SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q




(Mark One)
<checked-box>  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 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 May 9, 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>
<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 (unaudited) at March 31, 1997
          and September 30, 1996. . . . . . . . . . . . . . . . . . . . . . . 3
    Condensed Consolidated Statements of Income/(Loss)(unaudited) for the
          Six Months Ended March 31, 1997 and 1996. . . . . . . . . . . . . . 5
    Condensed Consolidated Statements of Income/(Loss)(unaudited) for the
          Three Months Ended March 31, 1997 and 1996. . . . . . . . . . . . . 6
    Condensed Consolidated Statements of Income/(Loss)(unaudited) for the
          Six Months Ended March 31, 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 . . . . . . . . . . . . . . . . . . . . . . . .14


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

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

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . .20
      (a)   Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
      (b)   Reports on Form 8-K during the quarter ended March 31, 1997 . . .21

      SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       2

PAGE
<PAGE>
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


                        PEPSI-COLA PUERTO RICO BOTTLING
                           COMPANY AND SUBSIDIARIES

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

                                    ASSETS


<TABLE>
<CAPTION>
                                                           March  31,             September 30,
                                                              1997                    1996
                                                           ----------             ------------
                                                           (unaudited)              (audited)
<S>                                                        <C>                   <C>
Current Assets:
Cash and cash equivalents                                   $  20,732              $    18,614
Short-term investments                                              -                   12,904
Accounts receivable:
  Trade, less allowance for doubtful accounts of $1,263
    at March 31, 1997 and $1,158 at September 30, 1996         12,144                   11,262
  Due from PepsiCo, Inc. and affiliated companies                 740                      877
  Other                                                           887                    2,423
Inventories                                                     3,659                    4,495
Deferred income taxes                                             187                      187
Prepaid expenses and current assets                             1,241                    1,857
                                                            ---------              -----------
          Total current assets                              $  39,590              $    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                             49,476                   49,936
Intangible assets, net of accumulated amortization              1,427                    1,459
Other assets                                                       62                       86
                                                            ---------              -----------
          Total assets                                      $  96,436              $   109,981
                                                            =========              ===========
</TABLE>


        SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       3
PAGE
<PAGE>
                        PEPSI-COLA PUERTO RICO BOTTLING
                           COMPANY AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                          (U.S. DOLLARS IN THOUSANDS)
                     LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                 March 31,                 September 30,
                                                                   1997                        1996
                                                              -------------                -------------
<S>                                                          <C>                          <C>
                                                                (unaudited)                  (audited)
Current Liabilities:
Current installments of long-term debt                         $     1,551                 $      1,550
Current installments of capital lease obligations                      262                          341
Short-term borrowings                                               25,309                       25,000
Accounts payable:
      Trade                                                         14,837                       16,619
      Affiliate                                                          -                           50
Income tax payable                                                      59                          115
Other accrued expenses                                               6,662                        8,672
                                                               -----------                 ------------
    Total current liabilities                                       48,680                       52,347

Long-term debt, excluding current installments                       4,066                        4,813
Capital lease obligations, excluding current installments              479                          871
Accrued pension cost, long-term                                      2,593                        2,593
                                                               -----------                 ------------
    Total liabilities                                               55,818                       60,624
                                                               -----------                 ------------
Shareholders' equity:
Class A common shares of $0.01 par value; authorized,
    issued and outstanding 5,000,000 shares                             50                           50
Class B common shares, $0.01 par value; authorized
    35,000,000 shares; issued and outstanding
    16,500,000 shares                                                  165                          165
Additional paid-in capital                                          90,738                       90,738
Retained earnings/(deficit)                                        (48,971)                     (40,232)
Pension liability adjustment                                        (1,364)                      (1,364)
                                                               -----------                 ------------
      Total shareholders' equity                                    40,618                       49,357
                                                               -----------                 ------------
      Total liabilities and shareholders' equity               $    96,436                 $    109,981
                                                               ===========                 ============
</TABLE>


        SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       4
PAGE
<PAGE>
                        PEPSI-COLA PUERTO RICO BOTTLING
                           COMPANY AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                         Six Months Ended March 31,
                                                                      1997                       1996
                                                                   (UNAUDITED)               (UNAUDITED)
                                                                   -----------               -----------
<S>                                                             <C>                       <C>
Net Sales                                                        $     46,584              $     54,502
Cost of Sales                                                          32,663                    35,065
                                                                 ------------              ------------
   Gross profit                                                        13,921                    19,437

