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 JUNE 30, 1997

                                      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)

              DELAWARE                           ###-##-####
   (State or other jurisdiction of  (I.R.S. Employer Identification No.)
   incorporation or organization)

       CARRETERA #865, KM 0.4
      BARRIO CANDELARIA ARENAS
        TOA BAJA, PUERTO RICO                       00949
(Address of principal executive office)          (Zip code)

   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  August  14, 1997, 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:...........................................    3
      Condensed  Consolidated Balance Sheets - Assets (dated Months
            Ended  June 30, 1997 and September 30, 1996)................    3
      Condensed Consolidated  Balance  Sheets  -  Liabilities
            and Shareholders Equity (dated Months Ended
            June 30, 1997 and September 30, 1996).......................    4
      Condensed Consolidated Statements of Income/
            (Loss)(unaudited) for the Nine Months Ended
            June 30, 1997 and 1996......................................    5
      Condensed Consolidated Statements of Income/(Loss)
            (unaudited) for the Three Months Ended June
            30, 1997 and 1996...........................................    6
      Condensed Consolidated Statements of Cash Flows
            (unaudited) for the Nine Months Ended June 30,
            1997 and 1996...............................................    7
      Notes to Condensed Consolidated Financial Statements (Unaudited)..    8

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations.............................   15 


PART II OTHER INFORMATION...............................................   22

Item 1. Legal Proceedings...............................................   22

Item 6. Exhibits and Reports on Form 8-K................................   22
      (a)   Exhibits....................................................   22
      (b)   Reports on Form 8-K during the quarter ended June 30, 1997..   23








SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


<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>
                                                                            June 30,              September 30,
                                                                              1997                    1996
                                                                          -----------            -------------
                                                                          (unaudited)              (audited)
<S>                                                                           <C>                      <C>
Current Assets:
Cash and cash equivalents                                                $  19,235              $    18,614
Short-term investments                                                           -                   12,904
Accounts receivable:
  Trade, less allowance for doubtful accounts of $1,236
  at June 30, 1997 and $1,158 at September 30, 1996                         13,402                   11,262
  Due from PepsiCo, Inc. and affiliated companies                              374                      877
  Other                                                                      5,735                    2,423
Inventories                                                                  3,633                    4,495
Deferred income taxes                                                          187                      187
Prepaid expenses and current assets                                          1,541                    1,857
                                                                         ---------              -----------
          Total current assets                                           $  44,107              $    52,619

Investment in Buenos Aires Embotelladora S.A. (BAESA)                            -                        -
Deferred income tax, long-term                                               2,076                    2,076
Long-lived assets for sale, principally land and building                    3,805                    3,805
Property, plant and equipment, net                                          47,752                   49,936
Intangible assets, net of accumulated amortization                           1,702                    1,459
Other assets                                                                    60                       86
                                                                         ---------              -----------
          Total assets                                                   $  99,502              $   109,981
                                                                         =========              ===========
</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>
                                                                   June 30,                 September 30,
                                                                      1997                      1996
                                                                  ----------               ------------
                                                                  (unaudited)               (audited)
<S>                                                                   <C>                      <C>
Current Liabilities:
Current installments of long-term debt                        $      1,007                 $      1,550
Current installments of capital lease obligations                      649                          341
Short-term borrowings                                                5,153                       25,000
Accounts payable:
      Trade                                                         14,226                       16,619
      Affiliate                                                          -                           50
Income tax payable                                                      80                          115
Other accrued expenses                                               8,791                        8,672
                                                              ------------                  -----------
    Total current liabilities                                       29,906                       52,347
Long-term debt, excluding current installments                      23,761                        4,813
Capital lease obligations, excluding current installments            1,067                          871
Accrued pension cost, long-term                                      2,593                        2,593
                                                              ------------                  -----------
    Total liabilities                                               57,327                       60,624
                                                              ------------                  -----------
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                       90,738
Retained earnings/(deficit)                                        (60,586)                     (40,232)
Pension liability adjustment                                        (1,364)                      (1,364)
                                                              ------------                 ------------
      Total shareholders' equity                                    42,175                       49,357
                                                              ------------                 ------------
      Total liabilities and shareholders' equity              $     99,502                 $    109,981
                                                              ============                 ============
</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>
                                                                          Nine Months Ended June 30,
                                                                      1997                       1996
                                                                   (unaudited)               (unaudited)
                                                                 -------------             -------------
<S>                                                                    <C>                       <C>

Net Sales                                                        $     72,778              $     79,117
Cost of Sales                                                          50,390                    54,980
                                                                 -------------             -------------
   Gross profit                                                        22,388                    24,137

Selling and marketing expenses                                         22,342                    32,246
Administrative expenses                                                 6,497                     6,928
Estimated liability under shareholders' class action litigation        13,172                         -
Restructuring Charges                                                     535                     2,922
                                                                 -------------             -------------
Income/(loss) from operations                                         (20,158)                  (17,959)
                                                                 -------------             -------------
Other income (expenses):
      Interest expense                                                 (1,961)                     (876)
      Interest income                                                     966                     1,889
      Other, net                                                          100                      (230)
                                                                 -------------             -------------
        Total other income (expenses)                                    (895)                      783
                                                                 -------------             ------------- 
        Income/(loss) before income tax benefit/(expense)             (21,053)                  (17,176)
          and equity in net loss of BAESA
Income tax benefit/(expense)                                              699                      (601)
                                                                 -------------             -------------
      Income/(loss) before equity in net loss of BAESA                (20,354)                  (17,777)
Equity in net loss of BAESA, net of income tax
      benefit of $13,454 in 1996
                                                                            -                   (37,769)
Net Income/(Loss)                                                $    (20,354)             $    (55,546)
                                                                 -------------             -------------
Earnings per common share:
      Income/(loss) before equity in net loss of
      BAESA, net of taxes                                        $      (0.95)             $      (0.83)
                                                                 =============             =============
      Net income/(loss)                                          $      (0.95)             $      (2.58)
                                                                 =============             =============

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 June 30,
                                                                     1997                       1996
                                                                 (unaudited)                (unaudited)
                                                               ---------------             ------------
<S>                                                                 <C>                        <C>
Net Sales                                                      $   26,194                 $   24,615
Cost of Sales                                                      17,727                     19,915
                                                               ---------------             ------------
   Gross profit                                                     8,467                      4,700

Selling and marketing expenses                                      6,965                     11,620
Administrative expenses                                               339                      3,605
Estimated liability under shareholders' class action litigation    13,172                          -
Restructuring Charges                                                   -                      2,922
                                                               ---------------             ------------
Income/(loss) from operations                                     (11,999)                   (13,447)
                                                               ---------------             ------------

