SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                           FORM 10-K
(Mark One)
/x/        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
       OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
          For the fiscal year ended September 30, 1996
                               or
/ /       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
      OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
        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
         BO. CANDELARIA ARENAS
         TOA BAJA, PUERTO RICO                   00949
(Address of principal executive office)       (Zip code)

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

      Securities registered pursuant to Section 12(b) of the Act:

          Title of Each Class           Name of Exchange on Which Registered
Class B Common Stock, Par Value $.01         New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act:

                                    None

      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. /x/ Yes  / / No

      Indicate by check mark if disclosure of delinquent  filers pursuant to
Item  405  of Regulation  S-K is not contained herein,  and will  not  be
contained,  to  the  best   of registrant's  knowledge, in definitive  proxy
or  information  statements  incorporated  by reference  in Part III of this
Form  10-K  or any amendment to this Form 10-K. / / 

      Based  upon the closing price  of  the Class B Common Stock on December
19, 1996, as reported  on  the  New  York  Stock  Exchange Composite  Tape
(as  reported  by  The  Wall Street  Journal), the aggregate market  value
of the Registrant's Class B Common Stock held by  non-affiliates of the
Registrant  as  of such date was approximately $70,125,000.

      As  of  December 19, 1996,  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.

                   DOCUMENTS INCORPORATED BY REFERENCE

          Selected portions of the 1996 Proxy Statement of Pepsi-Cola Puerto
Rico  Bottling Company  are  incorporated by reference  into Part  III  of
this Form 10-K to  the  extent provided herein.



                 PEPSI-COLA PUERTO RICO BOTTLING COMPANY
                   Index to Annual Report on Form 10-K
                      Year Ended September 30, 1996


ITEM NO.                                                 PAGE NO.

PART I
    Item 1.   BUSINESS.............................................    1
    Item 2.   PROPERTIES...........................................   14
    Item 3.   LEGAL PROCEEDINGS....................................   14
    Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..   16

PART II
    Item 5.   MARKET  FOR  REGISTRANT'S  COMMON EQUITY AND RELATED
                STOCKHOLDER MATTERS................................   17
    Item 6.   SELECTED FINANCIAL DATA..............................   18
    Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS...................21
    Item 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.............28
    Item 9.   CHANGES  IN  AND  DISAGREEMENTS WITH ACCOUNTANTS ON
                ACCOUNTING AND FINANCIAL DISCLOSURE...................56

PART III
    Item 10.  DIRECTORS AND EXECUTIVE OFFICERS........................57
    Item 11.  EXECUTIVE COMPENSATION..................................57
    Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                AND MANAGEMENT........................................57
    Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...........57

PART IV
    Item  14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
                ON FORM 8-K...........................................58
    SIGNATURES........................................................61





                                i



                             PART I

Item 1.        BUSINESS

General

     Pepsi-Cola Puerto Rico Bottling Company (the "Company") is a
holding company which, through its manufacturing and distribution
subsidiaries, produces, sells and distributes a variety  of  soft
drink  and fruit juice products, iced teas, isotonics and bottled
water  in  the  Commonwealth  of  Puerto  Rico  ("Puerto  Rico"),
pursuant  to exclusive franchise arrangements with PepsiCo,  Inc.
("PepsiCo")  and other franchise arrangements.  The Company  also
has  rights to sell PepsiCo products to distributors in the  U.S.
Virgin Islands.  The Company produces, sells and distributes soft
drink  products  under the Pepsi-Cola, Diet  Pepsi,  Pepsi  Free,
Slice,  Wonder Kola, On-Tap and Mountain Dew trademarks  pursuant
to  exclusive franchise arrangements with PepsiCo.   The  Company
produces  (through  an arrangement with a co-packer),  sells  and
distributes  isotonics under the All Sport trademark pursuant  to
an  exclusive  franchise arrangement with PepsiCo.  In  addition,
the  Company  produces, sells and distributes tonic  water,  club
soda  and  ginger  ale  under  the  Seagram  trademark  under  an
exclusive  arrangement  with  Joseph  E.  Seagram  &  Sons,  Inc.
("Seagram") and sells and distributes fruit juice products  under
the  Welch's trademark, iced teas under the Lipton trademark  and
bottled  water  under  the  Naya  trademark.   The  Company  also
produces,  sells  and  distributes bottled water  under  its  own
Cristalia trademark.