Selling and marketing expenses                                         15,377                    20,626
Administrative expenses                                                 6,168                     3,323
Restructuring Charges                                                     535                         -
                                                                 ------------              ------------
Income/(loss) from operations                                          (8,159)                   (4,512)
                                                                 ------------              ------------
Other income (expenses):
      Interest expense                                                 (1,245)                     (365)
      Interest income                                                     699                     1,365
      Other, net                                                           95                       220
                                                                 ------------              ------------
        Total other income (expenses)                                    (451)                    1,220
                                                                 ------------              ------------
        Income/(loss) before income tax expense     
          and equity in net earnings/(loss) of BAESA                   (8,610)                   (3,292)
Income tax expense                                                       (129)                     (691)
      Income/(loss) before equity in net                         ------------              ------------
      earnings/(loss) of BAESA                                         (8,739)                   (3,983)

Equity in net earnings/(loss) of BAESA, net of income
      tax benefit of $2,763 in 1996                                         -                    (5,637)
                                                                 ------------              ------------
Net Income/(Loss)                                                $     (8,739)             $     (9,620)
                                                                 ------------              ------------
Earnings per common share:
      Income/(loss) before equity in net earnings of
      BAESA, net of taxes                                        $      (0.41)             $      (0.19)
                                                                 ============              ============
      Net income/(loss)                                          $      (0.41)             $      (0.45)
                                                                 ============              ============
Weighted average number of shares outstanding
  (in thousands)                                                       21,500                    21,500
                                                                 ============              ============
</TABLE>


        SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       5
PAGE
<PAGE>
                    PEPSI-COLA PUERTO RICO BOTTLING COMPANY
                               AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                       Three Months Ended March 31,
                                                                    1997                       1996
                                                                 (UNAUDITED)               (UNAUDITED)
                                                                 -----------               -----------
<S>                                                           <C>                       <C>
Net Sales                                                      $   20,786                 $   25,085
Cost of Sales                                                      14,754                     16,141
                                                               ----------                 ----------
   Gross profit                                                     6,032                      8,944

Selling and marketing expenses                                      7,159                     10,754
Administrative expenses                                             3,348                      1,725
Restructuring Charges                                                 535                          -
                                                               ----------                 ----------

Income/(loss) from operations                                      (5,010)                    (3,535)
                                                               ----------                 ----------
Other income (expenses):
      Interest expense                                               (613)                      (211)
      Interest income                                                 291                        680
      Other, net                                                       69                         91
                                                               ----------                 ----------
          Total other income (expenses)                              (253)                       560
                                                               ----------                 ----------
          Income/(loss) before income tax expense and equity
             in net earnings/(loss) of BAESA                       (5,263)                    (2,975)
Income tax expense                                                    (21)                      (425)
                                                               ----------                 ----------
      Income/(loss) before equity in net earnings/(loss) of BAESA  (5,284)                    (3,400)
Equity in net earnings/(loss) of BAESA, net of income tax
      benefit of $1,485 in 1996                                         -                     (3,014)
                                                               ----------                 ----------
      Net income/(loss)                                        $   (5,284)                $    6,414
                                                               ==========                 ==========

Earnings per common share:
      Income/(loss) before equity in net earnings of BAESA,
      net of taxes                                             $    (0.25)                $    (0.16)
                                                               ==========                 ==========
      Net income/(loss)                                        $    (0.25)                $    (0.30)
                                                               ==========                 ==========

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



        SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                      6
PAGE
<PAGE>
                    PEPSI-COLA PUERTO RICO BOTTLING COMPANY
                               AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                           Six Months Ended March 31,
                                                                          1997                    1996
                                                                      (UNAUDITED)             (UNAUDITED)
                                                                      -----------             -----------
<S>                                                                   <C>                    <C>
Cash flows from operating activities:
      Net income/(loss)                                                $   (8,739)            $   (9,620)
      Adjustments to reconcile net earnings to net cash
      provided by/(used in) operating activities:
      (Gain)/loss on sale of property, plant, and equipment                    30                   (529)
          Depreciation and amortization                                     3,278                  2,525
          Equity in net earnings/(losses) of BAESA                              -                  5,637
          Changes in assets and liabilities:
          Accounts receivable                                                 791                  2,337
          Inventories                                                         836                   (124)
          Prepaid expenses and other current assets                           616                 (3,014)
          Accounts payable                                                 (1,832)                 3,252
          Other accrued expenses                                           (2,010)                (1,199)
          Income taxes payable                                                (56)                   332
          Other, net                                                           24                   (883)
                                                                        ---------             ----------
          Net cash provided by/(used in) operating                         (7,062)                (1,286)
            activities

