FORM 10-Q
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(Mark One)
  X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
----
ACT OF 1934 For the quarterly period ended March 20, 1999 (12 weeks)
                                           -------------------------

                                       OR

     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  1-14893




                         THE PEPSI BOTTLING GROUP, INC.
                         ------------------------------
             (Exact name of registrant as specified in its charter)

              Delaware                                           13-4038356   
              --------                                           ----------   
  (State or other jurisdiction of                                  (I.R.S.
  Employer incorporate or organization)                      Identification No.)

     One Pepsi Way, Somers, New York                                10589      
     -------------------------------                                -----      
(Address of principal executive offices)                         (Zip Code)

                                  914-767-6000
                                  ------------
              (Registrant's telephone number, including area code)

                                       N/A
                                       ---
              (Former name, former address and former fiscal year,
                         if changed since last report.)

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

YES        NO   X 
    ---        ---
Number of shares of Capital Stock outstanding as of April 17, 1999:
155,000,000





                         THE PEPSI BOTTLING GROUP, INC.

                                      INDEX

                                                                        Page No.
                                                                        --------

Part I         Financial Information

    Item 1.    Financial Statements

               Condensed Combined Statements of Operations-
                    12 weeks ended March 21, 1998 and March 20, 1999       2

               Condensed Combined Statements of Cash Flows -
                    12 weeks ended March 21, 1998 and March 20, 1999       3

               Condensed Combined Balance Sheets -
                    December 26, 1998, March 20, 1999 and Pro Forma
                    March 20, 1999                                         4

               Notes to Condensed Combined Financial Statements            5-10

    Item 2.    Management's Discussion and Analysis of Results of
                    Operations and Financial Condition                     11-16

    Item 3.    Quantitative and Qualitative Disclosures About                
                    Market Risk                                            16

               Independent Accountants' Review Report                      17

Part II        Other Information and Signatures


    Item 6.    Exhibits and Reports on Form 8-K                            18






                                       -1-





                         PART I - FINANCIAL INFORMATION
Item 1.
                         THE PEPSI BOTTLING GROUP, INC.
                   CONDENSED COMBINED STATEMENTS OF OPERATIONS
                 in millions except per share amounts, unaudited

                                                             12 Weeks Ended   
                                                          March 21,   March 20,
                                                            1998        1999
                                                          --------    --------
 
Net Revenues ..........................................   $ 1,340    $ 1,452
Cost of sales .........................................       777        835
                                                          -------    -------
Gross Profit ..........................................       563        617
Selling, delivery and administrative expenses .........       524        575
                                                          -------    -------
Operating Income                                               39         42
Interest expense, net                                          52         46
Foreign currency loss                                           -          1
                                                          -------    -------
Loss before income taxes ..............................       (13)        (5)
                                                                          
Income tax benefit ....................................        (7)        (2)
                                                          -------    -------
Net Loss ..............................................   $    (6)   $    (3)
                                                          =======    =======
Weighted Average Basic and Diluted Shares Outstanding          55         55
   
Basic and Diluted Loss Per Share ......................   $  (.11)   $  (.06)
Pro Forma Weighted Average Basic and Diluted
   Shares Outstanding (see note 8) ....................       155        155
                                                                         
Pro Forma Basic and Diluted Loss Per Share (see note 8)   $  (.03)   $  (.02)

       
       See accompanying notes to Condensed Combined Financial Statements.







                                       -2-


<TABLE>
<CAPTION>


                         THE PEPSI BOTTLING GROUP, INC.
                   CONDENSED COMBINED STATEMENTS OF CASH FLOWS
                             in millions, unaudited

                                                                                    12 Weeks Ended   
                                                                                March 21,      March 20,
                                                                                  1998           1999
                                                                                --------       --------
Cash Flows - Operations
<S>                                                                              <C>            <C>  
   Net loss..................................................................    $ (6)          $ (3)
   Adjustments to reconcile net loss to net cash provided by operations:
        Depreciation.........................................................      74             79
        Amortization.........................................................      27             29
        Deferred income taxes................................................      12             (1)
        Other non-cash charges and credits, net..............................      17             14
                                                                                   
        Changes in operating working capital, excluding effects of
          acquisitions and dispositions;
          Trade accounts receivable..........................................      48            (17)
          Inventories........................................................     (34)           (15) 
          Prepaid expenses, deferred income taxes and other current assets...     (11)           (12) 
          Accounts payable and other current liabilities.....................     (95)             3  
          Trade accounts payable to PepsiCo..................................      18            (14)
                                                                                ------         ------
        Net change in operating working capital .............................     (74)           (55)
                                                                                ------         ------
Net Cash Provided by Operations..............................................      50             63
                                                                                ------         ------
Cash Flows - Investments
   Capital expenditures......................................................     (77)           (82)
   Acquisitions of bottlers and investments in affiliates....................    (140)          (104)
   Other, net................................................................     (10)             3
                                                                                ------         ------
Net Cash Used by Investments.................................................    (227)          (183)
                                                                                ------         ------