      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 Buenos Aires  Embotelladora
S.A.  ("BAESA").  BAESA is a Pepsi-Cola franchised bottler,  with
the exclusive rights to produce, sell and distribute PepsiCo soft
drink   products   directly  and  through  its  subsidiaries   in
Argentina,  Brazil, Costa Rica and Uruguay and  through  a  joint
venture in Chile.

      A  subsidiary of the Company manufactures and sells plastic
bottles  and  "preforms" (small molded plastic  units  which  are
expanded with air to produce plastic bottles).

      For  its fiscal year ended September 30, 1996, the  Company
had  a loss from operations of $(26.8) million compared to income
from  operations of $9.7 million during fiscal 1995.  This severe
impact  on the profitability of the Company's operations resulted
primarily from intense competitive pressures in Puerto Rico which
produced  lower  sales  prices, increased  discounts  offered  to
customers  and  a significant increase in selling  and  marketing
expenditures.  In addition, during the course of fiscal 1996, the
Company discovered accounting irregularities that required it  to
restate  its  financial  statements  for  the  first  and  second
quarters  ended December 31, 1995 and March 31, 1996.  Responding
to   the   circumstances  surrounding  the  discovery  of   these
irregularities has required extensive management  attention.   In
connection  with the accounting irregularities, the  Company  has
been named as a defendant in a number of class action shareholder
lawsuits alleging violations of federal securities laws, and  the
Securities   and   Exchange  Commission  is   investigating   the
circumstances    surrounding   the   accounting   irregularities.
Responding  to  these  lawsuits and this investigation  has  also
required  extensive management attention and the  expenditure  of
substantial  amounts  for  legal  defense.   In  addition,  BAESA
encountered  financial difficulties during the course  of  fiscal
1996.  The Company's net loss of $(74.3) million for fiscal  1996
reflects  loss  before  equity in earnings  (loss)  of  BAESA  of
$(22.9)  million and equity in net loss of BAESA, net  of  income
tax  of  $(51.5) million.  See "Item 7.  Management's  Discussion
and Analysis of Financial Condition and Results of Operations."

      In response to the difficulties faced by the Company during
the  past  fiscal year, the Company has taken a number  of  steps
intended  to  restore  the  profitability  of  its  Puerto  Rican
bottling  operations including the reorganization of  its  senior
management  and  Board  of Directors, the implementation  of  new
pricing  initiatives, the consolidation of most of  its  existing
operations  in its new Toa Baja bottling facility and other  cost
reduction measures.  There can be no assurance, however, that the
Company will be successful in reaching its goal of restoring  the
profitability of its Puerto Rican bottling operations.

      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  implement
pricing  initiatives  in  a  manner  that  improves  the  pricing
environment  in  the marketplace, its ability  to  generate  cost
savings  through  the consolidation of existing  operations,  its
expected  future capital expenditures and the ability to  achieve
its  goal  of  restoring the profitability  of  its  Puerto  Rico
bottling operations as a result of these pricing initiatives  and
cost   savings.    These  forward  looking   statements   reflect
management's expectations and are based upon currently  available
data;  however, actual results are subject to future  events  and
uncertainties  which could materially impact actual  performance.
The  Company's future performance also involves a number of risks
and  uncertainties.   Among the factors  that  can  cause  actual
performance  to  differ  materially are:   continued  competitive
pressures  with  respect to pricing in the  Puerto  Rican  market
notwithstanding  the  implementation of the pricing  initiatives,
the   inability  to  achieve  cost  savings  due  to   unexpected
developments  at  the  Company's new  plant  and  other  factors,
changed    plans   regarding   capital   expenditures,    adverse
developments  with respect to litigation, economic, climatic  and
political  conditions  in Puerto Rico, and  the  impact  of  such
conditions on consumer spending.

      The  Company  was incorporated and acquired  the  franchise
rights  to  produce,  sell  and  distribute  PepsiCo  soft  drink
products in Puerto Rico in 1987.  In 1989, the Company became one
of the founding shareholders of BAESA, which was incorporated and
commenced  operations  in the Buenos Aires metropolitan  area  in
that year.

Principal Market

      The  principal market for the Company's products is  Puerto
Rico,  a  commonwealth of the United States with a population  of
approximately 3.7 million.