Cash flows from investing activities:
      Proceeds from sale of property, plant and equipment                     152                  1,175
      Proceeds from matured short-term investment                          12,904                      -
      Purchases of property, plant and equipment                           (2,968)               (13,802)
      Increase in Notes Receivable - Officers and employees                     -                   (775)
      Dividends received from affiliates                                        -                  2,839
                                                                        ---------             ----------
          Net cash provided by/(used in) investing                         
            activities                                                     10,088                (10,563)

Cash flows from financing activities:
      Proceeds from short-term borrowings                                     309                 21,185
      Repayment of long-term debt                                            (746)                  (775)
      Repayment of capital lease obligations                                 (471)                (1,066)
      Dividends paid                                                            -                 (5,238)
                                                                        ---------             ----------
          Net cash provided by/(used in) financing activities                (908)                14,106

Net increase in cash and cash equivalents                                   2,118                  2,257
Cash and cash equivalents at beginning of period                           18,614                 46,091
                                                                        ---------             ----------
Cash and cash equivalent at end of period                              $   20,732             $   48,348
                                                                        =========             ==========

Supplemental disclosures:
Cash paid for:
      Interest                                                         $    1,217             $      988
      Income taxes                                                     $      185             $      186
</TABLE>

      SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                     7
PAGE
<PAGE>
                        PEPSI-COLA PUERTO RICO BOTTLING
                           COMPANY AND SUBSIDIARIES

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

(1)   ACCOUNTING PRINCIPLES AND BASIS OF PRESENTATION

      The  accompanying condensed consolidated financial statements, footnotes,
and discussions  should  be read in conjunction with the consolidated financial
statements, related footnotes,  and  discussions  contained  in  the  Company's
annual  report  on Form 10-K for the fiscal year ended September 30, 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  six months and three months ended
March  31,  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>
                                                                MARCH 31, 1997            SEPTEMBER 30, 1996
                                                              -----------------           ------------------
<S>                                                            <C>                         <C>
            Raw materials                                      $          1,449            $        1,346
            Finished goods                                                1,431                     1,684
            Other                                                           779                     1,465
                                                               ----------------            --------------
                                                               $          3,659            $        4,495
                                                               ================            ==============
</TABLE>

(3)   PROPERTY, PLANT AND EQUIPMENT, NET

      Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                  MARCH 31, 1997           SEPTEMBER 30, 1996
                                                                 ----------------          ------------------
<S>                                                              <C>                      <C>
      Land and improvements                                      $      7,057             $      7,057
      Buildings and improvements                                       14,780                   14,301
      Machinery, equipment and vehicles                                48,685                   45,931
      Bottles, cases and shells                                         1,446                    1,401
      Furniture and fixtures                                            1,519                    1,877
      Construction in process                                             942                    1,941
                                                                 ------------             ------------
                                                                       74,429                   72,508
Less accumulated depreciation and amortization                        (24,953)                 (22,572)
                                                                 ------------             ------------

Property, plant and equipment, net                               $     49,476             $     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>
                                                                                March 31,
                                                                  1997                       1996
                                                              ------------               ------------
<S>                                                           <C>                        <C>
Interest cost capitalized                                     $          -               $        623
Interest cost charged to income                                      1,245                        365
                                                              ------------               ------------
                                                              $      1,245               $        988
                                                              ============               ============
</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 March 31, 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  six  month
period ended March 31, 1997 and  $5,238 during the six month period ended March
31, 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.

(6)   INCOME TAX

      Income tax expense for  the  six  months  ended  March  31, 1997 and 1996
consisted of the following:

<TABLE>
<CAPTION>
                                                                       March 31,
                                                                 1997                         1996
                                                             ------------               ------------
<S>                                                          <C>                         <C>
Current                                                      $    129                    $     691
Deferred                                                           -                            -
                                                             ------------               ------------
Income tax expense                                           $    129                    $     691
                                                             ============               ============
</TABLE>

      Deferred  income  tax  benefit  of $2,763 for the six month period  ended
March 31, 1996 has been provided in connection with the Company's equity in net
earnings / (loss) of BAESA.

(7)   RELATED PARTY TRANSACTIONS

      The Company paid approximately $1,140  and  $1,101  during the six months
ended March 31, 1997 and 1996, respectively, for advertising  fees  to  a  firm
controlled by a shareholder of the Company.

      The Company paid approximately $232 during the six months ended March 31,
1996 for consulting fees to a shareholder and director of BAESA.