Other income (expenses):
      Interest expense                                               (716)                      (511)
      Interest income                                                 267                        524
      Other, net                                                        5                       (450)
                                                               ---------------             ------------
          Total other income (expenses)                              (444)                      (437)
                                                               ---------------             ------------
          Income/(loss) before income tax benefit and equity
               in net loss of BAESA                               (12,443)                   (13,884)
Income tax expense                                                    828                         90
                                                               ---------------             ------------
      Income/(loss) before equity in net loss of BAESA            (11,615)                   (13,794)
Equity in net loss of BAESA, net of income tax
      benefit of $1,485 in 1996                                         -                    (32,132)
                                                               ===============             ============
Net Income/(loss)                                              $  (11,615)                $  (45,926)

Earnings per common share:
      Income/(loss) before equity in net loss of BAESA, net of
      taxes                                                    $    (0.54)                $    (0.64)
                                                               ===============             ============

      Net income/(loss)                                        $    (0.54)                $    (2.14)
                                                               ===============             ============


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>
                                                                             Nine Months Ended June 30,
                                                                           1997                   1996
                                                                        (unaudited)            (unaudited)
                                                                        -----------           -----------
<S>                                                                           <C>                  <C>
Cash flows from operating activities:
      Net income/(loss)                                                $  (20,354)            $  (55,546)
      Adjustments to reconcile net earnings (loss) to net
      cash provided by/(used in) operating activities:
          Estimated liability under shareholders' class action
           litigation                                                      13,172                      -
          (Gain)/loss on sale of property, plant, and equipment                60                    510
          Depreciation and amortization                                     4,649                  3,951
          Intangible Write-off                                                  -                    647
          Equity in net earnings/(losses) of BAESA                              -                 37,769
      Changes in assets and liabilities:
          Accounts receivable                                              (4,949)                (3,262)
          Inventories                                                         862                    774
          Prepaid expenses and other current assets                           316                   (366)
          Accounts payable                                                 (2,443)                 6,068
          Other accrued expenses                                              119                  2,810
          Income taxes payable                                                (35)                   743
          Other, net                                                           26                    308
                                                                        -----------           -----------

             Net cash provided by/(used in) operating                      (8,577)                (5,594)
              activities

Cash flows from investing activities:
      Proceeds from sale of property, plant and equipment                     313                  1,280
      Proceeds from matured short-term investment                          12,904                      -
      Purchases of property, plant and equipment                           (3,081)               (20,531)
                                                                        -----------           -----------
      Dividends received from affiliates                                        -                  2,839
          Net cash provided by/(used in) investing activities              10,136                (16,412)

Cash flows from financing activities:
      Proceeds from short-term borrowings                                     309                 48,316
      Repayment of short-term borrowings                                        -                (17,000)
      Repayment of long-term debt                                          (1,751)                (1,163)
      Proceeds from Capital Lease                                           1,793                      -
      Repayment of capital lease obligations                               (1,289)                (1,149)
      Dividends paid                                                            -                 (5,308)
                                                                        -----------           -----------
          Net cash provided by/(used in) financing activities                (938)                23,696
          
Net increase in cash and cash equivalents                                     621                  1,690
Cash and cash equivalents at beginning of period                           18,614                 46,091
                                                                        -----------           -----------
Cash and cash equivalent at end of period                              $   19,235             $   47,781
                                                                        ===========           ===========

Supplemental disclosures:
Cash paid for:
      Interest                                                         $    1,855             $    1,769
      Income taxes                                                     $      217             $      186


SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                7

</TABLE>

                        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,  1996.   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 nine months and three months  ended
June  30,  1997 are not necessarily indicative  of  the  results  that  may  be
expected for the fiscal year ending September 30, 1997.

(2)   INVENTORIES

      Inventories consist of the following:

<TABLE>
<CAPTION>
                                                  JUNE 30, 1997           SEPTEMBER 30, 1996
                                               ----------------           ------------------
<S>                                                 <C>                           <C>
            Raw materials                      $          1,050            $        1,346
            Finished goods                                1,537                     1,684
            Other                                         1,046                     1,465
                                               ----------------           ------------------
                                               $          3,633            $        4,495
                                               ================           ==================
</TABLE>

(3)   PROPERTY, PLANT AND EQUIPMENT, NET

      Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                  JUNE 30, 1997            SEPTEMBER 30, 1996
                                                  -------------            ------------------
<S>                                                   <C>                          <C>

      Land and improvements                       $      7,057             $      7,057
      Buildings and improvements                        14,621                   14,301
      Machinery, equipment and vehicles                 45,923                   45,931
      Bottles, cases and shells                          1,444                    1,401
      Furniture and fixtures                             1,565                    1,877
      Construction in process                              360                    1,941
                                                  ------------             ------------------
                                                        70,970                   72,508
      Less accumulated depreciation and amortization   (23,218)                 (22,572)
                                                  ------------             ------------------
      Property, plant and equipment, net          $     47,752             $     49,936
                                                  ============             ==================
</TABLE>

The Company  capitalizes  interest  cost  as a component of the cost of certain
building  and improvements, and machinery.   The  following  is  a  summary  of
interest cost incurred:

<TABLE>
<CAPTION>
                                                              JUNE 30,
                                                              --------
                                                              
                                                      1997             1996
                                                --------------     ------------
<S>                                                    <C>               <C>
Interest cost capitalized                       $          -       $        893
Interest cost charged to income                        1,961                876
                                                --------------     ------------
                                                $      1,961       $      1,769
                                                ==============     ============
</TABLE>


                                        8
<PAGE>



(4)   ACCOUNTING FOR LONG LIVED ASSETS

      During  the  year  ended  September  30,  1996,  the  Company adopted the
provisions of FASB 121 - Accounting for Long Lived Assets.  The  Company  deems
an  asset  to  be  impaired  if  a  forecast  of undiscounted future cash flows
directly related to the asset, including disposal  value,  if any, is less than
its  carrying  amount.   Factors leading to the impairment were  the  Company's
decision, in mid-1996, to  consolidate  all  of its manufacturing activities in
its new manufacturing facility, and anticipated  losses from the disposition of
the former manufacturing facility, and remaining unused  equipment.  The amount
of  the  impairment was calculated using a recent appraisal  of  the  estimated
value of such  property less estimated costs of disposition.  At June 30, 1997,
those Long Lived  Assets  remained  at the same value as the value at September
30, 1996.

(5)   SHAREHOLDERS' EQUITY

      The Company declared and paid no  cash  dividends  during  the nine month
period ended June 30, 1997 and $5,308 during the nine month period  ended  June
30, 1996.