      Currently,  approximately 35% of the population  of  Puerto
Rico  is  under the age of 18 and 45% of the population is  under
the  age  of 25 which the Company believes is significant because
young people are major consumers of soft drinks.

The Beverage Industry in Puerto Rico

     Consumption and Market Trends

      The  Puerto  Rican  soft drink market is  characterized  by
relatively   low  per  capita  consumption.   In  addition,   the
imposition of the Carbonated Beverage Tax had a material  adverse
effect  on per capita consumption of soft drinks in the years  in
which  it  was in effect.  See "Item 7.  Management's  Discussion
and  Analysis of Financial Condition and Results of Operations  -
General Overview - Carbonated Beverage Tax."  Consumption  levels
have  generally increased since the replacement of the Carbonated
Beverage  Tax  in  January  1994  but  remain  low  compared   to
consumption levels in the United States.  In 1995, the annual per
capita  consumption  of soft drink products in  Puerto  Rico  was
approximately   410  eight-ounce  servings,  as   compared   with
approximately 816 eight-ounce servings in the United States.

     Market Share and Sales Data

      This  subsection contains information regarding the  Puerto
Rican soft drink industry and the Company's market share thereof.
Certain  information regarding the Puerto Rican soft drink  take-
home market segment (retail sales to customers) has been obtained
or derived from data published by Asesores, Inc. ("Asesores"), an
independent  research  company.   Asesores  publishes   bimonthly
estimates  of  beverage consumption in the soft  drink  take-home
market  segment  based  on  information obtained  through  weekly
surveys  of  the  consumption patterns of  panels  of  individual
consumers  throughout Puerto Rico.  The data for the surveys  are
collected  in two ways: product presence is verified  through  an
inventory "pantry check"; and information on purchases during the
prior week is collected utilizing personal interviews.  For  each
product  category,  the  recorded  information  includes  in-home
presence,  brand  and type, size, quantity purchased,  price  and
establishment  where purchased.  The universe  of  the  study  is
defined as "all family households in Puerto Rico."  The sample is
stratified and proportional by geographic area, urban  and  rural
zone,  socio-economic levels and age group.  The consumption  and
sales  information relating to the take-home market  segment  may
not  be  representative of sales of the Company's products  as  a
whole.


                                2



      As  used  throughout this Form 10-K, the term "soft  drink"
refers  generally  to carbonated, nonalcoholic  beverages.   Soft
drink products can be classified as colas or other flavored  soft
drinks.  References to the term "case" throughout this Form refer
to  192  ounces  of  finished beverage  product  (24  eight-ounce
servings).

     Soft Drink Products

      The  following table shows the estimated total sales volume
of  the  soft  drink  industry in Puerto  Rico  as  well  as  the
Company's   total  soft  drink  sales  volume  for  the   periods
indicated:

                               Estimated Industry      
                                     Volume              Company Volume
Calendar Year              (in millions of cases)(1)  (in millions of cases)
-------------              -------------------------  ----------------------
                                                                
   1990....................            61.3                23.2
   1991....................            54.6                24.1(2)
   1992....................            52.7                23.2(2)
   1993....................            54.1                24.5(2)
   1994....................            60.9                26.6
   1995....................            63.3                27.2(3)
   1996....................            60.1                29.1(4)
---------------
(1) Source:  Company estimates.
(2) Actual Company soft drink volume during 1991, 1992 and 1993 were 24.1,
    23.2 and 24.5 million cases respectively, of which 1.4, 1.4 and 2.3
    million cases, respectively, were exported to Argentina.
(3) Represents fiscal year 1995 sales volume.
(4) Represents fiscal year 1996 sales volumes.

      Soft  drink  products can be classified as colas  or  other
flavored soft drinks.  The cola and flavored soft drinks segments
represented approximately 64% and 36%, respectively, of the  soft
drink  market in Puerto Rico in 1996.  The following chart  shows
the  Company's  case  sales volume of cola soft  drinks  for  the
periods indicated:

                                                     Company Cola
                                                        Volume
   Calendar Year                                (in millions of cases)
   -------------                                ----------------------
   1990.........................................          21.4
   1991.........................................          22.5
   1992.........................................          21.6
   1993.........................................          21.9
   1994.........................................          24.8
   1995 (fiscal year cola sales volume).........          24.9
   1996 (fiscal year cola sales volume).........          25.9

      Sales of cola soft drinks represented approximately 90%  of
the  Company's total soft drink sales volume in the  fiscal  year
1996.




