SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C. 20549

                               FORM 10-Q


(Mark One)

<checked-box> QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                OF THE SECURITIES EXCHANGE ACT OF 1934
             For the quarterly period ended March 31, 1998

                                  or

<square>   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                OF THE SECURITIES EXCHANGE ACT OF 1934
        For the transition period from _________ to _________

                    COMMISSION FILE NUMBER 1-13914

                PEPSI-COLA PUERTO RICO BOTTLING COMPANY
        (Exact name of Registrant as specified in its Charter)

<TABLE>
<CAPTION>
                    DELAWARE                                       ###-##-####
         (State or other jurisdiction of              (I.R.S. Employer Identification No.)
         incorporation or organization)
<S>                                               <C>
             CARRETERA #865, KM 0.4
            BARRIO CANDELARIA ARENAS
              TOA BAJA, PUERTO RICO                                   00949
     (Address of principal executive office)                       (Zip code)
</TABLE>

  Registrant's telephone number, including area code: (787) 251-2000


      Indicate by check mark whether the registrant:  (1) has filed all reports
required  to  be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the  preceding  12  months  (or  for  such  shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. <checked-box> Yes  <square> No

      As of May 15, 1998, there were 21,500,000 shares of  Common  Stock issued
and outstanding.  This amount includes 5,000,000 shares of Class A Common Stock
and 16,500,000 shares of Class B Common Stock.




<PAGE>
                        PEPSI-COLA PUERTO RICO BOTTLING
                           COMPANY AND SUBSIDIARIES

             INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                                                          PAGE
                                                                        NUMBER

PART I FINANCIAL INFORMATION.................................................3

Item 1. Financial Statements:

       Condensed Consolidated Balance Sheets (unaudited) at March 31, 1998
            and September 30, 1997...........................................3
       Condensed Consolidated Statements of Income/(Loss) (unaudited) for the
            Six Months Ended March 31, 1998 and 1997.........................5
       Condensed Consolidated Statements of Income/(Loss) (unaudited) for the
            Three Months Ended March 31, 1998 and 1997.......................5
       Condensed Consolidated Statements of Cash Flows (unaudited) for the
            Six Months Ended March 31, 1998 and 1997.........................7
       Notes to Condensed Consolidated Financial Statements (unaudited)......8

Item  2.  Management's  Discussions  and  Analysis  of Financial Condition  
              and Results of Operations.....................................13


PART II OTHER INFORMATION...................................................20

Item 1. Legal Proceedings...................................................20

Item 6. Exhibits and Reports on Form 8-K....................................20
         (a) Exhibits.......................................................20
         (b) Reports on Form 8-K during the quarter ended March 31, 1998....20




                                          2

<PAGE>

PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS


                        PEPSI-COLA PUERTO RICO BOTTLING
                           COMPANY AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                          (U.S. DOLLARS IN THOUSANDS)

                                    ASSETS

<TABLE>
<CAPTION>
                                                                March 31,                            September
30,
                                                                  1998                                   1997
                                                               (UNAUDITED)                             (AUDITED)
                                                               ___________                           
____________ 
<S>                                                          <C>                       <C>          <C>
Current Assets:
   Cash and cash equivalents                                      $12,954                                $19,447
   Accounts receivable:
            Trade, less allowance for doubtful accounts of         12,433                                 11,681
$1,396 at
              March 31, 1998 and $1,389 at September 30,
1997
            Due from PepsiCo, Inc.                                    865                                   
943
            Other                                                   5,066                                  4,273
   Inventories                                                      3,949                                  3,635
   Deferred income taxes                                               97                                    
97
   Prepaid expenses and other current assets                        1,208                                  1,414
                                                                 ________                                _______

                  Total current assets                             36,572                                 41,490

Deferred income tax, long-term                                      1,645                                  1,619
Long-lived assets for sale, principally land and building           3,752                                  3,752
Property, plant and equipment, net                                 45,656                                 47,347
Intangible assets, net of accumulated amortization                  1,598                                  1,644
Other assets                                                            9                                    
58
                                                                 ________                                _______
                  Total assets                                    $89,232                                $95,910
                                                                 ========                                =======
</TABLE>

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                          3

<PAGE>

                        PEPSI-COLA PUERTO RICO BOTTLING
                           COMPANY AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                          (U.S. DOLLARS IN THOUSANDS)

                     LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                       March 31,                       
September 30,
                                                                         1998                               1997
                                                                       (UNAUDITED)                       
(AUDITED)
                                                                       ___________                      
____________
<S>                                                                   <C>                   <C>          <C>
Liabilities:
   Current installments of long-term debt                                $1,007                            
$1,007
   Current installments of capital lease obligations                        700                              
 908
   Short-term borrowings                                                  5,329                             
5,430
   Accounts payable:
              Trade                                                      10,181                            
13,750
              Affiliate                                                      --                              
  32
   Income tax payable                                                        76                              
 199
   Other accrued expenses                                                 5,940                             
4,830
                                                                     __________                         
_________
        Total current liabilities                                        23,233                            
26,156
Long-term debt, excluding current installments                           23,119                            
23,636
Capital lease obligations, excluding current installments                   123                              
 513
Accrued pension cost, long-term                                           1,507                             
2,213
                                                                     __________                         
_________
        Total liabilities                                                47,982                            
52,518
Shareholders' equity:
   Class A common shares of $0.01 par value; authorized,                     50                              
  50
       issued and outstanding 5,000,000 shares
   Class B common shares, $0.01 par value; authorized                       165                              
 165
       35,000,000 shares; issued and outstanding
       16,500,000 shares
   Additional paid-in capital                                           103,910                           
103,910
   Retained earnings/(deficit)                                          (61,877)                          
(59,735)
   Pension liability adjustment                                            (998)                             
(998)
                                                                     __________                         
_________
                                                                         41,250                            
43,392
                                                                     __________                         
_________
                                                                        $89,232                           
$95,910
                                                                     ==========                         
=========
</TABLE>


        SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                          4


<PAGE>

                        PEPSI-COLA PUERTO RICO BOTTLING
                           COMPANY AND SUBSIDIARIES

              CONDENSED CONSOLIDATED STATEMENTS OF INCOME/(LOSS)
               (U.S. DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                   Six Months Ended March  31,
<S>                                                                     <C>                     <C>          
<C>
                                                                            1998                             
   1997
                                                                         (UNAUDITED)                         
 (UNAUDITED)
                                                                       ______________                       
______________

Net Sales                                                                  48,460                            
  $46,584
Cost of Sales                                                              33,530                            
   32,663
   Gross profit                                                            14,930                            
   13,921
Selling and marketing expenses                                             14,283                            
   15,377
Administrative expenses                                                     3,147                            
    6,168
Restructuring charges                                                           -                            
      535
                                                                        _________                            
 ________
Income/(loss) from operations                                              (2,500)                           
   (8,159)
                                                                        _________                            
 ________
Other income (expenses):
            Interest expense                                               (1,292)                           
   (1,245)
            Interest income                                                   392                            
      699
            Other, net                                                        322                            
       95
                                                                        _________                            
 ________
                    Total other income (expenses)                            (578)                           
     (451)
                                                                        _________                            
 ________
Loss before income tax benefit (expense)                                   (3,078)                           
   (8,610)
                                                                        _________                            
 ________
Income tax benefit (expense)                                                  936                            
     (129)
Net income/(loss)                                                         $(2,142)                           
  $(8,739)
                                                                        =========                            
 ========

Basic loss per common share                                                $(0.10)                           
   $(0.41)
                                                                        =========                            
 ========

Weighted average number of shares outstanding (in thousands)               21,500                            
   21,500
                                                                        =========                            
 ========
</TABLE>



        SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                          5


<PAGE>

                    PEPSI-COLA PUERTO RICO BOTTLING COMPANY
                               AND SUBSIDIARIES

              CONDENSED CONSOLIDATED STATEMENTS OF INCOME/(LOSS)
                          (U.S. DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                Three Months Ended March 31,
<S>                                                               <C>                       <C>         <C>
                                                                       1998                                 1997
                                                                    (UNAUDITED)                         
(UNAUDITED)
                                                                  _______________                      
____________
  
Net Sales                                                         $    22,943                           $   
20,786
Cost of Sales                                                          16,331                               
14,754
                                                                  ___________                          
___________ 
   Gross profit                                                         6,612                                
6,032

Selling and marketing expenses                                          6,870                                
7,159
Administrative expenses                                                 1,763                                
3,348
Restructuring charges                                                       -                                
  535
                                                                  ___________                           
__________

Income/(loss) from operations                                          (2,021)                              
(5,010)
                                                                  ___________                           
__________
Other income (expenses):
            Interest expense                                             (629)                               
 (613)
            Interest income                                               156                                
  291
            Other, net                                                    282                                
   69
                                                                  ___________                           
__________
                  Total other income (expenses)                          (191)                               
 (253)
                                                                  ___________                           
__________
                  Income/(loss) before income tax benefit              (2,212)                              
(5,263)
(expense )
Income tax benefit ( expense)                                           1,061                                
  (21)
                                                                  ___________                           
__________
Net income/(loss)                                                 $    (1,151)                          $   
(5,284)
                                                                  ===========                          
===========

Basic loss per common share                                       $     (0.05)                          $    
(0.25)
                                                                  ===========                          
===========

Weighted average number of shares outstanding (in thousands)           21,500                               
21,500
                                                                  ===========                           
==========
</TABLE>


        SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.



                                          6

<PAGE>

                    PEPSI-COLA PUERTO RICO BOTTLING COMPANY
                               AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (U.S. DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   Six Months Ended March 31,
<S>                                                                    <C>                     <C>         <C>
                                                                           1998                              
1997
                                                                        (UNAUDITED)                        
(UNAUDITED)
                                                                       _____________                      
____________
      
Net loss                                                               $(2,142)                           
$(8,739)
Adjustments to reconcile net earnings to net cash provided by/
  (used in) operating activities:
  (Gain)/loss on sale of property, plant and equipment                    (228)                              
  30
  Depreciation and amortization                                          2,721                              
3,278
  Changes in assets and liabilities:
       Accounts receivable                                              (1,467)                              
 791
       Inventories                                                        (314)                              
 836
       Prepaid expenses and other current assets                           206                               
 616
       Accounts payable                                                 (3,601)                            
(1,832)
       Other accrued expenses                                            1,110                             
(2,010)
       Income taxes payable                                               (123)                              
 (56)
       Other, net                                                         (749)                              
  24
                                                                     _________                           
________
Net cash provided by/(used in) operating activities                     (4,587)                            
(7,062)
Cash flows from investing activities:
  Proceeds from sale of property, plant and equipment                      518                               
 152
  Proceeds from matured short-term investment                                -                             
12,904
  Purchases of property, plant and equipment                            (1,208)                            
(2,968)
                                                                     _________                           
________
       Net cash provided by/(used in) investing activities                (690)                            
10,088
Cash flows from financing activities:
  Proceeds from (repayment of) short-term borrowings                      (101)                              
 309
  Repayment of long-term debt                                             (517)                              
(746)
  Repayment of capital lease obligations                                  (598)                              
(471)
                                                                     _________                           
________
       Net cash provided by/(used in) financing activities              (1,216)                              
(908)

Net increase/(decrease) in cash and cash equivalents                    (6,493)                             
2,118
Cash and cash equivalents at beginning of period                        19,447                             
18,614
                                                                     _________                           
________
Cash and cash equivalents at end of period                             $12,954                            
$20,732
                                                                     =========                           
========
Supplemental disclosures:
Cash paid for:
       Interest                                                         $1,322                             
$1,217
       Income taxes                                                        285                               
 185
</TABLE>



        SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.



                                          7

<PAGE>

                    PEPSI COLA PUERTO RICO BOTTLING COMPANY
                               AND SUBSIDIARIES

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
          (U.S. DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
                                  (UNAUDITED)

(1)   ACCOUNTING PRINCIPLES AND BASIS OF PRESENTATION

      The accompanying condensed consolidated financial  statements, footnotes,
and  discussions should be read in conjunction with the consolidated  financial
statements,  related  footnotes,  and  discussions  contained  in the Company's
annual  report on Form 10-K for the fiscal year ended September 30,  1997.   In
the opinion  of  the Company's management, the unaudited condensed consolidated
interim financial  statements  reflect  all  adjustments  necessary  for a fair
presentation.   Operating  results for the six months ended March 31, 1998  are
not necessarily indicative of  the  results that may be expected for the fiscal
year ended September 30, 1998.

(2)   INVENTORIES

      Inventories consist of the following:
<TABLE>
<CAPTION>
                                                      March 31,                     September 30,
                                                        1998                            1997
                                                     __________                     _____________
<S>                                                  <C>                  <C>       <C>
Raw materials                                             $1,565                         $1,070
Finished goods                                             1,179                          1,428
Other                                                      1,205                          1,137
                                                     ___________                     __________ 
                                                          $3,949                         $3,635
                                                     ===========                     ==========
</TABLE>

(3)   PROPERTY, PLANT AND EQUIPMENT, NET

      Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
                                                        March 31,                     September 30,
                                                          1998                            1997
                                                     ____________                     _____________
  
<S>                                                   <C>                   <C>       <C>
Land and improvements                                      $6,892                          $7,057
Buildings and improvements                                 14,695                          14,682
Machinery, equipment and vehicles                          48,473                          48,081
Bottles, cases and shells                                   1,345                           1,515
Furniture and fixtures                                      1,617                           1,580
Construction in process                                       750                              86
                                                     ____________                     ___________
 
                                                           73,772                          73,001
Less accumulated depreciation and amortization            (28,116)                        (25,654)
                                                     ____________                     ___________
  Property, plant and equipment, net                   $   45,656                      $   47,347
                                                     ============                     ===========
</TABLE>

(4)   ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT

      The Company has adopted the provisions  of FASB 128 for fiscal year 1998.
Under  the  provisions  of  FASB  128  the  Company  is   required   to  report
earnings/(losses)  per  share  under  the  following  two  concepts:  (i) basic
earnings/(losses)  per  share  and  (ii)  diluted  earnings/(losses) per share.
Under the diluted earnings/(losses) per share method, the Company must consider
in the computation of earnings/(losses) per share the  effect  of  all dilutive
common  shares  that  were outstanding for the period, including the number  of
common shares that would have been issued and outstanding, if the stock options
granted by the Company  for the period under the plans (as defined, in footnote
no. 9) had been exercised.   Nevertheless,  if  the  effect  of considering the
potential common shares results in the computation being antidilutive  then the
FASB requires that the Company present basic earnings/(losses) per share  only.
The  Company  has  reported  losses for both the 1997 and 1998 interim periods,
therefore it does not include the potential common shares in the computation of


                                          8

<PAGE>

loss per share since this would  result  in an antidilutive computation of such
loss  per common share.  Therefore the Company's  reported  basic  and  diluted
earnings/(losses)  per  share is the same.  Potential common shares outstanding
at March 31, 1998 which could,  in  the  future,  enter into the computation of
diluted earnings/(losses) per share amount to 1,761,667.