      The Company paid approximately $151 during the six months ended March 31,
1996  for construction management services to a shareholder and former director
of the Company.

                                       9
<PAGE>

8)    INVESTMENT IN BAESA

      The following condensed unaudited financial information relating to BAESA
as of March  31,  1997  and for the six months and three months ended March 31,
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>
                                                                   March 31,                  September 30,
                                                                     1997                         1996
                                                                  (UNAUDITED)                   (AUDITED)
                                                                 ------------                 ------------
<S>                                                              <C>                          <C>
                   ASSETS
Cash and cash equivalents                                        $    7,021                   $   27,361
Accounts receivable, less allowance for doubtful 
accounts                                                             77,643                       64,069
Inventories                                                          25,041                       31,077
Deferred income tax, net                                              6,130                        6,681
Prepaid expenses and other current assets                             9,474                        8,469
                                                                 ----------                   ----------
     Total current assets                                           125,309                      137,657

Property, plant and equipment                                       569,676                      586,908
Intangible assets, net of accumulated amortization                   75,705                       78,943
Investment in affiliated company                                    112,011                      106,918
Other assets                                                         17,528                       16,954
                                                                 ----------                   ----------
Total assets                                                     $  900,229                   $  927,380
                                                                 ==========                   ==========

LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current installments of long-term debt                           $  322,702                   $  290,299
Bank loans and overdrafts                                           391,141                      367,440
Accounts payable                                                     60,797                       72,155
Income tax payable                                                    3,381                        3,149
Accrued expenses and other current liabilities                      131,718                      124,025
                                                                 ----------                   ----------
     Total current liabilities                                      909,739                      857,068

Long-term debt, excluding current installments                       47,166                       87,461
Deferred income taxes                                                 7,490                        7,740
Other long-term liabilities                                           8,062                        8,385
                                                                 ----------                   ----------
Total liabilities                                                   972,457                      960,654
Total shareholders' equity/(deficit)                                (72,228)                     (33,274)
                                                                 ----------                   ----------  
Total liabilities and shareholders' equity/deficit               $  900,229                   $  927,380
                                                                 ==========                   ==========  
</TABLE>

                                       10
<PAGE>

(8)   INVESTMENT IN BAESA (CONTINUED)

<TABLE>
<CAPTION>
                                      Three Months Ended March 31,            Six Months Ended March 31,
RESULTS OF OPERATIONS                     1997                1996                1997                1996
                                       (UNAUDITED)         (UNAUDITED)         (UNAUDITED)         (UNAUDITED)
                                      ------------        ------------        ------------        ------------
<S>                                   <C>                 <C>                 <C>                 <C>
Net sales                             $  182,800          $  206,814          $  399,032          $  440,107

Cost and expenses:
  Cost of sales                           (95,632)           (118,280)           (200,045)           (236,138)
  Selling and marketing expenses          (55,538)            (80,576)           (128,460)           (155,399)
  Administrative expenses                 (29,521)            (27,499)            (61,168)            (58,521)
  Debt and other restructuring        
  charges                                 (10,612)                  -             (13,981)            (11,540)
                                      -----------         -----------         -----------         ----------- 

    Income/(loss) from operations          (8,503)            (19,541)             (4,622)            (21,491)
                                      -----------         -----------         -----------         ----------- 

Interest expense                          (21,967)            (19,507)            (44,260)            (37,310)
Interest income                                69               1,437                 151               2,152
Foreign exchange gain/(loss)                1,876                (569)              2,737              (1,200)
Other, net                                 (2,201)             (3,101)             (3,839)             (4,150)
                                      -----------         -----------         -----------         ----------- 
                                          (22,223)            (21,740)            (45,211)            (40,508)
                                      -----------         -----------         -----------         ----------- 

Net income/(loss) before tax expense
and equity in net earnings of
affiliate                                 (30,726)            (41,281)            (49,833)            (61,999)
Income tax expense                           (935)             13,072              (1,223)              8,994
                                      -----------         -----------         -----------         ----------- 

Net income before equity in net
earnings of affiliate                     (31,661)            (28,209)            (51,056)            (53,005)
Equity in earnings of affiliate             2,525               1,791               5,233               3,680
                                      -----------         -----------         -----------         ----------- 
    Net income/(loss)                 $   (29,136)        $   (26,418)        $   (45,823)        $   (49,325)
                                      ===========         ===========         ===========         =========== 
</TABLE>

(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
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 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.

