. If the currency exchange rates had changed by 5
percent in the first half of 1999, the impact on reported operating income would
have been less than $0.5 million.  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. The economy
in Russia was considered highly inflationary for accounting purposes with all
transactions being recorded at historical costs in U.S. dollars. All gains and
losses due to foreign exchange transactions from the Russia operations, which
were sold in the first quarter of 1999, are included in the consolidated results
of operations.


                                      17
<PAGE>   19

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


PART II - OTHER INFORMATION

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     (a) MAY 20, 1999 SPECIAL MEETING OF SHAREHOLDERS.

     (c) MATTERS VOTED UPON

         To consider and vote upon the proposed Contribution and Merger
         Agreement (the "Agreement") between the Company and PepsiCo as
         outlined in the Definitive Proxy Statement dated April 19, 1999 (see
         Note 3 to the Condensed Consolidated Financial Statements).

         The following votes were recorded with respect thereto:

<TABLE>
                           <S>                         <C>
                           Votes for                    61,561,944
                           Votes against                 5,484,946
                           Votes withheld                  204,328
                           Total votes received         67,251,218
</TABLE>

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

     (a) EXHIBITS.

<TABLE>
          <S>                                                                       <C>
           3a.    Certificate of Incorporation, as Amended and                       Filed Herewith
                  Restated on May 20, 1999

           3b.    By-Laws, as Amended and Restated on May 20, 1999                   Filed Herewith

           4a.    First Supplemental Indenture dated as of May 20, 1999              Filed Herewith
                  between Whitman Corporation and The First National
                  Bank of Chicago, Trustee, to the Indenture dated as of
                  January 15, 1993

           10a.   Revised Stock Incentive Plan, as Adopted May 20, 1999              Filed Herewith

           10b.   Form of Nonqualified Stock Option Agreement as                     Filed Herewith
                  Amended May 20, 1999

           10c.   Form of Change in Control Agreement dated May 21, 1999             Filed Herewith

           10d.   Deferred Compensation Plan for Directors, as Adopted               Filed Herewith
                  May 20, 1999
</TABLE>


                                      18
<PAGE>   20

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


<TABLE>
           <S>                                                                       <C>

           10e.   1982 Stock Option, Restricted Stock Award and Performance          Filed Herewith
                  Award Plan (as amended through June 16, 1989)

           10f.   Amendment No. 2 to 1982 Stock Option, Restricted Stock             Filed Herewith
                  Award and Performance Award Plan made as of
                  September 1, 1992

           10g.   Form of Nonqualified Stock Option Agreement                        Filed Herewith

           10h.   Amendment to 1982 Stock Option, Restricted Stock Award             Filed Herewith
                  and Performance Award Plan made as of February 19, 1993

           10i.   Management Incentive Compensation Plan                             Filed Herewith

           10j.   Long Term Performance Compensation Program                         Filed Herewith

           10k.   Whitman Corporation Executive Retirement Plan, as                  Filed Herewith
                  Amended and Restated Effective January 1, 1998

           10l.   Pepsi-Cola General Bottlers, Inc. Executive Retirement             Filed Herewith
                  Plan, as Amended and Restated Effective January 1, 1998

           12.    Statement of Calculation of Ratio of Earnings to                   Filed Herewith
                  Fixed Charge

           27.    Financial Data Schedules for the first half of 1999 and 1998       Filed Herewith
</TABLE>

     (b)   REPORTS ON FORM 8-K.

           Old Whitman (as defined below) filed a current report on April 22,
           1999, during the second quarter of 1999. The current report included
           as an exhibit, under Item 7, the Form of Supplemental Indenture
           between the former Whitman Corporation ("Old Whitman") and the First
           National Bank of Chicago, as trustee. Also included under Item 7
           were PepsiCo Bottling Operations Combined Financial Statements, as
           well as New Whitman's (as defined below) Unaudited Pro Forma Combined
           Financial Information.

           New Whitman also filed a current report on May 20, 1999, which,
           under Item 2, described the merging of Old Whitman into Heartland
           Territories Holdings, Inc. ("New Whitman" or the "Company"), with New
           Whitman as the surviving corporation and with New Whitman acquiring
           all assets of Old Whitman. Simultaneously with the merger, the name
           of Heartland Territories Holdings, Inc. was changed to "Whitman
           Corporation". Such report also described, under Item 5, the adoption
           of a new rights plan, under which each shareholder acquired one
           preferred share purchase right for each share of common stock held
           on June 11, 1999. Included as an exhibit to such report under Item 7
           was the text of the press release dated May 20, 1999 relating to the
           closing of the merger and the authorization of the rights.

           On July 28, 1999, the Company filed an amendment to the current
           report filed on May 20, 1999 to indicate that New Whitman is the
           successor to Old Whitman under Rule 12g(3)(a) of the Securities Act
           of 1934, as amended.


                                      19
<PAGE>   21

                              WHITMAN CORPORATION
                                   FORM 10-Q
                              SECOND QUARTER 1999


                                   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.



                                WHITMAN CORPORATION


Date:      August 17, 1999      By:  /s/ MARTIN M. ELLEN
                                     -------------------------
                                     Martin M. Ellen
                                     Senior Vice President and Chief Financial
                                     Officer
                                     (As Chief Accounting Officer and Duly
                                     Authorized Officer of Whitman Corporation)


                                      20