      Prior to October 1, 1996, the Company accounted for its stock option plan
in  accordance  with  the  provisions  of Accounting Principles  Board  ("APB")
opinion  no.  25,  "Accounting  for Stock issued  to  Employees",  and  related
interpretations.  As such, compensation  expense  would be recorded on the date
of the grant only if the current market price of the  underlying stock exceeded
the  exercise  price.  On October 1, 1996, the Company adopted  SFAS  No.  123,
"Accounting for  Stock-Based Compensation", which permits entities to recognize
as expense, over the  vesting  period, the fair value of all stock-based awards
on the date of the grant.  Alternatively,  SFAS No. 123 also allows entities to
continue to apply the provisions of APB No. 25 and provide pro forma net income
and pro forma earnings per share disclosures  for  employee stock option grants
made in 1995 and future years as if the fair value based method defined in SFAS
No. 123 had been applied.  The Company has elected to  continue  to  apply  the
provisions  of APB No. 25 and provide the pro forma disclosure required by SFAS
No. 123.

(5)   INCOME TAX

      The Company  recorded  a  current income tax expense of $118 and $129 for
the six month periods ended March 31, 1998 and 1997, respectively.

(6)   NOTES PAYABLE TO BANK AND LONG-TERM DEBT

      The Company has, among its  credit  facilities,  a  $5  million revolving
credit facility which was fully drawn as of March 31, 1998.

(7)   RELATED PARTY TRANSACTIONS

      The following are transactions between the Company and subsidiaries,  and
other  related  parties,  for  the  six  months  ended March 31, 1998 and 1997,
respectively:

            (i)  The Company paid approximately $724  and $1,140 during the six
            months ended March 31, 1998 and 1997, respectively,  in advertising
            fees to a firm controlled by a shareholder of the Company.

            (ii)  The Company paid approximately $100 and $110 during  the  six
            month periods ended March 31, 1998 and 1997, respectively for legal
            fees to  a  firm,  one  of  whose  partners  is  a  relative of the
            Company's President.

(8)   INVESTMENT IN BAESA

      The Company owns 12,345,347 shares, or approximately 17% as  of September
30,  1997  and  1996, respectively, of the outstanding capital stock of  BAESA.
Through June 30,  1996,  the  Company  exercised significant influence over the
management of BAESA, subject to the right  of  PepsiCo,  Inc.  ("PepsiCo")  and
certain  of its affiliates to approve certain management decisions.  As of July
1, 1996, PepsiCo  assumed  operating  control of BAESA and the Company does not
control, or have significant influence  over,  the  management or operations of
BAESA.  On May 9, 1997, The Buenos Aires Stock Exchange  suspended  trading  of
BAESA's  Class  B shares after its fiscal second quarter results for the period
ended March 31, 1997  showed  a  negative  net worth under Argentine Accounting
Principles.   The  New  York  Stock Exchange also  halted  trading  in  BAESA's
American Depository Shares.   On  December 5, 1997, BAESA announced a financial
restructuring plan which would result  in  the issuance of additional equity by
BAESA in exchange for a portion of its outstanding  debt,  and  would  (if  the
Company  does  not  elect to exercise its preemptive rights to purchase its pro
rata share of the additional  equity)  result  in the Company's 17% interest in
the outstanding capital stock of BAESA being diluted  to  a  .34% interest.  On
January  29,  1998,  BAESA  announced  that  its shareholders had approved  the
restructuring plan.  The plan provides for the  recapitalization  of  BAESA and


                                          9

<PAGE>

involves  lenders  holding 89% of the approximately $700 million of debt  being
restructured.  This  $700  million  includes  $60  million  of  8.5% negotiable
obligations  originally  issued in the Eurobond market (the "Eurobonds").   The
implementation of the plan  is  contingent  upon  the  satisfaction  of several
conditions including:  (i) the tender of at least 92% of the face value  of the
Eurobonds  in  connection  with the restructuring; (ii) the settlement of class
action litigation commenced  against  BAESA  in  the  United  States; and (iii)
approvals  by  Argentine  and  United  States  regulatory authorities  for  the
issuance of new BAESA equity, and by Argentine authorities  for the issuance of
new  debt,  as part of the restructuring.  BAESA also announced  that,  if  the
requisite amount  of  Eurobonds is not tendered, or the class action litigation
is not settled on terms  acceptable  to BAESA, the parties to the restructuring
plan agreement have agreed to support  a  prepackaged plan of reorganization of
BAESA under Chapter XI of the United States Bankruptcy Code.

      The  Company  withdrew  its  interest  in  BAESA  Shareholder  Associates
("BSA"), and liquidated Argentine Bottling Associates,  two partnerships, which
previously  held  the  Company's  interest in BAESA, during fiscal  year  1997.
These actions have resulted in the  Company  holding its BAESA shares directly,
and eliminates for future periods, the accounting  requirement that the Company
report on an equity basis the results of operations of BAESA.

      The Company's Board of Directors have declared a  dividend  consisting of
the  12,345,347  shares  of  capital stock of BAESA owned by the Company.   The
dividend will be distributed on June 17,  1998 to the Company's shareholders of
record on May 28, 1998.  The distribution will be made in the form of 6,172,674
BAESA  American  Depository  Shares  (each representing  two  underlying  BAESA
shares)  on  a  pro  rata  basis to the holders  of  the  Company's  21,500,000
outstanding Class shares A and Class B shares, and for the benefit of Rafael Nin
who, pursuant to a Stock Option Agreement between the Company and Mr. Nin, holds
an option to  acquire  1,516,667  Class  B  shares,  with  fractional  American
Depository  Shares  being  rounded  to  the  nearest  whole  number of American
Depository  Shares.  Under the Stock Option Agreement with Mr. Nin, the Company
is obligated to retain the  BAESA shares  allocable to the  1,516,667  unissued
Class B shares (as if they were outstanding on the record date) represented  by
Mr. Nin's option, so that such BAESA shares also will be subject to acquisition
by Mr. Nin upon exercise of the option.

      The following condensed  audited  financial information relating to BAESA
as of September 30, 1996 (in thousands of  U.S. dollars), and for the year then
ended has been provided to the Company by BAESA;  its  inclusion in this report
is for disclosure purposes only and the Company makes no  representation  as to
the  accuracy  or  completeness  of such information.  At the present time, the
Company does not control, or have significant influence over, the management or
operations of BAESA. For further information  regarding BAESA, investors should
consult information made publicly available by BAESA to its shareholders.

<TABLE>
<CAPTION>
                                                                                                      SEPTEMBER
30,
                                                                                                         1996
                                                                                                      
___________
<S>                                                                                                  <C>
ASSETS
Cash and cash equivalents......................................................                         $27,361
Accounts receivable, net.......................................................                          64,069
Inventories....................................................................                          31,077
Deferred income tax, net.......................................................                           6,681
Other current assets...........................................................                           8,469
                                                                                                       ________
        Total current assets...................................................                         137,657
Property, plant and equipment, net.............................................                         586,908
Intangible assets, net.........................................................                          79,092
Investment in joint venture....................................................                         106,918
Other assets...................................................................                          16,805
                                                                                                        
        Total assets                                                                                   ________
                                                                                                       $927,380
LIABILITIES
Current installments of long-term debt and capital lease obligations...........                        $290,299
Bank loans and overdrafts......................................................                         375,788
Accounts payable, income tax payable and accrued expenses......................                         190,981
                                                                                                       ________
        Total current liabilities..............................................                        $857,068
Long-term debt.................................................................                          87,461
Deferred income taxes..........................................................                           7,740
Other long-term liabilities....................................................                           8,385
                                                                                                       ________
        Total liabilities......................................................                         960,654
Total shareholders' equity/(deficit)...........................................                         (33,274)
                                                                                                       ________
        Total liabilities and shareholders' equity/(deficit)...................                        $927,380
                                                                                                       ========
</TABLE>