Cash Flows - Financing
   Short-term borrowings - three months or less..............................      14              -         
   Proceeds from third party debt............................................      38          3,300
   Replacement of PepsiCo allocated debt.....................................       -         (3,300)
   Payments of third party debt..............................................      (1)           (45)
   Increase in advances from PepsiCo.........................................     123            144
                                                                                ------         ------
Net Cash Provided by Financing...............................................     174             99
                                                                                ------         ------
Effect of Exchange Rate Changes on Cash and Cash Equivalents.................       -             (1)
                                                                                ------         ------
Net Decrease in Cash and Cash Equivalents....................................      (3)           (22)
Cash and Cash Equivalents - Beginning of Period..............................      86             36
                                                                                ------         ------

Cash and Cash Equivalents - End of Period....................................    $ 83           $ 14
                                                                                ======         ======
       See accompanying notes to Condensed Combined Financial Statements.

</TABLE>


                                       -3-


<TABLE>
<CAPTION>



                         THE PEPSI BOTTLING GROUP, INC.
                        CONDENSED COMBINED BALANCE SHEETS
                        in millions, except share amounts
                                                                                          Pro Forma
                                                                              (Unaudited) (Unaudited)
                                                                    December    March 20,  March 20, 
                                                                     26,1998      1999       1999
                                                                     -------     -------   -------
ASSETS                                                                                    (See note 8)
Current Assets
<S>                                                                     <C>                <C>    
  Cash and cash equivalents ......................................   $    36     $   14    $    14
                                                                                                
  Trade accounts receivable, less allowance of $46 and $49
        at December 26, 1998 and  March 20, 1999, respectively ...       808        821        821
  Inventories ....................................................       296        312        312
  Prepaid expenses, deferred income taxes and other current assets       178        190        183
                                                                     -------    -------    -------
         Total Current Assets ....................................     1,318      1,337      1,330

Property, plant and equipment, net ...............................     2,055      2,078      2,078
Intangible assets, net ...........................................     3,806      3,854      3,854
Other assets .....................................................       143        145        185
                                                                     -------    -------    -------
          Total Assets ...........................................   $ 7,322    $ 7,414    $ 7,447
                                                                     =======    =======    =======

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
 Accounts payable and other current liabilities ..................   $   890    $   887    $   887
 Trade accounts payable to PepsiCo ...............................        23         12         12
 Short-term borrowings ...........................................       112        106          -
                                                                     -------    -------    -------
          Total Current Liabilities ..............................     1,025      1,005        899

Allocation of PepsiCo long-term debt .............................     3,300          -          -
Long-term debt due to third parties ..............................        61      3,322      3,300
Other liabilities ................................................       367        363        363
Deferred income taxes ............................................     1,202      1,217      1,136
Minority interest ................................................         -          -        254
Advances from PepsiCo ............................................     1,605      1,734          -
                                                                     -------    -------    -------
          Total Liabilities ......................................     7,560      7,641      5,952
                                                                       

Shareholders' Equity
   Common stock, par value $.01 per share:
      Authorized 300,000,000 shares, issued 55,000,000
       Shares (pro forma issued 155,000,000 shares)                        -          -          2
                                                                          
   Additional paid in capital                                              -          -      1,720
                                                                          
   Accumulated comprehensive loss ................................      (238)      (227)      (227)
                                                                     -------    -------    ------- 
          Total Shareholders' Equity .............................      (238)      (227)     1,495
                                                                     -------    -------    -------
              Total Liabilities and Shareholders' Equity .........   $ 7,322    $ 7,414    $ 7,447
                                                                     =======    =======    =======
       See accompanying notes to Condensed Combined Financial Statements.
                                       
</TABLE>

                                      -4-
 
                       
                         THE PEPSI BOTTLING GROUP, INC.
                                    unaudited
               tabular dollars in millions, except per share data

                NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation
     The Pepsi Bottling Group, Inc. consists of bottling  operations  located in
the United States, Canada, Spain, Greece and Russia. Prior to its formation, and
for the periods  presented,  PBG was an operating unit of PepsiCo,  Inc. PBG was
incorporated  in  Delaware  in January  1999 and,  prior to its  initial  public
offering and for the periods  presented,  PepsiCo owned all 55,000,000 shares of
outstanding common stock.

     The accompanying Combined Financial Statements are presented on a carve-out
basis  and  include  the  historical   results  of  operations  and  assets  and
liabilities  directly  related  to PBG and have  been  prepared  from  PepsiCo's
historical  accounting records.  Certain estimates,  assumptions and allocations
were made in preparing such financial  statements.  Therefore,  these  financial
statements  may not  necessarily  be  indicative  of the results of  operations,
financial  position  or cash  flows  that  would  have  existed  had PBG  been a
separate, independent company.

