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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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

                                    FORM 10-K

|X|  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

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




                      COMMISSION FILE NUMBER _______


                         DELTA BEVERAGE GROUP, INC.
          (Exact Name of Registrant as Specified in Its Charter)


         DELAWARE                                               75-2048317
(State or Other Jurisdiction                                 (I.R.S. Employer
of Incorporation or Organization)                           Identification No.)


                  2221 DEMOCRAT ROAD, MEMPHIS, TENNESSEE 38132
          (Address of Principal Executive Offices, including Zip Code)

                                 (901) 344-7100
              (Registrant's Telephone Number, including Area Code)


SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE.

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE.

     As of March 15, 1999, the Registrant had outstanding: (i) 6,158.84 
shares of Series AA Preferred Stock, $5,000 stated value, (ii) 20,301.87 
shares of voting Common Stock, $0.01 par value, and (iii) 32,949.93 shares of 
nonvoting Common Stock, $0.01 par value.




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                                 TABLE OF CONTENTS

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CAUTIONARY STATEMENT...................................................................1

PART I.................................................................................7

      ITEM 1    BUSINESS...............................................................7
      ITEM 2    PROPERTIES............................................................18
      ITEM 3    LEGAL PROCEEDINGS.....................................................18
      ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................18

PART II...............................................................................19

      ITEM 5    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                STOCKHOLDER MATTERS...................................................19
      ITEM 6    SELECTED FINANCIAL DATA...............................................20
      ITEM 7    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS...................................21
      ITEM 7A   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK............27
      ITEM 8    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...........................28
      ITEM 9    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                ON ACCOUNTING AND FINANCIAL DISCLOSURE................................46

PART III..............................................................................47

      ITEM 10   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT....................47
      ITEM 11   EXECUTIVE COMPENSATION................................................50
      ITEM 12   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                AND MANAGEMENT........................................................53
      ITEM 13   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................54

PART IV...............................................................................57

      ITEM 14   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K......57

SIGNATURES............................................................................59

INDEX TO EXHIBITS.....................................................................60

</TABLE>
                   
                                       i
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                           CAUTIONARY STATEMENT

     DELTA BEVERAGE GROUP, INC. (THE "COMPANY"), OR PERSONS ACTING ON BEHALF
OF THE COMPANY, OR OUTSIDE REVIEWERS RETAINED BY THE COMPANY MAKING STATEMENTS
ON BEHALF OF THE COMPANY, OR UNDERWRITERS OF THE COMPANY'S SECURITIES, FROM TIME
TO TIME, MAY MAKE, IN WRITING OR ORALLY, "FORWARD-LOOKING STATEMENTS" AS DEFINED
UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (THE "LITIGATION
REFORM ACT"). THIS CAUTIONARY STATEMENT, WHEN USED IN CONJUNCTION WITH AN
IDENTIFIED FORWARD-LOOKING STATEMENT, IS FOR THE PURPOSE OF QUALIFYING FOR THE
"SAFE HARBOR" PROVISIONS OF THE LITIGATION REFORM ACT AND IS INTENDED TO BE A
READILY AVAILABLE WRITTEN DOCUMENT THAT CONTAINS FACTORS WHICH COULD CAUSE
RESULTS TO DIFFER MATERIALLY FROM SUCH FORWARD-LOOKING STATEMENTS. THESE FACTORS
ARE IN ADDITION TO ANY OTHER CAUTIONARY STATEMENTS, WRITTEN OR ORAL, WHICH MAY
BE MADE, OR REFERRED TO, IN CONNECTION WITH ANY SUCH FORWARD-LOOKING STATEMENT.

     THE FOLLOWING MATTERS, AMONG OTHERS, MAY HAVE A MATERIAL ADVERSE EFFECT
ON THE BUSINESS, FINANCIAL CONDITION, LIQUIDITY, RESULTS OF OPERATIONS OR
PROSPECTS, FINANCIAL OR OTHERWISE, OF THE COMPANY. REFERENCE TO THIS CAUTIONARY
STATEMENT IN THE CONTEXT OF A FORWARD-LOOKING STATEMENT OR STATEMENTS SHALL BE
DEEMED TO BE A STATEMENT THAT ANY ONE OR MORE OF THE FOLLOWING FACTORS MAY CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN SUCH FORWARD-LOOKING STATEMENT
OR STATEMENTS.

SIGNIFICANT LEVERAGE AND DEBT SERVICE

     Issuance of $120.0 million principal amount (the "Debt Offering") of 
9-3/4% Senior Notes Due 2003 (the "Notes"), retirement of certain existing 
indebtedness of the Company and the consummation of the transaction 
contemplated in the Credit Agreement (the "Credit Agreement"), dated December 
16, 1996, by and among the Company, NationsBank, N.A. and other lending 
institutions (collectively, the "Financing Transactions"), have heightened 
the Company's highly leveraged status. At December 31, 1998, the Company had 
total consolidated outstanding long term debt of approximately $180.7 
million, of which approximately $132.1 million was Senior Indebtedness (as 
defined herein) and approximately $48.6 million was subordinated debt. In 
addition, subject to the restrictions in the Credit Agreement and the 
Indenture (the "Indenture"), dated December 17, 1996, between the Company and 
Norwest Bank Minnesota, National Association, as trustee, relating to the 
Notes, the Company may incur certain additional indebtedness from time to 
time, which may include additional Notes to be issued by the Company in the 
future under the Indenture. At December 31, 1998, the Company had borrowing 
capacity of up to $30.0 million under the Credit Agreement, including $10.0 
million available thereunder for the issuance of letters of credit, of which 
$5.6 million was drawn upon and $8.5 million had been issued, respectively.

     The level of the Company's indebtedness could have important 
consequences to holders of the Notes, including: (i) a substantial portion of 
the Company's cash flow from operations must be dedicated to debt service and 
will not be available for other purposes; (ii) the Company's ability to 
obtain additional debt financing in the future for other acquisitions, 
working capital or capital expenditures may be limited; and (iii) the 
Company's level of indebtedness could limit its flexibility in reacting to 
changes in its industry or economic conditions generally.

         The Company's ability to pay interest on the Notes and to satisfy 
its other debt obligations will depend upon its future operating performance, 
which will be affected by prevailing economic conditions and financial, 
business and other factors, certain of which are beyond its control, as well 
as the availability of borrowings under the Credit Agreement or any successor 
credit facilities. The Company will require substantial amounts of cash to 
fund scheduled payments of interest on its outstanding indebtedness as well 
as for future capital expenditures and any increased working capital 
requirements. If the Company is unable to meet its cash requirements out of 
cash flow from operations and its available borrowings, there can be no 
assurance that it will be able to obtain alternative financing or that it 
will be permitted to do so under the terms of the Indenture or the Credit 
Agreement. In the absence of such financing, the Company's ability to respond 
to changing business and economic conditions, to absorb adverse operating 
results, to fund capital expenditures or to make future acquisitions may be 
adversely affected. In addition, actions taken by the lending banks under the 
Credit Agreement are not subject to approval by the holders of the Notes. 
Moreover, the principal balance of the Company's 11% subordinated notes is 
due in December 2003 (the "Subordinated Notes"). Finally, it is anticipated 
that in order to pay the principal balance of


<PAGE>

the Notes due at maturity, the Company will be required to obtain alternative 
financing. There can be no assurance, however, that the Company will be able 
to refinance the Notes at maturity, and the inability to refinance the Notes 
would likely have a material adverse effect on the Company and on the market 
value and marketability of the Notes.

     Borrowings under the Credit Agreement bear interest at floating rates. 
Increases in interest rates on such borrowings could adversely affect the 
financial condition or results of operations of the Company. Increases in 
interest rates could negatively impact the ability of the Company to meet its 
debt service obligations, including its obligations under the Notes and the 
Subordinated Notes.

UNSECURED STATUS OF THE NOTES

     The Notes are not secured by any of the assets of the Company or its 
subsidiaries. At December 31, 1998, the Company had borrowing capacity of up 
to $30.0 million under the Credit Agreement, including $10.0 million 
available thereunder for the issuance of letters of credit, of which $5.6 
million was drawn upon and $8.5 million had been issued, respectively. The 
indebtedness pursuant to the Credit Agreement is secured by a first priority, 
perfected security interest in the Company's, and any future guarantor's, 
accounts receivable and inventory. In addition, as of December 31, 1998, the 
Company had approximately $155,000 of other secured indebtedness outstanding. 
Despite being senior indebtedness of the Company, ranking PARI PASSU with all 
other unsubordinated, unsecured indebtedness of the Company, the Notes are 
effectively subordinated to the indebtedness incurred pursuant to the Credit 
Agreement and such other indebtedness to the extent of such security 
interests. In the event of bankruptcy, liquidation, reorganization or other 
winding up of the Company, the assets of the Company will be available to pay 
the Company's obligations under the Notes and its other unsecured debt only 
after all of the Company's obligations under the Credit Agreement and its 
other secured indebtedness have been paid in full.

EFFECTIVE SUBORDINATION TO CREDITORS OF THE COMPANY'S NON-GUARANTOR SUBSIDIARIES

     The creditors of the Company (including the holders of the Notes) 
effectively rank, or will rank, junior to all creditors (including unsecured 
creditors) of the Company's subsidiaries (other than any subsidiary that 
guarantees the Notes (a "Guaranteeing Subsidiary")) with respect to the 
assets of such subsidiaries notwithstanding that the Notes are senior 
obligations of the Company. At December 31, 1998, there are no Guaranteeing 
Subsidiaries with respect to the Notes. Any right of the Company or a 
Guaranteeing Subsidiary to receive the assets of any of its respective 
subsidiaries which are not Guaranteeing Subsidiaries upon liquidation or 
reorganization of such subsidiary (and the consequent right of the holders of 
the Notes to participate in those assets) will be effectively subordinated to 
the claims of that subsidiary's creditors (including trade creditors), except 
to the extent that the Company or such Guaranteeing Subsidiary is itself 
recognized as a creditor of such subsidiary, in which case the claims of the 
Company or such Guaranteeing Subsidiary would still be subordinated to any 
security interests in the assets of such subsidiary in favor of another 
creditor and subordinated to any indebtedness of such subsidiary senior to 
that held by the Company or such Guaranteeing Subsidiary. As of December 31, 
1998, the aggregate amount of indebtedness of the Company's subsidiary to 
which the holders of the Notes were effectively subordinated was 
approximately $3.1 million.

RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS

     The Indenture restricts, among other things, the ability of the Company 
to incur additional indebtedness, pay dividends, make certain other 
restricted payments, incur liens to secure PARI PASSU or subordinated 
indebtedness, apply net proceeds from certain asset sales, merge or 
consolidate with any other person, sell, assign, transfer, lease, convey or 
otherwise dispose of substantially all of the assets of the Company, enter 
into certain transactions with affiliates or enter into sale and leaseback 
transactions. In addition, the Credit Agreement contains other and more 
restrictive covenants. As a result of these covenants, the ability of the 
Company to respond to changing business and economic conditions and to secure 
additional financing, if needed, may be significantly

                                       2

<PAGE>


restricted, and the Company may be prevented from engaging in transactions 
that might otherwise be considered beneficial to the Company.

     The Credit Agreement contains more extensive and restrictive covenants 
and restrictions than the Indenture and also requires the Company to maintain 
specified financial ratios and satisfy certain financial condition tests. The 
Company's ability to meet those financial ratios and tests can be affected by 
events beyond its control, and there can be no assurance that the Company 
will meet those tests. A breach of any of these covenants could result in a 
default under the Credit Agreement. Upon the occurrence of an event of 
default under the Credit Agreement, the lenders thereunder could elect to 
declare all amounts outstanding under the Credit Agreement, including accrued 
interest or other obligations, to be immediately due and payable. If the 
Company were unable to repay those amounts, such lenders could proceed 
against the collateral granted to them to secure that indebtedness. If any 
indebtedness senior in right of payment to all existing and future 
subordinated indebtedness of the Company and PARI PASSU in right of payment 
to all existing and future unsubordinated indebtedness of the Company 
("Senior Indebtedness") were to be accelerated, there can be no assurance 
that the assets of the Company would be sufficient to repay in full the 
Senior Indebtedness and the other indebtedness of the Company, including the 
Notes.

DEPENDENCE ON FRANCHISES AND DISTRIBUTOR AGREEMENTS

     The Company operates under franchise agreements with a number of soft 
drink concentrate and syrup producers. The franchise agreements contain 
comprehensive provisions regarding the manufacturing, bottling, canning, 
distribution and sale of the franchisors' products and impose substantial 
obligations on the Company. Violation of the provisions of any franchise 
agreement could result in the termination of such franchise, resulting in the 
Company's loss of the right to bottle and sell the products covered by such 
franchise. No assurance can be given that the Company will be able to 
maintain its existing franchises indefinitely.

     Beer distribution operations are conducted by the Company pursuant to 
distributor agreements which contain comprehensive provisions regarding the 
distribution and sale of beer and impose substantial obligations on the 
Company. Violation of the provisions of any distributor agreement could 
result in the termination of such agreement, resulting in the Company's loss 
of the right to distribute and sell the products covered by the distributor 
agreement. No assurance can be given that the Company will be able to 
maintain its existing distributorships indefinitely.

DEPENDENCE ON PEPSICO AND MILLER PRODUCTS

     For the year ended December 31, 1998, approximately 79% of the Company's 
soft drink sales were derived from the sale of PepsiCo, Inc. ("PepsiCo") 
products pursuant to franchise agreements with PepsiCo and approximately 81% 
of the Company's beer sales were derived from the sale of Miller Brewing 
Company ("Miller") products pursuant to a distributor agreement with Miller. 
If adverse events affect the popularity of PepsiCo or Miller products in the 
Company's territories, the Company's business would be adversely affected.

DEPENDENCE ON MANAGEMENT AGREEMENT

     The services of the Company's Chief Executive Officer, Robert C. Pohlad, 
and Chief Financial Officer, John F. Bierbaum, are provided pursuant to a 
Management Agreement between the Company and the Pohlad Companies (the 
"Management Agreement"). The Management Agreement may be terminated when the 
Pohlad Companies or its affiliates cease to hold any common stock, par value 
$0.01 per share (the "Common Stock") of the Company or when the Pohlad 
Companies is no longer controlled by members of the Pohlad family. 
Termination of the Management Agreement and the loss of services provided by 
Messrs. Pohlad and Bierbaum could have an adverse impact on the Company's 
operations.

                                       3

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DEPENDENCE ON KEY PERSONNEL

     The Company believes that its continued success will depend to a 
significant extent upon the efforts and abilities of its senior management 
team, including Kenneth E. Keiser, the President and Chief Operating Officer 
of the Company. The Company has an employment agreement (the "Employment 
Agreement") in effect with Mr. Keiser which is renewable annually each 
February 1, subject to the agreement of Mr. Keiser and the Company. The 
Company has no employment agreements in effect with any of its other 
executive officers. Failure of the Company to renew the Employment Agreement, 
to retain its other executive officers or to attract and retain additional 
qualified personnel could adversely affect the Company's operations.

GOVERNMENT REGULATION

     The production, distribution and sale of many of the Company's products 
are subject to federal and state statutes regulating the franchising, 
production, sale, safety, advertising, labeling and ingredients of such 
products. The Company is subject to regulations governing the installation, 
maintenance and use of, and the clean-up of any releases from underground 
storage tanks and the generation, treatment, storage and disposal of 
hazardous materials. Of the states in which the Company conducts business, 
Arkansas and Tennessee both impose specific soft drink taxes. In addition, 
the alcoholic beverage industry is subject to extensive regulation by state 
and federal agencies of such matters as licensing requirements, trade and 
pricing practices, permitted and required labeling, advertising and relations 
with wholesalers and retailers. The federal government requires warning 
labels on packaging of beer. New or revised taxes, increased licensing fees 
or additional regulatory requirements, environmental or otherwise, could have 
a material adverse effect on the Company's financial condition and its 
results of operations.

COMPETITION

     The soft drink and beer businesses are highly competitive. The Company's 
products are sold in competition with all liquid refreshments. Sales of 
beverages occur in a variety of locations, including supermarkets, retail and 
convenience stores, restaurants and vending machines.

SOFT DRINKS

     Competitors in the soft drink industry include bottlers and distributors 
of nationally advertised and marketed products, such as Coca-Cola Company 
("Coca-Cola") products, as well as chain store and private label soft drinks. 
The primary methods of competition include brand recognition, price and price 
promotion, retail space management, service to the retail trade, new product 
introductions, packaging changes, distribution methods and advertising. The 
Company's primary competitor in its territory is Coca-Cola Enterprises 
("CCE"). CCE enjoys substantial financial and other support from Coca-Cola, 
which has a substantial ownership interest in CCE, and has greater financial 
resources than the Company. Coca-Cola products currently outsell the 
Company's PepsiCo products by a ratio of approximately three to one in the 
Company's territories. This ratio has remained relatively constant since 1990.

BEER

     Competitors in the beer industry include distributors of nationally 
advertised and marketed products, such as Anheuser-Busch Companies, Inc. 
("Anheuser-Busch") products, as well as regional and local products. Some of 
the Company's beer competitors may have greater financial resources than the 
Company. The primary methods of competition include quality, taste and 
freshness of the products, price, packaging, brand recognition, retail space 
management and advertising.

                                      4

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     The Company's principal competitors are distributors of Anheuser-Busch 
products. In 1998, Anheuser- Busch products accounted for 46% of total U.S. 
beer sales, while sales of Miller products, the Company's primary brewer, 
accounted for 21% of total U.S. beer sales.

DEPENDENCE ON RAW MATERIALS

     Raw materials for the Company's soft drink products include concentrates 
and syrups obtained from its franchisors, water, carbon dioxide, fructose, 
polyethylene terephthalate ("PET") bottles, aluminum cans, closures, premix 
containers and other packaging materials. The price of concentrates and 
syrups is determined by the franchisors and may be changed at any time. 
Prices for the remaining raw materials are determined by the market, and may 
change at any time. Increases in prices for any of these raw materials could 
have a material adverse impact on the Company's financial position.

     A substantial portion of the Company's raw materials, including its 
aluminum cans, closures, other packaging materials and fructose, are 
purchased through the Consolidated Purchasing Group, Inc. ("CPG"). The 
Company and other franchisees or affiliates of franchisees of PepsiCo are 
members of CPG. The Company and other CPG members submit their raw material 
requirements to CPG which then negotiates with suppliers and makes purchases 
based on the combined requirements of all CPG members. There can be no 
assurance that price increases for packaging, ingredients and other raw 
materials will not occur. Other than its purchasing agreement with CPG, the 
Company has taken no steps to alleviate or provide for price fluctuations of 
its raw materials.

EXPIRATION OF LABOR CONTRACTS

     At December 31, 1998, the Company had approximately 1,760 full-time 
employees and 50 part-time employees. Approximately 145 of the Company's 
employees at its Collierville, Tennessee, facility are represented by the 
International Brotherhood of Teamsters Local Union No. 1196 pursuant to two 
labor contracts. The first contract expires in September 2000 and 
automatically extends for one-year terms thereafter unless written notice is 
provided by either party to the other at least 60 days prior to expiration of 
the contract. The second contract expires in December 1999. Approximately 160 
of the Company's employees at its Harahan, Louisiana, facility are 
represented by the International Brotherhood of Teamsters, AFL-CIO, General 
Truck Drivers, Chauffeurs, Warehousemen and Helpers Local 270 pursuant to two 
labor contracts. The first contract expires in March 1999. The second 
contract expires in December 1999. If any labor contract is not renewed or if 
there is a labor dispute, the Company's financial position could be adversely 
affected.

CERTAIN FACTORS AFFECTING SALES

     The Company's sales are seasonal. In a typical year, approximately 55% 
of the Company's sales by volume occur from April to September and 
approximately 45% occur from October to March. As a result, the Company's 
working capital requirements and cash flow vary substantially throughout the 
year. Consumer demand for the Company's products is affected by weather 
conditions. Cool, wet spring or summer weather could result in decreased 
sales of the Company's products and could have an adverse effect on the 
Company's financial position. In addition, sales of the Company's products 
are dependent on the condition of the local economies in the Company's 
territories. A depressed local economy could have an adverse effect on the 
Company's sales and results of operations.

INABILITY TO FUND A CHANGE OF CONTROL OFFER

     Upon a Change of Control (as defined in the Indenture), the Company will 
be required to offer to repurchase all outstanding Notes at 101% of the 
principal amount thereof plus accrued and unpaid interest to the date of 
repurchase and liquidated damages. However, there can be no assurance (i) 
that sufficient funds will be available at the time of any Change of Control 
to make any required repurchases of Notes tendered or (ii) that restrictions 
in the Credit Agreement will allow the Company to make such required 
repurchases. Notwithstanding

                                        5

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these provisions, the Company could enter into certain transactions, 
including certain recapitalizations, that would not constitute a Change of 
Control but would increase the amount of debt outstanding at such time.