                                          10

<TABLE>
<CAPTION>
                                                                                                      YEAR ENDED
                                                                                                      SEPTEMBER
30,
                                                                                                         1996
                                                                                                     
____________
<S>                                                                                                  <C>
Net Sales......................................................................                        $680,236
                                                                                                       _________
Cost and Expenses:
Cost of sales..................................................................                        (472,692)
Selling and marketing expenses.................................................                        (354,880)
Administrative expenses........................................................                        (192,210)
Restructuring costs............................................................                         (34,782)
                                                                                                      _________
                                                                                                     (1,054,564)
                                                                                                      _________
Income/(loss) from operations..................................................                        (374,328)
Other income (expenses), net...................................................                         (75,459)
                                                                                                      _________
            Income/(loss) before income tax (expense) benefit and equity 
               in net earnings of affiliate.....................................                       (449,787)

Income/(loss) tax (expense) benefit.............................................                         (8,191)
                                                                                                       ________
            Income/(loss) before equity in net earnings of affiliate............                       (457,978)
Equity in net earnings of affiliate.............................................                          5,597
                                                                                                       ________
            Net income/(loss)...................................................                      $(452,381)
                                                                                                       ========
</TABLE>

(9)   STOCK OPTION PLANS

      In 1997 the Company adopted two stock option plans (the "plans") pursuant
to which the Company's Board of Directors may grant  stock  options  to certain
employees  and  directors of the Company and its affiliates who have served  in
such capacities for  at  least  one  year  prior  to  the  date the options are
granted.  The plans authorize grants of options to purchase  up  to one million
shares  of  authorized  but unissued Class B  Common  Stock.  One of the option
plans is designed so as to be qualified  for income  tax purposes,  whereas the
other is not a  qualified  plan.  Stock  options under  the qualified  plan are
granted with an exercise price  equal  to  the stock's fair market value at the
date  of  the grant.   Each of the stock options granted under the plans  has a
ten-year term and vests and becomes  fully exercisable in  accordance  with the
terms of its grant.

      At September 30, 1997, there were 810,000 additional shares available for
grant under the plans.  Prior to September 30, 1997, Rafael  Nin was granted an
option  to  purchase  190,000  Class B shares under the plans.  The  per  share
weighted-average estimated fair  value of stock options granted during 1997 was
$3.52 on the date of the grant, using  the  Black  Scholes option-pricing model
with the following weighted average assumptions:  expected  dividend  yield 0%,
risk-free  interest  rate  of  6.125%,  expected  volatility  of  51.42% and an
expected life of 10 years.

      On  March  3,  1998, the Company issued 110,000 stock options to  acquire
Class B shares, to certain  officers  and key management employees, pursuant to
the qualified stock option plan.  The exercise  price of these options is $6.25
per share. The per share weighted-average estimated fair value of stock options
granted during the twelve month period ended March  3,  1998  was  $4.73 on the
date  of  the  grant,  using  the  Black Scholes option-pricing model with  the
following weighted average assumptions:   expected dividend yield 0%, risk-free
interest rate of 6%, expected volatility of  41.17%  and an expected life of 10
years.  After this transaction there were 700,000 Class  B shares available for
grant under the plans.  On March 3, 1998, 50% of these stock options vested and
are considered granted.  The balance will become vested and  considered granted
on  the  earlier of (i) the date there is a change in control of the Company or
(ii) December 31, 1998.

      Additionally, the  Company has entered into a Stock Option Agreement with
Rafael Nin,(the "Nin Option") the Chief Executive Officer of the Company, which
grants him the right to acquire 1,516,667 Class B shares of the Company,  at an
exercise price of $5.00 per share.  This stock  option  will be  exercisable in
whole  or in part  until exercised  in  full.  The per  share  weighted-average
estimated fair value of stock options granted during 1997 was $3.52 on the date
of the grant, using the Black Scholes option-pricing model with  the  following
weighted average assumptions: expected dividend  yield  0%,  risk-free interest
rate of 6.125%, expected volatility of 51.42% and an expected life of 10 years.

      The Company applies APB opinion No. 25  in accounting  for all  the stock
option  granted  under the  plans  and  the  Nin  Option  and,  accordingly, no
compensation  cost has been  recognized for its stock  options in the financial
statements.  Had the Company determined  compensation  costs based on  the fair
value at the grant date  for its  stock options, under  SFAS 123, the Company's
net loss would have increased  to  the  pro  forma  amounts indicated below:

                                          11

<PAGE>

<TABLE>
<CAPTION>
                                                             1998
                                                            ______
<S>                          <C>                   <C>
Net Loss                     As Reported                    $2,142
                                                            ______
                             Pro Forma                      $2,402
                                                            ______
Net Loss Per Share                                            $.11
                                                            ______
</TABLE>

      At March 31, 1998 the number of options exercisable was 1,761,667 and the
exercise price of such options was as follows:


           1,706,667 class B shares      Exercise price of $5.00 per share
              55,000 class B shares      Exercise price of $6.25 per share

(10)  CONTINGENCIES

LEGAL PROCEEDINGS

      The  Company  has resolved the U.S. Securities and Exchange  Commission's
(the "Commission") administrative  proceeding  relating  to certain fiscal year
1996 accounting irregularities that were first uncovered during  1996.  Without
admitting  or  denying  any  of  the Commission's allegations and findings, the
Company has agreed to cease and desist  from  committing  any  violation of the
reporting,  record-keeping  and  internal  control  provisions  of the  federal
securities laws.  No fines or penalties were imposed on the Company.

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

(11)  FAIR VALUE OF FINANCIAL INSTRUMENTS

      The carrying amounts of cash and cash equivalents,  accounts  receivable,
accounts  payable, bank loans and overdrafts, accrued payroll, taxes and  other
current liabilities  approximate  fair  value  because of the short maturity of
these instruments.

      The  fair value of each of the Company's long-term  debt  instruments  is
based on the  amount  of  future  cash  flows  associated  with each instrument
discounted  using  the  Company's  current  borrowing  rate  for  similar  debt
instruments  of  comparable  maturity.   The  carrying amounts approximate  the
estimated fair value at March 31, 1998.

      The Company currently does not hold any derivatives.

      Under the equity method of accounting, the  Company's investment in BAESA
was reduced to zero.

(12)  YEAR 2000 COMPLIANCE

      The   Company  recognizes  potential  software  failures   arising   from
processing the  Year 2000 date as a known risk.  The Company is addressing this
risk by developing  and  implementing  procedures  that  identify  systems  and
equipment  that are not Year 2000 compliant and executing appropriate solutions
to modify or  replace  them in order to become compliant.  The Company believes
that the cost associated  with  becoming  Year  2000  compliant will not have a
material  adverse effect on its results.  There can be no  assurance,  however,
that the Company  will  be able to identify and correct all aspects of the Year
2000 problems that affect  the  Company's  business  or that becoming Year 2000
compliant will not have a material adverse effect on its financial results.


                                          12
<PAGE>




                        PEPSI-COLA PUERTO RICO BOTTLING
                           COMPANY AND SUBSIDIARIES


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

GENERAL OVERVIEW

      The  following  discussion  of  the financial condition  and  results  of
operations of the Company should be read  in conjunction with this overview and
the Condensed Consolidated Financial Statements  of  the Company, and the Notes
thereto, as of March 31, 1998 (unaudited) and September  30,  1997, and for the
six  month periods ended March 31, 1998 and March 31, 1997 (the "1998 six month
interim period" and the "1997  six month interim period," respectively) and for
the three month interim periods  ended March 31, 1998 and  March 31, 1997  (the
"1998 three month interim period"  and the "1997  three month  interim period",
respectively).