                                3


     The following chart reflects the Company's share of the soft
drink  and cola take-home market segments in Puerto Rico for  the
periods indicated:

                                    Company Share of      Company Share of
                                    Soft Drink Take-Home  Cola Take-Home
Calendar Year                       Market Segment(1)     Market Segment(1)
-------------                       --------------------  -----------------
                                                             
   1990............................         47.3%              58.7%
   1991............................          47.8              60.7
   1992............................          53.1              61.4
   1993............................          49.1              59.5
   1994............................          49.3              56.7
   1995 (for the twelve-month             
     period ended August 31, 1995).          49.4              56.5
   1996 (for the twelve-month             
     period ended August 31, 1996).          47.3              54.2
----------------
(1) Source:  Asesores

     Other Products

       The   Company's   total  sales  volume  of  non-carbonated
beverages,   including  water,  fruit  juices,  iced   teas   and
isotonics, was 3.9 and 3.7 million cases, representing 12.9%  and
11.4%  of  total sales volume, in calendar year 1995  and  fiscal
year 1996, respectively.  The Company estimates that the industry
sales  volume  of such beverages in Puerto Rico was 36.8  million
cases  in fiscal year 1996.  The Company believes that its  sales
of non-carbonated beverages will represent an increasingly higher
percentage of its total sales.  The Company expects that the  Toa
Baja  plant which was completed in early calendar year 1996  will
enable the Company to begin or expand production of such products
to meet anticipated growth in demand for such products.

Business Strategy

      The  Company's current business strategy is to restore  the
profitability  of  its  Puerto Rican  bottling  operations.   The
Company   intends   to   pursue   this   strategy   through   the
implementation of new pricing initiatives designed to address the
current  intense  price competition in the soft drink  market  in
Puerto  Rico,  the realization of efficiencies and  cost  savings
through  the consolidation of its existing operations in its  new
Toa  Baja  manufacturing  facility,  and  the  implementation  of
further  cost  cutting  measures.  There  can  be  no  assurance,
however,  that  the Company will be successful in  achieving  its
goal  of restoring the profitability of its Puerto Rican bottling
operations.

      The  Company  completed, during the fiscal year  1996,  the
construction of the Toa Baja plant and the consolidation  of  its
operations  in  the Toa Baja plant.  The Toa  Baja  plant  has  3
bottling  lines  and  increased the Company's  annual  production
capacity   by   60%   (at   comparable  utilization   rates)   to
approximately  44 million cases per year.  The Company  commenced
operations at the Toa Baja plant in the third fiscal quarter  and
plans  to  close  and  sell  the Rio Piedras  plant  as  soon  as
possible.  The plastics production facility has moved to Toa Baja
in  the  first  fiscal  quarter of  fiscal  year  1997.   Several
facilities  leased  by  the Company in  the  San  Juan  area  and
elsewhere  in  Puerto  Rico  were  closed  as  a  result  of  the
completion and consolidation of operations in the Toa Baja plant.
The Company anticipates that the opening of the new plant and the
closing  of  leased facilities will lead to cost savings  in  the
manufacturing   and  distribution  of  the  Company's   products,
eliminate  existing capacity constraints and  the  need  for  co-
packing arrangements and improve production efficiency.

     The Company is pursuing opportunities to expand its presence
in  the  flavored soft drink markets through the introduction  of
new  products under both PepsiCo and other trademarks in 1996 and
1997.