     On March 31, 1999,  100,000,000 shares of PBG common stock were offered for
sale at $23 per share in an initial public  offering  generating $2.2 billion in
net proceeds,  which were used to fund  acquisitions  and repay  obligations  to
PepsiCo.  Subsequent to the offering, PepsiCo continued to own 55,000,000 shares
of common  stock  consisting  of  54,912,000  shares of common  stock and 88,000
shares of Class B common  stock.  PepsiCo's  ownership  represents  35.4% of the
outstanding  common  stock  and 100% of the  outstanding  Class B  common  stock
together  representing  43.5% of the voting power of all classes of PBG's voting
stock.  Subsequent  to the  offering,  PepsiCo  also owns 7.1% of the  equity of
Bottling  Group,  LLC,  PBG's  principal  operating  subsidiary,  giving PepsiCo
economic  ownership  of  40.0%  of  PBG's  combined  operations.  The pro  forma
condensed combined financial  information  presented  elsewhere in this document
reflects the impact of the offering.

     The accompanying Condensed Combined Balance Sheet at March 20, 1999 and the
Condensed  Combined  Statements  of  Operations  and Cash Flows for the 12 weeks
ended  March 21, 1998 and March 20,  1999 have not been  audited,  but have been
prepared in conformity with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation S-X. These Condensed Combined Financial  Statements should be read in
conjunction  with the audited combined  financial  statements for the year ended
December  26, 1998 as  presented  in PBG's  Registration  Statement on Form S-1,
which was declared  effective on March 30, 1999.  In the opinion of  management,
this  interim  information  includes all  material  adjustments,  which are of a
normal and recurring nature, necessary for a fair presentation.


                                       -5-






Note 2 -  Seasonality  of Business  
     The results for the first  quarter are not  necessarily  indicative  of the
results that may be expected for the full year because of business  seasonality.
The seasonality of our operating  results arises from higher sales in the second
and third quarters  versus the first and fourth  quarters of the year,  combined
with the impact of fixed costs, such as depreciation, amortization and interest,
which are not significantly impacted by business seasonality.

Note 3 - Acquisitions  
     During 1998 and 1999, PBG acquired the exclusive right to manufacture, sell
and distribute  Pepsi-Cola  beverages from several independent PepsiCo franchise
bottlers.  These acquisitions were accounted for by the purchase method.  During
the first quarter of 1999, the following  acquisitions occurred for an aggregate
cash purchase price of $104 million:
               
          - Jeff Bottling Company, Inc. in New York in January.
               
          - Princetonco  and  Marionco with  territories  in  Virginia  and West
            Virginia in March.

During 1998, the following  acquisitions occurred for an aggregate cash purchase
price of $546 million:
               
          - The remaining 75% interest in our Russian  bottling  joint  venture,
            Pepsi International Bottlers, LLC in February. 

          - Gray Beverages,  Inc. in Canada in May. 

          - Pepsi-Cola  Allied  Bottlers,  Inc. in New York and  Connecticut  in
            November.

     The following  table  presents the first  quarter 1998  unaudited pro forma
combined  results of PBG and the 1998  acquisitions  noted  above as if they had
occurred at the beginning of fiscal year 1998.  The  performance  results of the
1999  acquisitions  have  been  excluded,  as  their  impact  on  the  financial
statements was not significant.  The pro forma  information does not necessarily
represent what the actual combined results would have been for the first quarter
and is not intended to be indicative of future results.
                                                                March 21, 
                                                                  1998
                                                                ---------

Net revenues.................................................    $ 1,396
                                                                 =======
Net loss.....................................................      $ (8)
                                                                 =======
Pro forma loss per share (see "Loss per Share" in note 8)....    $ (.05)
                                                                 =======




                                       -6-




<TABLE>
<CAPTION>



Note 4 - Inventories
                                                         December      March 20,
                                                         26, 1998        1999
                                                         --------      --------
<S>                                                        <C>           <C>  
Raw materials and supplies.........................      $   120       $   111
Finished goods.....................................          176           201
                                                         -------       -------
                                                         $   296       $   312
                                                         =======       =======


Note 5 - Property, Plant and Equipment, net
                                                         December      March 20,
                                                         26, 1998        1999
                                                         --------      --------

Land............................................         $   151       $   146
Buildings and improvements......................             813           832
Production and distribution equipment...........           1,989         1,987
Marketing equipment.............................           1,368         1,414
Other...........................................              95            90
                                                          -------       -------
                                                           4,416         4,469
Accumulated depreciation........................          (2,361)       (2,391)
                                                          -------       -------
                                                        $  2,055      $  2,078
                                                          =======       =======

Note 6 - Long-Term Debt and Interest Expense
                                                         December      March 20,
                                                         26, 1998        1999
                                                         --------      --------
5 5/8% notes due 2009...........................        $      -      $  1,300
5 3/8% notes due 2004...........................               -         1,000
7% notes due 2029...............................               -         1,000
Other...........................................             173           128
                                                         -------       -------
                                                             173         3,428
Less current maturities of long-term debt.......             112           106
                                                         -------       -------
                                                        $     61      $  3,322
                                                         =======       =======
Allocation of PepsiCo long-term debt............        $  3,300      $      -

</TABLE>

     The $1.3  billion  of 5 5/8%  senior  notes and the $1.0  billion of 5 3/8%
senior  notes were issued on February  9, 1999 by  Bottling  Group,  LLC and are
guaranteed by PepsiCo.  PBG issued the 7% senior notes,  which are guaranteed by
Bottling Group, LLC, on March 8, 1999.

