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 DECEMBER 31, 1996
                                              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 February 10, 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
          December 31, 1996 and September 30, 1996....................  3
        Condensed Consolidated Statements of Income / (Loss)
          (unaudited) for the Three Months Ended December 31,
          1996 and 1995...............................................  5
        Condensed Consolidated Statements of Cash Flows (Unaudited)
          for the Three Months Ended December 31, 1996 and 1995.......  6
        Notes to Condensed Consolidated Financial Statements
          (Unaudited).................................................  7

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

PART II  OTHER INFORMATION............................................ 17

Item 1. Legal Proceedings............................................. 17

Item 6. Exhibits and Reports on Form 8-K.............................. 17
        (a)  Exhibits................................................. 17
        (b)  Reports on Form 8-K during the quarter ended
             December 31, 1996........................................ 18


        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>
                                                        December 31,             September 30,
                                                            1996                     1996
                                                        ------------             -------------
                                                         (unaudited)               (audited)
<S>                                                         <C>                      <C>
Cash and cash equivalents                                 $25,049                   $18,614
Short term investments                                         --                    12,904
Accounts receivable:
        Trade, less allowance for doubtful accounts of                            
           $1,309 at December 31, 1996 and $1,158 at
            September 30, 1996                             13,420                    11,262
        Due from PepsiCo, Inc. and affiliated companies       398                       877
        Other                                               1,399                     2,423
Inventories                                                 3,945                     4,495
Deferred income taxes                                         187                       187
Prepaid expenses and current assets                         1,965                     1,857
                                                         --------                  --------
          Total current assets                            $46,363                   $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                         49,530                    49,936
Intangible assets, net of accumulated amortization          1,436                     1,459
Other assets                                                   64                        86
                                                         --------                  --------
          Total assets                                   $103,274                  $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>
                                                   December 31,                 September 30,
                                                       1996                         1996
                                                   ------------                -------------
                                                   (unaudited)                  (audited)
<S>                                                     <C>                          <C>       

Liabilities:
Current installments of long-term debt                 $1,551                       $1,550
Current installments of capital lease
obligations                                               334                          341
Short term borrowings                                  25,462                       25,000
Accounts payable:
        Trade                                          15,927                       16,619
        Affiliate                                          --                           50
Income tax payable                                         38                          115
Other accrued expenses                                  6,310                        8,672
                                                     --------                     --------
    Total current liabilities                          49,622                       52,347

Long-term debt, excluding current installments          4,426                        4,813
Capital lease obligations, excluding current
  installments                                            731                          871
Accrued pension cost, long-term                         2,593                        2,593
                                                     --------                     --------
   Total liabilities                                   57,372                       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)                           (43,687)                     (40,232)
Pension liability adjustment                           (1,364)                      (1,364)
                                                     ________                     ________
       Total shareholders' equity                      45,902                       49,357
       Total liabilities and shareholders' equity    $103,274                     $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>
                                                                    Three Months Ended December 31,
                                                                      1996                     1995
                                                                    (unaudited)              (unaudited)
                                                                    -----------              -----------

<S>                                                                <C>                     <C>

Net Sales                                                           $   25,798               $   29,417
Cost of Sales                                                           17,909                   18,924
                                                                    ----------               ----------
   Gross profit                                                          7,889                   10,493