      Earnings  per  common  share are determined by dividing net income by the
weighted average number of common shares outstanding during each period.  Stock
options  granted  to the Company's  President  have  been  disregarded  in  the
computation of earnings  per  common  share  as  their  effect  would have been
antidilutive.

      As  indicated  in  note  10,  the  Company's  founding shareholders  have
effectively contributed to the Company 2,500,000 Class B shares of Common Stock
with an estimated value of $13,172.

(6)   INCOME TAX

      Income tax (benefit) expense for the nine months  ended June 30, 1997 and
1996 consisted of the following:

<TABLE>
<CAPTION>
                                                     JUNE 30,
                                                     --------
                                                1997             1996
                                             ---------      ---------
<S>                                             <C>             <C>             
      Current                                $   (699)      $     601
      Deferred                                      -               -
                                             ---------      ---------
      Income tax (benefit) expense           $   (699)      $     601
                                             =========      =========


</TABLE>

      Deferred income tax benefit of $13,454 for the nine  month  period  ended
June 30, 1996 has been provided in connection with the Company's equity in  net
loss of BAESA.

      The 1997 income tax benefit includes $897 of Federal income taxes paid in
prior years for which the company has filed a claim using as the basis thereof,
the significant net operating losses incurred during 1996.

(7)   RELATED PARTY TRANSACTIONS

      The  Company  paid approximately $1,553 and $1,682 during the nine months
ended June 30, 1997 and  1996,  respectively,  for  advertising  fees to a firm
controlled by a shareholder of the Company.

      The Company paid approximately $232 during the nine months ended June 30,
1996 for consulting fees to a shareholder and director of BAESA.

      The Company paid approximately $151 during the nine months ended June 30,
1996 for construction management services to a shareholder and former  director
of the Company.

      The Company paid approximately $300 during the nine months ended June 30,
1997  for  legal  fees  to  a  firm, one of whose partners is a relative of the
Company's President.




                                    9
<PAGE>


      The Company's President has  been  granted  by  the company's controlling
shareholders, a ten year voting trust agreement which entitles him to vote, but
not own, 5,000,000 class A shares, representing a controlling  interest  in the
Company.   The  Company's  President was granted a two-year option at $1.00 per
share on these controlling shares, to be exercised for the exclusive benefit of
the Company.  This option expires on September 28, 1998.

8)    INVESTMENT IN BAESA

      The following condensed unaudited financial information relating to BAESA
as of June 30, 1997 and for  the  nine  months  and three months ended June 30,
1997 and 1996 and audited balance sheet financial  information  as of September
30,  1996  (in thousands of U.S. dollars) has been provided to the  Company  by
BAESA.  Its  inclusion  in this report is for information purposes only and the
Company makes no representation  as  to  the  accuracy  or completeness of such
information.   At the time of filing of this Form 10-Q, 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>
                                                                   June 30,                   September 30,
                                                                     1997                         1996
                                                                  (unaudited)                   (audited)
                                                                  ----------                  -------------
<S>                                                                   <C>                          <C>
                   ASSETS
Cash and cash equivalents                                        $    9,308                   $   27,361
Accounts receivable, less allowance for doubtful                     65,750                       64,069
accounts
Inventories                                                          19,557                       31,077
Deferred income tax, net                                              6,124                        6,681
Prepaid expenses and other current assets                            10,798                        8,469
                                                                  ----------                  -------------
     Total current assets                                           111,537                      137,657

Property, plant and equipment                                       369,707                      586,908
Intangible assets, net of accumulated amortization                   59,287                       78,943
Investment in affiliated company                                    109,790                      106,918
Other assets                                                          8,181                       16,954
                                                                  ----------                  -------------
          Total assets                                           $  658,502                   $  927,380
                                                                  ==========                  =============

LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current installments of long-term debt                           $  335,014                   $  290,299
Bank loans and overdrafts                                           397,035                      367,440
Accounts payable                                                     44,246                       72,155
Income tax payable                                                    2,784                        3,149
Other accrued taxes                                                  72,261                            -
Accrued expenses and other current liabilities                       88,328                      124,025
                                                                  ----------                  -------------
     Total current liabilities                                      939,668                      857,068
Long-term debt, excluding current installments                       33,922                       87,461
Deferred income taxes                                                 7,511                        7,740
Other long-term liabilities                                           7,996                        8,385
                                                                  ----------                  -------------
          Total liabilities                                         989,097                      960,654

          Total shareholders' equity/(deficit)                     (330,595)                     (33,274)
                                                                  ----------                  -------------
          Total liabilities and shareholders' equity/(deficit)   $  658,502                   $  927,380
                                                                  ==========                  =============

</TABLE>



                                  10
<PAGE>


(8)   INVESTMENT IN BAESA (CONTINUED)

<TABLE>
<CAPTION>
                                         Three Months Ended June 30,             Nine Months Ended June 30,
RESULTS OF OPERATIONS                     1997                1996                1997                1996
                                       (UNAUDITED)         (UNAUDITED)         (UNAUDITED)         (UNAUDITED)
                                      ------------        ------------        ------------        ------------
<S>                                        <C>                 <C>                 <C>                 <C>
Net sales                              $  130,521          $  123,318          $  529,553          $  563,425

Cost and expenses:

  Cost of sales                           (76,076)           (105,386)           (276,120)           (341,524)

  Selling and marketing expenses          (54,009)           (124,640)           (182,469)           (280,039)

  Administrative expenses                 (25,707)            (86,922)            (86,875)           (145,444)

  Debt and other restructuring charges   (205,444)             (9,531)           (219,425)            (21,071)
                                       -----------         -----------         -----------         -----------

    Income/(loss) from operations        (230,716)           (203,161)           (235,336)           (224,653)
                                       -----------         -----------         -----------         -----------

Interest expense                          (30,257)            (21,346)            (74,518)            (58,656)
Interest income                                91                 472                 242               2,624
Foreign exchange gain/(loss)                1,800                (372)              4,537              (1,572)
Other, net                                   (601)             (3,341)             (4,439)             (7,491)
                                       -----------         -----------         -----------         -----------
                                          (28,967)            (24,587)            (74,178)            (65,095)
                                       -----------         -----------         -----------         -----------
Net income/(loss) before tax expense     (259,683)           (227,748)           (309,514)           (289,748)

 and equity in net earnings of
affiliate
Income tax expense                            286             (23,555)               (937)            (14,560)
                                       -----------         -----------         -----------         -----------
Net income before equity in net          (259,397)           (251,303)           (310,451)           (304,308)
earnings
 of affiliate
Equity in earnings of affiliate             1,090                (152)              6,323               3,528
                                       -----------         -----------         -----------         -----------
    Net income/(loss)                 $  (258,307)        $  (251,455)        $  (304,128)        $  (300,780)
                                       ===========         ===========         ===========         ===========
</TABLE>

      On July 29, 1997, BAESA announced an agreement in principle to enter into
a  long-term financial restructuring  plan  with  its  major  debt  holders  in
Argentina.   Under the terms of the restructuring, BAESA's unsecured lenders in
Argentina would exchange debt for at least 98% of the equity in BAESA.  BAESA's
existing shareholders  would  retain  up  to  2% of the equity and the right to
purchase additional equity pursuant to a rights offering, which would allow the
stockholders  to  retain  their  proportionate  ownership.   Additionally,  the
current stockholders would be able to sell the rights  if a market develops for
them.