VOIDING OR SUBORDINATION OF THE NOTES UNDER FRAUDULENT CONVEYANCE STATUTES

     Under applicable provisions of federal bankruptcy law or comparable 
provisions of state fraudulent transfer law, if, among other things, the 
Company, at the time it incurred the indebtedness evidenced by the Notes, 
(i)(a) was insolvent or rendered insolvent by reason of such occurrence or 
(b) was engaged in a business or transaction for which the assets remaining 
with the Company constituted unreasonably small capital or (c) intended to 
incur, or believed that it would incur, debts beyond its ability to pay such 
debts as they mature, and (ii) received less than reasonably equivalent value 
or consideration for the incurrence of such indebtedness, the Notes could be 
voided, or claims in respect of the Notes could be subordinated to all other 
debts of the Company. The voiding or subordination of any such indebtedness 
could result in an Event of Default (as defined in the Indenture) with 
respect to such indebtedness, which could result in acceleration thereof. In 
addition, the payment of interest and principal by the Company pursuant to 
the Notes could be voided and required to be returned to the person making 
such payment or to a fund for the benefit of the creditors of the Company.

     The measures of insolvency for purposes of the foregoing considerations 
will vary depending upon the law applied in any proceeding with respect to 
the foregoing. Generally, however, the Company would be considered insolvent 
if (i) the sum of its debts, including contingent liabilities, were greater 
than the fair saleable value of all of its assets at a fair valuation or if 
the present fair saleable value of its assets were less than the amount that 
would be required to pay its probable liability on its existing debts, 
including contingent liabilities, as they become absolute and mature or (ii) 
it could not pay its debts as they become due. There can be no assurance, 
however, as to what standard a court would apply in making such 
determinations.

NO ASSURANCE AS TO LIQUIDITY

     There can be no assurance as to the liquidity of any markets that may 
develop for the Notes, the ability of holders of the Notes to sell their 
Notes, or the prices at which holders would be able to sell their Notes. 
Future trading prices of the Notes will depend on many factors, including, 
among other things, prevailing interest rates, the Company's operating 
results and the market for similar securities. The Company does not intend to 
apply for listing of the Notes on any securities exchange.


                                       6

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                                  PART I

ITEM 1  BUSINESS

     THE FOLLOWING DESCRIPTION OF THE COMPANY'S BUSINESS CONTAINS CERTAIN 
FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES," "ANTICIPATES," "EXPECTS," AND 
"INTENDS," OR COMPARABLE TERMINOLOGY. SUCH STATEMENTS ARE SUBJECT TO CERTAIN 
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY 
FROM THOSE PROJECTED. HOLDERS AND POTENTIAL PURCHASERS OF THE COMPANY'S 
SECURITIES ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING 
STATEMENTS WHICH ARE QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONS AND RISKS 
DESCRIBED HEREIN.

GENERAL

     The Company is one of the largest soft drink manufacturers and 
distributors in the U.S., selling over 27.9 million hard cases of PepsiCo 
products and 7.3 million hard cases of other soft drinks in 1998. The Company 
is the fifth largest independent PepsiCo bottler in the U.S. PepsiCo is the 
second leading soft drink franchisor in the U.S., capturing approximately 
31.4% of all soft drink sales in 1998. In 1998, net sales for the Company 
totaled $352.1 million and EBITDA was $29.9 million.

     The Company's exclusive franchise territories cover portions of 
Arkansas, Louisiana, Mississippi, Tennessee and Texas and include the cities 
of New Orleans, Memphis, Little Rock, Shreveport, Baton Rouge and Tupelo. In 
the aggregate, there are approximately seven million people in the Company's 
territories. The Company has the exclusive right within its territories to 
manufacture and/or distribute the following families of products: PEPSI-COLA 
(cola), MOUNTAIN DEW (heavy citrus), SEVEN-UP (lemon-lime), SLICE (orange), 
OCEAN SPRAY (juices), LIPTON (iced teas), SQUIRT (heavy citrus), COUNTRY TIME 
(lemonade), CANADA DRY (ginger ale), CRUSH (fruit), HAWAIIAN PUNCH (fruit), 
MUG (root beer), ALL SPORT (sport drink), YOO- HOO (chocolate), CRYSTAL LIGHT 
(diet) and various other product offerings. In addition, the Company is the 
largest distributor of Miller products in the state of Louisiana and has the 
exclusive right to distribute Miller and Heineken USA Incorporated 
("Heineken") products in greater New Orleans, Louisiana.

     The Company believes its success as an independent bottler is due 
primarily to its ability to produce efficiently and to market and distribute 
effectively its national brands. The Company's products include highly 
recognizable trademarks, most of which are supported by considerable national 
advertising expenditures made by the franchisors. In 1998, for example, 
PepsiCo spent in excess of $165 million in national advertising to advertise 
PepsiCo products. Furthermore, all of the Company's territories are located 
in the southern region of the U.S. that historically has posted above average 
per capita consumption of soft drinks.

     The Company operates two soft drink production facilities, one in 
Collierville, Tennessee, and the other in Reserve, Louisiana, with a total 
annual production capacity of 74.3 million cases. The Company distributes 
approximately 97% of its soft drink products to retail outlets through its 
computerized direct store delivery ("DSD") system. The Company's DSD system 
utilizes hand-held computer technology to receive orders from and process 
deliveries to the Company's customers. Through its DSD system and its 24 
warehouse distribution facilities strategically located throughout its 
territories, the Company services and distributes products to over 32,000 
retail outlets in five states. Retail customers in the Company's territories 
include The Kroger Company, Wal-Mart Stores, Inc., Winn-Dixie Stores, Inc. 
and Circle K Convenience Stores, Inc. The Company tracks its product sales 
daily and uses this information to plan its production, which is subject to 
seasonal swings in demand, and to interpret and react to changes in consumer 
buying patterns. This allows the Company to provide efficient and effective 
service to its retail customers.

     Since it was acquired by its current owners in 1988, the Company has 
broadened its product offerings through the establishment of the Joint 
Venture (as defined herein) as well as the acquisition of additional 
franchises, improved its production facilities and implemented efficient 
delivery systems. Moreover, the Company has better managed product 
discounting and driven sales mix toward higher margin products. As a result 
of these initiatives, for the period from 1990 to 1998, the Company's case 
volume and operating profit grew at compound annual rates of 106% and 108%, 
respectively.

     The Company used approximately $117.2 million of the proceeds from its 
Debt Offering to retire certain existing indebtedness of the Company and $2.8 
million for working capital purposes. In connection with the Debt Offering, 
the Company also entered into the Credit Agreement pursuant to which the 
Company has borrowing


                                       7

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capacity of up to $30.0 million, including $10.0 million available for the 
issuance of letters of credit, of which $5.6 million was drawn upon and $8.5 
million had been issued, respectively, at December 31, 1998. The Company 
believes that the consummation of the Financing Transactions has provided it 
with (i) increased operating flexibility by extending the repayment of its 
debt obligations and (ii) additional cash flow for use in capital 
expenditures to implement the Company's strategic objectives.

STRATEGIC OBJECTIVES

     The Company's business strategy is to continue to manufacture, 
distribute and market a broad array of national brands in all beverage 
categories. Specifically, the Company's long-term strategic objectives are to 
(i) increase growth in volume and market share in its existing territories 
through coordinating its franchisors' national advertising and marketing 
campaigns with the Company's regional and local marketing efforts, (ii) 
improve operating margins by shifting package mix to higher margin packages 
and controlling the level of retail discounts, (iii) pursue acquisitions that 
leverage the Company's existing structure and managerial expertise, (iv) 
strengthen the Company's corporate culture to better leverage human resources 
and (v) maximize operating efficiencies by utilizing emerging technologies to 
improve customer service and communications and increase the efficiency of 
logistics and distribution operations.

INCREASE GROWTH IN VOLUME AND MARKET SHARE

     The Company intends to increase its growth in volume and market share by 
increasing consumer preference for its high volume products. The Company 
believes it can achieve this objective by maintaining a wide variety of 
national brands supported by the franchisors' national advertising and major 
marketing campaigns, and coordinating its own regional and local 
merchandising and promotion activities to take advantage of such national 
advertising and marketing campaigns. Current national advertising and 
marketing campaigns supporting the Company's products include PepsiCo's POP 
CULTURE and Cadbury's HIT THE ROAD. After successful test marketing in the 
Company's New Orleans territory, all of the companies territories adopted the 
PEPSI BLUE marketing initiative late in 1997. Under the PEPSI BLUE 
initiative, all Pepsi-Cola trademark graphics on packaging, point-of-sales, 
cold storage equipment and delivery trucks are coordinated with PEPSI BLUE 
advertising. The Company believes these advertising and marketing campaigns 
will help build consumer awareness of its product offerings. The Company 
believes its own regional and local merchandising and promotion activities, 
designed to take advantage of such increased consumer awareness, will 
ultimately increase consumer preference and sales volume for its products. To 
this end, the Company intends to (i) conduct consumer research to identify 
those brands, packaging configurations and retail channels which appeal to 
consumers in the Company's territories and tailor regional and local 
marketing efforts accordingly, (ii) increase its share of local print 
advertising, conducted primarily by high volume supermarkets and mass 
merchandisers, through shared product advertisements which benefit both the 
retailer, by increasing the total volume and profitability, and the Company, 
through higher volume due to increased advertising frequency and (iii) 
continue to develop marketing initiatives such as EVERY CAP'S A WINNER, an 
under the cap promotion that rewards consumers with free products and 
merchandise.

IMPROVE OPERATING MARGINS

     The Company intends to improve its operating margins by shifting package 
mix to higher margin packages and controlling the level of discounts. 
Single-serve 20-ounce packages and one-liter bottles sold through cold 
storage equipment (i.e., "visi-coolers" and express lane merchandise units) 
for immediate consumption are less price sensitive than other 
non-refrigerated packages. Therefore, sales of single serve cold drink 
packages generate above average margins for both the Company and retailers. 
The Company intends to increase the presence and sales of these single serve 
packages by increasing its capital investment in cold storage equipment in 
convenience stores, supermarkets and other single serve outlets throughout 
its territories. By investing in these assets, the Company hopes to drive 
volume and profitability of its major soft drink brands while providing 
additional refrigerated space to merchandise more effectively the Company's 
other less visible products such as bottled

                                       8

<PAGE>

waters, teas, juices and sports drinks. The Company typically receives a full 
return on its investment in these assets in approximately two years. 
Twenty-ounce vending machine products represent another high margin package, 
andthe Company intends to capitalize on the 20-ounce vending market by 
investing in additional 20-ounce vending machines.

     The Company also intends to continue to control the level of product 
discounting for its more price sensitive packages such as cans and two-liter 
bottles. The Company manages its product discounts by a variety of methods, 
including (i) using its information system capabilities to analyze 
volume/price relationships by package and customer detail, (ii) utilizing 
retail scan information to analyze volume and retail price sensitivities, 
(iii) developing retail audits to monitor the effectiveness of merchandising 
and discount offerings, including the introduction of new promotional 
strategies to shift consumer preference to less price sensitive packages and 
(iv) providing innovative and unique account specific promotions to provide 
additional value to consumers.

ACQUISITION STRATEGY

     The Company's acquisition strategy includes identifying and pursuing 
potential franchise opportunities (i) contiguous to the Company's existing 
territories and (ii) that would permit the Company to extend its existing 
operations while leveraging its existing structure and managerial expertise. 
The acquisition of the Miller distributorships illustrates the Company's 
acquisition philosophy. The Company consolidated soft drinks and beer 
operations into a single facility and incorporated both products into its 
existing organization, thereby extending its operations while leveraging its 
structure and managerial expertise.

STRENGTHEN CORPORATE CULTURE

     The Company intends to strengthen its corporate culture by rewarding 
employees for achieving common goals and operating improvements, empowering 
employees with flexibility to make decisions, providing an opportunity for 
personal growth and encouraging open communications and teamwork by 
developing common goals.

MAXIMIZE OPERATING EFFICIENCIES

     The Company believes it can further enhance its operating efficiency by 
utilizing emerging technologies to improve customer service and 
communications and increase the efficiency of logistics and distribution 
operations. In addition, the Company intends to continue to invest in its 
manufacturing operations to improve production efficiencies and flexibility.

     Over the past six years, the Company has invested approximately $6.4 
million to upgrade its computer hardware and networking systems and acquire 
hand-held computer technology in order to automate its selling, ordering and 
delivery processes. See " - Sales and Distribution." In addition, the Company 
acquired and developed new software to automate its forecasting, production 
scheduling, inventory controls, transportation of goods and back hauling of 
raw materials.

     The Company intends to expand its existing technology systems to create 
additional operating efficiencies. The Company intends to utilize Electronic 
Data Interchange (EDI) to create paperless transactions with customers and 
suppliers by permitting electronic transmission of transactions. In addition, 
the Company has built an intranet with an internet access point to enable 
direct electronic communications with its customers. The Company is creating 
a data warehouse which will enable the Company to use advanced tool sets to 
analyze realtime information which will aid management in its decision-making 
processes. Finally, the Company intends to continue the expansion of its 
automated routing and truck loading programs to maximize delivery 
efficiencies.

                                     9

<PAGE>

JOINT VENTURE

     Pursuant to a Joint Venture Agreement dated September 3, 1992, as 
amended and restated (the "Joint Venture Agreement"), the Company and Poydras 
Street Investors LLC, a Louisiana limited liability company ("Poydras"), 
formed the Pepsi Cola/Seven-Up Beverage Group of Louisiana, a Louisiana 
general partnership (the "Joint Venture").  The Joint Venture distributes 
soft drinks in New Orleans and Baton Rouge, Louisiana, pursuant to franchise 
agreements entered into or assumed by the Joint Venture.  The soft drink 
products distributed by the Joint Venture are supplied by the Company.  The 
Joint Venture distributes beer in greater New Orleans, pursuant to 
distributor agreements entered into by the Joint Venture.  See " - Products" 
and "Certain Relationships and Related Transactions - Joint Venture."

     The day to day operations of the Joint Venture are managed by the 
Company in its role as Managing Venturer. As Managing Venturer, the Company 
has the authority to make capital expenditures to maintain and replace 
facilities to meet the anticipated needs of the Joint Venture. The business 
and affairs of the Joint Venture are subject to the governance of a four 
member Management Committee, of which two members are designated by the 
Company and two members are designated by Poydras. The Company has a 62.0% 
interest in the Joint Venture. Poydras has the remaining 38.0% interest. 
Profits and losses of the Joint Venture are distributed based on the parties' 
interests in the Joint Venture.

     Under the terms of the Joint Venture Agreement, the Company may elect, 
as of December 31, 1999, to purchase Poydras' ownership interest at a price 
equal to 38.0% of the fair market value of the Joint Venture. Poydras may 
elect to defer the closing of any such purchase to January 2001. No similar 
feature exists for purchase of the Company's ownership interest by Poydras.

PRODUCTS

SOFT DRINKS

     The following table sets forth products of PepsiCo, Cadbury and other 
franchisors produced and/or distributed by the Company. The Company packages 
and distributes its soft drink products in one, two, three-liter and 20-ounce 
PET bottles, aluminum cans in six packs, 12-packs, 20-packs and 24-packs and 
five gallon containers.

                     PEPSICO PRODUCTS                    CADBURY PRODUCTS

                          PEPSI                              SEVEN-UP
                        PEPSI ONE                            DIET 7UP
                   CAFFEINE FREE PEPSI                      CHERRY 7UP
                        DIET PEPSI                          CANADA DRY
                 CAFFEINE FREE DIET PEPSI                  COUNTRY TIME
                    WILD CHERRY PEPSI                      CRYSTAL LIGHT
                       MOUNTAIN DEW                            CRUSH
                    DIET MOUNTAIN DEW    
                          SLICE                           OTHER PRODUCTS
                      MUG ROOT BEER      
                      LIPTON ICE TEA                      HAWAIIAN PUNCH
                       OCEAN SPRAY                         SUNNY DELIGHT
                        ALL SPORT                             NUGRAPE
                         AQUAFINA                             YOO-HOO
                       FRAPPUCCINO       

                                       10

<PAGE>

BEER

     The following table sets forth products of Miller and Heineken 
distributed by the Company. The Company distributes its beer products in 
glass bottles, aluminum cans in six packs, 12-packs and 24-packs and a 
variety of bulk draft containers.

                     MILLER PRODUCTS                       HEINEKEN PRODUCTS

                       MILLER BEER                             HEINEKEN
                       MILLER LITE                           AMSTEL LIGHT
                   MILLER GENUINE DRAFT
                     MILLER HIGH LIFE                       OTHER PRODUCTS
                    LOWENBRAU SPECIAL
                      LOWENBRAU DARK                          DIXIE BEER
                  LOWENBRAU MALT LIQUOR                    PETE'S WICKED ALE
                          MAGNUM                              SHINER BOCK
                     MILWAUKEE'S BEST
                  MILWAUKEE'S BEST LIGHT
                         SHARP'S
                         ICEHOUSE
                         LITE ICE
                         RED DOG
                      MOLSON GOLDEN
                        MOLSON ICE
                      FOSTER'S LAGER

SOFT DRINK FRANCHISES

     Under franchise agreements with PepsiCo, Cadbury and several other 
beverage companies, the Company produces and/or distributes soft drinks and 
engages in certain other marketing activities. Under the terms of the 
franchise agreements, the Company has the exclusive right to produce and 
distribute certain products of the franchisors in prescribed geographic 
areas. The Company believes that it is currently in compliance with all of 
the terms of its franchise agreements.

     The Company's franchisors are the sole owners of the secret formulae 
under which the primary component (concentrate or syrup) of various soft 
drink products bearing the franchisors' trademarks are manufactured. Each 
concentrate, when mixed with water and sweetener, produces syrup which, when 
mixed with carbonated water, produces soft drinks. Except to the extent 
reflected in the price of concentrate or syrup, no royalty or other 
compensation is paid under the franchise agreements to the franchisors for 
the right of the Company to use the franchisors' trade names and trademarks 
in its territories and the associated patents, copyrights, designs and 
labels, all of which are owned by the franchisors.

     Under the terms of its franchise agreements with PepsiCo, the Company is 
required to purchase either concentrate or syrup manufactured only by 
PepsiCo, at prices established by PepsiCo, for PepsiCo trademarked products. 
Historically, prices established by PepsiCo for its concentrates and syrups 
have been adjusted annually in accordance with changes in the Consumer Price 
Index ("CPI"). The PepsiCo franchise agreements further provide that 
suppliers of bottles and crowns for PepsiCo products must be approved by 
PepsiCo. The franchise agreements require the Company to promote vigorously 
the sale of PepsiCo products in its territory, to ensure it has adequate 
capacity to meet demand for PepsiCo products and to advertise and promote 
actively PepsiCo products in its territory at its own cost. The PepsiCo 
franchise agreements prohibit the Company from bottling, distributing or 
selling any other beverage which could be confused with Pepsi-Cola. The 
franchise agreements remain in effect for an indefinite period of time, 
subject to termination with due notice by PepsiCo upon (i) the

                                     11

<PAGE>

violation of any of the prescribed terms thereof, (ii) the insolvency of the 
Company, an assignment by the Company for the benefit of its creditors, or 
the failure of the Company to vacate the appointment of a receiver within 60 
days thereof, or (iii) the sale, disposition, change in control or transfer 
of the Company's rights pursuant to the franchise agreement without the 
written consent of PepsiCo.

     The franchise agreements relating to soft drink products from other 
significant soft drink franchisors are substantially similar to the franchise 
agreements with PepsiCo. The territories covered by the franchise agreements 
for products of other franchisors generally correspond with the territories 
covered by the franchise agreements with PepsiCo.

BEER DISTRIBUTORSHIPS

     The Company distributes Miller products and Heineken products pursuant 
to distributor agreements entered into with Miller and Heineken (the "Miller 
Agreement" and the "Heineken Agreement," respectively). Each of the 
distributor agreements gives the Company exclusive rights to distribute 
products in its territory. The Company began distribution of Miller products 
pursuant to the Miller Agreement in 1995 and began distribution of Heineken 
products pursuant to the Heineken Agreement in 1996. The Company also 
distributes a small volume of beer produced by other brewers. The distributor 
agreements relating to these beer products are substantially similar to the 
Miller and Heineken Agreements. Distribution of such beer products is not 
material to the Company's results of operations.