      All  of  the  5,000,000 shares of Class A Common Stock,  (six  votes  per
share) are being held  in  a  voting  trust for which Rafael Nin, the Company's
Chief  Executive  Officer,  acts  as  a voting  trustee.   These  shares  which
represent a controlling interest in the  Company,  are  subject  to  a purchase
option exercisable at $1 per share which may be transferred exclusively for the
benefit of the Company.  Any transfer of the option which results in a transfer
of  voting  control  of the Company, will require the prior written consent  of
PepsiCo Inc. ("PepsiCo"), approval  of  the  Company's principal lender and 
compliance with applicable regulatory requirements.   The option expires on 
September 28, 1998. The Company has retained the services of  a  financial  
adviser to assist it in connection  with the possible sale of the option.  
There can  be  no  assurance that the Company will be successful in 
consummating any transaction.

      This Report  contains  forward  looking  statements  of  expected  future
developments.    The   Company  wishes  to  insure  that  such  statements  are
accompanied by meaningful  cautionary  statements  pursuant  to the safe harbor
established  in  the  Private  Securities Litigation Reform Act of  1995.   The
forward looking statements in this  Report  refer to expectations regarding the
payment of dividends, seasonality and estimated capital expenditures for future
years.  These forward looking statements reflect  Management's expectations and
are  based  upon  currently  available  data;  however,  actual   payments  and
expenditures  are  subject  to  future  events  and  uncertainties  which could
materially  impact  the Company's ability to pay dividends and its ability  and
need to make capital expenditures.

      Presentation of Financial Information

      In addition to  conducting  its own bottling operations, the Company owns
12,345,347 shares, or approximately 17% of the outstanding capital stock (prior
to the restructuring described in the  following  paragraph), and, through June
30, 1996, exercised significant influence over the management of BAESA, subject
to  the  right  of  PepsiCo,  Inc. ("PepsiCo") and certain  of  its  affiliates
(collectively,  "Pepsi  Cola  International"   or  "PCI")  to  approve  certain
management decisions.  As of July 1, 1996, PepsiCo assumed operating control of
BAESA and the Company does not control, or have significant influence over, the
management or operations of BAESA.

      On  May  9, 1997, The Buenos Aires Stock Exchange  suspended  trading  of
BAESA's Class B  Shares  after its fiscal second quarter results for the period
ended March 31, 1997 showed  a  negative  net  worth under Argentine accounting
principles of $18.7 million.  The New York Stock  Exchange  also halted trading
in BAESA's American Depository Shares.  On December 5, 1997,  BAESA announced a
financial restructuring plan which would result in the issuance  of  additional
equity  by  BAESA in exchange for a portion of its outstanding debt, and  would
(if the Company  does  not  elect to exercise its preemptive rights to purchase
its  pro rata share of the additional  equity)  result  in  the  Company's  17%
interest  in  the  outstanding  capital  stock of BAESA being diluted to a .34%
interest.   On  January 29, 1998, BAESA announced  that  its  shareholders  had
approved the restructuring plan.  The plan provides for the recapitalization of
BAESA and involves  lenders  holding  89%  of the approximately $700 million of
debt  being  restructured.  This $700 million  includes  $60  million  of  8.5%
negotiable  obligations   originally   issued   in  the  Eurobond  market  (the


                                          13

<PAGE>

"Eurobonds").   The  implementation  of  the  plan  is   contingent   upon  the
satisfaction  of several conditions including:  (i) the tender of at least  92%
of the face value  of  the Eurobonds in connection with the restructuring; (ii)
the settlement of class action litigation commenced against BAESA in the United
States;  and  (iii)  approvals   by  Argentine  and  United  States  regulatory
authorities for the issuance of new  BAESA equity, and by Argentine authorities
for  the  issuance  of new debt, as part  of  the  restructuring.   BAESA  also
announced that, if the  requisite  amount  of Eurobonds is not tendered, or the
class  action  litigation  is not settled on terms  acceptable  to  BAESA,  the
parties  to  the  restructuring   plan  agreement  have  agreed  to  support  a
prepackaged plan of reorganization  of  BAESA  under  Chapter  XI of the United
States Bankruptcy Code.

      The  Company  withdrew  its interest in BAESA Shareholder Associates, and
liquidated  Argentine  Bottling  Associates, two partnerships, which previously
held  the  Company's interest in BAESA, during fiscal year 1997.  These actions
have resulted in the Company holding its BAESA  shares directly, and eliminates
for future periods, the accounting requirement that the  Company  report  on an
equity basis the results of operations of BAESA.

      The  Company's  Board of Directors has declared a dividend consisting  of
the 12,345,347 shares of  capital  stock  of  BAESA  owned by the Company.  The
dividend  will be distributed on June 17, 1998 to the Company  shareholders  of
record on May 28, 1998.  The distribution will be made in the form of 6,172,674
BAESA American  Depository  Shares  (each  representing  two  underlying  BAESA
shares)  on  a  pro  rata  basis  to  the  holders  of the Company's 21,500,000
outstanding Class A shares and Class B shares, and for the benefit of Rafael Nin
who, pursuant to a Stock Option Agreement between the Company and Mr. Nin, holds
an  option  to  acquire  1,516,667  Class B  shares, with  fractional  American
Depository  Shares  being  rounded  to  the  nearest  whole number  of American
Depository Shares.  Under the Stock Option Agreement with Mr. Nin, the  Company
is obligated to retain  the BAESA  shares  allocable to the  1,515,667 unissued
Class B Shares (as if they were outstanding on the record date)  represented by
Mr. Nin upon exercise of the option.

      Seasonality

      The  historical  results  of  operations  of  the Company have  not  been
significantly seasonal. However, the Company anticipates  that  its  results of
operations  in  the  future  may be somewhat seasonal in the summer and holiday
seasons.

THE COMPANY

      GENERAL

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

<TABLE>
<CAPTION>
                                                                              Six Months               Three
Months
                                           FISCAL YEAR                          INTERIM                  
INTERIM
                                     _______________________________        __________________       
__________________
<S>                                  <C>          <C>          <C>          <C>          <C>          <C>    
     <C>
                                     1995         1996         1997         1997         1998         1997   
     1998
                                    _______      _______      _______      _______      _______      _______ 
    _______
Net Sales                             100.0%       100.0%       100.0%       100.0%       100.0%       100.0% 
     100.0%
Cost of Sales                          59.4         72.8         68.8         70.1         69.2         71.0 
       71.2
Gross Profit                           40.6         27.2         31.2         29.9         30.8         29.0 
       28.8
Selling and Marketing Expenses         26.6         41.3         30.5         33.0         29.5         34.4 
       29.9
Administrative Expenses                 5.5          9.3          8.5         13.2          6.5         16.1 
        7.7
Restructuring Charges                     -          2.6           .5          1.1            -          2.6 
          -
Settlement expenses                                              13.3
Income (Loss) from Operations           8.5        (26.1)       (21.6)       (17.4)        (5.2)       (24.1) 
      (8.8)
                                      =====        ======       ======       ======        ======      ====== 
      ======
</TABLE>

                                          14


<PAGE>

1998 SIX MONTH INTERIM PERIOD COMPARED TO 1997 SIX MONTH INTERIM PERIOD

      NET SALES.  Net Sales  for  the  Company increased $1.9 million, or 4.0%,
for the 1998 six month interim period from the 1997 six month interim period to
$48.5 million.  This increase was primarily  the result of an increase in sales
volume of 14.9% offset partially by increased  discounts  provided to customers
in the 1998 six month interim period as compared to the 1997  six month interim
period.   The  average  net  sales  price  on  an eight ounce equivalent  basis
decreased during the 1998 six month interim period  by  approximately  9.4%  as
compared to the 1997 six month interim period.