      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.  Trading of these securities  has  not  resumed  to
date.

(9)   STOCK OPTION PLANS

      The  Company  has  established two Stock Option Plans for the granting of
stock options to purchase  Class B Shares 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.   It is expected that all
officers and directors and other employees of the Company  and  its  affiliates
will  be  eligible  to  participate  under  these stock option plans, as deemed


                                11
<PAGE>


appropriate by the Company's Board of Directors.   One  of  these  stock option
plans  is  qualified  for  income  tax  purposes,  whereas  the other is not  a
qualified plan.  Options issued under the stock option plan that  is  qualified
for  income tax purposes will have exercise prices which are not less than  the
fair market  value  of  the  Class  B Shares at the date of grant; the exercise
prices of options issued under the non-qualified  stock option plan may be less
than the fair market value of the Class B shares at  the  date  of  grant.   On
October 15, 1996, the Company granted an option to the President of the Company
to  acquire  190,000 shares under the qualified plan at an exercise price of $5
per share.  These  plans  replace  a  stock  option  plan  that existed and was
terminated during 1996.

      The  Company  has  granted another stock option to the President  of  the
Company to acquire 1,516,667  Class  B  Shares  of  the Company, at an exercise
price of $5 per share.  This stock option is exercisable  in  whole  or in part
until  exercised  in  full.   A similar option previously granted to the former
president of the Company was canceled during 1996.

(10)  LEGAL PROCEEDINGS

      The Company is a defendant  in  eight  putative class actions (originally
nine)  alleging  federal  securities  violations by  the  Company  and  various
officers and directors of the Company based  on  accounting irregularities that
required the Company to restate certain of its reported  financial  results and
other   alleged   misstatements  and  omissions  in  the  Company's  disclosure
documents.   In  the  original  filings  plaintiffs  sought  unspecified  money
damages.  In a ninth  action, the United States District Court for the District
of  Puerto Rico issued an  order  granting  plaintiff's  motion  for  voluntary
dismissal  without  prejudice.   The  Company has reached a settlement with the
attorneys for the plaintiffs in seven of these lawsuits.  The settlement, which
has been approved by the Court, will result  in the payment of $2.5 million and
2.5  million  in  previously  issued and outstanding  Class  B  shares  to  the
plaintiffs and their attorneys.  The settlement will result in the dismissal of
all eight actions.  The Company  and  the  other  defendants  have  reached  an
agreement  with  the  Company's  founding shareholders under which the founding
shareholders will effectively contribute  to  the Company for use in connection
with the settlement 2.5 million Class B shares  owned  by  them.   Each  of the
named  defendants  will  be  released from all claims by the plaintiffs and the
class, and certain of the Company's  officers  and  directors  and the founding
shareholders will be released by the Company from all claims arising out of the
circumstances which precipitated the litigation and certain other claims.

      Additionally  the  Company  and  the  various  directors  of the  company
referred  to  above  have  reached  a  settlement  agreement with the company's
directors,  officers  and  entity  liability insurance coverage  carriers  (the
insurers)  pursuant to which the insurers  would  make  payments  amounting  to
$4,000,000 in  payment  of  their  obligations  to  the  Company  and  to other
insureds.   These  funds  are  to  be initially deposited in an escrow fund and
would be released only upon approval by all interested parties, including BAESA
and PepsiCo, and when  the  settlement  of  the eight  putative  class  actions
referred to above becomes final and effective.

      The  Company has accrued the estimated cost  of  the  settlement  of  the
aforementioned eight putative actions as follows:


Cost of 2,500,000 class B shares of stock effectively
contributed by the founding shareholders valued using
the trading price of the stock for a period of
fourteen days prior to the date of the settlement ($5.269)    $  13,172

Cash Payment of $2,500,000 less recovery from insurers                -
                                                              ---------  
                                                              $  13,172
                                                              =========

      The remaining balance of the expected recovery from the insurers has been
recorded as a reduction of legal fees incurred in connection with this matter.

      The effective  contribution  of  the  2,500,000  class  B  shares  by the
founding  shareholders  has  been recorded as an additional contribution to the
Company's capital using as its  basis  the  average  trading price of the stock
referred to above.



                                        12
<PAGE>

      The shares of stock effectively contributed by the  founding shareholders
have been deposited in a trust managed for the benefit of the  Company,  by the
Company's  President,  and  will  be released, pursuant to the terms of a stock
option agreement, when the settlement  of  the  litigation  becomes  final  and
unappealable.

      The  effect  on  the results of operations of the Company for the quarter
and nine month periods ended  June 30, 1997, of the above mentioned transaction
is as follows:

<TABLE>
<CAPTION>
                                                   THREE MONTHS           NINE MONTHS
                                                       ENDED                  ENDED
                                                  JUNE 30, 1997          JUNE 30, 1997
                                                  -------------          -------------
<S>                                                    <C>                     <C>
                                                              (In thousands)
<circle> Reduction in administrative expenses     $     1,500             $     1,500
<circle> Settlement of the litigation                 (13,172)                (13,172)
                                                  -----------             -----------
          Net effect on net income/(loss)             (11,672)                (11,672)
<circle> Contribution of Class B shares by founding    13,172                  13,172
             shareholders                         -----------             -----------
         Net effect on shareholders' Equity       $     1,500             $     1,500
                                                  ===========             ===========

</TABLE>


      In  addition,  in connection  with  the  accounting  irregularities,  the
Securities and Exchange Commission (the "Commission") has issued a formal order
of investigation.  The  Staff  of  the  Commission is currently engaged in that
investigation and the Company is cooperating fully.

(11)  FAIR VALUE OF FINANCIAL INSTRUMENTS

      The carrying amounts of cash and cash  equivalents,  accounts receivable,
accounts  payable,  bank  loans,  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 June 30, 1997.

      The Company currently does not hold any derivatives.