     First quarter 1999 interest  expense was  determined  using $3.3 billion of
allocated debt and PepsiCo's  weighted  average interest rate of 5.75% until the
above PBG debt was issued.  Once issued, the actual PBG interest rates were used
to determine  interest  expense for the  remainder of the period.  First quarter
1998 interest  expense was  calculated  using $3.3 billion of allocated debt and
PepsiCo's weighted average interest rate of 6.4%.

                                       -7-



<TABLE>
<CAPTION>

Note 7 - Comprehensive Income (Loss)
                                                               12 Weeks Ended
                                                           March 21,   March 20,
                                                             1998         1999
                                                           --------    --------
<S>                                                        <C>        <C>     
Net Loss ...............................................     $  (6)     $  (3)
Currency translation adjustment ........................        (1)        11
                                                            -------    -------

Comprehensive Income (Loss) ............................     $  (7)     $   8
                                                            =======    =======

Note 8 - Pro Forma Financial Information
     The following table sets forth the Pro Forma Condensed Combined  Statements
of Operations reflecting the offering adjustments described below:

                                                               12 Weeks Ended
                                                           March 21,   March 20, 
                                                             1998        1999
                                                           --------    --------
Net revenues ...........................................   $ 1,340    $ 1,452
Cost of sales ..........................................       777        835
                                                           -------    -------
Gross profit ...........................................       563        617
Selling, delivery and administrative expenses ..........       524        575
                                                           -------    -------
Operating income .......................................        39         42
Interest expense, net ..................................        46         46
Foreign currency loss ..................................         -          1
                                                           -------    -------

Loss before income taxes and minority interest .........        (7)        (5)
Income tax benefit .....................................        (4)        (2)
                                                           -------    -------
Net loss before minority interest ......................        (3)        (3)
Minority interest ......................................        (1)        (1)
                                                           -------    -------
Net loss ...............................................   $    (4)   $    (4)
                                                           =======    ======= 

Basic and diluted loss per share .......................   $ (0.03)   $ (0.02)
                                                           =======    =======
Weighted average shares outstanding ....................       155        155
</TABLE>




                                       -8-




Refinancing
     On February 9, 1999,  Bottling Group,  LLC issued $2.3 billion of debt. The
debt, which is guaranteed by PepsiCo,  consists of $1.0 billion of 5 3/8% senior
notes due 2004 and $1.3  billion of 5 5/8%  senior  notes due 2009.  On March 8,
1999, PBG issued $1.0 billion of 7% senior notes, due 2029, which are guaranteed
by  Bottling  Group,  LLC. In  addition,  PBG  incurred  $40 million of deferred
financing costs in conjunction with the issuance of this debt.

     The Pro Forma  Condensed  Statements of  Operations  for the 12 weeks ended
March 21, 1998 and March 20, 1999 reflect PBG's weighted  average  interest rate
of 6.1% on the debt described above as if the debt had been outstanding from the
first day of the periods presented.

Minority Interest
     In connection  with the formation of PBG and Bottling Group,  LLC,  PepsiCo
contributed  bottling  businesses and assets used in the bottling  businesses to
PBG which will be held by Bottling Group,  LLC. As a result of the  contribution
of the  assets,  PBG owns 92.9% of  Bottling  Group,  LLC and  PepsiCo  owns the
remaining  7.1%.  Accordingly,  the pro  forma  financial  information  reflects
PepsiCo's  share of combined  net income as  minority  interest on the Pro Forma
Condensed Combined  Statements of Operations and PepsiCo's share of combined net
assets of Bottling  Group,  LLC as minority  interest on the Condensed  Combined
Balance Sheet.

Loss per Share
     PBG's historical  capital  structure is not  representative  of its current
structure due to PBG's initial public offering that became effective on April 6,
1999.  Immediately  preceding the offering,  PBG had 55 million shares of common
stock outstanding. In connection with the offering, 100 million shares were sold
to the public  generating $2.2 billion of net proceeds,  which were used to fund
acquisitions  and  repay  obligations  to  PepsiCo.  The pro  forma  information
contained in the Condensed  Combined  Balance Sheet has been adjusted to reflect
the offering and the Pro Forma Condensed Combined  Statements of Operations have
been adjusted to reflect the 155 million shares of common stock as if this stock
had been outstanding for the entire 12 week periods in 1998 and 1999.