      The Company's stock price  was  below the exercise price established  for
the stock options granted as described above,  thus  no  compensation  cost  is
required to be measured and recognized as of March 31, 1997.

(10)  CONTINGENCIES

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

                                       11
<PAGE>

dismissal without prejudice.  The Company has reached a settlement with the 
attorneys for the plaintiffs in  seven  of  these  lawsuits.   The  settlement,
which must be approved  by  the Court, would 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.  If the settlement is approved, it  will
result in the dismissal  of  all  eight  actions.  The Company and the other 
defendants  have reached an agreement with its  founding  shareholders  under 
which the founding shareholders  will  contribute  to the Company for use in 
connection  with  the settlement 2.5 million Class B shares owned by them.  If
the settlement becomes effective, 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.  There is  no  assurance  that the  Court
will  approve  the  settlement or that other circumstances will not prevent the
settlement from becoming effective.

      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.

      In November 1995, the Company obtained  directors,  officers  and  entity
liability  insurance  coverage.   The Company has been advised by the insurance
carrier that based on the allegations  contained  in the complaints relating to
the  lawsuits filed against the Company, the insurance  carrier  (although  not
implying  that  it  believes  such  allegations  to  be true) now believes that
certain of the claims appear not to be covered by the  policies, and that other
claims  may  also  not be covered.  The Company has vigorously  contested  this
interpretation of the  policy  by  the  insurance  carrier.   The  Company  has
requested  the  insurance  carrier to provide the funds necessary for the above
settlement with the plaintiffs  and  to provide additional funds to cover costs
of the Company, including legal fees, incurred in connection with the
litigation to date.  The insurance  carrier has not agreed to provide these
funds on terms acceptable to the Company, and the Company is commencing
litigation against the insurance carrier in the courts of the Commonwealth of
Puerto Rico to enforce its rights.  There can  be no assurance  that the
insurance  carrier will provide these funds or that any coverage  ultimately
will be available to the Company  under  the  policy  with respect to  some or
all of the claims under these or any similar lawsuits.  If the Company receives
from the insurance carrier funds in excess of the cost to the Company of the
settlement and the amount required to pay the Company's accumulated costs, the
Company has agreed to use such  excess  to pay the founding shareholders for 
the contributed 2.5 million Class B Shares up to the value of those shares.

(11)  FAIR VALUE OF FINANCIAL INSTRUMENTS

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

      The  fair value of each of the Company's long-term  debt  instruments  is
based on the  amount  of  future  cash  flows  associated  with each instrument
discounted  using  the  Company's  current  borrowing  rate  for  similar  debt
instruments  of  comparable  maturity.   The  carrying amounts approximate  the
estimated fair value at March 31, 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 March 31, 1997, such  investment had an estimated
fair value of $13,117 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.

      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.  BAESA announced that it expects to meet
with both exchanges to discuss the situation.

                                       12
<PAGE>
(12)  RESTRUCTURING CHARGES

       The Company's  results  of operations for the six months ended March 31,
1997  have been affected by the incurrance  of  a  non-recurring  restructuring
charge  totaling  $.5  million.   This charge was for the costs associated with
employee terminations which resulted in a reduction of the Company's work force
by approximately 5%.  There were no  such  charges  during  the  1996 six month
interim period.

(13)  SUBSEQUENT EVENTS

      Subsequent  to  March  31,  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

      Subsequent  to March 31, 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.

                                       13
PAGE
<PAGE>
                        PEPSI-COLA PUERTO RICO BOTTLING
                           COMPANY AND SUBSIDIARIES

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


GENERAL OVERVIEW

      The  following  discussion  of  the  financial  condition  and results of
operations of the Company should be read in conjunction with this  overview and
the Condensed Consolidated Financial Statements of the Company, and  the  Notes
thereto,  as  of  March 31, 1997 (unaudited) and September 30, 1996 and for the
six month periods ended  March  31,  1996 and 1997 (the "1996 six month interim
period" and the "1997 six month interim  period,"  respectively)  and  for  the
three  month  interim  periods  ended  March 31, 1996 and 1997 (the "1996 three
month interim period" and the "1997 three  month  interim period," respectively
).  The Company's financial results for the six month  period  ended  March 31,
1996  as  reported  in  the  Company's  quarterly report on Form 10-Q which was
originally filed by the Company on May 15,  1996  were  restated as a result of
the discovery of accounting irregularities.  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 with the
participation of 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 obtain the Court's approval of the Company's lawsuit
settlement agreement, or other developments regarding the litigation (including
a refusal by either the plaintiffs or one or more of the defendants to  proceed
with the settlement or a refusal by the insurance carrier to participate in the
settlement to the extent anticipated by the Company); 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, 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.  BAESA announced that it
expects to meet with both exchanges to discuss the situation.