      Under the equity method of accounting, the  Company's investment in BAESA
has been reduced to zero.  At June 30, 1997, such investment  had  an estimated
fair  value  of  $0.00  determined using as a basis the New York Stock Exchange
quoted closing price per  share  of the Company's American Depository Shares on
that date.

(12)  RESTRUCTURING CHARGES

       The Company's results of operations  for  the nine months ended June 30,
1997  have  been  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%.  The Company's results of operations  for  the nine months
ended  June  30,  1996  have  been  affected by the incurrence of several  non-
recurring restructuring charges totaling  $2.9  million.   These  charges  were
comprised  of  the following: (1) a $1.4 million fixed asset write-down related
to the closing of  all  bottling  operations in the old plant, which is now for
sale  and  (2) $1.4 million in pension  write-off  and  costs  associated  with
employee termination.   The  amount  of  $1.4  million in pension write-off and
costs associated with employee termination referred  to  above,  includes  $0.6
million  of  a  pension  plan  intangible asset judged to be of no value to the
Company, and $0.8 million of benefits relating to two executives of the Company
who had either resigned or where  the  decision  had  been taken, pending board
approval, to discontinue their employment with the Company.

(13)  LOAN RESTRUCTURING


                                        13
<PAGE>


      On April 8, 1997, the Company refinanced its short  term  borrowings with
Banco  Popular  de Puerto Rico.  Under the terms of the Second Restated  Credit
Agreement, a term  loan  of $25 million has been granted to the Company payable
in stipulated monthly installments  over  a  ten-year  period,  with  a balloon
payment at maturity of $11.8 million.  The term loan is collateralized  with  a
priority  lien  over  all  real  estate, machinery and equipment, and any other
assets or properties of the Company,  acceptable  to the Bank.  The Company has
also been granted a $5 million revolving credit facility,  the principal amount
of which may not exceed certain stipulated percentages of eligible  receivables
and inventories, as defined.

(14)  PENSION PLANS

      On  April  16,  1997, the Company announced its intention to suspend  its
pension plans for periods  not  yet  determined.   The  Company  does  not have
revised  actuarial  valuations under FASB 87 that reflect the full benefits  of
the freeze of the pension  plans.   As  these  valuations become available, the
accrued pension costs will be adjusted accordingly.

(15)  ADOPTION OF NEW ACCOUNTING STANDARDS

      In  February  1997,  the  Financial  Accounting  Standards  Board  issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS
no.  128).   This  statement  is effective for financial  statements  for  both
interim  and  annual periods ending  after  December  15,  1997.   It  requires
restatement of  all  prior-period  earnings  per  share ("EPS") data presented.
SFAS No. 128 establishes standards for computing and presenting EPS and applies
to  entities  with  publicly held common stock.  This  statement  replaces  the
presentation of primary EPS with a presentation of basic EPS.  The Company will
adopt SFAS No. 128 for the first quarter ending December 31, 1997.
















                                 14
<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  June  30, 1997 (unaudited) and September 30, 1996 and for the
nine month periods ended  June  30, 1997 and 1996 (the "1997 nine month interim
period" and the "1996 nine month  interim  period,"  respectively)  and for the
three month interim periods ended June 30, 1997 and 1996 (the "1997 three month
interim period" and the "1996 three month interim period," respectively ).  The
Company's  financial results for the nine month period ended June 30,  1996  as
reported in  the  Company's  quarterly report on Form 10-Q which was originally
filed by the Company on October  8,  1996  were restated.  The restated results
are  contained in an amended quarterly report  on  Form  10-Q/A  filed  by  the
Company on December 23, 1996.

      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 the ability of the Company
to successfully conclude the settlement of its  class  action  lawsuits and the
Company's  claim  against  its  liability  insurance carrier and to payment  of
dividends 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
requirements.  Among the factors that can cause actual  performance  to  differ
materially  are:  failure  to  complete  the  settlement of the Company's class
action  lawsuits  or  failure  to complete the anticipated  settlement  of  the
Company's claim against its liability  insurance  carrier; the availability of
cash in the future which may be used to pay dividends;  and  changes  in  plans
with  respect to capital expenditures, as well as the availability of resources
to fund  those  capital  expenditures;  and  other factors, including economic,
climatic  and  political conditions in Puerto Rico,  and  the  impact  of  such
conditions on consumer spending.

      PRESENTATION OF FINANCIAL INFORMATION

      In addition  to  conducting  its  own  bottling  operations,  the Company
indirectly  owns  12,345,347  shares,  or  approximately 17% of the outstanding
capital  stock  of  BAESA as of June 30, 1997,  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.  The financial information relating  to  the  Company  set
forth  below  reflects the operations of the Company and its equity interest in
the net earnings  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 July 29,  1997,
BAESA announced  an  agreement in principle to enter into a long-term financial
restructuring plan with  its  major debt holders in Argentina.  Under the terms
of the restructuring, BAESA's unsecured  lenders  in  Argentina  would exchange
debt  for  at  least 98% of the equity in BAESA.  BAESA's existing shareholders
would retain up to 2% of the equity and the right to purchase additional equity
pursuant to a rights  offering,  which  would  allow the stockholders to retain
their proportionate ownership.  Additionally, the current stockholders would be
able to sell the rights if a market develops for them.  The Company is studying
its options in regards to BAESA's restructuring.   Additionally, the Company is
liquidating  Argentine  Bottling Associates, a partnership  through  which  the
Company holds its interest  in  BAESA.   This  liquidation  will  result in the
Company  holding  its  BAESA shares directly, and will eliminate the accounting
requirement to report on  an equity basis the results of operations of BAESA in
the future.




                                  15
<PAGE>


      SEASONALITY

      The historical results  of  operations  of  the  Company  have  not  been
significantly  seasonal.  The Company believes that this could have been partly
attributable to  existing  capacity  constraints while operating out of the old
plant  which might have prevented the Company  from  meeting  increased  demand
during peak  periods.   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>
                                                         FISCAL YEAR                   NINE MONTHS INTERIM   THREE MONTHS INTERIM
                                             -----------------------------------       -------------------   ---------------------

                                             1994           1995           1996        1996        1997        1996       1997
                                             ----           ----           ----        ----        ----        ----       ----
<S>                                           <C>            <C>            <C>         <C>        <C>          <C>       <C>
Net Sales                                   100.0%         100.0%         100.0%      100.0%      100.0%     100.0%      100.0%
Cost of Sales                                 58.2          59.4           72.8        69.5        69.2       80.9        67.7
Gross Profit                                  41.8          40.6           27.2        30.5        30.8       19.1        32.3
Selling and Marketing Expenses                29.3          26.6           41.3        40.8        30.7       47.2        26.6
Administrative Expenses                       10.1           5.5            9.3         8.8         8.9       14.6         1.2
Settlement of Litigation                         -             -              -           -        18.1          -        50.3
Intangibles and Fixed Asset                    2.8             -              -           -           -          - 
Write-offs
Restructuring Charges                            -             -            2.6         3.7          .7       11.9           -
Income (Loss) from Operations                  (.4)          8.5          (26.1)      (22.7)      (27.7)     (54.6)      (45.8)
                                             ======         =====          =====       ====        =====     =====        =====    
                                         