                                4



Franchise Arrangements

     PepsiCo Products

      The  Company has entered into a master franchise commitment
letter  (the  "Franchise Commitment Letter")  with  PepsiCo  with
respect  to  the  sale of PepsiCo soft drink products  in  Puerto
Rico.   The  Company  has  also entered into  exclusive  bottling
appointment  agreements (each an "Exclusive Bottling Appointment"
and  collectively,  with  the Franchise  Commitment  Letter,  the
Concentrate  Price Agreement and the Cooperative Advertising  and
Marketing Agreement between PepsiCo (or its affiliates)  and  the
Company,   the   "Franchise  Arrangements")  for   the   relevant
trademarks  Pepsi-Cola, Diet Pepsi, Pepsi Free, Diet Pepsi  Free,
Lemon-Lime  Slice, Diet Lemon-Lime Slice, Mandarin Orange  Slice,
Diet  Mandarin  Orange Slice, Teem, Diet Teem,  Mirinda,  On-Tap,
Wonder   Kola,  Mountain  Dew  and  All  Sport.   The   Franchise
Arrangements  grant  the  Company exclusive  rights  to  produce,
bottle, sell and distribute PepsiCo soft drink products in Puerto
Rico.   The Franchise Arrangements also authorize the Company  to
supply canned beverages to the U.S. Virgin Islands, provided that
it  remains  competitive  in price, quality  and  quantity.   The
Company  has  the right of first refusal to purchase distribution
rights for PepsiCo products in the U.S. Virgin Islands when  such
rights  become available.  If the Company wishes to bottle,  sell
or  distribute  any  flavored  soft  drink  or  other  carbonated
beverage  other  than  the  products  covered  by  the  Exclusive
Bottling Appointments, PepsiCo has the right of first refusal  to
provide  the Company with concentrate for any such soft drink  or
to  supply  the  Company with such other carbonated  beverage  at
prevailing  market prices.  The Franchise Commitment Letters  run
concurrently   with  the  Exclusive  Bottling  Appointments   and
terminate  in the event of the termination or expiration  of  the
Exclusive   Bottling   Appointments.   All   of   the   Franchise
Arrangements have the provisions described below.

      The  Franchise Arrangements require the Company to purchase
its entire requirements of concentrates and syrups for all of the
PepsiCo  soft drink products from certain affiliates of  PepsiCo.
Pursuant  to the Concentrate Price Agreement between the  Company
and  PepsiCo, PepsiCo charges the Company the actual price  of  a
unit  of  concentrate that is paid by bottlers for  the  same  or
similar  concentrate  in  the continental  United  States  on  an
equivalent yield basis based upon the then current domestic  list
price for each of the respective PepsiCo products.

      The  Franchise  Commitment Letter requires the  Company  to
attain  minimum volume and market share levels of the cola market
and  flavored  soft drink market, minimum levels of  nominal  and
effective   distribution   and   minimum   levels   of    capital
expenditures.   The Company believes it has so far exceeded  such
minimum levels.  The Exclusive Bottling Appointments require  the
Company  to  maintain  the  share, distribution  and  expenditure
targets  for  the PepsiCo soft drink products set  forth  in  the
Franchise Commitment Letter.  In a number of minor respects,  the
Company  may  not  have during the past fiscal year  met  certain
market  share  requirements contained in the  Exclusive  Bottling
Appointments  with  respect to certain soft drink  flavors.   The
Company  has  not received any notice from PepsiCo regarding  any
violations  and does not believe that there is any  risk  to  the
Company of the Company being adversely affected by them.  In  the
event  the  Company  materially fails to achieve  such  aggregate
market share distribution or capital expenditure and such failure
continues for a period of 12 months following notice thereof from
PepsiCo,  then  PepsiCo has the right to require the  Company  to
dispose of the bottling business, plant and operating assets to a
purchaser satisfactory to PepsiCo, or, if such purchaser  is  not
found,  to terminate the agreement.  As required by the Exclusive
Bottling  Appointments, the Company has also developed a  postmix
department with the necessary infrastructure to provide effective
service to the food service channel of distribution.

     The Company is obligated under the Franchise Arrangements to
use,  handle and process the concentrates purchased from  PepsiCo
and  to  bottle, label, package and distribute the  PepsiCo  soft
drink  products  in accordance with PepsiCo's instructions.   The
Company  must maintain and operate its plants and all  sales  and
distribution  equipment  in  clean  and  sanitary  conditions  in
accordance  with  PepsiCo's  standards  and  specifications,  and
otherwise must satisfy PepsiCo's quality control standards.   The
Company  must  comply with all standards and specifications  with
respect  to  the  treatment and purification  of  water  used  in
manufacturing PepsiCo soft drink products and the maintenance and
operation  of  water  treatment  and  purifying  equipment.   The
Company  must  also  conduct  tests of  the  PepsiCo  soft  drink
products  and  the  water  used  in their  manufacture,  maintain
records  of  such  testing  and  permit  PepsiCo  access  to  its
facilities for inspection purposes.