Note 9 - Supplemental Cash Flow Information
<TABLE>
<CAPTION>
                                                             12 Weeks Ended
                                                         March 21,     March 20,
                                                            1998          1999
                                                         --------      --------
<S>                                                        <C>           <C>
Liabilities incurred and/or assumed in connection with
   acquisitions of bottlers.............................   $ 22          $ 16
Interest paid to third parties..........................   $  5          $  2

     Amounts paid to third parties for income taxes were not  significant in the
periods presented.
</TABLE>

                                       -9-






Note 10 - Subsequent Events
     In connection  with the  consummation  of the offering,  substantially  all
non-vested  PepsiCo stock options held by PBG employees vested. As a result, PBG
will incur a non-cash  compensation  charge in the second  quarter  equal to the
difference  between  the  market  price of the  PepsiCo  capital  stock  and the
exercise price of these options at the vesting date. We currently  estimate this
non-cash charge to be approximately $50 million.

     PBG acquired the St. Petersburg,  Russia territory from Whitman Corporation
on March 31,  1999 and  Leader  Beverage  Corporation,  an  independent  PepsiCo
bottler  with  territories  in  Connecticut,  on April 16, 1999 for an aggregate
purchase  price of $72  million  in cash and debt.  These  acquisitions  will be
accounted for by the purchase method.  The purchase price has been preliminarily
allocated to the  estimated  fair value of the assets  acquired and  liabilities
assumed.  Franchise  rights,  goodwill and other intangible  assets that will be
recorded in connection with this acquisition will be amortized over 40 years.

     In April, PBG entered into a $500 million  commercial paper program that is
supported by a credit facility. The credit facility consists of two $250 million
components,  one of which is one year in duration and the other of which is five
years in duration.

     On April 26,  1999,  the Board of  Directors  of PBG  declared a  quarterly
dividend  of $.02 per share.  The  dividend  is payable on June 30,  1999 to PBG
shareholders of record on June 16, 1999.

Note 11 - New Accounting Standards
     In June 1998, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting Standard 133,  "Accounting for Derivative  Instruments and
Hedging  Activities."  This  statement  establishes   accounting  and  reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other contracts which are  collectively  referred to as derivatives,
and for hedging activities. It requires that an entity recognize all derivatives
as either  assets or  liabilities  in the  statement of  financial  position and
measure those instruments at fair value. PBG is currently  assessing the effects
of adopting SFAS 133, and has not yet made a determination  of the impact on its
financial  position or results of  operations.  SFAS 133 will be  effective  for
PBG's first quarter of fiscal year 2000.







                                      -10-




Item 2.

MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF RESULTS OF  OPERATIONS  AND  FINANCIAL
CONDITION

The Business
     PBG  is  the  world's  largest  manufacturer,  seller  and  distributor  of
Pepsi-Cola beverages, accounting for 55% of the Pepsi-Cola beverages sold in the
United  States and  Canada and 32%  worldwide.  We have the  exclusive  right to
manufacture,  sell and distribute Pepsi-Cola beverages in all or a portion of 41
states, the District of Columbia,  eight Canadian  provinces,  Spain, Greece and
Russia.  Approximately 92% of our annual volume is sold in the United States and
Canada.

General
     Management's  discussion and analysis  should be read in  conjunction  with
PBG's Condensed Combined Financial  Statements and accompanying  footnotes along
with the cautionary statements at the end of this section.
     Management believes that constant territory  performance results are better
indicators of operating trends and  performance.  Constant  territory  operating
results are achieved by adjusting 1999 results to exclude 1999  acquisitions and
1998 results to include the results of 1998 acquisitions as if they had occurred
on the first day of fiscal year 1998.  The results for the 12 week periods ended
March 21,  1998 and March 20,  1999 are  presented  both on an as  reported  and
constant territory basis.

Results of Operations
---------------------

Overview
     
     EBITDA,  which is computed as operating income plus the sum of depreciation
and amortization, is a key indicator management and the industry use to evaluate
our operating  performance.  On a reported basis,  first quarter EBITDA was $150
million,  a 7%  increase  over the  comparable  period  in 1998.  On a  constant
territory  basis,  EBITDA  grew 5% which was ahead of our  expectations  for the
first quarter  indicating that we are on track to deliver our anticipated growth
of 8-10% for full year 1999.

     In line with our strategy to be a key  consolidator  of PepsiCo's  bottling
system,  1999 results are impacted by the 1998  acquisitions  of Gray Beverages,
Inc. in Canada, Pepsi-Cola Allied Bottlers, Inc. in New York and Connecticut and
Pepsi International  Bottlers,  LLC in Russia. In addition, in February 1999 PBG
acquired Jeff Bottling Company,  Inc. in New York and in March 1999 PBG acquired
Princetonco and Marionco, whose territories are in Virginia and West Virginia.
                                      

                                      -11-





EBITDA
                                                                     Constant
                                                      Reported      Territory
                                                       Change         Change
                                                       ------         ------
  Growth.......................................           7%             5%

     EBITDA  is  used by  management  as an  important  indicator  of  operating
performance.  It is  not,  however,  required  under  GAAP  and  should  not  be
considered an alternative to measurements required by GAAP such as net income or
cash flows.