</TABLE>


      1997 NINE MONTH INTERIM PERIOD COMPARED TO 1996 NINE MONTH INTERIM PERIOD

      NET  SALES.  Net Sales for the Company decreased $6.3 million,  or  8.0%,
for the 1997  nine month interim period from the 1996 nine month interim period
to $72.8 million.   This  decrease  was primarily the result of the significant
increase in discounts provided to customers,  reflecting  increased competitive
activity, and was partially offset by a 2.9% increase in unit  sales  volume in
the  1997  nine month interim period as compared to the 1996 nine month interim
period.  The  average  net  sales  price  on  an  eight  ounce equivalent basis
decreased during the 1997 nine month interim period by approximately  10.6%  as
compared to the 1996 nine month interim period.

      COST  OF SALES.  Cost of sales for the Company decreased $4.6 million, or
8.3% for the  1997 nine month interim period as compared to the 1996 nine month
interim period  to  $50.4  million.   This decrease was primarily the result of
lower raw material costs partially offset the 2.9% increase in sales volume and
by higher depreciation costs for the new  manufacturing  facility  in  the 1997
nine month interim period as compared to the 1996 nine month interim period.

      GROSS PROFIT.  Gross profit for the Company decreased by $1.7 million  to
$22.4  million  in the 1997 nine month interim period from $24.1 million in the
1996 nine month interim  period.   As  a  percentage of net sales, gross profit
increased to 30.8% in the 1997 nine month interim period from 30.5% in the 1996
nine month interim period.  The decrease in  gross  profit was primarily due to
higher discounts provided to customers, the lower average  net sales price, and
increased depreciation on the new manufacturing facility, which  were partially
offset by the volume increase of 2.9% and 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


                                16
<PAGE>


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 $9.9 million, or
30.7%, to $22.4 million  for  the 1997 nine month interim period as compared to
the 1996 nine month interim period.   This  decrease  was  primarily  due  to a
reduction  in  marketing spending of $6.9 million, reductions in labor costs of
$1.2 million, a  decrease in repair and maintenance costs of $1.4 million and a
reduction in insurance  costs  of  $.4  million  in the 1997 nine month interim
period as compared to the 1996 nine month interim  period.  As  a percentage of
net  sales, selling and marketing expenses decreased to 30.7% during  the  1997
nine month interim period from 40.8% in the 1996 nine month interim period.

      ADMINISTRATIVE   EXPENSES.    Administrative  expenses  for  the  Company
decreased $.4 million or 6.2% for the  1997  nine month interim period from the
1996 nine month interim period to $6.5 million.   This  decrease  was primarily
the result of lower professional fees incurred in the 1997 period,  due in part
to  the  anticipated  recovery of $1.5 million from the Company's officers  and
directors liability insurance  carrier,  compared  to  the  1996  period.  As a
percentage of net sales, administrative expenses increased to 8.9%  during  the
1997 nine month interim period from 8.8% in the 1996 nine month interim period.

      SETTLEMENT  OF  LITIGATION.   The Company's results of operations for the
nine months ended June 30, 1997 were  affected  by the incurrence of a non-cash
expense of $13.2 million in connection with the Company's settlement of certain
civil  litigation, representing the estimated value  of  2.5  million  Class  B
shares being  transferred  as part of the settlement.  Because these shares are
to  be contributed by the Company's  founding  shareholders,  and  because  the
Company  anticipates  receiving  a  $4.0  million  recovery  from its liability
insurance  carrier,  the  net effect on the Company's equity of the  settlement
transaction is a $1.5 million  gain,  which  can  be  viewed  as  a recovery of
previously expensed legal cost.  There was no similar non-cash expense incurred
during  the 1996 nine month interim period.  For further information  regarding
the effect  on  the  Company's  results  of  operations of certain transactions
relating  to  the  proposed  settlement, see note  10  to  Notes  to  Condensed
Consolidated Financial Statements.

      RESTRUCTURING CHARGES.   The Company's results of operations for the nine
months ended June 30, 1997 have  been  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%.   During  the  1996  nine  month
interim  period  a  charge  of  $2.9 million was recorded.  The 1996 charge was
recorded in connection with the fixed  asset write-down of $1.4 million related
to the closing of all bottling operations  in the Company's old bottling plant,
which is now for sale, and $1.5 million in pension  asset  write-offs and costs
associated with employee termination.

      INCOME  (LOSS)  FROM OPERATIONS.  Income (loss) from operations  for  the
Company decreased to $(20.2)  million  in  the  1997 nine month interim period,
from $(18.0) million in the 1996 nine month interim  period.   This decrease is
the  result of (i) lower net sales, reflecting increased discounts  offered  to
customers  offset  partially by increased volume of 2.9%, (ii) recognition of a
loss contingency due  to  the  proposed  settlement  of the civil litigation of
$15.7 million (the $13.2 million estimated value of 2.5  million Class B Shares
plus $2.5 million in cash) offset by insurance recovery of  $4.0 million, (iii)
legal  fees incurred in connection with the civil litigation and  investigation
of the accounting  irregularities,  and  (iv) the restructuring charges, offset
partially by lower raw material costs and reduced levels of marketing spending,
and other cost reductions for the 1997 nine month interim period as compared to
the 1996 nine month interim period.

      OTHER  INCOME/(EXPENSES).   Other income/(expenses)  decreased  to  $(.9)
million in the 1997 nine month interim  period,  from  $.8  million in the 1996
nine   month   interim  period.   This  decrease  was  primarily  due  to   the
capitalization of  construction  period  interest  during  the  1996 nine month
interim period for the new manufacturing facility which was occupied during the
third quarter of 1996.  There was no such capitalization during the  1997  nine
month  interim  period.  Interest earnings decreased during the 1997 nine month
interim period as a result  of  lower cash balances available for investment as
compared to the 1996 nine month interim period.