Selling and marketing expenses                                           8,218                    9,872
Administrative expenses                                                  2,820                    1,598
                                                                    ----------               ----------
Income/(loss) from operations                                           (3,149)                    (977)
                                                                    ----------               ----------
Other income (expenses):
     Interest expense                                                     (632)                    (154)
     Interest income                                                       408                      685
     Other, net                                                             26                      129
                                                                    ----------               ----------
         Total other income (expenses)                                    (198)                     660
                                                                    ----------               ----------
         Income/(loss) before income tax expense and                    (3,347)                    (317)
         equity in net earnings/(loss) of BAESA
Income tax expense                                                        (108)                    (266)
     Income/(loss) before equity in net earnings/(loss) of BAESA        (3,455)                    (583)
Equity in net earnings/(loss) of BAESA, net of income tax                    -
     benefit of $1,278 in 1995                                               -                   (2,623)
                                                                    ----------               ----------
Net income/(loss)                                                   $   (3,455)              $   (3,206)
                                                                    ==========               ==========
Earnings per common share:
     Income/(loss) before equity in net earnings of BAESA,                        
     net of taxes                                                   $    (0.16)              $    (0.03)
                                                                    ==========               ==========
     Net income/(loss)                                              $    (0.16)              $    (0.15)
                                                                    ==========               ==========
Weighted average number of shares outstanding                           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 CASH FLOWS
                          (U.S. DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                   Three Months Ended December 31,
<S>                                                                               <C>                         <C>
                                                                                  1996                        1995
                                                                               (unaudited)                 (unaudited)
Cash flows from operating activities:
  Net income/(loss)                                                              ($3,455)                    ($3,206)
  Adjustments to reconcile net earnings to net cash
     provided by/(used in) operating activities:
     (Gain)/loss on sale of property, plant, and equipment                             60                        (279)
     Depreciation and amortization                                                  1,632                       1,251
     Equity in net earnings/(losses) of BAESA                                          --                       2,623
     Changes in assets and liabilities:
        Accounts receivable                                                         (655)                     (1,535)
        Inventories                                                                  550                         405
        Prepaid expenses and other current assets                                   (108)                         90
        Accounts payable                                                            (742)                       (174)
        Other accrued expenses                                                    (2,362)                     (1,864)
        Income taxes payable                                                         (77)                        768
        Other, net                                                                    22                         127
                                                                                --------                    --------
     Net cash provided by/(used in) operating activities                          (5,135)                     (1,794)

Cash flows from investing activities:
  Proceeds from sale of property, plant and equipment                                137                         538
  Proceeds from matured short-term investment                                     12,904                          --
  Purchases of property, plant and equipment                                      (1,400)                     (5,075)
  Dividends received from affiliates                                                  --                       2,839
                                                                                --------                    --------
     Net cash provided by/(used in) investing activities                          11,641                      (1,698)

Cash flows from financing activities:
  Proceeds from short-term borrowings                                                462                      10,236
  Repayment of long-term debt                                                       (386)                       (388)
  Repayment of capital lease obligations                                            (147)                       (527)
  Dividends paid                                                                      --                      (5,217)
                                                                                --------                     -------
     Net cash provided by/(used in) financing activities                             (71)                      4,104

Net increase in cash and cash equivalents                                          6,435                         612
Cash and cash equivalents at beginning of period                                  18,614                      46,091
                                                                               ---------                     -------
Cash and cash equivalent at end of period                                      $  25,049                     $46,703
                                                                               =========                     =======

Supplemental disclosures:
Cash paid for:
  Interest                                                                          $573                        $409
  Income taxes                                                                      185                           --

</TABLE>

        SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                           6

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 three months ended December 31, 1996
are  not  necessarily  indicative  of  the results that may be expected for the
fiscal year ended September 30, 1997.

(2)     INVENTORIES

        Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                 December 31,                 September 30,
                                                                     1996                          1996
                                                              -----------------              ---------------
<S>                                                                  <C>                           <C>      
                Raw materials                                     $ 1,264                         $ 1,346
                Finished goods                                      1,631                           1,684
                Other                                               1,050                           1,465
                                                                  -------                         -------
                                                                  $ 3,945                         $ 4,495
                                                                  =======                         =======
</TABLE>

(3)     PROPERTY, PLANT AND EQUIPMENT, NET

 Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                 December 31,                    September 30,
                                                                     1996                            1996
                                                               --------------                    ------------
<S>                                                                   <C>                              <C>
        Land and improvements                                       $ 7,057                          $ 7,057
        Buildings and improvements                                   14,780                           14,301
        Machinery, equipment and vehicles                            47,542                           45,931
        Bottles, cases and shells                                     1,654                            1,401
        Furniture and fixtures                                        1,477                            1,877
        Construction in process                                         563                            1,941
                                                                    -------                         --------
                                                                     73,073                           72,508
        Less accumulated depreciation and amortization              (23,543)                         (22,572)
                                                                   --------                         --------
        Property, plant and equipment, net                         $ 49,530                         $ 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>
                                                                     1996                           1995
                                                                --------------                 --------------
<S>                                                                  <C>                             <C>
Interest cost capitalized                                         $   -0-                          $    255
Interest cost charged to income                                       632                               154
                                                                  -------                          --------
                                                                  $   632                          $    409
                                                                  =======                          ========
</TABLE>

                                      7
PAGE
<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  December  31,
1996 those Long Lived Assets remained at the same value.