      COST  OF  SALES.  Cost of sales for the Company increased $.9 million, or
2.7% for the 1998  six  month  interim period as compared to the 1997 six month
interim period to $33.5 million.  This increase was primarily the result of the
14.9% increase in sales volume offset  in  part  by  lower  raw  material costs
during  the  1998  six  month interim period as compared to the 1997 six  month
interim period.

      GROSS PROFIT.  Gross  profit for the Company increased by $1.0 million to
$14.9 million in the 1998 six  month  interim  period from $13.9 million in the
1997 six month interim period.  As a percentage  of  net  sales,  gross  profit
increased to 30.8% in the 1998 six month interim period from 29.9% in the  1997
six  month  interim  period.  The increase was primarily due to the increase in
sales volume of 14.9%  offset in part by higher discounts provided to customers
(which resulted in a lower average net sales price), and the lower raw material
costs.

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

      Selling and marketing expenses for the Company decreased $1.1 million, or
7.1%, to $14.3 million for the 1998 six month interim period as compared to the
1997 six month interim period.   This  decrease  was  primarily  due to reduced
selling expenses of $.8 million and reduced marketing spending of  $.3  million
in  the 1998 six month interim period as compared to the 1997 six month interim
period.  As a percentage of net sales, selling and marketing expenses decreased
to 29.5% during  the  1998  six month interim period from 33.0% in the 1997 six
month interim period.

      ADMINISTRATIVE  EXPENSES.    Administrative   expenses  for  the  Company
decreased $3.0 million or 49.0% for the 1998 six month  interim period from the
1997 six month interim period to $3.1 million.  This decrease was primarily the
result of reductions of $2.0 million in the cost of legal  services  associated
with   certain  civil  litigation  and  the  investigation  of  the  accounting
irregularities  and  reductions of $1.0 million in salaries and wages and other
expenses.  As a percentage  of  net sales, administrative expenses decreased to
6.5% during the 1998 six month interim  period from 13.2% in the 1997 six month
interim period.

      RESTRUCTURING CHARGES.  The Company's  results  of operations for the six
months ended March 31, 1997 were affected by the incurrence  of a non-recurring
restructuring  charge  totaling  $.5  million.  This charge was for  the  costs
associated with employee terminations which  resulted  in  a  reduction  of the
Company's  work  force  by approximately 5%.  There were no such charges during
the 1998 six month interim period.

      INCOME (LOSS) FROM  OPERATIONS.   Income  (loss)  from operations for the
Company increased to $(2.5) million in the 1998 six month  interim period, from
$(8.2)  million  in  the 1997 six month interim period.  This increase  is  the
result of an increase  in Gross Profit of $1.0 million (due to increased volume
of 14.9% partially offset  by  increased  discounts provided to customers), and
decreased selling and marketing costs of $1.1 million and decreased general and
administrative costs of $3.0 million and the  reduction  in restructuring costs
of $.5 million for the 1998 six month interim period as compared  to  the  1997
six month interim period.

      OTHER  INCOME/(EXPENSES).   Other  income/(expenses)  decreased  to $(.6)
million  in  the 1998 six month interim period, from $(.5) million in the  1997
six month interim  period.   This  decrease  is primarily due to lower interest

                                          15

<PAGE>

earnings during the 1998 six month interim period  as  a  result  of lower cash
balances  available  for  investment as compared to the 1997 six month  interim
period.

      INCOME TAX BENEFIT (EXPENSE).   Income  tax  benefit  (expense)  was  $.9
million  for  the  1998  six  month interim period as compared to $(.1) million
expense for the 1997 six month  interim period.  The increase was primarily due
to  income tax benefit realized from  carrying  back  certain  tax  credits  to
previous years.

      NET  INCOME/(LOSS).   Net income/(loss) during the 1998 six month interim
period was $(2.1) million, compared to $(8.7) million during the 1997 six month
interim period.


                                          16

<PAGE>

1998 THREE MONTH INTERIM PERIOD COMPARED TO 1997 THREE MONTH INTERIM PERIOD

      NET SALES.  Net Sales for  the  Company increased $2.2 million, or 10.4%,
for the 1998 three month interim period  from  the  1997  three  month  interim
period  to  $22.9 million.  This increase was primarily the result of the 22.8%
increase in sales  volume partially offset by an increase in discounts provided
to customers, in the  1998  three  month interim period as compared to the 1997
three month interim period.  The average  net  sales  price  on  an eight ounce
equivalent  basis  decreased  during  the  1998  three month interim period  by
approximately 10.0% as compared to the 1997 three month interim period.

      COST OF SALES.  Cost of sales for the Company  increased $1.6 million, or
10.7% for the 1998 three month interim period as compared  to  the  1997  three
month  interim period to $16.3 million.  This increase was primarily the result
of the 22.8%  increase  in sales volume, offset partially by lower raw material
and fixed manufacturing costs  in  the  1998  three  month  interim  period  as
compared to the 1997 three month interim period.

      GROSS  PROFIT.   Gross profit for the Company increased by $.6 million to
$6.6 million in the 1998  three  month  interim period from $6.0 million in the
1997 three month interim period.  As a percentage  of  net  sales, gross profit
decreased slightly to 28.8% in the 1998 three month interim period  from  29.0%
in  the  1997  three  month  interim  period.  The increase in gross profit was
primarily  due  to  the  increase in sales volume offset  partially  by  higher
discounts provided to customers,  and  the  resulting  lower  average net sales
price, and reductions in raw material and other fixed manufacturing  costs  for
the 1998 three month interim period as compared to the 1997 three month interim
period.

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

      Selling and marketing  expenses for the Company decreased $.3 million, or
4.0%, to $6.9 million for the  1998  three  month interim period as compared to
the  1997  three  month interim period.  This decrease  was  primarily  due  to
reduced selling expenses  in the 1998 three month interim period as compared to
the 1997 three month interim  period. As a percentage of net sales, selling and
marketing expenses decreased to  29.9%  during  the  1998  three  month interim
period from 34.4% in the 1997 three month interim period.

      ADMINISTRATIVE   EXPENSES.    Administrative  expenses  for  the  Company
decreased $1.6 million or 47.3% for the  1998  three  month interim period from
the  1997  three  month  interim  period  to  $1.8 million.  This  decrease  is
primarily the result of the reduced cost of legal  services of $1.0 million and
lower salaries and wages and other costs of $.6 million.   As  a  percentage of
net  sales,  administrative  expenses  decreased to 7.7% during the 1998  three
month interim period from 16.1% in the 1997 three month interim period.

      RESTRUCTURING CHARGES.  The Company's results of  operations for the 1997
three month  interim period were affected  by the incurrence of a non-recurring
restructuring charge totaling $0.5 million.   This  charge  was  for  the costs
associated  with  employee  terminations  which resulted in a reduction of  the
Company's work force by approximately 5%.   There  were  no such charges during
the 1998 three month interim period.

      INCOME  (LOSS)  FROM OPERATIONS.  Income (loss) from operations  for  the
Company increased to $(2.0)  million  in  the  1998 three month interim period,
from $(5.0) million in the 1997 three month interim  period.   This increase is
the  result of greater gross profit of $.6 million, reflecting increased  sales
volume,  offset  partially  by  increased discounts offered to customers, lower
operating expenses of $1.9 million  and  lower  restructuring  charges  of  $.5
million,  for the 1998 three month interim period as compared to the 1997 three
month interim period.