      EQUITY IN NET LOSS OF BAESA.  Based on information disseminated by BAESA,
equity in net loss of BAESA, net of income tax, amounted to $(37.8) million for
the 1996 nine month interim period.   The Company's equity in the loss reported
by BAESA for the fiscal year ended September  30, 1996 was such that it reduced
the Company's investment in BAESA to zero, meaning  that  no  further equity in
losses of BAESA were to be reported by the Company until BAESA  reports profits



                                17
<PAGE>


sufficient  to produce a positive investment in BAESA on the Company's  balance
sheet.  No such  profits  were  realized  during  the  1997  nine month interim
period.   In  view  of the intended liquidation of the affiliated  partnerships
through which the Company  holds  its  investment  in BAESA the Company will no
longer be subject to the accounting requirement that  it  report  on  an equity
basis the results of operations of BAESA.

      NET INCOME/(LOSS).  Net income/(loss) during the 1997 nine month  interim
period  was  $(20.4)  million, compared to $(55.5) million during the 1996 nine
month interim period.   Net  (loss)  in  the  1997  nine  month  interim period
reflects loss before equity in net earnings (loss) of BAESA of $(20.4) million,
as compared to $(17.8) million of loss before equity in net loss of  BAESA  and
equity  in  net  loss  of  BAESA  of $(37.8) million during the 1996 nine month
interim period.

1997 THREE MONTH INTERIM PERIOD COMPARED TO 1996 THREE MONTH INTERIM PERIOD

      NET SALES.  Net Sales for the  Company  increased  $1.6 million, or 6.4%,
for  the  1997  three  month interim period from the 1996 three  month  interim
period to $26.2 million.   This  increase was primarily the result of increased
sales volume of 15.3% offset in part  by  an  increase in discounts provided to
customers during the 1997 three month interim period  as  compared  to the 1996
three month interim period.  The average net sales price per case on  an  eight
ounce equivalent basis decreased during the 1997 three month interim period  by
approximately 7.7% as compared to the 1996 three month interim period.

      COST  OF SALES.  Cost of sales for the Company decreased $2.2 million, or
11.0% for the  1997  three  month  interim period as compared to the 1996 three
month interim period to $17.7 million.   This decrease was primarily the result
of reductions in raw material costs of $3.6  million, reductions in labor costs
of  $.8  million,  and  reductions in utility and  operating  expenses  of  $.2
million, partially offset  by  the  $2.4 million cost associated with the 15.3%
increase in sales volume in the 1997  three month interim period as compared to
the 1996 three month interim period.

      GROSS PROFIT.  Gross profit for the  Company increased by $3.8 million to
$8.5 million in the 1997 three month interim  period  from  $4.7 million in the
1996  three month interim period.  As a percentage of net sales,  gross  profit
increased  to  32.3%  in  the 1997 three month interim period from 19.1% in the
1996 three month interim period.   The  increase  was  due  to  the 15.3% sales
volume  increase,  offset in part, by the lower average net sales price,  which
resulted in a net revenue  increase of $1.6 million, coupled with the reduction
in cost of sales of $2.2 million  which  was  due  to lower raw material costs,
lower  labor  and other expenses, offset by the cost of  the  additional  sales
volume of 15.3%.

      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 $4.7 million, or
40.1%, to $7.0 million for the  1997  three month interim period as compared to
the  1996  three month interim period.  This  decrease  was  primarily  due  to
reductions in  marketing  spending  of  $2.5 million coupled with reductions in
labor costs of $1.2 million, and reductions  in  insurance,  fleet,  and  other
costs of $1.0 million in the 1997 three month interim period as compared to the
1996  three  month  interim  period.  As a percentage of net sales, selling and
marketing expenses decreased to  26.6%  during  the  1997  three  month interim
period from 47.2% in the 1996 three month interim period.

      ADMINISTRATIVE   EXPENSES.    Administrative  expenses  for  the  Company
decreased $3.3 million or 90.5% for the  1997  three  month interim period from
the  1996  three  month  interim  period  to  $.3 million.  This  decrease  was
primarily the result of recording the anticipated reimbursement of a portion of
the cost of legal services associated with certain  civil  litigation  and  the


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<PAGE>


investigation  of  the  accounting irregularities by insurance proceeds of $1.5
million.  As a percentage  of  net  sales, administrative expenses decreased to
1.2% during the 1997 three month interim  period  from  14.6% in the 1996 three
month interim period.

      SETTLEMENT OF LITIGATION.  The Company's results of  operations  for  the
three  months ended June 30, 1997 were affected by the incurrence of a non-cash
expense of $13.2 million in connection with the Company's settlement of certain
civil  litigation,  representing  the  estimated  value  of 2.5 million Class B
shares being transferred as part of the  settlement.   Because these shares are
to  be  contributed  by  the  Company's  founding shareholders, and because the
Company  anticipates  receiving  a $4.0 million  recovery  from  its  liability
insurance  carrier,  the  net  effect on the Company's equity of the settlement
transactions  is a $1.5 million gain, which  can  be  viewed  as  a recovery of
previously expensed  legal cost.  For further information  regarding the effect
on  the Company's  operations  of certain transactions relating to the proposed
settlement,  see  note  10  to  Notes   to  Condensed  Consolidated   Financial
Statements.

      RESTRUCTURING  CHARGES.   There  were no restructuring  charges  recorded
during the three month interim period ended June 30, 1996.  For the three month
interim period ended June 30, 1996 the Company  recorded  restructuring charges
of  $2.9 million.  These charges were comprised of the fixed  asset  write-down
related  to  the  closing  of  all bottling operations at the old manufacturing
facility of $1.4 million, and $1.5  million  in  pension  asset  write-offs and
costs associated with employee termination.

      INCOME  (LOSS)  FROM OPERATIONS.  Income (loss) from operations  for  the
Company decreased to $(12.0)  million  in  the 1997 three month interim period,
from $(13.4) million in the 1996 three month  interim period.  This decrease is
the  result of higher net sales, lower cost of sales,  and  lower  selling  and
marketing  expenses, offset by the contingency loss recorded in connection with
the  settlement  of  the  civil  litigation,  net  of  the  proceeds  from  the
anticipated insurance settlement.

      OTHER  INCOME/(EXPENSES).  Other income/(expenses) were $(0.4) million in
the 1997 three  month interim period, as compared to $(0.4) million in the 1996
three month interim period.

      EQUITY IN NET LOSS OF BAESA.  Based on information disseminated by BAESA,
equity in net loss of BAESA, net of income tax, amounted to $(32.1) million for
the 1996 three month interim period.  The Company's equity in the loss reported
by BAESA for the  fiscal year ended September 30, 1996 was such that it reduced
the Company's investment  in  BAESA  to zero, meaning that no further equity in
losses of BAESA were to be reported by  the Company until BAESA reports profits
sufficient to produce a positive investment  in  BAESA on the Company's balance
sheet.   No  such  profits were realized during the 1997  three  month  interim
period.  In view of  the  intended  liquidation  of the affiliated partnerships
through which the Company holds its investment in  BAESA,  the  Company will no
longer  be  subject to the accounting requirement that it report on  an  equity
basis the results of operations of BAESA.