(5)  SHAREHOLDERS' EQUITY

     The  Company  declared  and paid cash dividends of $5,217 during the three
months ended December 31, 1995.

     Earnings per common share  are  determined  by  dividing net income by the
weighted average number of common shares outstanding during each year.

(6)  INCOME TAX

     Income tax expense for the three months ended December 31, 1996 and 1995
consisted of the following:

<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                           1996               1995
                                                                        -----------       ------------
<S>                                                                         <C>                <C>   
   

          Current                                                            $108              $266
          Deferred                                                             --                --
                                                                        -----------       -------------
          Income tax expense                                                 $108              $266
                                                                        ===========       =============
</TABLE>

     Deferred  income  tax (benefit) / expense of $(1,278) for the three  month
period ended December 31,  1995,  has  been  provided  in  connection  with the
Company's equity in net earnings / (loss) of BAESA.

(7)  RELATED PARTY TRANSACTIONS

     The Company paid approximately $856 and $637 during the three months ended
December  31,  1996  and  1995,  respectively,  for  advertising fees to a firm
controlled by a shareholder of the Company.

     The Company paid approximately $232 during the three months ended December
31, 1995 for consulting fees to a shareholder and director of BAESA.

     The Company paid approximately $150 during the three months ended December
31,  1995  for  construction  management services to a shareholder  and  former
director of the Company.



                                      8
PAGE
<PAGE>
                        PEPSI-COLA PUERTO RICO BOTTLING
                           COMPANY AND SUBSIDIARIES
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

(8)  INVESTMENT IN BAESA

     The following condensed unaudited  financial information relating to BAESA
as of December 31, 1996 and for the three  months  ended  December 31, 1996 and
1995 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>
                                                                   December 31,                   September 30,
                                                                       1996                           1996
                                                                   (unaudited)                      (audited)
                                                                  ----------------               --------------
<S>                                                                     <C>                             <C>
                    ASSETS
Cash and cash equivalents                                           $   9,750                       $  27,361
Accounts receivable, less allowance for doubtful accounts             109,601                          64,069
Inventories                                                            32,350                          31,077
Deferred income tax, net                                                6,138                           6,681
Prepaid expenses and other current assets                               6,121                           8,469
                                                                    ---------                      ---------
     Total current assets                                             163,960                         137,657

Property, plant and equipment                                         577,379                         586,908
Intangible assets, net of accumulated amortization                     77,998                          78,943
Investment in affiliated company                                      108,188                         106,918
Other assets                                                           16,359                          16,954
                                                                    ---------                       ---------
         Total assets                                               $ 943,884                       $ 927,380
                                                                    =========                       =========

LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
                                                                                         
Current installments of long-term debt                              $ 302,748                       $ 290,299
Bank loans and overdrafts                                             391,304                         367,440
Accounts payable                                                       85,703                          72,155
Income tax payable                                                      3,175                           3,149
Accrued expenses and other current liabilities                        125,781                         124,025
                                                                    ---------                       ---------
     Total current liabilities                                        908,711                         857,068
    
Long-term debt, excluding current installments                         71,107                          87,461
Deferred income taxes                                                   7,469                           7,740
Other long-term liabilities                                             7,970                           8,385
                                                                    ---------                       ---------
         Total liabilities                                            995,257                         960,654

Total shareholders' equity/(deficit)                                  (51,373)                        (33,274)
                                                                    ---------                       ---------
Total liabilities and shareholders' equity/deficit                  $ 943,884                       $ 927,380
                                                                    =========                       =========
</TABLE>



                                      9
PAGE
<PAGE>
                        PEPSI-COLA PUERTO RICO BOTTLING
                           COMPANY AND SUBSIDIARIES
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


(8)      INVESTMENT IN BAESA (CONTINUED)