     On a constant territory basis, the growth in EBITDA reflects a 4% growth in
North America volume, a modest increase in revenue per physical case,  favorable
raw  material  costs and  reduced  operating  losses in Russia.  These  positive
factors were  partially  offset by a one-time $6 million  cash cost  incurred to
eliminate PBG's previous practice of collecting  deposits on plastic shells used
to carry our product to market.

Volume
                                                                      Constant
                                                       Reported      Territory
                                                        Change         Change
                                                        ------         ------
  North America................................           9%             4%
  Outside North America........................          (3%)          (13%)
  Total........................................           8%             3%

     Our worldwide  physical case volume grew 8% on a reported basis and 3% on a
constant territory basis. In North America,  which includes the U.S. and Canada,
constant  territory  volume increased 4% driven by solid growth in both the take
home and cold drink channels of our business.  Trademark Pepsi brands, driven by
Pepsi One, contributed one point of growth while Mountain Dew and other flavored
carbonated  soft drinks  contributed  two points and Aquafina,  Lipton and other
alternative  beverages  contributed one point. Outside North America our volumes
decreased 13% on a constant  territory  basis driven by the economic  turmoil in
Russia which began last August with the devaluation of the ruble.

Net Revenues
     Net Revenues for the quarter were $1,452  million,  an 8% increase over the
prior year.  On a constant  territory  basis net revenues grew 4%. This increase
was driven by strong North America  volume growth and an approximate 1% increase
in revenue per physical case driven  largely by improved  pricing and changes in
channel and package mix in our North American business.

Cost of Sales
     Cost of sales as a percentage of net revenues improved by one-half point on
a reported  basis and one point on a  constant  territory  basis to 57.5%.  This
improvement was driven by lower packaging costs partially offset by the February
increase in North America concentrate prices.

                                      -12-




Selling, delivery and administrative expenses
     Selling,  delivery  and  administrative  expenses  as a  percentage  of net
revenues  grew seven tenths of a point to 39.6% on a constant  territory  basis.
This primarily  reflects  increased selling and delivery costs resulting from an
increase in our North  American  sales force and our continued  program of heavy
investment  in vending  machines  and  coolers,  consistent  with our  long-term
strategy to increase our  presence in the cold drink  segment of the industry in
North America. These increases were partially funded through reduced general and
administrative  costs  from  effective  leveraging  of our  North  America  cost
structure and reduced operating costs in Russia as our cost structure  benefited
from our fourth quarter 1998 restructuring  actions.  In addition,  1999 expense
also included a $6 million one-time cash cost for shell deposits.

Interest expense, net
     Interest  expense  decreased  by $6 million to $46  million  due to a lower
weighted  average  interest rate, which went from 6.4% in the prior year to 5.9%
in the current year.

Provision for Income Taxes
     PBG's full year  forecasted tax rate for 1999 is 40% and this rate has been
applied to first quarter results. This rate corresponds to an effective tax rate
of 53.5% in 1998.  The decrease of 13.5 points is  primarily  due to the reduced
impact of fixed  non-deductible  permanent expenses on higher anticipated pretax
income in 1999.

Liquidity and Capital Resources
-------------------------------

Cash Flows
     Net cash  provided by  operating  activities  increased  26% to $63 million
reflecting  favorable  working  capital cash flows  resulting from the timing of
cash payments on current liabilities.
     Net cash  used by  investments  decreased  from $227  million  in the first
quarter of 1998 to $183 million  over the same period in 1999 mainly  related to
the timing of acquisitions,  which were $36 million,  or 26%, lower in the first
quarter of 1999. However,  capital expenditures  increased by $5 million, or 6%,
driven by a 17%  increase in North  America as we continue to invest  heavily in
cold drink  equipment  and an 89%  reduction in spending  outside  North America
mainly in Russia  where our  existing  infrastructure  is  adequate  for current
operations.
     Net cash provided by financing  decreased by $75 million to $99 million for
the first quarter 1999 mainly due to 1998  borrowings  in Russia  related to the
purchase of Pepsi  International  Bottlers LLC, which was paid down in the first
quarter of 1999.