      NET INCOME/(LOSS).  Net income/(loss) during the 1997 three month interim
period was $(11.6)  million,  compared to $(45.9) million during the 1996 three
month interim period.  Net (loss)  in  the  1997  three  month  interim  period
reflects loss before equity in net earnings (loss) of BAESA of $(11.6) million,
as compared to $(13.8) million of loss before equity in net earnings (loss)  in
BAESA  and equity in net earnings (loss) of BAESA of $(32.1) million during the
1996 three month interim period.

LIQUIDITY AND CAPITAL RESOURCES

      At  June  30,  1997,  the  Company  had  $19.2  million  of cash and cash
equivalents,   and   indebtedness  for  borrowed  money,  including  short-term
borrowings and capital lease obligations, of $31.6 million.

      The Company has  announced  that  its  current  priority  is  to  restore
profitability with respect to its Puerto Rican operations.  In that connection,
the  Company  has made a decision to set aside its expansion plans temporarily.
Also, as of June  30,  1997,  the Company has used approximately $25.6 million,
net of interest earnings, of the cash set aside from its September 1995 initial


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<PAGE>


public offering to support these efforts through the repayment of indebtedness,
by 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  1997  nine  month  interim  period  was $(8.6) million compared to  $(5.6)
million during the 1996 nine month interim  period.  This change was mainly the
result  of  the  net cash loss after depreciation  and  amortization,  loss  on
contingency and other  adjustments  and  equity  in net loss of BAESA of $(2.5)
million and changes in assets and liabilities of $(6.1) million during the 1997
nine month interim period, as compared to $(12.7)  million  and  $7.1  million,
respectively, for the 1996 nine month interim period.  As of June 30, 1997, the
Company  had  $60.7  million  in net operating loss carryforwards available  to
offset future Puerto Rican income taxes and $42.6 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
$10.1 million for the 1997 nine month interim  period,  as  compared to $(16.4)
million  during  the  1996  interim period.  Purchases of property,  plant  and
equipment, net, amounted to $(2.8)  million  during the 1997 nine month interim
period  as  compared  to $(19.3) million during the  1996  nine  month  interim
period. The 1996 nine month  interim  period  included significant expenditures
incurred in constructing the new manufacturing  facility in Toa Baja.  Proceeds
from short-term investments provided $12.9 million  during  the 1997 nine month
interim  period  as  compared  to zero for the 1996 nine month interim  period.
Dividends received from BAESA during  the  1997  interim  period  were  zero as
compared  to  $2.8  million  during  the  1996  interim period.  In view of the
current financial difficulties being experienced  by  BAESA  as reported in its
recent public announcements, the Company does not believe that BAESA will be in
a  position  to  pay  dividends  on  its shares in the foreseeable future.   In
addition, because the Company exerts no  influence  over  BAESA,  even if BAESA
does return to profitability, the Company would not be able to affect decisions
made  by  BAESA  with  respect  to the payment of dividends.  As a result,  the
Company  is  unable to predict whether  or  when  BAESA  will  pay  any  future
dividends.

      Cash flows  provided  by  (used  in) financing activities for the Company
during the 1997 nine month interim period were $(1.1) million compared to $23.7
million during the 1996 nine month interim  period.   The significant financing
activities of the Company during the 1997 interim period were the net repayment
of debt.  The significant financing activities during the  1996  interim period
were the net borrowing of $29.0 million and the payment of dividends  of $(5.3)
million.  In the future, the payment of 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 the consent of Banco  Popular.   The  Company  does  not  expect to pay any
dividends on its common stock for the foreseeable future.

      In November 1994, the Company and its subsidiaries entered  into a Credit
Agreement with Banco Popular.  The Credit Agreement provided 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 7.9% during the
first  nine  months  of  the  fiscal  year 1997.  Beginning on May 1, 1997, the
Company is required to make monthly payments of principal in the amount of $.83
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 a $11.8 million balloon  payment  is due.
The  Company may prepay either of the loans subject to the terms and conditions
of the Second Restated Credit Agreement.




                                20
<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 1.00 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  the  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.

      As a result of the Company initially providing to Banco Popular incorrect
financial  statements for the first and second quarters ended December 31, 1995
and March 31,  1996,  and  certain  other  circumstances,  the  Company  was in
technical  default  of  the terms of the Credit Agreement during part of fiscal
year 1996.  The Company has,  however,  received  from  Banco Popular a written
waiver  of  such default.  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 $3.0 million in the 1997
nine month interim period as compared to  $20.5  million in the 1996 nine month
interim   period.    During  fiscal  1996,  the  Company  constructed   a   new
manufacturing facility at its Toa Baja property and purchased new manufacturing
equipment to increase  production capacity and capability in the new plant.  In
the  past,  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 1997
and 1998 may be approximately $4 million in each year.




                                21

<PAGE>


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  nine
month period ended June 30, 1997.

      ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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

Exhibit
Number                  Description of Exhibit
-------                 ----------------------

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.  (Incorporated  by reference to Exhibit 3.2
      to the Company's quarterly report on Form 10-Q  for  the quarterly period
      ended December 31, 1996).
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 Bottling Company and the Grantors (incorporated by  reference
      to Exhibit 2 to the Schedule 13D of Rafael Nin dated October 9, 1996).




                                22
<PAGE>




10.13 Consent  of  PepsiCo.,  Inc.  to  the terms of the Voting Trust Agreement
      referred to under Exhibit No. 10.12 above.  (Incorporated by reference to
      Exhibit  3.2 to the Company's quarterly  report  on  Form  10-Q  for  the
      quarterly period ended December 31, 1996).
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).
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  Distributing  Company,  Beverage   Plastics
      Company and Banco Popular de Puerto Rico.
10.19 Master  Lease  Agreement  dated  April  18, 1997 between General Electric
      Capital Corporation of Puerto Rico and Pepsi-Cola  Puerto  Rico  Bottling
      Company.
10.20 Amendment No. 5 to Class A Shareholders Agreement.
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).

(b)  There were no reports on Form 8-K filed during the quarter ended March 31,
     1997









                                        23
<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.

       SIGNATURES                      TITLE                   DATE


   /S/ RAFAEL NIN              Chief  Executive Officer    August 14, 1997
   -----------------------
Rafael Nin


   /S/ DAVID L. VIRGINIA       Chief  Financial Officer    August 14, 1997
   -----------------------
David L. Virginia


   /S/ WANDA RIVERA ORTIZ      Chief  Accounting Officer   August 14, 1997
   ------------------------
Wanda Rivera Ortiz
















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