     Many of the terms of the Miller and Heineken Agreements are similar. 
Under these agreements, product prices to the Company are determined by the 
brewer or importer. Historically, product prices have been adjusted annually 
in accordance with changes in the CPI. The individual who manages the 
distribution of the products must be approved by the brewer or importer. Any 
sale, disposition, change in control or transfer of the Company's rights 
pursuant to the distributor agreement must receive prior approval of the 
brewer or importer. Each of the distributor agreements remains in effect for 
an indefinite period of time, however, the Company may terminate its 
distribution agreement with either Miller or Heineken upon 90 days' prior 
written notice. Moreover, Miller or Heineken may terminate the Company's 
distribution rights in the event: (i) the Company fails to comply with any of 
its commitments or obligations pursuant to the distribution agreement; (ii) 
the Company or any of its owners is convicted of a felony; (iii) the Company 
engages in fraudulent conduct or substantial misrepresentation in its 
dealings concerning the brewer's or importer's products; (iv) the Company's 
federal, state or local licenses or permits for its distribution operations 
are revoked or suspended for more than 31 days; (v) the Company becomes 
insolvent, fails to pay monies due the brewer or importer, makes an 
assignment or attempts to make an assignment for the benefit of creditors, 
institutes or has instituted against it bankruptcy proceedings, dissolves or 
liquidates; or (vi) the Company fails to undertake a good faith effort to 
cure any such noncompliance. Miller reserves the right to terminate the 
Miller Agreement upon 30 days' notice, provided it gives notice 
contemporaneously to all of the other Miller distributors in the U.S. 
Heineken reserves the right to terminate the Heineken Agreement upon 30 days' 
notice, provided it gives notice contemporaneously to all of the other 
Heineken distributors in Louisiana.

SALES AND DISTRIBUTION

     The Company's products are generally sold in advance by a salesperson 
and then delivered within 24 hours from one of the Company's distribution 
facilities to the customer. The Company recently invested in hand-held 
computer technology and other hardware and software to improve customer 
service and delivery effectiveness. Hand-held computers allow the advance 
salesperson to download all order information for each customer into the 
Company's main computer system. The orders are electronically processed for 
truck loading, route dispatching and customer invoicing. Customer files are 
controlled with the correct wholesale price and discount for each store 
keeping unit. The product is delivered by a Company employee using a 
hand-held delivery computer. The delivery is verified by both the customer 
and Company employee, and a computerized invoice is printed and presented to 
the customer. Upon completing delivery of all orders, the driver performs a 
self settlement at the

                                       12

<PAGE>


Company's distribution facility. The customer data is then transferred from 
the hand-held computer into the Company's route settlement process for 
verification.

     The Company operates a 1,300 vehicle fleet to support its sales and 
distribution operations. Maintenance and service of the fleet are provided by 
the Company.

SOFT DRINKS

     In 1998, approximately 53% of the Company's soft drink products were 
sold to supermarkets, 25% to convenience stores, gas stations and small 
grocery stores, 9% to drug stores and mass merchants, 4% to third party 
operators and full service vending accounts and 9% to other miscellaneous 
accounts.

     Soft drink sales oriented towards high-volume customers such as large 
retail chains result in economies of scale in selling and distribution 
expenses. Bulk deliveries for high-volume customers are made from the 
Company's distribution facilities to the customer's outlets via transport 
vehicles and are unloaded into the outlets in full pallet quantities. Some 
soft drink deliveries are made directly from the manufacturing plant to 
retail outlets, thereby bypassing the Company's warehouse operations. Soft 
drink sales are also made to smaller independent retail outlets where 
consumers prefer to purchase cold beverages in single packages or at fountain 
outlets. Conventional route trucks are used to make soft drink deliveries to 
the Company's smaller customers.

     The Company also makes cold soft drinks available to consumers through 
vending machines, fountain equipment and visi-coolers. Substantially all 
vending machines utilized by the Company are Company-owned and provided at no 
cost to retail outlets or third-party operators. Company-owned vending 
machines are maintained and stocked by the Company. Vending machines provided 
to retail outlets or third-party operators are maintained by the Company and 
stocked by the party operating the vending machine. Fountain equipment 
dispenses products in convenience stores, gas stations, restaurants, bars, 
theaters and other similar locations. The Company sells either premix, a 
ready-to-use product, or postmix, a syrup product, to retailers in stainless 
steel or disposable containers for use in fountain equipment. Visi-coolers 
are generally loaned by the Company to large retail outlets and convenience 
stores. The Company has an installed base of approximately 8,400 visi-coolers 
and 12,900 vending machines.

BEER

         In 1998, approximately 40% of the Company's beer products were sold to
supermarkets, 23% to on- premise channels such as restaurants and bars, 22% to
convenience stores, 8% to drug stores and mass merchants
and 7% to other miscellaneous accounts.

         The sales and distribution process for the Company's beer business is
essentially the same as for soft drinks. To maximize distribution efficiency,
beer and soft drinks are loaded and delivered on the same vehicle for
distribution and merchandising to large bulk customers. Kegs of beer for
delivery to on-premise customers are stored in a climate-controlled refrigerated
section of the Company's facilities and delivered on refrigerated route
vehicles.

MARKETING

         The Company's marketing efforts are directed towards brand 
management, key account management, promotional activities and merchandising. 
The Company believes that its marketing program allows it to compete 
effectively in its territories.

                                       13

<PAGE>

SOFT DRINKS

     Marketing programs for each of the Company's soft drink products are 
coordinated with the franchisor. Advertising campaigns are developed by the 
franchisors on the national level and by both the Company and the franchisor 
on the local level. A significant portion of the Company's promotional effort 
focuses on price discounting and allowances, newspaper advertising and 
coupons. The goal of these activities is to position the Company's brands to 
compete effectively in the marketplace and to obtain "feature" retail 
advertisements and end- aisle displays in high volume retail outlets. 
End-aisle and secondary displays are generally limited to special promotions 
and advertisements designed to stimulate sales and encourage impulse 
purchases. As a service to customers and to better merchandise its products, 
the Company builds displays in conjunction with promotional programs and for 
restocking products in grocery stores, mass merchandise outlets and 
convenience stores.

     The Company pays retail stores under annual marketing agreements for the 
right to be included in the retailer's advertising programs. Retail 
promotional programs are the Company's most significant marketing 
expenditures and are supported through cost-sharing arrangements with the 
franchisors. Other marketing expenditures are also typically supported by the 
franchisors. National media advertising is funded primarily by the 
franchisors, while local media advertising is funded through cost-sharing 
arrangements. See " - General."

BEER

     Marketing programs, national advertising and all television and radio 
advertising for the Company's beer products are provided by the brewer or 
importer. Marketing efforts by the Company to secure large accounts such as 
supermarkets and convenience stores in its territories and discount pricing 
of beer products are also generally supported by the brewer or importer.

     Promotional efforts focus on price discounting and allowances to obtain 
newspaper advertising that features value pricing to consumers supported with 
secondary displays. Cold merchandising availability is also important as over 
63% of beer in supermarkets is sold cold. On-premise sales are aggressively 
supported by both the brewer or importer and the distributor since this 
channel represents significant sampling and trial of beer products.

MANUFACTURING PROCESS

     The Company produced 42.1 million cases of soft drinks in 1998 at its 
two manufacturing facilities in Collierville, Tennessee, and Reserve, 
Louisiana. The Collierville and Reserve facilities have annual production 
capacity of 41.0 million and 33.3 million cases of beverages, respectively. 
During the peak volume months of May through August, the plants typically 
operate at approximately 63% of capacity.

     The manufacturing process consists of receiving, batching, filling and 
packaging product. Containers are received in bulk and are moved from the 
supplier's trailers to "de-palletizing" equipment which then automatically 
places the containers on conveyers that feed them to the filling equipment. 
Treated water, extract and additives are combined in large stainless steel 
tanks and mixed, or "batched," into syrup with a motorized impeller. The 
syrup is then mixed with additional purified water and carbonated. Finished 
product is then sent to the filling equipment. At the same time, containers 
arrive by conveyor and are rinsed using ionized air and vacuums to remove 
dust particles. The filling equipment fills the cleaned containers with 
finished products. The filled cans and bottles are then automatically scanned 
to test levels and cap or top placement. Cans are either placed in corrugated 
trays and fastened with plastic rings or placed in multipack cartons. Bottles 
are usually placed in boxes for stability. Each case is then automatically 
transported to a "palletizer" where it is stacked on a wooden pallet and 
shrink-wrapped to be stored before distribution.

     The Company's can lines have been modified for additional capacity as 
well as the capability to produce six pack cans and multi-pack cans 
simultaneously. The bottle lines which produce 20-ounce, one-liter and 
two-liter

                                       14

<PAGE>


bottles have on-line labeling capabilities that reduce packaging 
inventories. Moreover, the filling equipment on the Company's bottle lines 
has been upgraded with quick change parts to reduce down time for flavor 
changeovers. One-liter, two-liter, three-liter and 20-ounce PET bottle 
products have been converted to standardized deposit shells, which eliminate 
packaging costs and provide intraplant flexibility to cross ship products 
regardless of plant location.

     The Company receives all beer products from brewer or importer 
manufacturing facilities and does not itself manufacture beer products.

COMPETITION

     The beverage industry is highly competitive. The Company's products are 
sold in competition with all liquid refreshments. Sales of beverages occur in 
a variety of locations, including supermarkets, retail and convenience 
stores, restaurants and vending machines.

SOFT DRINKS

     Competitors in the soft drink industry include bottlers and distributors 
of nationally advertised and marketed products as well as chain store and 
private label soft drinks. The principal methods of competition include brand 
recognition, price and price promotion, retail space management, service to 
the retail trade, new product introductions, packaging changes, distribution 
methods and advertising. The Company's primary competitor in its territory is 
CCE. The Company believes that its flexibility and innovation in developing 
and implementing new methods of marketing, merchandising and distributing its 
products permit it to compete effectively against CCE. See " -Strategic 
Objectives."

BEER

     Competitors in the distribution of beer include distributors of 
nationally advertised and marketed products as well as regional and local 
products. The primary methods of competition include quality, taste and 
freshness of the products, price, packaging, brand recognition, retail space 
management and advertising. The Company's principal competitors in its beer 
distribution operations are distributors of Anheuser-Busch products, whose 
products accounted for 46% of total U.S. beer sales in 1998. Sales of Miller 
products in the same time period represented 21% of total U.S. beer sales. 
The Company believes it competes effectively by executing its marketing 
campaigns and product introductions effectively, maintaining price 
competitiveness and increasing presence and maximizing availability of its 
products in selected distribution channels.

RAW MATERIALS

     In addition to concentrates and syrups obtained from its franchisors, 
the Company also purchases water, carbon dioxide, fructose, PET bottles, 
aluminum cans, closures, premix containers and other packaging materials. The 
price of concentrates and syrups is determined by the franchisors, and may be 
changed at any time; however, historically these prices have been adjusted 
annually in accordance with changes in the CPI. Prices for the remaining raw 
materials are determined by the market.

     A substantial portion of the Company's raw materials, including its 
aluminum cans, closures, other packaging materials and fructose, are made 
through CPG. The Company and other franchisees or affiliates of franchisees 
of PepsiCo are members of CPG. The Company and other CPG members submit their 
raw material requirements to CPG which then negotiates with suppliers and 
makes purchases based on the combined requirements of all CPG members. The 
Company believes the magnitude of CPG's purchases gives the Company greater 
influence with suppliers than the Company could achieve on a stand alone 
basis.

                                       15

<PAGE>

GOVERNMENT REGULATION

     The production, distribution and sale of many of the Company's products 
are subject to the Federal Food, Drug and Cosmetic Act, the Occupational 
Safety and Health Act and various federal and state statutes regulating the 
franchising, production, sale, safety, advertising, labeling and ingredients 
of such products. Two ingredients in its soft drink products, saccharin and 
aspartame, are regulated by the U.S. Food and Drug Administration.

     Bills are considered from time to time in various state legislatures and 
in Congress which would prohibit the sale of beverages unless a deposit is 
made for the containers. Proposals have been introduced in certain states and 
localities that would impose a special tax on beverages sold in nonreturnable 
containers as a means of encouraging the use of returnable containers. No 
such legislation is currently in effect and, to the knowledge of management 
of the Company, none is currently under consideration in any territories 
served by the Company.

     Specific soft drink taxes have been imposed in some states for several 
years. Of the states in which the Company conducts business, Arkansas and 
Tennessee both impose specific soft drink taxes. The Company believes it is 
in compliance with all tax regulations pertaining to its operations.

     The Company's beer distribution operations are subject to extensive 
regulations by state and federal agencies of such matters as licensing 
requirements, trade and pricing practices, permitted and required labeling, 
advertising and relations with retailers. The federal government also 
requires warning labels on packaging of beer. The distribution and sale of 
beer is subject to excise taxes at both the state and federal level. The 
Company believes it is in compliance with all such regulations pertaining to 
its beer distribution operations.

     The Company's business is also subject to federal and state 
environmental laws, rules and regulations. See " - Environmental."

ENVIRONMENTAL

     The Company is subject to a variety of federal and state environmental 
laws, rules and regulations, as are other companies in the same or similar 
business. In particular, the Company is subject to regulations governing the 
installation, maintenance and use of, and the clean-up of any releases from, 
underground storage tanks and the generation, treatment, storage and disposal 
of hazardous materials. The Company believes it is in substantial compliance 
with such laws, rules and regulations; however, these laws, rules and 
regulations change from time to time, and such changes may affect the ongoing 
business and operations of the Company. From time to time, the Company has 
received, and in the future may receive, requests from environmental 
regulatory authorities to provide information or to conduct investigative or 
remediation activities with respect to its facilities. None of these requests 
is expected by management to have a material adverse effect on the Company's 
business.

     In connection with the maintenance and service of its 1,300 vehicle 
fleet, the Company generates hazardous wastes, which are either transported 
off-site by licensed haulers to permitted disposal facilities or recycled by 
vendors as mandated by federal and state law. Some of the Company's 
facilities have underground storage tanks which meet U.S. Environmental 
Protection Agency and state standards. Other facilities have above-ground 
storage tanks which are owned and maintained by petroleum vendors.

EMPLOYEES AND EMPLOYEE BENEFITS

     At December 31, 1998, the Company had approximately 1,760 full-time 
employees and 50 part-time employees. Approximately 145 of the Company's 
employees at its Collierville, Tennessee, facility are represented by the 
International Brotherhood of Teamsters Local Union No. 1196 pursuant to two 
labor contracts. The first contract expires in September 2000 and 
automatically extends for one-year terms thereafter unless written notice is 
provided by either party to the other at least 60 days prior to expiration of 
the contract. The second contract expires in December 1999. Approximately 160 
of the Company's employees at its Harahan, Louisiana, facility

                                       16

<PAGE>

are represented by the International Brotherhood of Teamsters, AFL-CIO, 
General Truck Drivers, Chauffeurs, Warehousemen and Helpers Local 270 
pursuant to two labor contracts. The first contract expires in March 1999. 
The second contract expires in December 1999. The Company has not experienced 
any labor disputes and believes relations with its employees are satisfactory.

     The Company makes a variety of benefits available to its employees. In 
particular, the Company sponsors a tax-qualified 401(k) plan that permits 
eligible employees to defer a portion of their salary on a tax-deferred basis 
and receive a 50% Company matching contribution that is capped at $1,000 per 
employee. In addition, the Company sponsors welfare benefits programs that 
provide health, dental, life and accidental death and dismemberment insurance 
coverage to substantially all employees. The Company does not presently 
maintain, or contribute to, any defined benefit pension plans or 
multiemployer pension plans. The Company also provides additional benefits to 
its executive employees. These plans provide bonus, incentive and deferred 
compensation to eligible executive employees. See "Executive Compensation."

                                       17

<PAGE>

ITEM 2  PROPERTIES

     The Company currently bottles and cans soft drink products in two 
production facilities, a 110,000 square foot production facility adjacent to 
an 89,000 square foot warehouse facility in Collierville, Tennessee (located 
outside Memphis, Tennessee), and a 120,000 square foot production facility in 
Reserve, Louisiana (located outside New Orleans, Louisiana). The Company 
believes that its production facilities will be sufficient to meet 
anticipated production needs for the foreseeable future.

     The Company's headquarters are located in Memphis, Tennessee. The 
headquarters facilities are leased. As of December 31, 1998, the Company also 
operated 24 warehouse distribution facilities from which it conducts its 
sales, delivery and vending operations. The Company owned 15 of the warehouse 
distribution facilities and leased the remaining 9 facilities. The locations 
of the warehouse distribution facilities are as follows:

      OWNED FACILITIES                     LEASED FACILITIES
--------------------------           ---------------------------
Batesville, Arkansas                 Forrest City, Arkansas
Camden, Arkansas                     Alexandria, Louisiana
Hot Springs, Arkansas                Baton Rouge, Louisiana
Jonesboro, Arkansas                  Shreveport, Louisiana
Little Rock, Arkansas                Columbus, Mississippi
Monticello, Arkansas                 Kosciusko, Mississippi
Harahan, Louisiana                   Jackson, Tennessee
Leesville, Louisiana                 Covington, Louisiana
Monroe, Louisiana                    Corinth, Mississippi
Shriever, Louisiana (1)
Batesville, Mississippi
Greenville, Mississippi
Tupelo, Mississippi
Collierville, Tennessee
Texarkana, Texas

-----------------
(1) This facility is owned by the Company and leased to the Joint Venture.

ITEM 3  LEGAL PROCEEDINGS

     In August, 1993, the Company was named in a suit filed in the District 
Court of Morris County, Texas by a number of bottlers in parts of the 
Company's territories. Additional defendants named in the suit include 
PepsiCo, Inc., Pepsi-Cola Company, Coca-Cola, CCE and others. The suit 
alleges that the defendants engaged in unfair trade practices and conspired 
to monopolize the soft drink industry in eastern Texas, Louisiana and 
Arkansas. The Company intends to defend itself fully in this action.

     From time to time, the Company is involved in various other legal 
proceedings arising in the ordinary course of business. The Company believes 
ultimate resolution of such litigation will not have a material adverse 
effect on the Company's business, financial condition or results of 
operations.

ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matter was submitted to a vote of security holders through the 
solicitation of proxies or otherwise during the fourth quarter of the 
Company's most recently completed fiscal year.

                                        18

<PAGE>

                                      PART II

ITEM 5  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     There is no established public trading market for the Company's Common 
Stock. The Company's Common Stock is not registered under Section 12(b) or 
Section 12(g) of the Securities Exchange Act of 1934, as amended.






                                       19

<PAGE>


ITEM 6  SELECTED FINANCIAL DATA

     The following table presents selected financial data of the Company and 
consolidated Joint Venture as of and for each of the five years ended 
December 31, 1994, 1995, 1996, 1997 and 1998. The information presented for 
each of the five years ended December 31 has been derived from the 
consolidated financial statements of the Company, which statements have been 
audited by Arthur Andersen LLP, independent public accountants. The following 
information should be read in conjunction with "Management's Discussion and 
Analysis of Financial Condition and Results of Operations" and the 
consolidated financial statements of the Company and notes thereto included 
elsewhere in this Annual Report.

<TABLE>
<CAPTION>

                                                               Years Ended December 31
                                       ---------------------------------------------------------------------
                                          1994            1995             1996          1997         1998
                                       ----------      ----------      ----------     ---------     --------
                                                        (DOLLARS IN THOUSANDS)
<S>                                  <C>            <C>              <C>          <C>            <C>
STATEMENT OF OPERATIONS DATA:
  Net sales.........................  $   245,472    $   284,709     $   312,284   $   323,221   $   352,085
  Cost of sales.....................      162,667        198,777         215,085       216,560       245,683
                                          -------        -------         -------       -------       -------
  Gross profit......................       82,805         85,932          97,199       106,661       106,402
  Selling, general and
     administrative expenses........       62,710         71,802          76,883        83,344        87,019
  Amortization of franchise costs
     and other intangibles..........        3,631          3,576           3,664         3,648         3,648
                                          -------        -------         -------       -------       -------
  Income from operations............       16,464         10,554          16,652        19,669        15,735
  Interest expense .................       12,152         13,254          15,094        17,865        18,770
  Other expenses (income)...........          (45)            75             620           (32)          175
                                          -------        -------         -------       -------       -------
  Income (loss) before income taxes.        4,357         (2,775)            938         1,836        (3,210)
  Income tax expense(1).............       (3,262)        (1,641)         (1,745)       (2,040)         (436)
  Minority interest in Joint Venture(2)          -           464              48            65           335
                                       -----------      --------       ---------            --           ---
  Income (loss) before
     non-recurring items............        1,095         (3,952)           (759)         (139)       (3,311)
  Non-recurring items(3)............            -              -          (1,519)            -             -
                                                -              -          ------             -             -
                                          -------        -------         -------       -------       -------
  Net income (loss).................  $     1,095    $    (3,952)    $    (2,278)  $      (139)  $    (3,311)
                                          -------        -------         -------       -------       -------
                                          -------        -------         -------       -------       -------
BALANCE SHEET DATA (AT END OF PERIOD):
  Working capital(4)................  $    30,421    $    27,547     $    23,698   $    35,404   $    32,507
  Total assets......................      244,705        248,437         255,327       260,914       271,652
  Long-term debt(5):
     Senior debt....................      106,000        117,250         120,000       120,000       125,600
     Subordinated notes payable.....       31,650         35,227          39,209        43,640        48,573
     Other..........................        6,579          5,673           5,067         6,764         6,557
  Stockholders' equity..............       66,660         62,718          60,449        60,317        57,010

OTHER DATA:
  EBITDA(6).........................  $    25,594    $    20,730     $    26,248   $    30,855   $    29,870
  Depreciation and amortization.....        9,085          9,687          10,314        11,441        13,938
  Capital expenditures..............        7,104         10,726           8,964        14,988        14,885

</TABLE>

--------------
(1)  The effective income tax rate is significantly impacted by the non-tax
     deductibility of amortization of franchise
     costs.
(2)  Represents minority interest in the net income (loss) of the Joint 
     Venture which is consolidated with the Company.
(3)  For the year ended December 31, 1996, includes an extraordinary item, (loss
     on extinguishment of debt) of
     $2,472, net of income tax benefit of $953.
(4)  Working capital represents current assets (excluding cash and cash
     equivalents) less current liabilities (excluding current maturities of
     long-term debt and other long-term liabilities).
(5) Includes current maturities of long-term debt.