                                      -13-




Euro
----
     On  January  1,  1999,  eleven  member  countries  of  the  European  Union
established  fixed conversion  rates between existing  currencies and one common
currency,  the Euro. Beginning in January 2002, new  Euro-denominated  bills and
coins  will  be  issued,   and  existing   currencies  will  be  withdrawn  from
circulation.  Spain is one of the member  countries that instituted the Euro and
we have  established  plans to address  the issues  raised by the Euro  currency
conversion.  These issues include,  among others, the need to adapt computer and
financial systems,  business processes and equipment,  such as vending machines,
to  accommodate  Euro-denominated  transactions  and the  impact  of one  common
currency  on  cross-border  pricing.   Since  financial  systems  and  processes
currently  accommodate  multiple  currencies,  we do not  expect  the system and
equipment  conversion costs to be material.  Due to numerous  uncertainties,  we
cannot reasonably estimate the long-term effects one common currency may have on
pricing,  costs and the resulting impact, if any, on the financial  condition or
results of operations.

Year 2000
---------
     Many  computerized  systems  and  microprocessors  that are  embedded  in a
variety of products used by PBG have the potential for  operational  problems if
they lack the  ability  to  handle  the  transition  to the Year  2000.  We have
established  teams to identify and correct Year 2000 issues. We have engaged IBM
to help set testing  strategy  and  complete  some of the  offsite  remediation.
Information  technology  systems  with  non-compliant  code are  expected  to be
modified or replaced with systems that are Year 2000 compliant.  Similar actions
are being  taken with  respect to systems  embedded in  manufacturing  and other
facilities.  The  teams  are also  charged  with  investigating  the  Year  2000
readiness of suppliers,  customers  and other third parties and with  developing
contingency plans where necessary.

     Key information  technology  systems have been inventoried and assessed for
compliance, and detailed plans are in place for required system modifications or
replacements.   Remediation  and  testing  activities  are  well  underway  with
approximately 91% of the systems already compliant.  This percentage is expected
to  increase  to 97% in the  second  quarter  and  100%  in the  third  quarter.
Inventories  and  assessments  of systems  embedded in  manufacturing  and other
facilities  are in  progress  and  are  expected  to be  complete  by  year-end;
remediation  began in the fourth  quarter of 1998 with a  mid-year  1999  target
completion  date.  Independent   consultants  are  monitoring  progress  against
remediation programs and performing tests at certain key locations. In addition,
senior management and the board of directors are also monitoring the progress of
the remediation programs.

     Our most  significant  exposure  arises from our  dependence on high volume
transaction   processing  systems,   particularly  for  production   scheduling,
inventory cost  accounting,  purchasing,  customer  billing and collection,  and
payroll. We anticipate that any corrective actions to these applications will be
completed by the end of the second quarter.


                                      -14-





     We have  contacted  the key suppliers  that are critical to our  production
processes.  There are approximately 150 key suppliers,  all of whom responded to
our initial request for information about their remediation plans. We are now in
the process of visiting the 60 suppliers we have  identified as  presenting  the
greatest risk and we have already visited 37 of them.  These suppliers have been
selected  either  because  of our  dependence  on them or  because  of  concerns
regarding  their  remediation  plans.  To date we have  not  identified  any key
suppliers  who will  not be Year  2000  compliant.  We  will,  however,  develop
contingency  plans  for  the  non-compliance  of key  suppliers.  We  have  also
contacted   significant   customers  and  PepsiCo  joint  venture  partners  who
manufacture certain Lipton and Starbucks products that we sell and have begun to
survey their Year 2000  remediation  programs.  Risk  assessment and contingency
plans, where necessary, will be finalized in the second quarter.
     
     Costs directly related to Year 2000 issues are estimated to be $56 million,
of which $3 million was spent in the first  quarter of 1999,  $26 million and $7
million  in  full  year  1998  and  1997,   respectively.   We  have  redeployed
approximately  160  employees to support this work,  as well as engaged over 100
independent contractors.  Approximately one-half of the total estimated spending
represents  costs to modify  existing  systems,  which  includes the  inventory,
assessment,  remediation,  and testing and rollout phases. The remaining dollars
represent  spending for the  development,  testing and rollout of new systems to
replace older,  non-compliant  applications.  This estimate assumes that we will
not  incur  any  costs on behalf  of our  suppliers,  customers  or other  third
parties.  These costs will not necessarily increase our normal level of spending
on information technology, due to the deferral of other projects to enable us to
focus on Year 2000 remediation.

     Contingency  plans for Year 2000 related  interruptions are being developed
and will include, but not be limited to, the development of emergency backup and
recovery procedures,  remediation of existing systems parallel with installation
of new systems,  replacement of electronic  applications  with manual processes,
identification  of  alternative  suppliers  and an increase in raw  material and
finished goods inventory  levels.  All plans are expected to be completed by the
end of the second quarter.

     In light of the  foregoing,  we do not  currently  anticipate  that we will
experience a significant disruption to our business as a result of the Year 2000
issue. Our most likely  potential risk is a temporary  inability of suppliers to
provide  supplies of raw  materials or customers  to pay on a timely  basis.  We
typically  experience  below average sales in January due to the  seasonality of
our business.  In addition, we are not dependent on any single supplier location
or PBG location for a critical  commodity  or product.  Consequently  we believe
that in a worst case scenario any supply  disruption can be minimized by drawing
down  inventories  or  increasing  production  at  unaffected  plants  with some
increase in distribution  costs. We are testing  electronic  billing and payment
systems during 1999 as part of our overall Year 2000 strategy and will work with
customers that experience disruptions that might impact payment to us.