<TABLE>
<CAPTION>
                                                                              Three Months Ended
                                                                                 DECEMBER 31,
                                                                  ---------------------------------------------
<S>                                                                   <C>                             <C>
             RESULTS OF OPERATIONS                                    1996                            1995
                                                                   (UNAUDITED)                     (UNAUDITED)
                                                                --------------                    -------------
Net sales                                                         $ 206,916                         $ 227,122
Cost and expenses:
  Cost of sales                                                     104,413                           117,858
  Selling and marketing expenses                                     63,606                            68,652
  Administrative expenses                                            32,021                            31,397
  Debt and other restructuring charges                                3,369                            11,540
                                                                  --------------                  -------------
    Income/(loss) from operations                                     3,507                            (2,325)
                                                                  --------------                  -------------
Interest expense                                                    (22,293)                          (17,803)
Interest income                                                          82                               715
Foreign exchange gain/(loss)                                            861                              (631)
Other, net                                                           (1,638)                           (1,049)
                                                                  --------------                  -------------	
                                                                    (22,988)                          (18,768)
                                                                 --------------                  -------------
Net income/(loss) before tax expense
  and equity in net earnings of affiliate                           (19,481)                          (21,093)
Income tax expense                                                $    (288)                           (4,078)
                                                                 -----------                       -----------

Net income before equity in net earnings                            (19,769)                          (25,171)
 of affiliate
Equity in earnings of affiliate                                       3,083                             2,264
                                                                 -------------                   -------------
     Net income/(loss)                                            $ (16,686)                        $ (22,907)
                                                                 =============                   =============
</TABLE>



                                      10
PAGE
<PAGE>
                        PEPSI-COLA PUERTO RICO BOTTLING
                           COMPANY AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (U.S. DOLLARS IN THOUSANDS EXCEPT SHARE DATA)



(9)  STOCK OPTION PLANS

     The Company has established two Stock Option Plans, subject to shareholder
approval,  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  will be qualified for income tax
purposes, whereas the other will not be a qualified plan.  Options issued under
the stock option plan that will be 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,
subject  to  shareholder approval, 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,  subject  to shareholder approval, 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 will be
exercisable  in  whole  or  in part until exercised in full.  A similar  option
previously granted to the former  president of the Company was cancelled 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 December 31, 1996.

(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.  Plaintiffs in all actions seek  unspecified  money damages.  In one
case plaintiff and other putative class members also seek  rescission  of their
purchases of shares in the Company's September 19, 1995 initial public offering
to  the  extent  they continue to own such securities.  In a ninth action,  the
United States District for the District of Puerto Rico issued an order granting
plaintiff's motion for voluntary dismissal without prejudice.

     The Company intends  to  contest  the  cases vigorously.  No discovery has
been taken in any of the actions.  It is not  possible  at  this early stage of
the proceedings to determine the likelihood and amount of the possible loss, if
any.

     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
PAGE
<PAGE>
     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 intends to vigorously contest this
interpretation  of  the  policy  by  the insurance carrier, but there can be no
assurance 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.

(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 December 31, 1996.

     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  December  31,  1996, such investment has an
estimated fair value of $23,100 determined using as  a basis the New York Stock
Exchange quoted closing price per share of the Company's Class B Shares on that
date.




                                      12
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 December 31, 1996 and September 30, 1996 and for the three month
period  ended  December 31, 1995 and 1996 (the "1996 interim  period"  and  the
"1997 interim period,"  respectively).  The Company's financial results for the
three month period ended  December  31,  1995  as  reported  in  the  Company's
quarterly  report  on  Form  10-Q which was originally filed by the Company  on
February 14, 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  payments  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.

     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, 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.

     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.



                                      13
PAGE
<PAGE>

<TABLE>
<CAPTION>
                                                             Fiscal Year                                  Interim
                                            -------------------------------------------          -------------------------
<S>                                           <C>               <C>              <C>               <C>             <C>
                                              1994              1995             1996              1996            1997
					    --------	      --------	       --------		 --------	 --------
Net Sales                                    100.0%            100.0%           100.0%            100.0%          100.0%
Cost of Sales                                 58.2              59.4             72.8              64.3            69.4
Gross Profit                                  41.8              40.6             27.2              35.7            30.6
Selling and Marketing Expenses                29.3              26.6             41.3              33.5            31.9
Administrative Expenses                       10.1               5.5              9.3               5.4            10.9
Intangibles and Fixed Asset Write-offs         2.8                -                -                 -               -

Restructuring Charges                           -                 -               2.6                -               -
Income (Loss) from Operations                  (.4)              8.5            (26.1)             (3.3)          (12.2)
					   =========	      ========        =========          ========	 =========

</TABLE>


      1997 INTERIM PERIOD COMPARED TO 1996 INTERIM PERIOD

      NET SALES.   Net  Sales for the Company decreased $3.6 million, or 12.3%,
for the 1997 interim period  from  the  1996  interim  period to $25.8 million.
This decrease was primarily the result of the significant increase in discounts
provided to customers partially offset by a 1.8% increase  in  sales  volume in
the  1997 interim period as compared to the 1996 interim period.  This increase
in discounts  resulted  from  increased  competitive activity.  The average net
sales  price  on  an eight ounce equivalent basis  decreased  during  the  1997
interim period by approximately 13.9% as compared to the 1996 interim period.