                                        20

<PAGE>

(6)  EBITDA consists of net income (loss) before income taxes, interest,
     depreciation and amortization. EBITDA also excludes extraordinary items and
     accounting changes. EBITDA has also been adjusted for Poydras' interest in
     the Joint Venture. EBITDA is included herein to provide additional
     information about the Company's ability to service its debt. EBITDA should
     not be considered as an alternative measure of the Company's net income,
     operating income, cash flow from operating activities or liquidity.

ITEM 7  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

RESULTS OF OPERATIONS

GENERAL

     Delta Beverage Group, Inc., a Delaware corporation, was acquired by its 
current owners in March 1988 in a highly leveraged transaction which was 
premised on a turnaround of operations and expansion of business 
opportunities. The results of operations started to reflect a significant 
turnaround in 1990 when the current senior management group took office. The 
Company has accomplished a number of business combinations since 1988, the 
most significant of which have been (i) combining in 1992 its PepsiCo based 
sales operation in southern Louisiana with a Seven-Up based sales operation 
in the same territory through a joint venture in which the Company is 
majority owner and managing venturer and (ii) acquiring in April 1995 the 
distribution rights for Miller products in a significant portion of the joint 
venture territory.

     In September 1993, the Company issued the 1993 Senior Notes (the "1993 
Senior Notes"), the Subordinated Notes and other equity to refinance the debt 
incurred in 1988. As a result, the Company's interest expense burden was 
substantially reduced. However, effective in May 1996, the interest rate on 
the 1993 Senior Notes was adjusted as part of obtaining covenant waivers 
necessitated by the down-turn in operating results in 1995. The Company fully 
repaid the 1993 Senior Notes in December 1996 with proceeds received from the 
issuance of the new Senior Notes (the "Notes").

     As is typical of acquisitions in the beverage industry, the Company's 
balance sheet reflects significant allocation of purchase price to the cost 
of franchise rights in excess of net assets acquired ($112.6 million and 
$109.0 million, each net of accumulated amortization, at December 31, 1997 
and December 31, 1998, respectively). Amortization of the cost of (i) 
franchises, (ii) obtaining financing and (iii) non-compete agreements from 
former owners constitutes a significant non-cash charge to operations.

     The Company accumulated significant tax-basis net operating loss 
carryforwards (NOL's) during the turnaround period prior to the 1993 
recapitalization. Management believes the NOL's will be utilized before their 
expiration to offset future income otherwise taxable. A deferred income tax 
asset representing the income tax benefit to be realized through future 
utilization of the NOL's was recorded on the Company's balance sheet in 1993 
following the recapitalization.  Provision for income taxes related to the 
results of operations for years subsequent to and including 1993 are 
substantially offset against the deferred income tax asset and thus are 
effectively a non-cash charge to operations.

     The Company's primary measurement of unit volume is franchise case sales 
which are case-sized quantities of the various packages in which products are 
produced. Franchise case sales refers to physical cases of beverages sold. 
The Company also sells premix or draft products (ready-to-serve beverages 
which are sold in tanks or kegs) and postmix products (fountain syrups to 
which carbonated water must be added). Premix and postmix products, while 
effectively containing the identical beverages as packaged product, are not 
included in case sales measurements as they are not the primary focus of the 
Company's selling efforts.

     The Company's primary source of revenue is franchise case sales which 
are sales of the Company's branded products directly to retailers whether of 
package, premix or postmix configuration. Another source of

                                       21

<PAGE>

revenue is contract sales which are sales, primarily of products in cans, to 
unaffiliated companies that hold soft drink franchises. Contract sales, which 
historically represent approximately 10.0% of total net sales, may fluctuate 
from year to year, and are made at relatively low prices and gross profit 
margins due to the competition for such sales, and are not a primary focus of 
management in determining the Company's business strategy. As a result, 
management believes that changes in franchise case sales more accurately 
measure growth than changes in total net sales.

     THIS DISCUSSION AND ANALYSIS CONTAINS CERTAIN FORWARD-LOOKING 
TERMINOLOGY SUCH AS "BELIEVES," "ANTICIPATES," "EXPECTS," AND "INTENDS," OR 
COMPARABLE TERMINOLOGY. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND 
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE 
PROJECTED. HOLDERS AND POTENTIAL PURCHASERS OF THE COMPANY'S SECURITIES ARE 
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS 
WHICH ARE QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONS AND RISKS DESCRIBED 
HEREIN.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

     Net sales, excluding contract net sales, for the year ended December 31, 
1998 increased by 3.7% to $307.2 million compared to $296.1 million for the 
same period in 1997. The increase was due primarily to a 4.5% increase in 
franchise case sales, of which (i) 4.0% was attributable to increased sales 
of the Company's soft drink products including an increase in average unit 
selling price of 0.7% and (ii) 0.5% was attributable to increased sales of 
the Company's beer products including a 1.2% increase in average unit selling 
prices. The majority of the increase in soft drink franchise case sales came 
in single-serve packages and also in take home soft drinks. Pricing for soft 
drink packages overall in 1998 was relatively consistent with the prior year 
although the pricing effect of a greater proportion of sales of single-serve 
packages was offset by moderate decreases in pricing of take-home packages. 
Beer pricing increased, reflecting industry trends and an increase in the 
proportion of premium beer sales to total beer sales. Contract net sales for 
the year ended December 31, 1998 increased 55.5% compared to the same period 
in 1997 due to the addition of bottled product requirements for an existing 
can product customer. As a result of the foregoing, net sales for the year 
ended December 31, 1998 increased 8.9% to $352.1 million compared to $323.2 
million for the same period in 1997.

     Cost of sales for the year ended December 31, 1998 increased to $245.7 
million compared to $216.6 million for the same period in 1997. The increase 
was due primarily to an increase in franchise case sales offset by a decrease 
in the unit prices paid by the Company for certain soft drink raw materials, 
primarily packaging materials and sweetener. In addition, the significant 
increase in the contract packaging business had the effect of reducing 
average unit cost of sales by spreading fixed manufacturing costs over a 
greater volume. As a percentage of net sales, cost of sales for the year 
ended December 31, 1998 increased to 69.8% compared to 67.0% for the same 
period in 1997 due primarily to the effect of the substantial increase in 
contract net sales. As a result of the foregoing, gross profit for the year 
ended December 31, 1998 was $106.4 million compared to $106.7 million for the 
same period in 1997.

     Selling, general and administrative expenses for the year ended December 
31, 1998 increased to $87.0 million compared to $83.3 million for the same 
period in 1997. Selling, general and administrative expenses are comprised of 
selling, distribution and warehousing expenses ("S&D"), advertising and 
marketing expenses ("A&M"), and general and administrative expenses ("G&A"). 
All categories grew at a rate consistent with franchise case sales growth. 
Thus, the effect of leveraging fixed costs against higher unit volumes was 
partially offset by increases in S&D due to expenses related to and the 
placement of equipment dedicated to single-serve packages of soft drinks.

     As a result of the above factors, income from operations for the year 
ended December 31, 1998 decreased to $15.7 million, or 4.5% of net sales, 
compared to $19.7 million, or 6.1% of net sales, for the same period in 1997.

     Interest expense for the year ended December 31, 1998 increased to
$18.8 million from $17.9 million for

                                      22

<PAGE>


the same period in 1997. The increase was due primarily to higher utilization 
of the Company's credit facility and the effect of payment in kind of 
interest on the subordinated debt.

     As a result of the above factors, the Company realized a loss before 
income taxes and minority interest of ($3.2) million for the year ended 
December 31, 1998 compared to income of $1.8 million for the same period in 
1997.

     The Company's effective income tax rate differs from statutory rates 
primarily due to the non-tax deductibility of franchise cost amortization.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

     Net sales, excluding contract net sales, for the year ended December 31, 
1997 increased by 3.0% to $296.1 million compared to $287.4 million for the 
same period in 1996. The increase was due primarily to a 2.6% increase in 
franchise case sales, of which (i) 2.5% was attributable to increased sales 
of the Company's soft drink products accompanied by an increase in average 
unit selling price of 0.2% and (ii) 0.1% was attributable to increased sales 
of the Company's beer products accompanied by a 2.0% increase in average unit 
selling prices. The majority of the increase in soft drink franchise case 
sales came in single-serve packages, although unit volume of take home soft 
drink and beer packages also increased. Pricing for soft drink packages 
overall was relatively consistent with the same period of the prior year 
although the pricing effect of a greater proportion of sales of single-serve 
packages was offset by moderate decreases in pricing of take-home packages. 
Beer pricing increased, reflecting industry trends and an increase in the 
proportion of premium beer sales to total beer sales. Contract net sales for 
the year ended December 31, 1997 increased 8.9% compared to the same period 
in 1996. As a result of the foregoing, net sales for the year ended December 
31, 1997 increased 3.5% to $323.2 million compared to $312.3 million for the 
same period in 1996.

     Cost of sales for the year ended December 31, 1997 increased to $216.6 
million compared to $215.1 million for the same period in 1996. The increase 
was due primarily to an increase in franchise case sales offset by a decrease 
in the unit prices paid by the Company for certain soft drink raw materials, 
primarily packaging materials and sweetener. In addition, the significant 
increase in the contract packaging business had the effect of reducing 
average unit cost of sales by spreading fixed manufacturing costs over a 
greater volume. As a percentage of net sales, cost of sales for the year 
ended December 31, 1997 decreased to 67.0% compared to 68.9% for the same 
period in 1996. The improved margin associated with single-serve packages of 
soft drinks and premium beer brands and increased franchise case sales 
resulted in gross profit for the year ended December 31, 1997 of $106.7 
million or 9.8% greater than the gross profit of $97.2 million for the same 
period in 1996.

     Selling, general and administrative expenses for the year ended December 
31, 1997 increased to $83.3 million compared to $76.9 million for the same 
period in 1996. All categories grew at a rate consistent with sales growth, 
reflecting the effect of leveraging fixed costs against higher unit volumes, 
partially offset by increases in S&D due to expenses related to and placement 
of equipment dedicated to single-serve packages of soft drinks. In addition, 
the increase reflected increases in G&A due to provisions for incentive 
compensation plans based on the attainment of targeted performance. The level 
of expenditure for such incentives in 1997 exceeded comparable expenditures 
during 1996 by approximately $2.3 million.

     As a result of the above factors, income from operations for the year 
ended December 31, 1997 increased to $19.7 million, or 6.1% of net sales, 
compared to $16.7 million, or 5.3% of net sales, for the same period in 1996. 

     Interest expense for the year ended December 31, 1997 increased to $17.9 
million from $15.1 million for the same period in 1996. The increase was due 
to the higher interest rates associated with the December 1996 refinancing of 
the Company's senior debt and the effect of payment in kind of interest on 
the subordinated debt. The total debt service requirements of the Company 
have been reduced through elimination of current principal payments on senior 
indebtedness.

                                     23

<PAGE>

     As a result of the above factors, the Company generated income before 
income taxes and minority interest of $1.8 million for the year ended 
December 31, 1997 compared to $0.9 million for the same period in 1996.

     The Company's effective income tax rate differs from statutory rates 
primarily due to the non-tax deductibility of franchise cost amortization.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

     The Company is highly leveraged, although there are no significant 
reductions in debt scheduled before December 2003. The Company's principal 
use of funds until 2003 will be the payment of interest and investment in 
capital assets and strategic acquisitions. It is expected that the Company's 
primary sources of funds for its future activities will be operations. While 
the Company does not currently anticipate utilizing the funds available under 
its Credit Agreement for other than seasonal working capital requirements, 
such funds may be used to augment operating cash flow. Pursuant to the Credit 
Agreement, the Company has a borrowing capacity of up to $30.0 million, 
including $10.0 million available for the issuance of letters of credit. At 
December 31, 1998, letters of credit of $8.5 million had been issued and 
$5.6 million had been drawn on the Credit Agreement. The credit facility will 
mature in 2001.

     The Company had cash of $3.8 million and working capital of $32.5 
million at December 31, 1998, compared to cash of $4.7 million and working 
capital of $35.4 million at December 31, 1997. Working capital represents 
current assets (excluding cash and cash equivalents) less current liabilities 
(excluding advances under the Credit Agreement and current maturities of 
long-term debt and other liabilities).

     The $0.9 million decrease in cash from December 31, 1997 to December 31, 
1998 resulted from net cash provided by operations of $17.0 million less cash 
used in investing activities of $22.6 million plus cash provided by financing 
activities of $4.7 million during the year. The cash provided by operations 
in 1998 was $6.9 million greater than provided in 1997 due principally to a 
reversal in the growth of working capital. In 1997, working capital grew 
$10.2 million and in 1998 decreased by $0.6 million primarily due to changes 
in inventory and current liabilities.

     Cash used in investing activities of $22.6 million in the year ended 
December 31, 1998 was a $6.4 million increase over the cash used during 1997. 
Cash used in investing activities included capital expenditures of $14.9 
million in the year ended December 31, 1998, a $0.1 million decrease from
1997, and included $7.5 million used for expenditures to secure long-term 
marketing relationships.

     Financing activities in the year ended December 31, 1998 provided $4.7 
million in net cash which represented a $6.2 million increase over the $1.5 
million in net cash used in the same period in 1997. This increase in net 
cash provided resulted primarily from net credit agreement advances of 
approximately $5.6 million.

     Management believes that the Company's production facilities will be 
sufficient to meet anticipated unit growth for the next several years. 
Accordingly, management anticipates the capital expenditures in respect of 
such facilities will consist of expenditures to maintain operating 
efficiency. Capital expenditures will be required primarily for the Company's 
automobile and truck fleet, vending machines, and routine plant, bottling, 
and canning equipment additions or maintenance. During the years ended 
December 31, 1998 and 1997, capital expenditures totaled $14.9 million and 
$15.0 million, respectively. The Company anticipates that capital expenditures 
will be reduced in fiscal year 1999.

     Based on the Company's anticipated operating results, management 
believes that the Company's future operating activities will generate 
sufficient cash flows to repay borrowings under the Credit Agreement as they 
become due and payable. However, based on such anticipated operating results, 
management does not expect that the Company's future operating activities 
will generate sufficient cash flows to repay in their entirety its $120.0 
million of Notes payable at their maturity on December 15, 2003. While 
management believes that the Company

                                       24

<PAGE>

will be able to refinance the Notes at or prior to their maturity, or raise 
sufficient funds through equity or assets sales to repay such indebtedness, 
or effect a combination of the foregoing, there can be no assurance that it 
will be able to do so.

     The Company has Subordinated Notes payable with a balance of $48.6 
million at December 31, 1998 and which mature on December 23, 2003. However 
the maturity of the Subordinated Notes can be extended to December 23, 2004 
and then to December 23, 2005 if any debt incurred to refinance the 1993 
Senior Notes is then outstanding. The Subordinated Notes have an interest 
rate of 11.0% which can be paid under certain conditions with additional 
Subordinated Notes ("PIK Notes"). Management expects those conditions will 
exist at least until June 1999 and that it will make payments of interest in 
PIK Notes to conserve cash. Management does not expect that the Company's 
future operating activities will generate sufficient cash flows to repay the 
Subordinated Notes at their maturity. While management believes that the 
Company will be able to refinance the Subordinated Notes, including any PIK 
Notes, at or prior to their maturity, or raise sufficient funds through 
equity or asset sales to repay such indebtedness, or effect a combination of 
the foregoing, there can be no assurance that it will be able to do so.

YEAR 2000 READINESS DISCLOSURE

     The term "Year 2000" is used to describe general problems that may 
result from improper processing of dates and date-sensitive calculations by 
computers or other machinery as the year 2000 is approached and reached. This 
problem stems from the fact that many of the world's computer hardware and 
software applications have historically used only the last two digits to 
refer to a year. As a result, many of these computer programs do not or will 
not properly recognize a year that begins with "20" instead of the familiar 
"19." If not corrected, many computer applications could fail or create 
erroneous results.

     The risks from this date change are both internal and external and can 
potentially affect the Company's production, distribution and administrative 
systems and the Company's customers, suppliers of raw materials, utilities 
and distribution services. Year 2000 related problems could prevent customers 
from accepting deliveries from the Company or processing payments for 
amounts due to the Company. Suppliers may be prevented from producing and 
supplying goods or services essential to the Company's business.

STATE OF READINESS

     The Company is currently in the process of evaluating its information 
technology ("IT") systems for Year 2000 compliance. PepsiCo has distributed 
to its franchisees its Year 2000 compliance plan, which the Company has used 
as a framework for the development and implementation of its own Year 2000 
compliance. The Company is also in the process of assessing its non-IT 
systems (i.e. embedded technology such as microprocessors in manufacturing 
and other equipment). The Company plans to complete its assessment by April 
15, 1999 and will then determine the best approach for remedying any 
non-compliant system.

     The Company uses outside vendors to supply its most significant data 
processing software. These vendors have indicated their products are Year 
2000 compliant or will be Year 2000 compliant in the near future. The Company 
also relies on third party suppliers for raw materials. The Company is in the 
process of contacting each of its critical suppliers to assess the readiness 
of such suppliers and to determine the extent to which the Company may be 
vulnerable to such parties' failure to resolve their own Year 2000 issues. 
This effort is expected to be completed by June 30, 1999.

COSTS TO ADDRESS YEAR 2000 ISSUES

     The Company does not expect the cost of becoming Year 2000 compliant to 
be material to its consolidated financial condition or results of operations. 
This is due, in part, to the Company's recent significant upgrades to its 
data communication network and key data processing hardware, all of which are 
Year 2000 compliant.

                                       25

<PAGE>

RISKS OF YEAR 2000 ISSUES

     The Company recognizes that Year 2000 issues constitute a material known 
uncertainty. The Company also recognizes the importance of ensuring that Year 
2000 issues will not adversely affect its operations. The Company believes 
that the processes described above will be effective to manage the risks 
associated with the problem. However, there can be no assurance that the 
processes can be completed on the timetable described above or that 
remediation will be fully effective. The failure to identify and remediate 
Year 2000 issues, or the failure of key vendors, suppliers or other critical 
third parties who do business with the Company to timely remediate their Year 
2000 issues could cause an interruption in the business operations of the 
Company. At this time, however, the Company does not possess information 
necessary to estimate the overall potential financial impact of Year 2000 
compliance issues.        

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

CONTINGENCY PLANS

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

INFLATION

     There was no significant impact on the Company's operations as a result 
of inflation during the fiscal year ended December 31, 1998, or during the 
years ended December 31, 1997 or 1996.

                                        26

<PAGE>


ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

DISCLOSURES ABOUT MARKET RISK

     The Company uses financial instruments, including fixed and variable 
rate debt, to finance operations, for capital expenditures and for general 
corporate purposes. The Company's exposure to market risk for changes in 
interest rates relates primarily to short and long term debt obligations. The 
Company does not use derivative financial instruments or engage in trading 
activities.

     The table below summarizes the principal cash flows of the Company's 
financial instruments outstanding at December 31, 1998, categorized by the 
type of instrument and year of maturity.