                                  

                                      -15-
     

     Our Year 2000  efforts are ongoing  and our  overall  plan,  as well as the
consideration of contingency  plans,  will continue to evolve as new information
becomes  available.  While we anticipate no major  interruption  to our business
activities,  there is still uncertainty about the broader scope of the Year 2000
issue as it may affect us and third parties,  including suppliers and customers.
For example,  lack of  readiness by  electrical  and water  utilities  and other
providers of general infrastructure such as rail transportation,  could, in some
geographic areas, pose significant impediments to our ability to carry on normal
operations in the area  affected.  Accordingly,  while we believe our actions in
this regard should have the effect of lessening  Year 2000 risks,  we are unable
to  estimate  such  risks or to  estimate  the  ultimate  Year 2000 risks on our
operations.

Cautionary Statements
---------------------
         
     Except for the historical  information  and discussions  contained  herein,
statements   contained  in  this  Form  10-Q  may  constitute  `forward  looking
statements' as defined by the Private Securities  Litigation Reform Act of 1995.
These `forward looking statements' are based on currently available competitive,
financial and economic data and our operating plans.  These statements involve a
number of risks, uncertainties and other factors that could cause actual results
to be  materially  different.  Among the  events  and  uncertainties  that could
adversely affect future periods are  lower-than-expected  net pricing  resulting
from marketplace competition,  material changes from expectations in the cost of
raw materials and  ingredients,  an inability to achieve the expected timing for
returns  on cold  drink  equipment  and  employee  infrastructure  expenditures,
material changes in expected levels of marketing  support payments from PepsiCo,
Inc.,  an  inability  to meet  projections  for  performance  in newly  acquired
territories,  unexpected  costs and  business  risks  associated  with Year 2000
compliance by PBG, its customers and/or  suppliers,  unexpected costs associated
with  conversion to the common European  currency and unfavorable  interest rate
and currency  fluctuations.  We caution that in addition to the above cautionary
statements,  all forward-looking  statements  contained herein should be read in
conjunction  with the detailed  cautionary  statements  found on pages eleven to
eighteen  of PBG's  Registration  Statement  on Form  S-1,  which  was  declared
effective on March 30, 1999.

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We have no material  changes to the disclosures  made on this matter in our
Registration  Statement on Form S-1,  which was declared  effective on March 30,
1999.






                                      -16-






                     Independent Accountants' Review Report
                     --------------------------------------

The Board of Directors
The Pepsi Bottling Group, Inc.

We have reviewed the accompanying  condensed combined balance sheet of The Pepsi
Bottling  Group,  Inc. as of March 20, 1999 and the related  condensed  combined
statements  of  operations  and cash flows for the twelve  weeks ended March 21,
1998 and March 20, 1999. These condensed combined  financial  statements are the
responsibility of The Pepsi Bottling Group, Inc.'s management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information  consists  principally of applying  analytical  review procedures to
financial  data and making  inquiries of persons  responsible  for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the  expression  of an opinion  regarding the  financial  statements  taken as a
whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the condensed  combined  financial  statements  referred to above for
them to be in conformity with generally accepted accounting principles.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards,  the combined  balance sheet of The Pepsi Bottling Group,  Inc. as of
December 26, 1998, and the related combined statements of operations, cash flows
and  accumulated  other  comprehensive  loss for the fifty-two  week period then
ended not presented herein;  and in our report dated March 8, 1999, we expressed
an unqualified opinion on those combined financial  statements.  In our opinion,
the information set forth in the accompanying  condensed  combined balance sheet
as of December 26, 1998,  is fairly  presented,  in all  material  respects,  in
relation to the combined balance sheet from which it has been derived.


KPMG LLP



New York, New York
April 14, 1999


                                      -17-






                   PART II - OTHER INFORMATION AND SIGNATAURES


Item 6.           Exhibits and Reports on Form 8-K
                  --------------------------------
                  (a)  Exhibits

                       See Index to Exhibits on page 20.






                                      -18-






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








                                                  THE PEPSI BOTTLING GROUP, INC.
                                                  ------------------------------
                                                                    (Registrant)






Date: May 12, 1999                                             Peter A. Bridgman
------------------                                             -----------------
                                                       Senior Vice President and
                                                                      Controller






Date: May 12, 1999                                                John T. Cahill
------------------                                                --------------
                                                    Executive Vice President and
                                                         Chief Financial Officer










                                      -19-





                                INDEX TO EXHIBITS
                                   ITEM 6 (a)



EXHIBITS

Exhibit 27.1               Financial Data Schedule 12 weeks ended March 20, 1999


Exhibit 27.2               Financial Data Schedule 12 weeks ended March 21, 1998







                                      -20-