      COST OF SALES.   Cost of sales for the Company decreased $1.0 million, or
5.4% for the 1997 interim  period  as  compared  to  the 1996 interim period to
$17.9 million.  This decrease was primarily the result  of  lower  raw material
costs,  offset by higher depreciation costs for the new manufacturing  facility
and the 1.8% increase in sales volume in the 1997 interim period as compared to
the 1996 interim period.

      GROSS  PROFIT.  Gross profit for the Company decreased by $2.6 million to
$7.9 million in  the 1997 interim period from $10.5 million in the 1996 interim
period.  As a percentage  of  net sales, gross profit decreased to 30.6% in the
1997 interim period from 35.7%  in  the  1996 interim period.  The decrease was
primarily due to higher discounts provided  to  customers and the lower average
net sales price, which were partially offset by a  1.8%  sales  volume increase
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
portion of such expenditures,  which  it  is  able to use to offset traditional
marketing  expenses  or to acquire fixed assets.   The  Company's  selling  and
marketing expenses are shown net of all such reimbursements from PepsiCo.

      Selling and marketing expenses for the Company decreased $1.7 million, or
16.8%, to $8.2 million  for  the  1997  interim  period as compared to the 1996
interim period.  This decrease was primarily due to  reduced marketing spending
in the 1997 interim period.

      ADMINISTRATIVE  EXPENSES.   Administrative  expenses   for   the  Company
increased  $1.2  million  or  76.5%  for the 1997 interim period from the  1996
interim period to $2.8 million.  This  increase  is primarily the result of the
cost  of  legal  services  associated  with  certain civil  litigation.   As  a
percentage of net sales, administrative expenses  increased to 10.9% during the
1997 interim period from 5.4% in the 1996 interim period.

      INCOME (LOSS) FROM OPERATIONS.  Income (loss) from operations for the 
Company  decreased  to  $(3.1)  million in the 1997 interim period, from $(1.0)
million in the 1996 interim period.   This  decrease  is  the  result  of lower
average  net  sales,  the  increased  discounts offered to customers, increased

                                      14
PAGE
<PAGE>

professional fees associated with the civil  litigation,  offset  partially  by
lower  raw  material cots and reduced levels of marketing spending for the 1997
interim period as compared to the 1996 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  interim  period,  compared to a
loss  of $(2.6) million for the 1996 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 interim period  was
$(3.4) million, compared to $(3.2) million during the 1996 interim period.  Net
(loss)  in  the 1997 interim period reflects loss before equity in net earnings
(loss) of BAESA  of $(3.4) million, as compared to $(.6) million of loss before
equity in net earnings  (loss)  in  BAESA  and equity in net earnings (loss) of
BAESA of $(2.6) million during the interim period 1996.

LIQUIDITY AND CAPITAL RESOURCES

      At December 31, 1996, the Company had  $25.0  million  of  cash  and cash
equivalents,   and   indebtedness  for  borrowed  money,  including  short-term
borrowings and capital lease obligations, of $32.5 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 December 31, 1996, the Company has used approximately $22.8 million
of the cash set  aside  from  its  September  1995  initial  public offering to
support these efforts through the repayment of indebtedness and by additions to
the  Company's  working  capital.   In  addition,  the  Company  currently   is
negotiating the refinancing of its remaining debt to include a payment schedule
which more closely matches the life of its production assets.  Banco Popular de
Puerto Rico, holder of the debt, is assisting the Company with this effort.