(Dollars in thousands)

<TABLE>
<CAPTION>                                                                                           There-                    Fair
                                  1999         2000        2001        2002           2003         after        Total         Value
                                  -----        ----        ----        ----           ----         -------      -----         -----
<S>                             <C>          <C>         <C>        <C>          <C>              <C>         <C>           <C>
Cash and cash equivalents-
  Deposit and money market
   accounts                      $  3,818    $     -     $    -     $     -      $       -        $     -     $    3,818    $  3,818

Long term debt-
  Senior notes payable (interest
   at 9.75%)                          --          --         --          --        120,000             --        120,000     123,501
  Subordinated notes payable
    (interest at 11%)                 --          --          -          --         48,573             --         48,573      51,702

Revolving line of credit-
  Swing line facility (7%
   average interest rate)             --          --      2,500          --             --             --          2,500       2,500
  All other (10.8% average
   interest rate)                     --          --      3,100          --             --             --          3,100       3,100

Other current and long term debt      240        154         34           --            --          6,129          6,557       6,557

</TABLE>


                                         27

<PAGE>


ITEM 8  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>

                            INDEX TO FINANCIAL STATEMENTS

DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY                                         PAGE
-----------------------------------------                                         ----
<S>                                                                               <C>
AUDITED FINANCIAL STATEMENTS
     Report of Independent Public Accountants...................................    29
     Consolidated Balance Sheets as of December 31, 1997 AND 1998...............    30
     Consolidated Statements of Operations for the years ended
     December 31, 1996, 1997 AND 1998...........................................    32
     Consolidated Statements of Stockholders' Equity for the years ended
     December 31, 1996, 1997 AND 1998...........................................    33
     Consolidated Statements of Cash Flows for the years ended
     December 31, 1996, 1997 AND 1998...........................................    34
     Notes to Consolidated Financial Statements.................................    35

</TABLE>



                                       28

<PAGE>


                        REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


TO Delta Beverage Group, Inc.:

We have audited the accompanying consolidated balance sheets of DELTA 
BEVERAGE GROUP, INC. (a Delaware corporation) and subsidiary as of December 
31, 1997 and 1998, and the related consolidated statements of operations, 
stockholders' equity and cash flows for each of the years in the three year 
period ended December 31, 1998. These financial statements are the 
responsibility of the company's management.  Our responsibility is to express 
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Delta Beverage Group, Inc. 
and subsidiary as of December 31, 1997 and 1998, and the results of their 
operations and their cash flows for each of the years in the three year 
period ended December 31, 1998, in conformity with generally accepted 
accounting principles.

                                                    /S/ ARTHUR ANDERSEN LLP


Memphis, Tennessee,
March 2, 1999.






                                       29

<PAGE>


                   DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS
                                AS OF DECEMBER 31

                              (Dollars in thousands)
<TABLE>
<CAPTION>

                                 ASSETS                    1997          1998   
                                 ------                -----------   -----------
<S>                                                   <C>            <C>
CURRENT ASSETS:
    Cash and cash equivalents                         $    4,680     $    3,818
    Receivables, net of allowance for doubtful
      accounts of $562 and $597
         Trade                                            19,644         24,201
         Marketing and advertising                         7,228          7,407
         Other                                             2,924          2,715
    Inventories, at cost                                  18,153         16,149
    Shells, tanks and pallets                              6,340          6,378
    Prepaid expenses and other                               986          1,783
    Deferred income taxes                                  5,747          4,186
                                                          ------         ------
              Total current assets                        65,702         66,637
                                                          ------         ------


PROPERTY AND EQUIPMENT:
    Land                                                   4,639           4,662
    Buildings and improvements                            16,286          18,732
    Machinery and equipment                               90,211          94,621
                                                          ------         -------
                                                         111,136         118,015
    Less accumulated depreciation and amortization       (55,880)        (56,476)
                                                         -------         -------
                                                          55,256          61,539
                                                         -------         -------


OTHER ASSETS:
    Cost of franchises in excess of net assets
      acquired, net of accumulated amortization
      of $50,652 and $54,300                             112,634         108,992
    Deferred income taxes                                 19,481          21,071
    Deferred financing costs and other                     7,841          13,413
                                                         -------         -------
                                                         139,956         143,476
                                                         -------         -------
                                                        $260,914      $  271,652
                                                         -------         -------
                                                         -------         -------

</TABLE>

            The accompanying notes are an integral part of these statements.


                                       30

<PAGE>

                                     DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
                                      CONSOLIDATED BALANCE SHEETS (CONTINUED)
                                                 AS OF DECEMBER 31

                                     (Dollars in thousands, except share data)

<TABLE>
<CAPTION>

               LIABILITIES AND STOCKHOLDERS' EQUITY                            1997                    1998    
               ------------------------------------                        -----------            -------------
<S>                                                                        <C>                    <C>
CURRENT LIABILITIES:
    Current maturities of long-term debt and other liabilities              $      215              $    240
    Accounts payable                                                             9,530                14,038
    Accrued liabilities                                                         16,088                16,274
                                                                            ----------              --------
       Total current liabilities                                                25,833                30,552
                                                                            ----------              --------

LONG-TERM DEBT AND OTHER LIABILITIES                                           170,189               180,490

MINORITY INTEREST                                                                4,575                 3,600

COMMITMENTS AND CONTINGENCIES (Notes 9 and 12)

STOCKHOLDERS' EQUITY:
    Preferred stock-
       Series AA, $5,000 stated value, 30,000 shares authorized, 5,802.77 and
          6,158.84 shares issued and
          outstanding                                                           29,014                30,794
    Common stock-
       Voting, $.01 par value, 60,000 shares authorized,
          20,301.87 shares issued and outstanding                                    -                     -
       Nonvoting, $.01 par value, 35,000 shares authorized,
          32,949.93 shares issued and outstanding                                    -                     -
    Additional paid-in capital                                                 115,765               115,765
    Accumulated deficit                                                       (84,456)              (89,547)
    Deferred compensation                                                          (6)                   (2)
                                                                            ----------              --------
                                                                                60,317                57,010
                                                                            ----------              --------
                                                                              $260,914              $271,652
                                                                            ----------              --------
                                                                            ----------              --------
</TABLE>
              The accompanying notes are an integral part of these statements.


                                       31

<PAGE>

                                     DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                          FOR THE YEARS ENDED DECEMBER 31

                                              (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                  1996              1997             1998    
                                                               ------------      ------------     ------------
<S>                                                            <C>               <C>              <C>
OPERATIONS:
    Net sales                                                     $312,284        $  323,221      $   352,085
    Cost of sales                                                  215,085           216,560          245,683
                                                                 ---------        -----------     ------------
       Gross profit                                                 97,199           106,661          106,402

    Selling, general and administrative expenses                    76,883            83,344           87,019
    Amortization of franchise costs and other intangibles            3,664             3,648            3,648
                                                                 ---------        -----------     ------------
       Operating income                                             16,652            19,669           15,735
                                                                 ---------        -----------     ------------

OTHER EXPENSES (INCOME):
    Interest                                                        15,094            17,865           18,770
    Other, net                                                         620               (32)             175
                                                                 ---------        -----------     ------------
                                                                    15,714            17,833           18,945
                                                                 ---------        -----------     ------------

INCOME (LOSS) BEFORE INCOME TAXES,
    MINORITY INTEREST AND EXTRAORDINARY
    ITEM                                                               938             1,836           (3,210)

    Income tax provision                                            (1,745)           (2,040)            (436)
    Minority interest, net of taxes                                     48                65              335
                                                                 ---------        -----------     ------------

LOSS BEFORE EXTRAORDINARY ITEM                                        (759)             (139)          (3,311)

    Extraordinary item - loss on extinguishment
       of debt, net of income tax benefit of $953                   (1,519)                -                -
                                                                 ---------        -----------     ------------

NET LOSS                                                        $   (2,278)       $     (139)     $    (3,311)
                                                                 ---------        -----------     ------------
                                                                 ---------        -----------     ------------

</TABLE>
        The accompanying notes are an integral part of these statements.

                                       32

<PAGE>


                    DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                           Preferred Stock                            Common Stock
                                       ----------------------     ---------------------------------------------------
                                             Series AA                    Voting                      Nonvoting
                                       ----------------------     ---------------------        ----------------------
                                        Number                      Number                       Number              
                                       of Shares      Amount      of Shares      Amount        of Shares       Amount
                                       ---------     --------     ----------     -------       ---------       ------
                                       <S>           <C>          <C>            <C>           <C>             <C>   
                                                                                                                     
                                                                                                                     
BALANCE AT DECEMBER 31, 1995           5,151.18      $25,756      20,301.87      $  --         32,949.93       $ --  
                                                                                                                     
     Preferred stock dividends           316.09        1,580         --             --             --            --  
                                                                                                                     
     Recognition of expense under                                                                                    
       deferred compensation plan          --            --          --             --             --            --  
                                                                                                                     
     Net loss                              --            --          --             --             --            --  
                                       ---------     --------     ----------     -------       ---------       ------
                                                                                                                     
BALANCE AT DECEMBER 31, 1996           5,467.27       27,336      20,301.87         --         32,949.93         --  
                                                                                                                     
     Preferred stock dividends           335.50        1,678          --            --             --            --  
                                                                                                                     
     Recognition of expense under                                                                                    
       deferred compensation plan          --            --           --            --             --            --  
                                                                                                                     
     Net loss                              --            --           --            --             --            --  
                                       ---------     --------     ----------     -------       ---------       ------
                                                                                                                     
BALANCE AT DECEMBER 31, 1997           5,802.77       29,014      20,301.87         --         32,949.93         --  
                                                                                                                     
     Preferred stock dividends           356.07        1,780          --            --             --            --  
                                                                                                                     
     Recognition of expense under                                                                                    
       deferred compensation plan          --            --           --            --             --            --  
                                                                                                                     
     Net loss                              --            --           --            --             --            --  
                                       ---------     --------     ----------     -------       ---------       ------
                                                                                                                     
BALANCE AT DECEMBER 31, 1998           6,158.84      $ 30,794      20,301.87     $  --         32,949.93       $ --  
                                       ---------     --------     ----------     -------       ---------       ------
                                       ---------     --------     ----------     -------       ---------       ------
</TABLE>

<TABLE>
<CAPTION>
                                           Additional
                                            Paid-in      Accumulated      Deferred
                                            Capital        Deficit      Compensation       Total
                                           ----------    -----------    ------------      -------
<S>                                        <C>           <C>            <C>               <C>    
BALANCE AT DECEMBER 31, 1995               $115,765      $(78,781)      $  (22)           $62,718
                                                                                                 
     Preferred stock dividends                  --         (1,580)          --                -- 
                                                                                                 
     Recognition of expense under                                                                
       deferred compensation plan               --           --              9                  9
                                                                                                 
     Net loss                                   --         (2,278)          --             (2,278)
                                           ----------    -----------    ------------      -------
BALANCE AT DECEMBER 31, 1996                115,765       (82,639)         (13)            60,449
                                                                                                 
     Preferred stock dividends                  --         (1,678)          --                -- 
                                                                                                 
     Recognition of expense under                                                                
       deferred compensation plan               --           --              7                  7
                                                                                                 
     Net loss                                   --           (139)          --               (139)
                                           ----------    -----------    ------------      -------
                                                                                                 
BALANCE AT DECEMBER 31, 1997                115,765       (84,456)          (6)            60,317
                                                                                                 
     Preferred stock dividends                  --         (1,780)          --                -- 
                                                                                                 
     Recognition of expense under                                                                
       deferred compensation plan               --           --              4                  4
                                                                                                 
     Net loss                                   --         (3,311)           --            (3,311)
                                           ----------    -----------    ------------      -------
BALANCE AT DECEMBER 31, 1998               $115,765     $ (89,547)        $  (2)         $ 57,010
                                           ----------    -----------    ------------      -------
                                           ----------    -----------    ------------      -------
</TABLE>

              The accompanying notes are an integral part of these statements.


                                       33

<PAGE>



                 DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                     FOR THE YEARS ENDED DECEMBER 31
                       (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                           1996          1997           1998    
                                                                      ------------    ------------    ----------
<S>                                                                   <C>              <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                          $    (2,278)     $     (139)     $ (3,311)
    Adjustments to reconcile net loss to net cash
       provided by operating activities:
           Depreciation and amortization                                   10,314          11,441        13,938
           Noncash interest on long-term debt                               4,891           5,514         5,884
           Write-off of deferred financing fees                             2,472            --             --
           Change in deferred income taxes                                    357           1,670           (29)
           Minority interest expense (income), before taxes                    98              70          (367)
           Net expense (payments) under deferred
              compensation plans                                               (3)          1,812           325
           Changes in current assets and liabilities:
              Receivables                                                   3,426          (5,444)       (4,527)
              Inventories                                                    (692)         (3,781)        2,004
              Shells, tanks and pallets                                      (147)           (671)          (38)
              Prepaid expenses and other                                      665            (512)         (655)
              Accounts payable and accrued liabilities                      2,606             198         3,822
                                                                      ------------    ------------    ----------
              Net cash provided by operating activities                    21,709          10,158        17,046
                                                                      ------------    ------------    ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                                   (8,964)        (14,988)      (14,885)
    Payments for exclusive beverage pouring rights                           (594)         (1,625)       (7,495)
    Acquisitions of businesses                                             (1,130)           --             --
    Deposit on land lease                                                     --             --            (540)
    Purchase of franchise rights                                           (1,994)           --             --
    Proceeds from sales of property and equipment                             --              388           304
    Collections on note receivable                                            110            --             --
    Other                                                                     --               37           (21)
                                                                      ------------    ------------    ----------
                Net cash used in investing activities                     (12,572)        (16,188)      (22,637)
                                                                      ------------    ------------    ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of long-term debt                              120,000           --             --
    Retirement of long-term debt                                         (111,250)          --             --
    Borrowings under revolving line of credit                                --            12,000        20,500
    Payments on revolving line of credit                                     --           (12,000)      (14,900)
    Payment of deferred financing costs                                    (5,946)            (78)         --
    Principal payments on long-term debt and other
       liabilities                                                         (7,703)           (585)         (263)
    Cash distribution to minority interest holder                            --              (798)         (608)
                                                                      ------------    ------------    ----------
                Net cash provided by (used in) financing
                    activities                                             (4,899)         (1,461)        4,729
                                                                      ------------    ------------    ----------

CHANGE IN CASH AND CASH EQUIVALENTS                                         4,238          (7,491)         (862)
CASH AND CASH EQUIVALENTS, beginning of year                                7,933          12,171         4,680
                                                                      ------------    ------------    ----------
CASH AND CASH EQUIVALENTS, end of year                                 $   12,171       $   4,680      $  3,818
                                                                      ------------    ------------    ----------
                                                                      ------------    ------------    ----------
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       34

<PAGE>

                  DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (Dollars in thousands, except per share data)

1.   ORGANIZATION AND NATURE OF OPERATIONS:

Delta Beverage Group, Inc. ("Delta") and the partnership described below 
(collectively, the "Company") bottle and distribute beverage products, 
principally Pepsi-Cola and Seven-Up products, in the mid-southern United 
States. The franchise territories cover portions of Arkansas, Louisiana, 
Mississippi, Tennessee and Texas. The partnership also distributes alcoholic 
malt beverages in southern Louisiana.

The Company operates under exclusive bottling appointments and franchise 
agreements with a number of soft drink concentrate and syrup producers. These 
agreements contain provisions regarding the manufacturing, bottling, canning, 
distribution and sale of the franchisors' products. The Company also 
distributes alcoholic beverages pursuant to distributor agreements that 
contain provisions regarding the distribution and sale of alcoholic beverages.

The Pepsi-Cola/Seven-Up Beverage Group of Louisiana (the "Joint Venture") is 
a partnership between Delta and Poydras Street Investors, L.L.C. ("Poydras"). 
 Delta's percentage ownership is 62% and Poydras' percentage ownership is 
38%.  Beginning January 1, 2000, Delta can purchase the percentage interest 
of Poydras at fair market value (as defined).

The Joint Venture's operations and net assets are consolidated with those of 
Delta in the accompanying financial statements. All significant intercompany 
accounts and transactions have been eliminated in consolidation. Poydras' 
share of the Joint Venture's income (loss) and net assets is reflected as a 
minority interest in the accompanying consolidated financial statements.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

USE OF ACCOUNTING ESTIMATES-

The preparation of financial statements in conformity with generally accepted 
accounting principles requires management to make estimates and assumptions 
that affect the reported amounts of assets and liabilities, and disclosure of 
contingent assets and liabilities, at the date of the financial statements 
and the reported amounts of revenues and expenses during the reporting 
period. Actual results could differ from those estimates. The more 
significant estimates with regard to these financial statements are disclosed 
in Note 12.

CASH AND CASH EQUIVALENTS-

Cash and cash equivalents include temporary investments in short-term 
securities with original maturities of three months or less. As of December 31,
1998, the Company had bank overdrafts of $2,054. Bank overdrafts are included 
in accounts payable in the accompanying consolidated balance sheet.

PROPERTY AND EQUIPMENT-

Property and equipment are stated at cost. Property and equipment renewals 
and betterments are capitalized, while maintenance and repair expenditures 
are charged to operations currently. Depreciation is computed using the 
straight-line method over the estimated useful lives of purchased property 
and equipment, or the shorter of the lease terms or the estimated useful 
lives of assets acquired under capital lease arrangements. Those lives are as 
follows:


<TABLE>
<CAPTION>
                                                                   Years
                                                                   -----
        <S>                                                        <C>
        Buildings and improvements                                 20-40
        Machinery and equipment                                     2-10
</TABLE>
                                       35
<PAGE>

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

INTANGIBLES AND OTHER ASSETS-

The cost of franchises in excess of net assets acquired is being amortized on 
a straight-line basis over 35 to 40 years. The Company, at least annually, 
evaluates whether events or circumstances have occurred that may impact the 
recoverability of franchise costs. Upon the occurrence of any such event or 
circumstance, the Company remeasures the realizable portion of franchise 
costs and adjusts the asset to the lesser of its carrying value or fair value.

Costs incurred to obtain long-term financing are deferred and amortized as
adjustments of interest using the effective interest method over the terms of
the related debt.

Amounts paid pursuant to contracts with outside parties providing the Company 
with exclusive beverage pouring rights are capitalized as other assets in the 
consolidated balance sheets and are amortized over the terms of the related 
contracts.

INCOME TAXES-

The Company uses the liability method of accounting for deferred income taxes.
Accordingly, deferred income taxes reflect both the estimated future tax
consequences attributable to operating loss and tax credit carryforwards, and
temporary differences between the Company's assets and liabilities for financial
reporting and income tax
purposes, using income tax rates currently in effect.

SUPPLEMENTAL CASH FLOW INFORMATION-

During 1996, 1997 and 1998, the Company issued additional preferred shares as 
payment-in-kind dividends on preferred stock of $1,580, $1,678 and $1,780, 
respectively (see Note 8).

Interest paid in cash during 1996, 1997 and 1998 was $12,363, $12,281 and 
$12,931, respectively. Income taxes of $177, $247 and $371 were paid in 1996, 
1997 and 1998, respectively.

CONCENTRATION OF CREDIT RISK-

The Company's business activities are concentrated within the mid-southern
United States. However, management believes that there are no significant
concentrations of credit risk with any individual party or groups of
parties.

FAIR VALUES OF FINANCIAL INSTRUMENTS-

The estimated fair values of the Company's financial instruments, except for 
fixed rate long-term debt, approximate their carrying amounts. For fixed rate 
long-term debt, fair value was estimated based on the current rates offered 
for similar obligations and maturities. The estimated fair value of total 
long-term debt and other liabilities was $187,000 at December 31, 1998 and 
$178,000 at December 31, 1997, compared to a recorded value of $180,000 at 
December 31, 1998 and $170,000 at December 31, 1997.

                                       36

<PAGE>

3.   ACQUISITIONS:

In April 1996, the Joint Venture acquired substantially all of the assets of 
Delta Distributing Company, a wholesale distributor of Miller Brewing Company 
alcoholic beverages in Raceland, Louisiana. In May 1996, the Joint Venture 
acquired the franchise rights from Heineken USA to distribute Heineken beer 
products in the greater New Orleans area. The acquisitions were accounted for 
as purchases, and the Company's consolidated results of operations include 
the results of the acquisitions since their respective purchase dates. The 
impact of the 1996 acquisitions on the Company's consolidated results of 
operations was not material.

In connection with the 1996 acquisition of Delta Distributing Company and the 
1995 acquisition of the assets of Miller Brands of Greater New Orleans, Inc. 
and certain assets of Svoboda Distributing Company, Inc., the Joint Venture 
entered into marketing support agreements with Miller Brewing Company's 
advertising agency for the general promotion of Miller products in the 
greater New Orleans area. The marketing support obligations have been 
capitalized and are being amortized over five years.