      OTHER  INCOME/(EXPENSES).   Other  income/(expenses)  increased  to $(.2)
million in the 1998 three month interim period, from $(0.3) million in the 1997
three month interim period.  This increase was primarily due to a gain realized
on  the sale of a portion of land of $.3 million which was partially offset  by
lower  interest  earnings realized as a result of lower cash balances available
for investment in  the  1998 interim period as compared to the 1997 three month
interim period.

                                          17

<PAGE>

      INCOME TAX BENEFIT  (EXPENSE).   Income  tax  benefit  (expense) was $1.1
million for the 1998 three month interim period as compared to  $(.2)  thousand
expense  for  the  1997 three month interim period.  The increase was primarily
due to income tax benefit  realized  from  carrying back certain tax credits to
previous years.

      NET INCOME/(LOSS).  Net income/(loss) during the 1998 three month interim
period was $(1.2) million, compared to $(5.3)  million  during  the  1997 three
month interim period.


                                          18


<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

      LIQUIDITY AND CAPITAL RESOURCES

      At  March  31,  1998,  the  Company  had  $13.0  million of cash and cash
equivalents and indebtedness for borrowed money, including short-term and long-
term borrowings and capital lease obligations, of $30.3  million, which in turn
included $7.0 million of current and short-term obligations.

      The Company's current priority is to restore profitability  with  respect
to  its  Puerto  Rican  operations.  As of March 31, 1998, the Company has used
approximately $28.6 million,  net  of  interest earnings, of the cash set aside
from its September 1995 initial public offering  to  support these efforts, for
the  repayment  of  indebtedness,  and for additions to the  Company's  working
capital  which has been and continues  to  be  affected  as  a  result  of  the
Company's  net  operating  losses,  and  to  cover a portion of the cost of the
offering.  In addition, on April 8, 1997, the Company completed the refinancing
of its remaining debt to include a payment schedule  which more closely matches
the life of its production assets.

      Net cash provided by/(used in) operating activities  for  the Company for
the 1998 six month interim period was $(4.6) million compared to $(7.1) million
during the 1997 six month interim period.  This change was mainly the result of
the net cash income after depreciation and amortization and (gain) loss on sale
of property,  plant and  equipment of $.3  million and changes  in  assets  and
liabilities of $(4.9)  million  during  the 1998 six  month interim  period, as
compared to $(5.4) million and $(1.7) million,  respectively, for  the 1997 six
month interim period.  As of  March 31, 1998, the  Company  had  $72.3  million
in  net  operating  loss carryforwards available to offset  future Puerto Rican
income taxes  and $41.1 million  in  net operating loss carryforwards available
to offset future U.S. taxable income.

      Net  cash  provided by/(used in) investing activities for the Company was
$(.7) million for the  1998 six month interim  period,  as  compared with $10.1
million  during  the 1997  interim  period.  Purchases of  property,  plant and
equipment, net of disposals, amounted  to $(.7) million during the 1998 interim
period as compared to $(2.8) million during the 1997 interim period.   Proceeds
from short-term investment were zero during the 1998 interim period as compared
to $12.9 million for the 1997 interim period.

      Cash flows  provided  by/(used  in)  financing activities for the Company
during the 1998 six month interim period were $(1.2) million compared to $(0.9)
million during the 1997 six  month interim  period.  The  significant financing
activities for the Company during the 1998 interim period were the net repayment
of debt. The significant financing activities during the 1997 six month interim
period  were  also the net  repayment  of debt.  The  Company  did not  pay any
dividends for either the 1998 or 1997 six month interim periods.  In the future,
the  payment of  cash  dividends  will be in part  dependent on the  receipt of
dividends from BAESA, and  in part dependent  on  the  achievement of  adequate
levels of profitability  in the Company's Puerto  Rican  operations, and, under
certain conditions, the consent by Banco Popular.  The Company does not  expect
to pay any cash dividends for the foreseeable future.

      In November 1994, the Company and its  subsidiaries entered into a Credit
Agreement with Banco Popular.  The Credit Agreement  provides for borrowings by
the Company from time to time of $5 million in revolving loans, $8.8 million in
term  loans and $15 million in non-revolving loans.  In  December  1995,  Banco
Popular  increased  the  amount the Company could borrow under revolving loans.
As of March 31, 1996, the  Company  had  outstanding under the Credit Agreement
revolving loans in an aggregate principal  amount  of $10.0 million, term loans
in an aggregate principal amount of $5.3 million and  non-revolving loans in an
aggregate principal amount of $15.0 million.  On April  8,  1997,  the  Company
entered  into a Second Restated Credit Agreement with Banco Popular, the holder
of this debt.  The effect of this new agreement was to restructure the existing
debt into  two  portions,  a  long-term  loan of $25.0 million and a short-term
revolving credit facility of $5.0 million.  Both portions bear interest at 2.5%
over LIBOR.

      The weighted average interest rate on  such  borrowings  was 8.3% for the
1998 interim period.  Beginning on May 1, 1997, the Company is required to make
monthly  payments of principal in the amount of $.083 million with  respect  to
the new term  loan  for  the first two years of the loan with annual escalating
monthly payments thereafter  until the end of the tenth year of the loan (April
1, 2007) when an $11.8 million  balloon payment is due.  The Company may prepay
certain of the loans subject to the terms and conditions of the Second Restated
Credit Agreement.

                                          19

<PAGE>

      Under the terms of the Second  Restated  Credit Agreement, the Company is
subject to the following financial restrictions:  (i) the Company must maintain
a minimum ratio of Total Liabilities to Tangible  Net  Worth (as defined in the
Second Restated Credit Agreement) of not more than 1.60  to  1  for fiscal year
1997  and  1.50  to  1 for each fiscal year thereafter during the term  of  the
Second Restated Credit  Agreement; (ii) a ratio of Operating Cash Flow to Total
Debt Service (as defined  in  the  Second  Restated Credit Agreement) of 1 to 1
through June 30, 1998, 1.30 to 1 from September 30, 1998 through June 30, 1999,
and 1.5 to 1 thereafter; (iii) a minimum Tangible  Net  Worth of $37 million on
September  30, 1997 and of $39.5 million, $42 million, $44.5  million  and  $47
million, respectively, by September 30, 1998, 1999, 2000, 2001, and thereafter.
The Company  is  also  required  to  maintain with Banco Popular a minimum cash
balance of $10 million less certain prepayments  of indebtedness under the term
loan, and under certain conditions this amount may  be  reduced  to  zero.   In
addition,  under certain circumstances, the Company may be required to prepay a
portion of the  debt.  Specifically, net proceeds of capital asset dispositions
over $.25 million  per  year,  insurance  recoveries  other  than  for business
interruption  not  promptly applied toward repair or replacement, a portion  of
excess cash flow (as  defined  in  the Second Restated Credit Agreement), and a
portion of net proceeds associated with  any  sale  of  Class A shares, require
early  repayment of the amounts outstanding under this agreement.   Certain  of
the repayment  amounts  offset the minimum cash balance requirement. The entire
principal  amount  of  loans  outstanding  under  the  Second  Restated  Credit
Agreement becomes immediately  due  and payable, if the Company violates any of
these financial restrictions.  Furthermore,  the  Company may not pay dividends
(other than amounts declared by and received from BAESA  as  dividends) without
the consent of Banco Popular under the Second Restated Credit Agreement.

      The  Company  believes that it is currently in full compliance  with  the
terms of the Second Restated Credit Agreement.