                                5



      The  Company  is required to test market and introduce  new
packages,  sizes and products as PepsiCo may direct  and  promote
and  advertise the PepsiCo soft drink products.  The  Company  is
also  required  to  make  capital  expenditures  to  maintain   a
sufficient inventory of bottles, cartons, containers and cases.

      The  Franchise  Arrangements also require  the  Company  to
display  all  advertising and promotional materials furnished  by
PepsiCo  or  its  affiliates and to incur  mutually  agreed  upon
marketing,  advertising  and sales promotion  expenditures.   See
"- Marketing."

     The Franchise Arrangements require the Company to not exceed
a ratio of senior debt to subordinated debt to equity of 65 to 25
to 10.

      The  Exclusive  Bottling Appointments have  ten-year  terms
expiring  on  November 5, 2003.  Each of the  Exclusive  Bottling
Appointments  will  automatically be extended for  an  additional
five-year term expiring on November 5, 2008, provided the Company
is not in breach of any provisions of the Franchise Arrangements.
Thereafter,   each   agreement  is  automatically   renewed   for
additional  five-year  terms unless either  party  gives  written
notice  of its intention not to renew the agreement at  least  18
months prior to the date of expiration of the term.  PepsiCo  may
terminate  the  Franchise Arrangements if the  Company  fails  to
comply  in any material respect with the terms and conditions  of
the Franchise Arrangements, subject to a right to cure in certain
instances.   In  addition,  PepsiCo may terminate  the  Franchise
Arrangements  if there is a change of effective  control  of  the
Company without PepsiCo's prior written consent.  For purposes of
the  Franchise Arrangements, a change of effective control of the
Company  shall  be  deemed  to have  occurred  if  the  Essential
Shareholders (as defined below), directly or indirectly, cease to
own  or  have  the  power to vote in the  aggregate  at  least  a
majority  of  the  voting stock of the Company.   The  "Essential
Shareholders"  are  the members of the Charles  H.  Beach  Voting
Trust  and  the  Michael J. Gerrits Voting Trust  (together,  the
"Essential  Shareholders") controlled by  Charles  H.  Beach  and
Michael J. Gerrits, respectively.  The Essential Shareholders are
thus  required  under the terms of the Franchise Arrangements  to
retain  voting control of the Company.  (See "Security Ownership"
in  the Company's Proxy Statement for 1996 incorporated herein by
reference).

      In  September 1996 in connection with his continued service
as   President  and  Chief  Executive  Officer,  Mr.  Rafael  Nin
requested,  and  was  granted by the Essential  Shareholders  and
certain  other shareholders, a ten-year voting trust (the "Voting
Trust") which entitles him to vote, but not own, 5,000,000  Class
A  Shares representing a controlling interest in the Company.  In
connection  with  the  execution of the Voting  Trust  agreement,
PepsiCo  consented  to  the change of effective  control  of  the
Company  from  the Essential Shareholders to Mr. Nin,  acting  as
voting  trustee (the "Trustee").  The initial term of the  Voting
Trust  is  five  years  and  is  automatically  renewed  for   an
additional five-year period unless either PepsiCo or the  Trustee
notifies the other party of non-renewal at least six months prior
to  the  end of the initial five-year term, provided that PepsiCo
may not unreasonably withhold its consent to the additional five-
year  period.  Under the terms of the Voting Trust,  Mr.  Nin  is
entitled  to  resign as Trustee at any time, which results  in  a
termination  of  the  Voting  Trust.   If  the  Voting  Trust  is
terminated  because of the resignation or death of  the  Trustee,
PepsiCo  has  the  right for a period of ninety days  after  such
resignation or death to appoint a new Trustee to replace Mr.  Nin
for  the  remaining  term of the Voting  Trust,  subject  to  the
approval  of the beneficial owners of a majority of the  Class  A
Shares.   Upon  the  termination  of  the  Voting  Trust  at  the
expiration  of  its term, the Class A Shares held in  the  Voting
Trust  will  be  returned to the Essential Shareholders  and  the
terms  of  the Franchise Arrangements applicable to the Essential
Shareholders will again become effective.

      In connection with the Voting Trust, Mr. Nin was granted  a
two-year option at $1 per share on the Class A Shares held in the
Voting  Trust, to be exercised for the exclusive benefit  of  the
Company.