4.   INVENTORIES:

Inventories are stated at the lower of cost (first-in, first-out method) or 
market and included the following at December 31:

<TABLE>
<CAPTION>
                                                       1997                 1998  
                                                    -----------          ---------
        <S>                                         <C>                  <C>
        Raw materials                                 $   4,988          $   3,116
        Finished goods                                   13,165             13,033
                                                      ---------          ---------
                                                      $  18,153          $  16,149
                                                      ---------          ---------
                                                      ---------          ---------
</TABLE>

5.   ACCRUED LIABILITIES:

Accrued liabilities consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                        1997              1998   
                                                     -------------      ---------
        <S>                                          <C>                <C>
        Payroll and related benefits                 $   2,841          $   1,713
        Income and other taxes                           2,689              2,970
        Insurance and related costs                      4,203              4,632
        Interest                                         1,768              1,858
        Marketing and advertising costs                  4,180              4,665
        Other                                              407                436
                                                     -------------      ---------
                                                     $  16,088          $  16,274
                                                     -------------      ---------
                                                     -------------      ---------
</TABLE>

6.   INCOME TAXES:

At December 31, 1998, the Company had federal income tax net operating loss 
carryforwards of $27,074 which had been incurred since the predecessor 
business was acquired in March 1988. These net operating loss carryforwards 
expire through 2007. In addition, as of December 31, 1998 the Company had 
similar net operating loss and tax credit carryforwards of $3,803 and $1,187, 
respectively, which were incurred prior to March 1988. Effective at that 
date, the predecessor business was acquired in a transaction accounted for as 
a purchase. The Internal Revenue Code limits the Company's utilization of the 
acquired net operating loss and tax credit carryforwards to $3,000 per year. 
These net operating loss and tax credit carryforwards may be used through 
2003.

                                       37

<PAGE>

6.   INCOME TAXES (Continued):

The Company has recognized deferred income tax assets for the estimated 
future income tax benefits of the pre-and post-acquisition net operating loss 
and tax credit carryforwards that are expected to be realized through the 
reduction of future taxable income from operations within the carryforward 
periods.

Deferred income taxes were composed of the following at December 31:

<TABLE>
<CAPTION>
                                                                  1997             1998   
                                                               ---------        ----------
        <S>                                                    <C>              <C>
        Current deferred income tax assets                      $  5,747         $    4,186
        Noncurrent deferred income tax assets                     25,109             27,245
                                                               ---------        ----------
                                                                  30,856             31,431

        Noncurrent deferred income tax liabilities                (5,628)            (6,174)
                                                               ---------        ----------
                                                                $ 25,228         $   25,257
                                                               ---------        ----------
                                                               ---------        ----------
</TABLE>

The tax effects of significant temporary differences representing deferred
income tax assets and liabilities at December 31, 1997 and 1998 were as follows:

<TABLE>
<CAPTION>
                                                                  1997              1998  
                                                               ---------         ---------
        <S>                                                    <C>               <C>
        Net operating loss and tax credit carryforwards        $ 14,213           $12,398
        Basis difference in preferred stock and               
            common stock                                          8,120             8,020
        Difference in book and tax basis of property           
            and equipment, deferred financing costs             
            and other assets                                     (4,590)           (5,280)
        Deferred interest on subordinated debt,               
            deferred compensation, and reserves                 
            not currently deductible for income                
            tax purposes                                          7,485            10,119
                                                               ---------         ---------
                                                               $ 25,228           $25,257
                                                               ---------         ---------
                                                               ---------         ---------
</TABLE>

Income tax provision recorded in the consolidated statements of operations, net
of taxes applicable to minority interest and extraordinary item, was as follows:


<TABLE>
<CAPTION>
                                     1996              1997           1998  
                                  ----------        ---------      ---------
                                  <S>               <C>            <C>
           Current                 $   (289)        $   (235)       $  (465)
           Deferred                  (1,456)          (1,805)            29
                                  ----------        ---------      ---------
                                    $(1,745)         $(2,040)       $  (436)
                                  ----------        ---------      ---------
                                  ----------        ---------      ---------
</TABLE>

                                       38

<PAGE>

6.   INCOME TAXES (Continued):

A reconciliation of the income tax provision to the amount computed by 
applying the federal statutory tax rate to income or loss before income taxes 
was as follows:

<TABLE>
<CAPTION>
                                                      1996         1997          1998  
                                                   ---------     --------      --------
      <S>                                          <C>           <C>           <C>
     Statutory federal income tax rate               (34.0)%       (34.0)%       34.0%
     State income taxes, net of federal benefit       (4.6)         (4.5)        (1.1)
     Franchise cost amortization                    (138.0)        (70.4)       (39.8)
     Change in effective state tax rate                  -             -         (5.0)
     Meals and entertainment disallowance             (8.4)         (4.9)        (2.6)
     State tax credits                                   -           5.2          1.8
     Other, net                                       (1.0)         (2.5)        (0.9)
                                                  ---------     --------      ---------
                                                    (186.0)%      (111.1)%      (13.6)%
                                                  ---------     --------      ---------
                                                  ---------     --------      ---------
</TABLE>

7.      LONG-TERM DEBT AND OTHER LIABILITIES:

Long-term debt and other liabilities consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                          1997                1998  
                                                                        --------            --------
   <S>                                                                  <C>                 <C>
   Senior notes payable, 9.75%, due
        December 16, 2003                                               $120,000            $120,000

   Subordinated notes payable, 11%, due
        December 23, 2003                                                 43,640              48,573

   Revolving line of credit                                                   --               5,600

   Note payable to Poydras, interest at the 
        prime rate plus 1% (9.50% and 8.75%
        at December 31, 1997 and 1998, 
        respectively), due December 31, 2007                               1,839               1,839

   Capital lease obligations, 10.89%, due
        in monthly installments through May 1999                             202                  96

   Marketing support obligation, imputed interest
        at 8.25% to 8.75%, payments due quarterly through
        June 30, 2000                                                        489                 331

   Obligations under deferred compensation plans                           3,276               3,333

   Deferred purchase obligation                                              900                 900

   Other long-term debt                                                       58                  58
                                                                        --------            --------
                                                                         170,404             180,730
   Less current maturities                                                 (215)               (240)
                                                                        --------            --------
                                                                        $170,189            $180,490
                                                                        --------            --------
                                                                        --------            --------
</TABLE>
                                       39

<PAGE>

7.   LONG-TERM DEBT AND OTHER LIABILITIES (Continued):

In December 1996, the Company placed $120 million of new senior notes and 
execuetd a new $30 million bank revolving line of credit. The net proceeds of 
the debt offering were used primarily to retire the Company's prior senior 
notes and the amounts outstanding under the Company's prior revolving line of 
credit.

In a registration statement filed with the Securities and Exchange Commission 
under the Securities Act of 1933 and declared effective on February 12, 1997, 
the Company exchanged the $120 million senior notes for new $120 million 
senior notes. The new senior notes retained the same interest rate, maturity 
date and ranking as the original senior notes. The Company did not receive 
any cash proceeds from this transaction.

The senior notes are general unsecured obligations of the Company and are 
senior to all existing and future subordinated indebtedness of the Company. 
Interest on the senior notes is payable semi-annually on June 15 and December 
15.

The new bank revolving line of credit matures on December 16, 2001 and bears 
interest, at Delta's option, at LIBOR or a defined margin over the higher of 
(1) the bank's prime rate or (2) the federal funds rate plus 0.5% (the "base 
rate"). Borrowings are limited to the sum of 80% of Delta's eligible 
receivables and 50% of Delta's eligible inventory. The line of credit 
includes a swing line facility of up to $2.5 million. Swing line loans bear 
interest at either the base rate or at an otherwise mutually agreed upon rate 
of interest. The line of credit also includes a $10 million limit for the 
issuance of letters of credit; the letter of credit facility fee is based on 
the Eurodollar applicable margin less 0.125%. The agreement also provides for 
a fee on the unused commitment ranging from 0.25% to 0.50%. Borrowings under 
the line of credit are secured by Delta's accounts receivable and inventory. 
Interest and commitment fees are payable quarterly.

There were no borrowings outstanding under the revolving line of credit as of 
December 31, 1997. $5,600 was outstanding under the revolving line of credit 
as of December 31, 1998, including $2,500 under the swing line facility. The 
interest rate as of December 31, 1998 on amounts outstanding under the swing 
line facility was 6.88%, while the interest rate on remaining amounts 
outstanding was 8.25%.

In connection with the debt placement described above, the Company incurred 
financing fees of $4,885. These fees have been capitalized and are being 
amortized over the terms of the related debt agreements. Deferred financing 
costs relating to debt retired in 1996 of $2,472 were written off. This 
write-off, less a related income tax benefit of $953, is reported as an 
extraordinary item in the 1996 consolidated statement of operations.

Interest on the subordinated notes is due semi-annually on April 1 and 
October 1, and may be paid in cash or, at the option of the Company, by the 
issuance of additional subordinated notes ("PIK Notes"). The PIK Notes bear 
interest at 11% or 15% depending upon whether the terms of the note agreement 
would have permitted the Company to pay any portion of the interest in cash. 
The Company issued additional subordinated notes of $4,431 and $4,935 under 
this provision in 1997 and 1998, respectively. These additional notes bear 
interest at 11% and are included with subordinated notes payable in the 
preceding table.

Certain of the subordinated debt holders are also preferred and non-voting 
common stockholders of the Company.

The Company's long-term debt agreements require, among other things, the 
maintenance of certain minimum financial ratios and financial requirements, 
and limit additional indebtedness, sales of assets, investments and capital 
expenditures. The agreements also restrict the payment of dividends and limit 
capital stock transactions.

In 1995, the Company acquired Miller Brands of Greater New Orleans, Inc. The 
purchase price included a $900 deferred obligation payable upon the Miller 
business achieving an annual $8,000 gross profit.

                                       40

<PAGE>

7.      LONG-TERM DEBT AND OTHER LIABILITIES (Continued):

Scheduled maturities of long-term debt and other liabilities during the four
years subsequent to 1999 are as follows:

<TABLE>
<CAPTION>
                  Year                               Amount
                  ----                             --------
                  <S>                            <C>
                  2000                           $      154
                  2001                                5,634
                  2002                                   --
                  2003                              168,573
</TABLE>

8.   STOCKHOLDERS' EQUITY:

PREFERRED STOCK-

Authorized preferred stock consists of 30,000 designated Series AA preferred 
shares. The Series AA preferred stock does not contain voting rights. Series 
AA preferred stockholders receive cumulative dividends at an annual rate of 
6% based on the $5 thousand stated value per share. The rate will increase 2% 
annually beginning October 1, 2004, but is limited to a cumulative increase 
of 8%. Dividends are payable quarterly in cash or in additional shares of 
Series AA preferred stock. The Company is obligated to pay the dividends in 
cash once the senior notes are retired. The preferred stock dividends for 
1996, 1997 and 1998 were paid with additional preferred shares and are 
included in stockholders' equity at December 31, 1996, 1997 and 1998. So long 
as the Series AA preferred stock is outstanding, the Company cannot declare 
or pay dividends on its common stock.

In the event of a liquidation, Series AA preferred stockholders have a 
$5 thousand per share liquidation preference.

VOTING COMMON STOCK-

Voting common stock consists of 60,000 authorized shares.

NON-VOTING COMMON STOCK-

Non-voting common stock consists of 35,000 authorized shares. Should the Company
register its shares in a public offering, the non-voting common stock may be
converted, at the holder's option, into voting common stock. The conversion rate
is one share of non-voting common stock for one share of voting common stock.
The conversion rate is subject to adjustment in certain instances as defined in
the Certificate of Incorporation.

The transfer and sale of shares by and among the stockholders and the Company
are restricted by a Shareholders' Agreement.

9.   LEASES:

The Company leases certain buildings and other facilities, vehicles and
equipment under agreements expiring through 2010.


                                       41
<PAGE>

9.       LEASES (Continued):

Future minimum rental payments under all noncancellable operating leases with 
initial or remaining lease terms of one year or more were as follows at 
December 31, 1998:

<TABLE>
<CAPTION>
                  
                  Year                                    Amount
                  ----                                  --------
                  <S>                                   <C>
                  1999                                  $ 3,983
                  2000                                    3,054
                  2001                                    2,459
                  2002                                    1,785
                  2003                                    1,184
                  Thereafter                              1,643
                                                        --------
                                                        $14,108
                                                        --------
                                                        --------
</TABLE>

Total rent expense during 1996, 1997 and 1998 was $3,587, $4,252 and $5,130, 
respectively.

10.  RELATED PARTY TRANSACTIONS:

The Company has entered into a management agreement with a company (the 
"management company") controlled by three individuals who own shares of the 
Company's common stock. For services performed pursuant to the agreement, the 
Company pays the management company a management fee and a transaction fee. 
Management fees of $533, $551 and $550 were paid during 1996, 1997 and 1998, 
respectively. The transaction fee is payable upon the acquisition of 
additional franchises and is equal to 1.5% of the acquisition cost of such 
franchises. Affiliates of the management company also own common stock of the 
Company.

In 1998 the Company entered into an accounting services agreement with a 
separate entity in which the management company described above owns a 
controlling interest. For services performed pursuant to this agreement, the 
affiliate pays the Company an accounting services fee. Accounting services 
fees of $170 were incurred with this affiliate in 1998. In addition, the 
Company sold $5,411 of product at cost to this affiliate in 1998 and as of 
December 31, 1998 had a receivable from this affiliate of $255.

11.  EMPLOYEE BENEFITS:

The Company sponsors a defined contribution employee benefit plan which 
covers all eligible full-time employees. Prior to April 1, 1997, employees 
who participated in the plan could defer up to 10% of their salaries and 
wages and receive matching payments by the Company of 50% of those deferrals, 
limited to annual employer contributions of $5 hundred per employee. 
Effective April 1, 1997, the plan was amended to increase the maximum 
employee deferral percentage to 15% and maximum annual employer contributions 
to $1 thousand per employee. The Company's contributions were $257 for 1996, 
$581 for 1997 and $546 for 1998.

The Company also maintains a nonqualified deferred compensation plan which is 
available for certain executives of the Company, as selected by the Company's 
board of directors. Executives who participate in the plan may elect to defer 
a percentage of their compensation (as defined), subject to limitations 
imposed by the Internal Revenue Service and the Company, and are eligible to 
receive discretionary contributions from the Company. Employee deferrals and 
employer discretionary contributions are held in a trust restricted from the 
general assets of the Company. Restricted assets held in trust, included in 
other assets in the accompanying consolidated balance sheets, totaled $1,225 
and $1,692 at December 31, 1997 and 1998, respectively.

The Company has a restricted stock bonus plan under which executives and key 
employees may be awarded shares of the Company's common stock. All shares 
granted contain restrictions on sale or transfer; these restrictions lapse 
over an eleven-year period. A maximum of 250 shares of common stock may be 
awarded under this plan. At December 31, 1997 and 1998, 22 restricted shares 
were outstanding, all of which were held by an officer.

                                       42

<PAGE>

11.  EMPLOYEE BENEFITS (Continued):

The Company maintains a phantom stock plan available to certain key members 
of management. This plan allows eligible executives to participate in the 
continued success of the Company based upon the annual appreciation in the 
equity value of the Company, as defined. The equivalent of 38,200 shares have 
been granted under this plan. Each phantom stock award vests over a 
three-year period, and is payable in cash or shares of the Company's common 
stock upon the earlier of the participant's death, disability, termination or 
retirement. Each participant is subject to a noncompete and nonsolicitation 
restriction in consideration of the share equivalent grant. All grants 
contain restrictions on assignment or transfer. There was no appreciation in 
the equity value of the Company, as defined, in 1996. Effective December 31, 
1997, the phantom stock plan was amended to redefine the beginning equity 
value upon which appreciation in the equity value of the Company is 
determined. As a result, in 1997 and 1998 benefits of $1,900 and $295, 
respectively, were earned under the amended plan.

12.  CERTAIN SIGNIFICANT ESTIMATES:

SELF INSURANCE-

The Company maintains self insurance reserves for estimated workers' 
compensation and product, automobile and general liability claims. These 
estimates are based on historical information along with certain assumptions 
about future events. Changes in assumptions for items such as medical costs, 
environmental hazards and legal actions, as well as changes in actual 
experience, could cause these estimates to change in the near term.

As of December 31, 1997 and 1998, the Company had $9,124 and $8,454 in 
outstanding letters of credit to secure the obligations to insurance 
companies for workers' compensation and product, automobile and general 
liability claims.

LOSS CONTINGENCIES-

The Company is subject to various litigation, claims and assessments arising 
in the normal course of business. Management believes that the ultimate 
resolution of these matters, either individually or in the aggregate, will 
not have a materially adverse effect on the Company's consolidated financial 
position or results of operations.

DEFERRED INCOME TAX ASSETS-

The Company has recorded deferred income tax assets reflecting the expected 
future benefits of operating loss and tax credit carryforwards which expire 
in varying amounts through 2007 (see Note 6). Realization is dependent on 
generating sufficient taxable income prior to expiration of these 
carryforwards. Although realization is not assured, management believes that 
it is more likely than not that all of the deferred income tax assets will be 
realized. The amount of the deferred income tax assets considered realizable, 
however, could be reduced in the near term if estimates of future taxable 
income during the carryforward periods are reduced.

                                       43

<PAGE>




                          FINANCIAL STATEMENT SCHEDULE

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                       ON FINANCIAL STATEMENT SCHEDULE


To Delta Beverage Group, Inc.:

We have audited in accordance with generally accepted auditing standards, the 
consolidated financial statements of Delta Beverage Group, Inc. and 
subsidiary included in this Form 10-K and have issued our report thereon 
dated March 2, 1999. Our audit was made for the purpose of forming an opinion 
on the basic financial statements taken as a whole. The schedule listed in 
Item 14(a)(2) is the responsibility of the Company's management and is 
presented for purposes of complying with the Securities and Exchange 
Commission's rules and is not part of the basic financial statements. This 
schedule has been subjected to the auditing procedures applied in the audit 
of the basic financial statements and, in our opinion, fairly states in all 
material respects the financial data required to be set forth therein in 
relation to the basic financial statements taken as a whole.

                                                /s/ ARTHUR ANDERSEN LLP


Memphis, Tennessee,
March 2, 1999.


                                       44
<PAGE>


                   DELTA BEVERAGE GROUP, INC. AND SUBSIDIARY
                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                              BALANCE AT     DEDUCTIONS                                BALANCE AT
                                              BEGINNING     (ADDITIONS)                    WRITE-        END OF
                                              OF PERIOD     TO EARNINGS     RECOVERIES      OFFS         PERIOD
                                             ------------   -----------     ----------    --------     ------------
<S>                                          <C>             <C>            <C>           <C>          <C>

ALLOWANCE FOR DOUBTFUL ACCOUNTS
  FOR THE YEAR ENDED DECEMBER 31, 1996         $  433         $    90        $   539      $  (562)      $  500
                                             ------------   -----------     ----------    --------     ------------
                                             ------------   -----------     ----------    --------     ------------
ALLOWANCE FOR DOUBTFUL ACCOUNTS
  FOR THE YEAR ENDED DECEMBER 31, 1997         $  500         $  (439)       $   596      $   (95)      $  562
                                             ------------   -----------     ----------    --------     ------------
                                             ------------   -----------     ----------    --------     ------------
ALLOWANCE FOR DOUBTFUL ACCOUNTS
  FOR THE YEAR ENDED DECEMBER 31, 1998         $  562         $   162        $   341      $  (468)      $  597
                                             ------------   -----------     ----------    --------     ------------
                                             ------------   -----------     ----------    --------     ------------
</TABLE>
                                       45

<PAGE>

ITEM 9       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
             FINANCIAL DISCLOSURE

         Not applicable.

                                       46

<PAGE>




                                  PART III

ITEM 10      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS

         The following table sets forth certain information with respect to the
directors and executive officers of the Company as of March 15, 1999. All
directors of the Company hold office until the next annual meeting of
shareholders or until their successors have been elected and qualified.
Executive officers are elected by the board of directors to hold office until
their successors are elected and qualified. There are no family relationships
between any director or officer.

<TABLE>
<CAPTION>

Name                                     Age      Position(s) With Company
----                                     ---      ------------------------
<S>                                      <C>      <C>
Robert C. Pohlad                         44       Chief Executive Officer and Director
John F. Bierbaum                         54       Chief Financial Officer, Vice President and Director
Kenneth E. Keiser                        47       President and Chief Operating Officer
Bradley J. Braun                         44       Vice President, Finance and Assistant Secretary
Jay S. Hulbert                           45       Vice President, Operations
Michael G. Naylor                        38       Vice President, General Manager
Charles M. Pullias                       49       Vice President, General Manager
Raymond R. Stitle                        45       Vice President, Human Resources
Donald E. Benson                         68       Chairman of the Board
John H. Agee                             50       Director
Christopher E. Clouser                   47       Director
Philip N. Hughes                         64       Director
Philip A. Marineau                       52       Director
Gerald A. Schwalbach                     54       Director
John F. Woodhead                         59       Director
</TABLE>

        ROBERT C. POHLAD. Mr. Pohlad has served as director and Chief 
Executive Officer of the Company since 1988. Since 1987, Mr. Pohlad has also 
served as President of the Pohlad Companies, a holding and management 
services company, which has an ownership interest in and provides management 
services to the Company. Prior to 1987, Mr. Pohlad was Northwest Area Vice 
President of the Pepsi-Cola Bottling Group. Mr. Pohlad also currently serves 
as a director for Pepsi-Cola Puerto Rico Bottling Company, Mesaba Holdings, 
Inc. and Grow Biz International, Inc. See "Certain Relationships and Related 
Transactions -Management Agreement."