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

      The Company's franchise arrangements  with  PepsiCo  require  it  not  to
exceed a ratio of senior debt to subordinated debt to equity of 65 to 25 to 10.
The Company is currently in compliance with these covenants.

      Capital  expenditures  for  the  Company totaled $1.2 million in the 1998
six month interim  period  as  compared to $3.0  million in the  1997 six month
interim period.  The Company's  capital  expenditures  have  been  financed  by
a  combination   of borrowings  from  third  parties  and  internally generated
funds.  The Company estimates that its capital expenditures for the fiscal years
1998 and 1999 may be approximately $3 million in each year.


                                          20


<PAGE>

                        PEPSI-COLA PUERTO RICO BOTTLING

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

      The information contained in Note 10 to Notes  to  Condensed Consolidated
Financial Statements contained in Part I of this Report is  incorporated herein
by  reference.   Except  as  described  in  that  Note, there were no  material
developments regarding legal proceedings involving  the  Company during the six
month period ended March 31, 1998.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

      (A)  EXHIBITS.  The following exhibits are filed herewith or incorporated
herein:

<TABLE>
<CAPTION>
Exhibit
NUMBER                      DESCRIPTION OF EXHIBIT
_______                     ______________________
<S>                         <C>
3.1                         Amended and Restated Certificate  of  Incorporation  of  the  Company  (incorporated
by reference to
                            Exhibit  3.1  to the Company's Annual Report on Form 10-K for the fiscal year  ended

September  30,
                            1995).
3.2                         Certificate of Amendment of the Company's Amended and Restated Certificate of
Incorporation.
3.3                         Amended  and  Restated  By-Laws  of  the  Company  (incorporated  by reference to
Exhibit 3.2 to the
                            Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1995).
4.1                         Form of Specimen Stock Certificate representing Class B Shares (incorporated by
reference to Exhibit
                            4.1 to Amendment No. 3 to the Company's Registration Statement on Form  S-1 
(Registration  No.  33-
                            94620) (the "S-1 Registration Statement")).
10.1                        Franchise  Commitment  Letter  (incorporated  by  reference  to Exhibit 10.1 to the
S-1 Registration
                            Statement).
10.2                        Letter  Agreement  between the Company and PepsiCo extending term of Exclusive
Bottling Appointments
                            (incorporated by reference to Exhibit 10.2 to the S-1 Registration Statement).
10.3                        Form of Exclusive Bottling  Appointment  (incorporated  by  reference  to  Exhibit 
10.3  to the S-1
                            Registration Statement).
10.4                        Material  Differences  in Exclusive Bottling Appointments (incorporated by reference
to Exhibit 10.4
                            to the S-1 Registration Statement).
10.5                        Concentrate Price Agreement  (incorporated  by  reference  to  Exhibit  10.5 to the
S-1 Registration
                            Statement).
10.6                        Amended  and  Restated  General  Partnership Agreement for BSA (incorporated by
reference to Exhibit
                            10.6 to Amendment No. 1 to the S-1 Registration Statement).
10.7                        Shareholders Agreement (incorporated  by  reference  to  Exhibit  10.7 to Amendment
No. 1 to the S-1
                            Registration Statement).
10.8                        Amendment  No.  1  to Shareholders Agreement (incorporated by reference to Exhibit
10.8 to Amendment
                            No. 1 to the S-1 Registration Statement).
10.9                        Amendment No. 2 to Shareholders  Agreement  (incorporated  by reference to Exhibit
10.9 to Amendment
                            No. 1 to the S-1 Registration Statement).
10.10                       Amendment  No.  3  to  Shareholders  Agreement  (incorporated  by  reference to
Exhibit 10.10 to the
                            Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1995).
10.11                       Stock  Option  Agreement  dated as of September 28, 1996 among Rafael Nin, 
Pepsi-Cola  Puerto  Rico
                            Bottling Company and the Shareholders (incorporated by reference to Exhibit 1 to
the Schedule 13D of
                            Rafael Nin dated October 9, 1996).
10.12                       Voting Trust Agreement dated  September  28,  1996 among Rafael Nin, Pepsi-Cola
Puerto Rico Bottling
                            Company and the Grantors (incorporated by reference  to  Exhibit 2 to the Schedule
13D of Rafael Nin
                            dated October 9, 1996).
10.13                       Consent  of  PepsiCo,  Inc. to the terms of the Voting Trust Agreement referred to
under Exhibit No.
                            10.12 above.
10.14                       Stock  Option  Agreement  dated as of October 15, 1996 between Rafael Nin and
Pepsi-Cola Puerto Rico
                            Bottling Company (incorporated  by reference to Exhibit 1 to the Amendment No. 1
to the Schedule 13D
                            of Rafael Nin dated January 7, 1997).
10.15                       Pepsi-Cola Puerto Rico Bottling Company  Qualified  Stock  Option Plan dated as of
December 30, 1996
                            (incorporated by reference to Exhibit 2 to the Amendment No.  1  to  the  Schedule
13D of Rafael Nin
                            dated January 7, 1997).
10.16                       Pepsi-Cola  Puerto  Rico  Bottling  Company Non-Qualified Stock Option Plan dated
as of December 30,
                            1996 (incorporated by reference to the Company's Proxy Statement dated January 31,
1997).
10.17                       Amendment No. 4 to the Shareholders Agreement (incorporated by reference to the
Exhibit 10.13 to the
                            Company's Annual Report on Form 10K/A-1 for the fiscal year ended September 30,
1996).

                                          21

<PAGE>


10.18                       Second Restated Credit Agreement dated  April 8, 1997 among Pepsi-Cola Puerto Rico
Bottling Company,
                            Pepsi-Cola Puerto Rico Manufacturing Company,  Pepsi-Cola Puerto Rico Distributing
Company, Beverage
                            Plastics Company and Banco Popular de Puerto Rico (incorporated by reference to the
Exhibit 10.18 to
                            the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30,
1997).
10.19                       Master Lease Agreement dated April 18, 1997 between  General  Electric Capital
Corporation of Puerto
                            Rico and Pepsi-Cola Puerto Rico Bottling Company (incorporated  by reference to the
Exhibit 10.19 to
                            the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30,
1997).
10.20                       Amendment No. 5 to Class A Shareholders Agreement (incorporated by reference to the
Exhibit 10.20 to
                            the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30,
1997).
10.21                       Trust Agreement dated as of May 14, 1997 among certain shareholders  of  the Company
and Rafael Nin,
                            as Trustee (incorporated by reference to Exhibit 1 to Amendment No. 3 to the 
Schedule 13D of Rafael
                            Nin dated August 13, 1997).
10.22                       Stock  Option  Agreement dated as of May 14, 1997 among certain grantors, a special
committee of the
                            Company's Board of Directors, the Company and Rafael Nin (incorporated by reference
to Exhibit No. 2
                            to Amendment No. 3 to the Schedule 13D of Rafael Nin dated August 13, 1997).
21.1                        List of Subsidiaries (incorporated by reference to Exhibit 21.1 to the S-1
Registration Statement).
</TABLE>

      (b)   There were no reports on Form 8-K filed  during  the  quarter ended
March 31, 1998.


                                          22

<PAGE>


                                  SIGNATURES

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

<TABLE>
<CAPTION>
             SIGNATURES                                TITLE                                 DATE
             __________                                _____                                 ____
<S>                                   <C>                                     <C>

Rafael Nin                            Chief Executive Officer                            May __, 1998

David L. Virginia                     Chief Financial Officer and Chief                  May __, 1998
                                      Accounting Officer

Wanda Rivera Ortiz                    Chief Accounting Officer                           May __, 1998
</TABLE>


                                          23


                                             NF104630.2  <<Date>> <<Time>>