      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                     SIX 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        64.3        70.1       64.3        71.0
Gross Profit                                  41.8              40.6           27.2        35.7        29.9       35.7        29.0
Selling and Marketing Expenses                29.3              26.6           41.3        37.8        33.0       42.9        34.4
Administrative Expenses                       10.1               5.5            9.3         6.1        13.2        6.9        16.1
Intangibles and Fixed Asset Write-offs         2.8                 -              -           -           -          -           -
Restructuring Charges                            -                 -            2.6           -         1.1          -         2.6
Income (Loss) from Operations                  (.4)              8.5          (26.1)       (8.3)      (17.4)     (14.1)      (24.1)
                                             =====             =====          =====       =====       =====      =====       =====
</TABLE>

      1997 SIX MONTH INTERIM PERIOD COMPARED TO 1996 SIX MONTH INTERIM PERIOD

      NET SALES.   Net  Sales for the Company decreased $7.9 million, or 14.5%,
for the 1997 six month interim period from the 1996 six month interim period to
$46.6 million.  This decrease  was  primarily  the  result  of  the significant
increase  in discounts provided to customers combined with a 3.4%  decrease  in
sales volume  in  the 1997 six month interim period as compared to the 1996 six
month interim period.   This decrease in sales volume and increase in discounts
resulted from increased competitive  activity.   The average net sales price on
an eight ounce equivalent basis decreased during the  1997  six  month  interim
period by approximately 11.5% as compared to the 1996 six month interim period.

      COST OF SALES.  Cost of sales for the Company decreased $2.4 million,  or
6.9%  for  the  1997 six month interim period as compared to the 1996 six month
interim period to  $32.7  million.   This  decrease was primarily the result of
lower  raw material costs and the 3.4% decrease  in  sales  volume  offset   by
higher depreciation  costs  for  the new manufacturing facility in the 1997 six
month interim period as compared to the 1996 six month interim period.

      GROSS PROFIT.  Gross profit  for the Company decreased by $5.5 million to
$13.9 million in the 1997 six month  interim  period  from $19.4 million in the
1996  six  month interim period.  As a percentage of net  sales,  gross  profit
decreased to  29.9% in the 1997 six month interim period from 35.7% in the 1996
six month interim  period.   The decrease was primarily due to higher discounts
provided to customers, the lower  average  net sales price, decreased volume of
3.4%  and increased depreciation on the new  manufacturing facility, which were
partially offset by lower raw material costs.

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

      Selling and marketing expenses for the Company decreased $5.2 million, or
25.4%, to $15.4 million for the 1997 six month interim period  as  compared  to
the  1996 six month interim period.  This decrease was primarily due to reduced
marketing spending in the 1997 six month interim period as compared to the 1996
six month  interim  period. As a percentage of net sales, selling and marketing
expenses decreased to 33.0% during the 1997 six month interim period from 37.8%
in the 1996 six month interim period.

                                       15
<PAGE>

      ADMINISTRATIVE   EXPENSES.    Administrative  expenses  for  the  Company
increased $2.8 million or 85.6% for the  1997 six month interim period from the
1996 six month interim period to $6.2 million.  This increase was primarily the
result of the cost of legal services associated  with  certain civil litigation
and the investigation of the accounting irregularities.  As a percentage of net
sales, administrative expenses increased to 13.2% during  the  1997  six  month
interim period from 6.1% in the 1996 six month interim period.

      RESTRUCTURING  CHARGES.   The Company's results of operations for the six
months ended March 31, 1997 have  been  affected  by  the  incurrance of a non-
recurring restructuring charge totaling $.5 million.  This charge  was  for the
costs  associated  with employee terminations which resulted in a reduction  of
the  Company's work  force  by  approximately  5%.   There were no such charges
during the 1996 six month interim period.

      INCOME  (LOSS) FROM OPERATIONS.  Income (loss) from  operations  for  the
Company decreased  to $(8.2) million in the 1997 six month interim period, from
$(4.5) million in the  1996  six  month  interim  period.  This decrease is the
result of lower net sales, reflecting increased discounts  offered to customers
and  decreased  volume of 3.4 %, increased professional fees and  restructuring
charges, offset partially  by  lower  raw  material costs and reduced levels of
marketing spending for the 1997 six month interim  period  as  compared  to the
1996 six month interim period.