        JOHN F. BIERBAUM. Mr. Bierbaum has served as director of the Company 
since 1993, and as Chief Financial Officer of the Company since March 1988. 
Mr. Bierbaum is also Chief Financial Officer of the Pohlad Companies, a 
holding and management services company, which has an ownership interest in 
and provides management services to the Company. Mr. Bierbaum has been 
associated with the Pohlad Companies from 1975 to the present in a variety of 
capacities, including his current position. Mr. Bierbaum is also Chief 
Financial 

                                       47

<PAGE>

Officer of Pepsi-Cola Puerto Rico Bottling Company. From 1986 to 1988, Mr. 
Bierbaum served as Vice President of the Pepsi-Cola Bottling Company of 
Tampa.  See "Certain Relationships and Related Transactions -Management 
Agreement."

        KENNETH E. KEISER. Mr. Keiser joined the Company in his present 
position in 1990. From 1976 to 1990, he was employed by the Pepsi-Cola 
Bottling Group in various capacities, including Division Vice President of 
the Central Division from 1989 to 1990, Vice President of the Minneapolis 
Area from 1986 to 1989, Director of Corporate Trade Development from 1985 to 
1986, Area Vice President of Philadelphia from 1982 to 1985, and various 
other capacities from 1976 to 1985. See "Executive Compensation - Employment 
Agreement."

        BRADLEY J. BRAUN. Mr. Braun became Vice President, Finance and 
Assistant Secretary for the Company in September 1991. Prior to joining the 
Company, Mr. Braun served as Controller of the Dakota Beverage Company, Inc., 
a PepsiCo franchise bottler which is a wholly-owned subsidiary of the Pohlad 
Companies. Mr. Braun is also an executive officer of Pepsi-Cola Puerto Rico 
Bottling Company.

        JAY S. HULBERT. Mr. Hulbert joined the Company in 1988 as Director of 
Operations, and in January 1991 was promoted to his current position of Vice 
President, Operations. Prior to joining the Company, Mr. Hulbert spent seven 
years working for the Pepsi-Cola Bottling Group in a variety of capacities. 
Mr. Hulbert is also an executive officer of Pepsi-Cola Puerto Rico Bottling 
Company.

        MICHAEL G. NAYLOR. Mr. Naylor joined the Company in 1984. In January 
1991, Mr. Naylor was promoted to his present position of Vice President, 
General Manager. From 1984 to 1990, Mr. Naylor served the Company in a 
variety of capacities, including Regional Sales Manager. Mr. Naylor is also 
an executive officer of Pepsi-Cola Puerto Rico Bottling Company.

        CHARLES M. PULLIAS. Mr. Pullias joined the Company in 1991 as Vice 
President of Sales for the Southern Region. In January 1991, Mr. Pullias was 
promoted to his current position of Vice President, General Manager. Prior to 
1991, Mr. Pullias spent ten years working for the Pepsi-Cola Company in Texas 
in various sales and marketing positions. Mr. Pullias is also an executive 
officer of Pepsi-Cola Puerto Rico Bottling Company.

        RAYMOND R. STITLE. Mr. Stitle joined the Company in 1988 as Director 
of Human Resources, and was promoted to his current position of Vice 
President, Human Resources in January 1991. Prior to joining the Company, Mr. 
Stitle was employed by Pepsi-Cola USA. Mr. Stitle is also an executive 
officer of Pepsi-Cola Puerto Rico Bottling Company.

         DONALD E. BENSON. Mr. Benson has been a director of the Company 
since 1988. Mr. Benson also serves as director for Mass Mutual Corporate 
Investors, Mass Mutual Participation Investors, Mesaba Holdings, Inc., 
National Mercantile Bancorp and Mercantile National Bank. Since 1995, Mr. 
Benson has also been employed by the Pohlad Companies, a holding and 
management services company, which has an ownership interest in and provides 
management services to the Company, and another of its affiliates, CRP 
Holdings, Inc., a management services company. Mr. Benson has served as a 
director and as Executive Vice President of Marquette Bancshares, Inc., a 
bank holding company and an affiliate of the Pohlad Companies, since 1993 and 
with its predecessor organizations since 1968. From 1986 to 1994, Mr. Benson 
was President and director of MEI Diversified Inc., a holding company with 
interests in various operating entities. In February 1993, MEI Diversified 
Inc. filed for Chapter 11 bankruptcy protection. A Plan of Reorganization for 
MEI Diversified Inc. was confirmed in October 1994, pursuant to which its 
assets and liabilities were liquidated.

        JOHN H. AGEE. Mr. Agee has been a director of the Company since 1988. 
Since 1986, Mr. Agee has also been President of ADLER MANAGEMENT CORP., a 
financial consulting and management services company. Mr. Agee was nominated 
by Arbeit & Co. and elected to his position by the shareholders of the 
Company pursuant to a Shareholders' Agreement, dated September 23, 1993, as 
amended and restated (the "Shareholders' Agreement"), among all of the 
shareholders of the Company, which provides that Arbeit & Co. may nominate 
one 

                                       48

<PAGE>

director to the Company's board of directors and that the shareholders will 
vote for such nominee. See "Certain Relationships and Related Transactions - 
Shareholders' Agreement."

        CHRISTOPHER E. CLOUSER. Mr. Clouser has been a director of the Company
since 1995. Mr. Clouser is Senior Vice President-Administration of Northwest
Airlines, Inc., the world's fourth largest airline, with responsibility for
worldwide human resources, corporate communications, advertising, audit and
security functions. Prior to joining Northwest Airlines in April 1991, Mr.
Clouser held officer positions with Bell Atlantic Corp., US Sprint
Communications Company, and Hallmark Cards, Inc. He currently serves on the
board of directors of Pepsi-Cola Puerto Rico Bottling Company and Mesaba
Holdings, Inc.

        PHILIP N. HUGHES. Mr. Hughes has been a director of the Company since 
1988. Mr. Hughes is also owner of Miller Printing, Inc., a commercial 
printer, and Rocket Lube, Inc., a chain of quick-service vehicle lube 
operations. From 1982 to 1986, Mr. Hughes was a director of MEI Corporation, 
and from 1983 to 1986 served as Senior Vice President of MEI Corporation. 
From May 1986 to December 1986, Mr. Hughes was President, MEI Division, 
Pepsi-Cola Bottling Group, a division of PepsiCo. From 1986 to 1993, Mr. 
Hughes served as a director of MEI Diversified, Inc. In February 1993, MEI 
Diversified Inc. filed for Chapter 11 bankruptcy protection. A Plan of 
Reorganization for MEI Diversified Inc. was confirmed in October 1994, 
pursuant to which its assets and liabilities were liquidated. Mr. Hughes 
serves as a director of Pepsi-Cola Puerto Rico Bottling Company.

        PHILIP A. MARINEAU. Mr. Marineau was appointed to the board of 
directors in March 1998 to fill the seat vacated by Brenda C. Barnes. Since 
1997, Mr. Marineau has been the President and Chief Executive Officer of 
Pepsi-Cola North America. Prior to joining Pepsi-Cola, Mr. Marineau held 
positions as the President of Quaker Oats Company and the President and Chief 
Operating Officer at Dean Foods. Mr. Marineau is also a member of the board 
of directors of the Arthur J. Gallagher Co., Inc., Evanston Northwestern 
Healthcare, Loyola University of Chicago, Georgetown University Board of 
Regents and the advisory board of the Kellogg Graduate School of Management. 
In addition, Mr. Marineau is the Chairman of the Board of Pete's Brewing 
Company. Mr. Marineau was nominated by PepsiCo, pursuant to the Shareholder's 
Agreement, which provides that PepsiCo, Inc. may nominate one director to the 
Company's board of directors and that the shareholders will vote for such 
nominee. See "Certain Relationships and Related Transactions - Other Business 
Relationships."

        GERALD A. SCHWALBACH. Mr. Schwalbach has served as a director of the 
Company since 1988. Since July 1996, Mr. Schwalbach has been a member of 
Superior Storage I, LLC and related companies, owners and operators of 
self-storage facilities. From 1985 to June 1996, Mr. Schwalbach served as 
Executive Vice President of Jacobs Management, Inc. From 1988 to June 1996, 
Mr. Schwalbach served concurrently as Vice President of an affiliate of 
Jacobs Management, I.J. Holdings, Inc. From 1990 to June 1996, Mr. Schwalbach 
served concurrently as Executive Vice President and Executive Vice President 
and Treasurer of two other affiliates of Jacobs Management, Jacobs Investors, 
Inc. and IMR General, Inc., respectively. Mr. Schwalbach joined the board of 
directors of CH Robinson Worldwide, Inc. in 1997.

        JOHN F. WOODHEAD. Mr. Woodhead has been a director of the Company 
since 1994. Since 1971, Mr. Woodhead has provided management consulting 
services to Dakota Beverage Company, Inc., a PepsiCo franchise bottler which 
is a wholly-owned subsidiary of the Pohlad Companies. Mr. Woodhead is also 
currently owner and President of JFW Inc., a management services company, and 
Woodhead Properties, a real estate investment firm. Since 1992, Mr. Woodhead 
has also served as President and Chairman of Park National Bank. From 1982 to 
1995, Mr. Woodhead was owner and Chairman of Allstate Medical Products. Mr. 
Woodhead is a director of WisPak, Inc. having served in this capacity since 
December 1997. Mr. Woodhead is also a director of Pepsi-Cola Puerto Rico 
Bottling Company.

                                       49

<PAGE>

BOARD OF DIRECTORS COMMITTEES AND COMPENSATION

        The Company has an Executive Committee whose members include Robert 
C. Pohlad, John H. Agee and Donald E. Benson. The Executive Committee is 
authorized by the board of directors to have and exercise the authority of 
the board of directors in the management of the business of the Company, 
including determining compensation levels for the Company's executives and 
officers. The Company also has an Audit Committee whose members include John 
H. Agee, Donald E. Benson and Philip N. Hughes. The Audit Committee is 
responsible for recommending independent public accountants, reviewing with 
the independent public accountants the scope and results of the audit 
engagement, establishing and monitoring the Company's financial policies and 
control procedures, reviewing and monitoring the provision of non-audit 
services by the Company's independent public accountants and reviewing all 
potential conflict of interest situations. In addition, the Company has a 
Compensation Committee whose members include Christopher E. Clouser, Gerald 
A. Schwalbach and John F. Woodhead. The Compensation Committee is responsible 
for approving executive compensation and incentive programs.

        Outside directors are paid $500 for each board meeting attended, plus 
reasonable travel expenses. No payment is made to employee-directors or 
directors with an equity interest in the Company.

ITEM 11    EXECUTIVE COMPENSATION

        The following table sets forth the aggregate cash compensation paid 
by the Company to its most highly paid executive officers for the fiscal 
years ended December 31, 1996, 1997 and 1998. Neither Robert C. Pohlad, the 
Company's Chief Executive Officer, nor John F. Bierbaum, the Company's Chief 
Financial Officer, receive any compensation from the Company, except that Mr. 
Bierbaum participates in the Company's Superior Performance Incentive Bonus 
Plan and the Company's Phantom Stock Plan. See " - Employee Benefit Plans." 
The services of Messrs. Pohlad and Bierbaum are provided to the Company 
pursuant to a Management Agreement between the Company and the Pohlad 
Companies. See "Certain Relationships and Related Transactions - Management 
Agreement."

                      SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                        ANNUAL COMPENSATION
                                                             -----------------------------------------
                                                                                             OTHER ANNUAL
                                                                                             COMPENSATION
NAME AND PRINCIPAL POSITION                        YEAR        SALARY ($)    BONUS ($)(1)       ($)(2)
---------------------------                        ----        ----------    ------------    ------------
<S>                                                <C>          <C>          <C>             <C>
    Kenneth E. Keiser                              1998          274,000      107,750             -
       President and Chief Operating Officer       1997          260,000      143,000             -
                                                   1996          250,000      140,250             -

    Charles M. Pullias                             1998          150,200       22,600         108,334
       Vice President, General Manager             1997          144,900       43,500          73,333
                                                   1996          139,300       55,600          60,000

    Jay S. Hulbert                                 1998          125,100       32,250          54,167
       Vice President, Operations                  1997          118,900       47,600          83,333
                                                   1996          114,300       34,200          73,333

    Michael G. Naylor                              1998          134,000       20,100          54,167
       Vice President, General Manager             1997          116,600       46,640          83,333
                                                   1996          106,000       37,100          73,333

    Bradley J. Braun                               1998          116,100       30,900         108,334
       Vice President, Finance                     1997          110,500       44,200          73,333
                                                   1996          104,000       41,600          60,000
</TABLE>
    ----------------------------------
(1)  Reflects bonuses awarded pursuant to the Company's 1995 bonus plan for 
     certain employees of the Company based in part on the financial performance
     of the Company.


                                       50

<PAGE>


(2)  Reflects payments awarded pursuant to the Company's Superior Performance
     Incentive Bonus Agreement based on operating income performance of the
     Company.

EMPLOYMENT AGREEMENT

         The Company has entered into an Employment Agreement with its Chief 
Operating Officer, Kenneth E. Keiser. Under the terms of the Employment 
Agreement, Mr. Keiser receives a base salary as determined by the Company's 
board of directors, with any increases in such base salary subject to the 
unanimous approval of the board of directors. Pursuant to the Employment 
Agreement, Mr. Keiser is also eligible to participate in Company incentive 
plans and receive an incentive bonus and fringe benefits available to other 
employees of the Company.

        The Employment Agreement is renewable for one year terms each 
February 1. In the event Mr. Keiser's employment is terminated for any reason 
prior to the expiration of a term, Mr. Keiser is prohibited, through such 
term, from (i) providing services, directly or indirectly, to any person or 
organization which is in the same or similar business as or is in competition 
with the Company, (ii) advising any Company employee or anyone in the service 
of the Company to compete with the Company or (iii) advising any competitor 
of the Company to engage the services of any Company employee or anyone in 
the service of the Company.

EMPLOYEE BENEFIT PLANS

        GENERAL. The Company makes a variety of benefits available to its
employees. The Company sponsors welfare benefits programs that provide health,
dental, life and accidental death and dismemberment insurance coverage to
substantially all employees. The Company does not presently maintain or
contribute to any defined benefit pension plans or multiemployer pension plans.

        INCENTIVE PLANS. The Company adopted a Superior Performance Incentive 
Bonus Agreement for certain executives and officers of the Company in 1991. 
The incentive plan provides for payments to participants upon meeting or 
exceeding certain operating income goals. Awards under this plan are fully 
vested and paid three years following the date of grant in the event the 
Company meets certain operating income goals during each year of the vesting 
period.  In the event the Company fails to meet the operating income goals 
for a particular year during the vesting period, the amount payable may be 
reduced by one-third.

        PHANTOM STOCK PLAN. Effective January 1994, the Company's board of 
directors approved a Phantom Stock Plan (the "Phantom Stock Plan") which 
provides for the issuance of phantom stock awards to select officers and 
other key employees of the Company. A total of 1,000,000 phantom shares are 
deemed outstanding pursuant to the Phantom Stock Plan, and are adjusted to 
reflect any additional shareholder capital contributions. The Company's board 
of directors, or a committee authorized by the Company's board of directors, 
has authority to administer the Phantom Stock Plan, select those officers and 
key employees eligible to participate in the Phantom Stock Plan, determine 
whether and to what extent phantom stock will be granted, determine the terms 
and conditions of any phantom stock granted under the Phantom Stock Plan, 
determine whether participants may enter into deemed purchases of phantom 
stock with deferred bonuses, and interpret, prescribe, amend or rescind the 
regulations relating to the Phantom Stock Plan. The Phantom Stock Plan will 
remain in effect until terminated by the board of directors of the Company. 
Effective December 31, 1997, the Phantom Stock Plan was amended (i) to 
redefine the beginning equity value upon which appreciation in the equity 
value of the Company is determined, (ii) to institute a cap on the amount of 
distributions to which participants are entitled and (iii) to allow 
participants to obtain distributions of up to 30% of their interests prior to 
the termination of employment.

        The value of each phantom share award will be, at the date of the 
grant of the award, (i) the average of the Company's operating cash flow for 
the prior three years multiplied by a factor established from time to time by 
the Company's board of directors, or a committee authorized by the Company's 
board of directors, to reflect the value of the Company, plus any excess cash 
less any debt and preferred stock outstanding, divided by (ii) the number of 
deemed shares outstanding. Participants are entitled to payment in the amount 
of the increase in value of the 

                                       51
<PAGE>

phantom share from the date of grant to the date of an event of distribution. 
Each phantom share award, other than deemed purchases of phantom shares, will 
be 100% vested at the earlier of the third anniversary of the date of the 
grant of the phantom award, the participant's death, disability, involuntary 
termination or retirement at age 65, or the sale of all or substantially all 
of the assets of the Company or a change of stock ownership of greater than 
50%, excluding purchases by the Pohlad Companies, its shareholders or their 
family members or its affiliates. During employment with the Company and for 
a period of three years following an event of distribution, participants are 
subject to a non-compete and non-solicitation restriction in consideration 
for phantom share awards. The Company made no payouts pursuant to the Phantom 
Stock Plan during fiscal years 1996, 1997 or 1998. No awards vested under the 
Phantom Stock Plan during 1998.

        401(k) PLAN. The Company sponsors a 401(k) retirement savings plan 
for substantially all employees of the Company who are at least 21 years of 
age and have been employed by the Company for one year. An employee may 
contribute, on a pre-tax basis, up to 15% of the employee's covered 
compensation, not to exceed contribution amounts established under the 
Internal Revenue Code. Contributions are allocated to each employee's 
individual account and are, at the employee's election, invested in various 
investment alternatives offered by the plan trustee. Employee contributions 
are fully vested and nonforfeitable. The Company matches 50% of employee 
contributions up to $1,000.

COMPENSATION OF DIRECTORS

        See "Directors and Executive Officers -- Board of Directors 
Committees and Compensation."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

        No member of the compensation committee of the Company's board of 
directors was an officer, former officer or employee of the Company during 
the fiscal year ended December 31, 1998. Other than Robert C. Pohlad, no 
executive officer of the Company served as a member of the compensation 
committee or the board of directors of another entity, one of whose executive 
officers served on the Company's compensation committee or board of directors 
during the fiscal year ended December 31, 1998. Mr. Pohlad, the Company's 
Chief Executive Officer, serves as a member of the compensation committee of 
the board of directors of Pepsi-Cola Puerto Rico Bottling Company. Robert C. 
Pohlad and John F. Bierbaum, executive officers of Pepsi-Cola Puerto Rico 
Bottling Company, serve on the Company's board of directors.

                                       52

<PAGE>

ITEM 12       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        As of the close of business on February 1, 1999, the Company had 
outstanding 53,251.80 shares of Common Stock and 6,158.84 shares of 
non-convertible series AA preferred stock, $0.01 par value per share 
("Preferred Stock"). The Common Stock consists of 20,301.87 shares of voting 
Common Stock and 32,949.93 shares of non-voting Common Stock.

        The following table contains certain information as of February 1, 
1999 as to the number of shares of voting Common Stock beneficially owned by 
(i) each person known by the Company to own beneficially more than five 
percent (5%) of the Company's stock, (ii) each person who is a director of 
the Company, (iii) each executive officer named in the Summary Compensation 
Table and (iv) all persons who are directors and officers of the Company as a 
group, and as to the percentage of the outstanding shares held by them on 
such date. Unless otherwise noted, each person identified below possesses 
sole voting and investment power with respect to such shares.

<TABLE>
<CAPTION>
                                                                        COMMON STOCK
                                                            ------------------------------------
                                                              NUMBER OF SHARES
                                                                BENEFICIALLY          PERCENT OF
NAME OF BENEFICIAL OWNER OF OR GROUP                               OWNED                 CLASS
------------------------------------                        -------------------      -----------
        <S>                                                 <C>                       <C>
         Pohlad Companies (1).............................         12,037.87            59.3%
            Dain Bosworth Plaza
            Suite 3880
            Minneapolis, MN 55402
         Arbeit & Co......................................          4,187.92            20.6
            c/o ADLER MANAGEMENT CORP.
            601 Second Avenue South
            Suite 4950
            Minneapolis, MN 55402
         Equity Beverage, Inc.............................          3,221.57            15.9
            1 Pepsi Way
            Mail Drop 812, Floor 8N
            Somers, NY 10589
         Robert C. Pohlad (2).............................         12,137.87            59.8
         John H. Agee (3).................................          4,187.92            20.6
         Donald E. Benson.................................              ---              ---
         John F. Bierbaum.................................             22.00             *
         Christopher E. Clouser...........................              ---              ---
         Philip N. Hughes.................................              ---              ---
         Philip A. Marineau...............................              ---              ---
         Gerald A. Schwalbach.............................              ---              ---
         John F. Woodhead.................................              ---              ---
         Kenneth E. Keiser................................            532.51             2.6
         Charles M. Pullias...............................              ---              ---
         Jay S. Hulbert...................................              ---              ---
         Raymond R. Stitle................................              ---              ---
         Bradley J. Braun.................................              ---              ---
         All directors and executive officers as a
            group (16 persons) (4)........................         16,880.30            83.1%

</TABLE>

         -------------------
         *    Less than 1%

        (1)  Excludes 300 shares over which the Pohlad Companies disclaims 
             beneficial ownership.