      Net  cash  provided by (used in) operating activities for the Company for
the 1997 interim period  was  $(5.1)  million compared to $(1.8) million during
the 1996 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
$(1.8)  million  and changes in assets and liabilities of $(3.3) million during
the 1997 interim period,  as  compared  to  $0.4  million  and  $(2.2)  million
respectively  for the 1996 interim period.  As of December 31, 1996 the Company
had $49.6 million  in  net  operating  loss  carryforwards  available to offset
future  Puerto  Rican  income  taxes  and  $29.5 million in net operating  loss
carryforwards  available to offset future U.S.  taxable  income.   The  Company
believes that its  cash position is adequate to meet its operating requirements
for the foreseeable future.

      Net cash provided  by  (used in) investing activities for the Company was
$11.6 million for the 1997 interim period, as compared to $(1.7) million during
the 1996 interim period.  Purchases  of  property,  plant  and  equipment, net,
amounted to $(1.3) million during the 1997 interim period as compared to $(4.5)
million during fiscal 1996.  Proceeds from short term investment provided $12.9
million during the 1997 interim period as compared to zero for the 1996 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 interim  period  were  $(0.1)  million compared to $4.1 million
during the 1996 interim period.  The significant  financing  activities for the

                                      15
PAGE
<PAGE>

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 $9.3 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, under
certain conditions, 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 may borrow under revolving loans.   As
of  December  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  $5.6 million and non-revolving loans in an
aggregate principal amount of $15.0 million.   These  loans mature on March 31,
1997, September 10, 2000, and March 30, 1997, respectively,  and  bear interest
at  a  floating  rate  of  2% over and above the cost to Banco Popular of  "936
Funds" (as defined below) (the  "936  Rate")  or  at LIBOR if 936 Funds are not
available.  At December 31, 1996, the 936 Rate was 5.5%.

      The weighted average interest rate on such borrowings  was  7.5%  for the
interim  period  1997.   "936  Funds"  are  defined  in the Credit Agreement as
deposits  in  U.S.  dollars  in  immediately  available funds  by  Section  936
Corporations on the first day of the relevant funding period for a period equal
to such funding period and in an amount equal or  comparable  to  the principal
amount of the relevant loan.  The Company is required to make monthly  payments
of  principal  in  the  amount of $128 thousand with respect to the outstanding
term loans.  The Company  may  prepay certain of the loans subject to the terms
and conditions of the Credit Agreement.

      Under the terms of the Credit  Agreement,  the  Company is subject to the
following  financial restrictions:  (i)  the Company must  maintain  a  minimum
Operating Cash  Flow  to  total  Debt  Service  ratio (as defined in the Credit
Agreement) of 1.50 to 1 for each fiscal year during  the  term  of  the  Credit
Agreement (ii) a minimum ratio of current assets to current liabilities of 0.75
and  1.00  to  1,  respectively,  and  a  maximum ratio of Total Liabilities to
Tangible Net Worth (as defined in the Credit  Agreement)  of  3.0 and 2.0 to 1,
respectively,  for  the  fiscal  years 1997, 1998 and thereafter, and  (iii)  a
minimum Tangible Net Worth of $18  million  through  the end of the fiscal year
1997 and of $21.5 million, $25 million and $30 million,  respectively,  through
the end of fiscal year 1998, 1999, and thereafter.  The Company is currently in
compliance  with these financial restrictions.  The entire principal amount  of
loans outstanding  under  the  Credit  Agreement  becomes  immediately  due and
payable,  subject  to  a  cure  period,  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 if  an  event  of  default  under the Credit Agreement
(including  a  violation  of  the financial restrictions described  above)  has
occurred or would occur because of the payment of dividends.

      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 Credit Agreement.

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

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

      Capital  expenditures  for  the  Company totaled $1.3 million in the 1997
interim period as compared to $4.5 million  in the 1996 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

                                      16
PAGE
<PAGE>

capacity  and  capability in the new plant.  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.


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 three
month period ended December 31, 1996.

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.*
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).


                                      17
PAGE
<PAGE>

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.*
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).
21.1        List of Subsidiaries (incorporated  by reference to Exhibit 21.1 to
            the S-1 Registration Statement).


_____________
*  Filed herewith.


(b)  There were no reports on Form 8-K filed during the quarter ended December
     31, 1996.



                                      18
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                     February 14, 1997
--------------------------------------------
Rafael Nin



  /S/ DAVID L. VIRGINIA                         Chief Financial Officer and Chief           February 14, 1997
_____________________________________________   Accounting Officer
David L. Virginia                               
</TABLE>




                                      19
<PAGE>