      OTHER  INCOME/(EXPENSES).   Other  income/(expenses)  decreased  to $(.5)
million in the 1997 six month interim period, from $1.2 million in the 1996 six
month interim period.  This decrease was primarily due to the capitalization of
construction  period interest during the 1996 six 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  six month interim period.
Interest  earnings  decreased  during the 1997 six month interim  period  as  a
result of lower cash balances available  for investment as compared to the 1996
six month interim period.

      EQUITY  IN  NET  EARNINGS  (LOSS)  OF  BAESA.    Based   on   information
disseminated  by  BAESA, equity in net earnings (loss) of BAESA, net of  income
tax, amounted to $0.0  million  during  the  1997  six  month  interim  period,
compared  to  a  loss  of $(5.6) million for the 1996 six 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 will be reported by
the  Company  until  BAESA  reports  profits sufficient to produce  a  positive
investment in BAESA on the Company's balance sheet.

      NET INCOME/(LOSS).  Net income/(loss)  during  the 1997 six month interim
period was $(8.7) million, compared to $(9.6) million during the 1996 six month
interim period.  Net (loss) in the 1997 six month interim  period reflects loss
before equity in net earnings (loss) of BAESA of $(8.7) million, as compared to
$(4.0) million of loss before equity in net earnings (loss) of BAESA and equity
in  net earnings (loss) of BAESA of $(5.6) million during the  1996  six  month
interim period.

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

      NET  SALES.   Net Sales for the Company decreased $4.3 million, or 17.1%,
for the 1997 three month  interim  period  from  the  1996  three month interim
period  to  $20.8  million.   This  decrease  was primarily the result  of  the
significant increase in discounts provided to customers  combined  with  a 9.2%
decrease in sales volume in the 1997 three month interim period as compared  to
the  1996  three  month  interim  period.   This  decrease  in sales volume and
increase  in  discounts  resulted  from  increased  competitive activity.   The
average net sales price on an eight ounce equivalent basis decreased during the
1997 three month interim period by approximately 8.7%  as  compared to the 1996
three month interim period.

      COST OF SALES.  Cost of sales for the Company decreased  $1.4 million, or
8.6%  for  the  1997 three month interim period as compared to the  1996  three
month interim period  to $14.8 million.  This decrease was primarily the result
of lower raw material costs  and  the  9.2 % decrease in sales volume partially
offset by higher depreciation costs for  the  new manufacturing facility in the
1997 three month interim period as compared to  the  1996  three  month interim
period.

                                       16
<PAGE>

      GROSS PROFIT.  Gross profit for the Company decreased by $2.9  million to
$6.0  million in the 1997 three month interim period from $8.9 million  in  the
1996 three  month  interim  period.  As a percentage of net sales, gross profit
decreased to 29.0% in the 1997  three  month  interim  period from 35.7% in the
1996  three  month  interim period. The decrease was primarily  due  to  higher
discounts provided to  customers,  the lower average net sales price, decreased
volume of 9.2 % and increased depreciation  on  the new manufacturing facility,
which were partially offset by lower raw material costs.

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

      Selling and marketing expenses for the Company decreased $3.6 million, or
33.4%, to $7.2 million for the 1997 three month interim period  as  compared to
the  1996  three  month  interim  period.   This decrease was primarily due  to
reduced marketing spending 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 34.4% during the 1997 three  month  interim
period from 42.9% in the 1996 three month interim period.

      ADMINISTRATIVE   EXPENSES.    Administrative  expenses  for  the  Company
increased $1.6 million or 94.1% for the  1997  three  month interim period from
the  1996  three  month  interim  period  to  $3.3 million.  This  increase  is
primarily  the  result of the cost of legal services  associated  with  certain
civil litigation  and the investigation of the accounting irregularities.  As a
percentage of net sales,  administrative expenses increased to 16.1% during the
1997 three month interim period  from  6.9%  in  the  1996  three month interim
period.

      RESTRUCTURING CHARGES.  The Company's results of operations for the three
months  ended  March 31, 1997 have been affected by the incurrance  of  a  non-
recurring restructuring  charge totaling $0.5 million.  This charge was for the
costs associated with employee  terminations  which  resulted in a reduction of
the  Company's work force by approximately 5 %.  There  were  no  such  charges
during the 1996 three month interim period.