                                       53

<PAGE>


        (2)  Includes 12,037.87 shares owned by the Pohlad Companies.
             Robert C. Pohlad is a one-third owner of the Pohlad
             Companies and exercises shared investment and voting
             power over such shares with the remaining owners of the
             Pohlad Companies.
        (3)  Includes 4,187.92 shares owned by Arbeit & Co. John H.
             Agee has power of attorney and exercises sole investment
             and voting power over such shares.
        (4)  Includes 12,037.87 shares owned by the Pohlad Companies, 
             of which Robert C. Pohlad is a one-third owner, and 
             4,187.92 shares owned by Arbeit & Co., over which John H.
             Agee
             has power of attorney.

ITEM 13           CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

MANAGEMENT AGREEMENT

        The services of the Company's Chief Executive Officer, Robert C. 
Pohlad, and Chief Financial Officer, John F. Bierbaum, are provided to the 
Company pursuant to a Management Agreement between the Company and the Pohlad 
Companies. The Pohlad Companies owns 59.3% of the Company's voting Common 
Stock. Robert C. Pohlad owns one-third of the Pohlad Companies. The Pohlad 
Companies is a holding and management services company which has interests in 
several entities, including Dakota Beverage Corp., Inc., Pepsi-Cola Puerto 
Rico Bottling Company and the Company. Neither Robert C. Pohlad nor John F. 
Bierbaum receives any compensation from the Company, except that John F. 
Bierbaum participates in the Company's Superior Performance Incentive Bonus 
Plan and the Company's Phantom Stock Plan.

        Subject to any limitations imposed by the Company's Amended and 
Restated Certificate of Incorporation, the Amended and Restated Bylaws, the 
Shareholders' Agreement, or the board of directors, the Pohlad Companies has 
the authority under the Management Agreement to: (i) administer, manage and 
direct the Company and its business and properties; (ii) monitor the day to 
day operations of the Company and make recommendations with respect thereto; 
(iii) investigate and make recommendations with respect to the selection and 
conduct of relations with the Company's consultants and technical advisors; 
and (iv) conduct all negotiations with franchisors. Subject to the 
limitations imposed by the Company's Amended and Restated Certificate of 
Incorporation, the Amended and Restated Bylaws or the Shareholders' 
Agreement, the Management Agreement and any other contractual limitations 
imposed on or obligating the Company, the Pohlad Companies also has the 
authority to: (i) cause the Company to expend its funds to further its 
business; (ii) sell, hypothecate, exchange, trade or otherwise dispose of the 
Company's properties or its interests therein; (iii) cause the Company to 
borrow money; (iv) refer to arbitration, settle, prosecute or defend any 
legal matter, proceeding or claim involving the Company; (v) mortgage, 
pledge, grant security interests in or otherwise encumber Company assets; and 
(vi) retain or employ and coordinate the services of all employees necessary 
to further the Company's business.

        The Management Agreement provides that the Pohlad Companies may 
devote as much time to the management of the Company as the Pohlad Companies 
deems necessary and that the Pohlad Companies may engage in any other 
businesses, including the bottling and distribution of soft drinks.

        For services performed pursuant to the Management Agreement, the Company
pays the Pohlad Companies a management fee and a transaction fee. The management
fee is paid monthly in advance at an annual rate equivalent to the greater of
$500,000, or $400,000 multiplied by the ratio of the CPI as of the year
preceding the date of computation to the CPI as of 1987. The transaction fee is
payable upon the acquisition of additional franchises and is equivalent to 1.5%
of the Company's acquisition cost of such franchises. During 1997 and 1998, the
Company paid the Pohlad Companies $551,000 and $550,000, respectively, in
management fees pursuant to the Management Agreement.

        The Management Agreement may be terminated by either the Company or the
Pohlad Companies when the Pohlad Companies or its affiliates cease to hold
Common Stock or when the Pohlad Companies is no longer controlled by members of
the Pohlad family. For purposes of the Management Agreement, an "affiliate" of
the Pohlad Companies means any person or entity controlling or controlled by or
under common control with

                                       54

<PAGE>

the Pohlad Companies, and "control" means the power to direct the management 
and policies of the Pohlad Companies, directly or indirectly, whether through 
the ownership of voting securities, by contract or otherwise. For purposes of 
the Management Agreement, members of the Pohlad family means Carl R. Pohlad 
and his spouse, children, grandchildren, sons-in-law, daughters-in-law, any 
corporation or partnership controlled by or affiliated with any of the 
foregoing and any employees of such corporations or partnerships, and any 
trust or foundation in which any of the foregoing has a substantial 
beneficial interest or serves as a trustee or in any similar capacity and 
retains voting powers of securities held in the trust or foundation. Robert 
C. Pohlad and his brothers, James O. Pohlad and William M. Pohlad, are all 
sons of Carl R. Pohlad, and the owners of all the equity interest of the 
Pohlad Companies.

JOINT VENTURE

        All of the Joint Venture's bottling and canning requirements are 
provided by the Company. The Company charges the Joint Venture for such 
requirements at its net cost, which includes the actual cost of such 
requirements plus a proportionate charge for depreciation, amortization and 
cost of capital. See "Business - Joint Venture."

        The profits (or losses) of the Joint Venture include an allocation of 
the profits (or losses) of the Company's manufacturing facilities in Reserve, 
Louisiana, and Collierville, Tennessee. The Joint Venture's allocation is 
equal to the total profits (or losses) of such facilities multiplied by a 
fraction, the numerator being the Joint Venture's bottling and canning 
requirements and the denominator being the Joint Venture's bottling and 
canning requirements plus all other requirements of such facilities by the 
Company's other distribution facilities.

        The Company in its role as Managing Venturer of the Joint Venture may 
cause the Joint Venture to borrow funds to support the operations of the 
Joint Venture. To the extent the Joint Venture is unable to borrow such 
funds, the Managing Venturer may call upon Poydras and the Company to make 
loans to the Joint Venture ("Mandatory Loans") in proportion to their 
respective ownership interests, in such amounts and payable at such times, in 
such manner and on such terms as may reasonably be determined by the Managing 
Venturer; provided, however, that unless and until determined otherwise by 
the Management Committee, Mandatory Loans will bear interest, payable 
quarterly, at a rate per annum equal to 1.0% over the prime or reference rate 
announced from time to time by Citibank, N.A. In the event either Poydras or 
the Company fails to make a Mandatory Loan (a "Refusing Venturer"), the party 
which has made the Mandatory Loan may (i) pursue any and all legal remedies 
against the Refusing Venturer and recover costs and expenses from the 
Refusing Venturer in connection with the pursuit of such remedies or (ii) 
make a loan to the Refusing Venturer in the amount of the Refusing Venturer's 
Mandatory Loan, which loan will bear interest, payable monthly, at a rate per 
annum equal to 5.0% over the prime or reference rate announced from time to 
time by Citibank, N.A. The Company had loaned approximately $27.6 million to 
the Joint Venture as of December 31, 1998, of which $3.0 million was a 
Mandatory Loan. Poydras had loaned approximately $1.8 million to the Joint 
Venture as of December 31, 1998, all of which was a Mandatory Loan.

        Personnel employed by the Joint Venture who also provide services to 
the Company or any entity directly or indirectly controlling, controlled by 
or under common control with the Company, any officer, director, employee or 
partner of the Company or any entity for which an officer, director or 
partner of the Company acts in any capacity or any affiliate of the foregoing 
will be paid by the Company or its affiliate proportionately. All personnel 
employed by the Company or its affiliate who also provide services to the 
Joint Venture will be paid by the Joint Venture proportionately.

        To the extent that the Company provides management and support 
functions to the Joint Venture from its office in Memphis, Tennessee, the 
Joint Venture will reimburse the Company for such services, including a 
proportionate share of (i) the reasonable overhead and administrative costs 
associated with the Company's Memphis office and (ii) the management fee, 
exclusive of travel and other expenses, paid by the Company pursuant to the 
Management Agreement. See " - Management Agreement." The Joint Venture's 
obligation to pay such costs and fees is subject to the following 
limitations: (i) the management fee shall not exceed $500,000, as 

                                       55

<PAGE>


adjusted annually for changes in the CPI, as provided in the Management 
Agreement; (ii) the Memphis office costs and the management fee described 
above shall be allocated to the Joint Venture according to the proportion 
that the number of cases distributed by the Joint Venture bears to the total 
number of cases distributed by the Joint Venture, the Company, its affiliates 
and others provided management and/or support services by the Memphis office; 
and (iii) only costs attributable to services being provided to the Joint 
Venture shall be allocated to the Joint Venture. Except for the proportionate 
share of overhead and administrative costs associated with such management 
and support functions, the Joint Venture will not reimburse the Company or 
Poydras for items generally constituting direct overhead or administrative 
expenses of the business.

OTHER BUSINESS RELATIONSHIPS

        Philip A. Marineau, one of the Company's directors, is President and 
Chief Executive Officer of Pepsi- Cola North America, the domestic soft drink 
division of PepsiCo, Inc. PepsiCo is the Company's primary franchisor.

SHAREHOLDERS' AGREEMENT

        The Company and its shareholders have entered into a Shareholders' 
Agreement which restricts the sale or transfer of (i) any Common Stock of the 
Company or the beneficial ownership thereof or (ii) any franchise rights 
relating to PepsiCo (the "Franchise Rights"), except for those sales or 
transfers to any affiliate of the Pohlad Companies or to any affiliate of the 
owner of the Common Stock or Franchise Rights. The Shareholders' Agreement 
further provides that a holder of Common Stock or Franchise Rights desiring 
to sell such Common Stock or Franchise Rights will first grant to Equity 
Beverage, Inc. ("Equity Beverage") the right to purchase any Common Stock or 
Franchise Rights at a purchase price equal to the higher of (i) the price 
negotiated between the holder of Common Stock or Franchise Rights and Equity 
Beverage or (ii) the price determined by two nationally recognized 
independent investment or merchant banks, one selected by Equity Beverage and 
the other selected by the holder of Common Stock or Franchise Rights. See 
"Securities Ownership of Certain Beneficial Owners and Management."

        The Shareholders' Agreement provides that, for a period of ten years 
following the date of the Shareholders' Agreement, each of PepsiCo,Inc. and 
Arbeit & Co. may nominate one director, and the holders of at least 60.0% of 
the Company's non-voting Common Stock may nominate two directors to the 
Company's board of directors. Under the Shareholders' Agreement, the holders 
of the Company's Common Stock agree to elect such nominees to the Company's 
board of directors.

        The Shareholders' Agreement also requires the Pohlad Companies to 
offer to the Company, for a period of ten years following the date of the 
Shareholders' Agreement, any business opportunities available to the Pohlad 
Companies in the Company's existing territories or in certain states 
surrounding the Company's existing territories to bottle or distribute brand 
name soft drinks or carbonated water pursuant to franchise or similar 
agreements.

        The Pohlad Companies and certain members of the Pohlad family and 
their affiliates may elect to purchase shares of the Company's Preferred 
Stock from the holders thereof for a purchase price of $5,000 per share, plus 
accrued and unpaid dividends. Such election is valid through September 15, 
2013.

EMPLOYMENT AGREEMENT

        See "Executive Compensation -- Employment Agreement."

                                       56

<PAGE>
                                    PART IV

ITEM 14   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

         (a)(1)  Financial Statements.

                 Report of Independent Public Accountants
                 Consolidated Financial Statements
                        Balance Sheets
                        Statements of Operations
                        Statements of Stockholders' Equity
                        Statements of Cash Flows
                        Notes to Consolidated Financial Statements

            (2)  Financial Statement Schedule.

                 Report of Independent Public Accountants on Financial 
                      Statement Schedule
                 Schedule II - Valuation and Qualifying Accounts

            (3)  Exhibits.

                  3.1      Amended and Restated Certificate of Incorporation of
                           the Company (incorporated by reference to the
                           Company's Registration Statement on Form S-4 (File
                           No. 333-19233) filed on January 3, 1997).
                  3.2      Amended and Restated Bylaws of the Company
                           (incorporated by reference to the Company's
                           Registration Statement on Form S-4 (File No.
                           333-19233) filed on January 3, 1997).
                  4.1      Indenture, dated as of December 17, 1996, between 
                           the Company and Norwest Bank Minnesota, National
                           Association, as Trustee, relating to $120,000,000
                           principal amount of 9 3/4 Senior Notes Due 2003,
                           including form of Initial Global Note (incorporated
                           by reference to the Company's Registration Statement
                           on Form S-4 (File No. 333-19233) 
                           filed on January 3, 1997).
                  4.2      Credit Agreement, dated as of December 16, 1996, by
                           and among the Company, NationsBank, N.A. and other
                           lending institutions (incorporated by reference to
                           the Company's Registration Statement on Form S-4
                           (File No. 333-19233) filed on January 3, 1997).
                  4.3      Security Agreement, dated as of December 16, 1996, by
                           and among the Company, NationsBank, N.A. and other
                           lending institutions (incorporated by reference to
                           the Company's Registration Statement on Form S-4
                           (File No. 333-19233) filed on January 3, 1997).
                  4.4      Registration Rights Agreement, dated as of December
                           17, 1996, by and between the Company and NationsBanc
                           Capital Markets, Inc., as Initial Purchaser
                           (incorporated by reference to the Company's
                           Registration Statement on Form S-4 (File No.
                           333-19233) filed on January 3, 1997).
                  4.5      Amended and Restated Shareholders' Agreement, dated
                           as of September 23, 1993 (incorporated by reference
                           to the Company's Registration Statement on Form S-4
                           (File No. 333-19233) filed on January 3, 1997).
                  10.1     Amended and Restated Delta Beverage Group, Inc. and 
                           Subsidiaries Phantom Plan (incorporated by reference 
                           to the Company's Annual Report on Form 10-K filed on
                           March 31, 1998).
                  10.2     Management Agreement, dated as of March 8, 1988, by
                           and between The Bellfonte Company and Mid-South
                           Acquisition Corporation (incorporated by reference 
                           to the

                                       57

<PAGE>


                           Company's Registration Statement on Form S-4 
                           (File No. 333-19233) filed on January 3, 1997).
                  10.3     Employment Agreement, dated as of February 1, 1990,
                           by and between the Company and Kenneth Keiser
                           (incorporated by reference to the Company's
                           Registration Statement on Form S-4 (File No.
                           333-19233) filed on January 3, 1997).
                  10.4     Form of 1991 Superior Performance Incentive Bonus
                           Agreement (incorporated by reference to the Company's
                           Registration Statement on Form S-4 (File No.
                           333-19233) filed on January 3, 1997).
                  10.5     Form of Franchise Agreement (incorporated by
                           reference to the Company's Registration Statement on
                           Form S-4 (File No. 333-19233) filed on January 3,
                           1997).
                  10.6     Miller Brewing Company Distributor Agreement 
                           (incorporated by reference to the Company's 
                           Registration Statement on Form S-4 
                           (File No. 333-19233) filed on January 3, 1997).
                  10.7     Amended and Restated Joint Venture Agreement,
                           effective as of September 3, 1992, by and between the
                           Company and Poydras Street Investors L.L.C.
                           (incorporated by reference to the Company's
                           Registration Statement on Form S-4 (File No.
                           333-19233) filed on January 3, 1997).
                  27.1     Financial Data Schedule.

            (b)     Reports on Form 8-K.

                    None

                                       58

<PAGE>




                                   SIGNATURES


         Pursuant to the requirements of Section 13 or 15(d) 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 on 
March 30, 1999.

                                           DELTA BEVERAGE GROUP, INC.



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


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the 
Registrant and in the capacities and on the dates indicated.


<TABLE>
<S>                          <C>                                      <C>
/s/ Robert C. Pohlad         Chief Executive Officer and Director                   
--------------------------   (Principal Executive Officer)            March 30, 1999 
Robert C. Pohlad           

/s/ John F. Bierbaum         Chief Financial Officer and Director       
--------------------------   (Principal Accounting Officer and                      
John F. Bierbaum             Principal Financial Officer)             March 30, 1999
                           

/s/ Donald E. Benson         Chairman of the Board                    March 30, 1999
--------------------------                                                          
Donald E. Benson          
                                                                                
/s/ John H. Agee             Director                                 March 30, 1999
--------------------------                                                      
John H. Agee                                                                    
                           
/s/ Christopher E. Clouser   Director                                 March 30, 1999
--------------------------                                                      
Christopher E. Clouser     

/s/ Philip N. Hughes         Director                                 March 30, 1999
--------------------------                                                      
Philip N. Hughes    

/s/ Philip A. Marineau       Director                                 March 30, 1999 
--------------------------                                                      
Philip A. Marineau    

/s/ Gerald A. Schwalbach     Director                                 March 30, 1999
--------------------------                                                      
Gerald A. Schwalbach       

/s/ John F. Woodhead         Director                                 March 30, 1999
--------------------------                                                      
John F. Woodhead    

</TABLE>
                                       59

<PAGE>

                                                 INDEX TO EXHIBITS
<TABLE>
<CAPTION>

Exhibit
 Number            Description
-------           -------------
<S>               <C>
3.1               Amended and Restated Certificate of Incorporation of the Company (incorporated by
                  reference to the Company's Registration Statement on Form S-4 (File No. 333-19233) 
                  filed on January 3, 1997).
3.2               Amended and Restated Bylaws of the Company (incorporated by
                  reference to the Company's Registration Statement on Form S-4
                  (File No. 333-19233) filed on January 3, 1997).
4.1               Indenture, dated as of December 17, 1996, between the Company and Norwest Bank Minnesota,
                  National Association, as Trustee, relating to $120,000,000 principal amount of 9 3/4 Senior
                  Notes Due 2003, including form of Initial Global Note (incorporated by reference to the
                  Company's Registration Statement on Form S-4 (File No. 333-19233) filed on January 3, 1997).
4.2               Credit Agreement, dated as of December 16, 1996, by and among the Company, NationsBank,
                  N.A. and other lending institutions (incorporated by reference to the Company's Registration
                  Statement on Form S-4 (File No. 333-19233) filed on January 3, 1997).
4.3               Security Agreement, dated as of December 16, 1996, by and among the Company, NationsBank,
                  N.A. and other lending institutions (incorporated by reference to the Company's Registration
                  Statement on Form S-4 (File No. 333-19233) filed on January 3, 1997).
4.4               Registration Rights Agreement, dated as of December 17, 1996, by and between the Company
                  and NationsBanc Capital Markets, Inc., as Initial Purchaser (incorporated by reference to the
                  Company's Registration Statement on Form S-4 (File No. 333-19233) filed on January 3,
                  1997).
4.5               Amended and Restated Shareholders' Agreement, dated as of September 23, 1993 (incorporated
                  by reference to the Company's Registration Statement on Form S-4 (File No. 333-19233)
                  filed on January 3, 1997).
10.1              Amended and Restated Delta Beverage Group, Inc. and Subsidiaries Phantom Plan (incorporated
                  by reference to the Company's Annual Report on Form 10-K filed on March 31, 1998).
10.2              Management Agreement, dated as of March 8, 1988, by and between The Bellfonte Company
                  and Mid-South Acquisition Corporation (incorporated by reference to the Company's
                  Registration Statement on Form S-4 (File No. 333-19233) filed on January 3, 1997).
10.3              Employment Agreement, dated as of February 1, 1990, by and between the Company and
                  Kenneth Keiser (incorporated by reference to the Company's Registration Statement on Form
                  S-4 (File No. 333-19233) filed on January 3, 1997).
10.4              Form of 1991 Superior Performance Incentive Bonus Agreement (incorporated by reference
                  to the Company's Registration Statement on Form S-4 (File No. 333-19233) filed on January 3,
                  1997).
10.5              Form of Franchise Agreement (incorporated by reference to the Company's Registration 
                  Statement on Form S-4 (File No. 333-19233) filed on January 3, 1997).
10.6              Miller Brewing Company Distributor Agreement (incorporated by reference to the Company's
                  Registration Statement on Form S-4 (File No. 333-19233) filed on January 3, 1997).
10.7              Amended and Restated Joint Venture Agreement, effective as of September 3, 1992, by and
                  between the Company and Poydras Street Investors L.L.C. (incorporated by reference to the
                  Company's Registration Statement on Form S-4 (File No. 333-19233) filed on January 3, 1997).
27.1              Financial Data Schedule.

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