      INCOME  (LOSS)  FROM  OPERATIONS.   Income (loss) from operations for the
Company decreased to $(5.0) million in the  1997  three  month  interim period,
from $(3.5) million in the 1996 three month interim period.  This  decrease  is
the  result  of  lower  net  sales,  reflecting  increased discounts offered to
customers  and  decreased  volume  of 9.2 %, increased  professional  fees  and
restructuring charges, offset partially by lower raw material costs and reduced
levels  of marketing spending, for the  1997  three  month  interim  period  as
compared to the 1996 three month interim period.

      OTHER  INCOME/(EXPENSES).   Other  income/(expenses)  decreased  to $(.3)
million  in the 1997 three month interim period, from $0.6 million in the  1996
three  month   interim   period.   This  decrease  was  primarily  due  to  the
capitalization of construction  period  interest  during  the  1996 three 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 three
month interim period. Interest earnings decreased during the 1997  three  month
interim  period as a result of lower cash balances available for investment  as
compared to the 1996 three month interim period.

      EQUITY   IN   NET   EARNINGS  (LOSS)  OF  BAESA.   Based  on  information
disseminated by BAESA, equity  in  net  earnings (loss) of BAESA, net of income
tax,  amounted to $0.0 million during the  1997  three  month  interim  period,
compared  to  a loss of $(3.0) 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 will be reported by
the  Company  until  BAESA reports profits sufficient  to  produce  a  positive
investment in BAESA on the Company's balance sheet.

      NET INCOME/(LOSS).  Net income/(loss) during the 1997 three month interim
period was $(5.3) million,  compared  to  $(6.4)  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 $(5.3) million,
as compared to $(3.4) million of loss  before  equity in net earnings (loss) in

                                       17
<PAGE>

BAESA and equity in net earnings (loss) of BAESA  of  $(3.0) million during the
1996 three month interim period.

LIQUIDITY AND CAPITAL RESOURCES

      At  March  31,  1997,  the Company had $20.7 million  of  cash  and  cash
equivalents,  and  indebtedness   for   borrowed  money,  including  short-term
borrowings and capital lease obligations, of $31.7 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 March 31, 1997, the Company has used approximately $28.3 million of
the cash set aside from its September  1995  initial 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 six month interim period was $(7.1) million compared to $(1.3) million
during the 1996 six month interim period.  This change was mainly the result of
the net cash loss after depreciation and amortization and equity in net loss of
BAESA of $(5.4) million and changes in assets and liabilities of $(1.7) million
during  the  1997 six month interim period, as compared to $(2.0)  million  and
$0.7 million, respectively, for the 1996 six month interim period.  As of March
31, 1997, the  Company  had  $55.2  million in net operating loss carryforwards
available to offset future Puerto Rican  income  taxes and $35.2 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 six month interim period, as compared  to  $(10.6)
million during the  1996  interim  period.   Purchases  of  property, plant and
equipment,  net, amounted to $(2.8) million during the 1997 six  month  interim
period as compared to $(12.6) million during the 1996 six month interim period.
The 1996 six 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  six month interim
period  as  compared to zero for the 1996 six 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 six month interim period  were  $(.9) million compared to $14.1
million during the 1996 six 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 $19.3 million and the payment of dividends of $(5.2)
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 provides for borrowings  by
the Company from time to time of $5 million in revolving loans, $8.8 million in
term  loans  and  $15  million in non-revolving loans.  In December 1995, Banco
Popular increased the amount  the  Company  could borrow under revolving loans.
As of March 31, 1996, the Company had outstanding  under  the  Credit Agreement
revolving loans in an aggregate principal amount of $10.0 million,  term  loans
in an aggregate principal amount of $5.3 million and non-revolving loans in  an

                                       18
<PAGE>

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 will bear interest at
2.5% over LIBOR.

      The weighted average interest rate on such borrowings was 7.4% during the
first  six  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
$83.3 thousand 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.

      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 $250 thousand  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 six
month interim period as compared to $13.8 million in the 1996 six 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.

                                       19
PAGE
<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  six
month period ended March 31, 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).
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)
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

                                       20
PAGE
<PAGE>
                                 SIGNATURES


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

<TABLE>
<CAPTION>
       SIGNATURES                                     TITLE                        DATE
       ----------                                     -----                        ----
<S>                                            <C>                                 <C>


   /S/ RAFAEL NIN                              Chief  Executive Officer            May 15, 1997
------------------------------------
Rafael Nin


   /S/ DAVID L. VIRGINIA                       Chief  Financial Officer            May 15, 1997
------------------------------------
David L. Virginia


   /S/ WANDA RIVERA ORTIZ                      Chief  Accounting Officer           May 15, 1997
------------------------------------
Wanda Rivera Ortiz
</TABLE>

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