      In  addition  to  the  products covered  by  the  Franchise
Arrangements,  the Company has the rights to sell and  distribute
Lipton  Ice  Tea  Original Formula pursuant to  a  joint  venture
arrangement between PCI and Lipton.


                                6


     Other Products

      The  Company has reached agreement on the terms of  a  soft
drink  trademark license and bottling agreement with Seagram  for
the exclusive rights to produce, sell and distribute tonic water,
club  soda  and ginger ale under the Seagram trademark in  Puerto
Rico.   The Company must purchase concentrate from Seagram  at  a
price  per unit mutually agreed upon by Seagram and the  Company.
The  Company  is  obligated to meet specified production  levels.
The  Company may not produce, sell or distribute any other  tonic
water,  club soda or ginger ale other than the Seagram trademark.
The Company has further agreed to maintain certain production and
quality  control  standards,  and to  use  its  best  efforts  to
advertise  and promote the sale, distribution and consumption  of
the Seagram products in the franchise territory.  The license and
bottling agreement with Seagram is effective through January  31,
2000 and is renewable for successive ten-year terms thereafter at
the  option  of  Seagram.   The agreement  with  Seagram  may  be
terminated in the event that the Company does not comply with its
terms  and,  in the case of the Company's bankruptcy, appointment
of a receiver or assignment for the benefit of creditors.

      The  Company  has  entered into a  sales  and  distribution
agreement effective through March 31, 1997 with Welch Foods  Inc.
("Welch's")  for the rights to sell and distribute non-carbonated
fruit juice beverages under the Welch's trademark in Puerto Rico.
The  Company  must  purchase the product from certain  authorized
sellers  and  may  not  manufacture, sell or  distribute  certain
specified  brand names which compete with Welch's products.   The
Company  is actively negotiating the renewal of this distribution
agreement.

      The  Company  has entered into an exclusive distributorship
agreement  effective  through 2013 with Nora  Beverages  Inc.  to
distribute  natural  spring water under  the  Naya  trademark  in
Puerto Rico and St. Maarten.

     Franchise Protection

      The  Company's  Franchise  Arrangements  with  PepsiCo  are
subject  to  Act  No.  75 of June 24, 1964  of  Puerto  Rico,  as
amended,  ("Act 75"), which provides that a company  that  grants
distribution  rights  to a distributor in  Puerto  Rico  may  not
unilaterally terminate, perform any act detrimental to or  refuse
to  renew its agreement with the distributor without just  cause,
and  would  be  required  to pay damages to  the  distributor  as
specified in Act 75 in the event of a termination, impairment  or
non-renewal without just cause, which are specific acts set forth
in  Act  75 which are attributable to the distribution.   Act  75
does  not protect a distributor in the event of a breach by  such
distributor.

Proprietary Trademarks

      The  Company produces, sells and distributes bottled  water
under  its  own Cristalia trademark in one-gallon and five-gallon
containers.   The  Company's  sales of  Cristalia  bottled  water
totalled  $4.5  million in 1996 and accounted  for  4.4%  of  the
Company's net sales and 9.4% of sales volume for the fiscal  year
1996.

Production

      Soft  drinks are produced by mixing water, concentrate  and
sweetener  and injecting carbon dioxide gas into the  mixture  to
produce  carbonation  immediately prior to  bottling.   Prior  to
mixing,  the  water  is  processed to  eliminate  mineral  salts,
chlorinated and then passed through purification tanks containing
sand filters to eliminate remaining impurities and carbon filters
to  eliminate  chlorine taste, copper and  odors.   The  purified
water  is  then  combined with processed sugar  and  concentrate.
Following carbonation the mixture is bottled in prewashed bottles
or aluminum cans.  The Company maintains a laboratory area at its
production facility where raw materials are tested and samples of
soft drink products are analyzed to ensure quality control.

      The raw materials used by the Company in the production  of
soft  drinks  include  concentrate, syrup, water,  sugar,  carbon
dioxide  gas, glass and plastic bottles, aluminum cans and  other
packaging material.  The Company is obligated under the terms  of
the   Franchise  Arrangements  to  obtain  concentrate  for   the
production of soft drink products from PepsiCo or its affiliates.
The  Company obtains water from publicly available supplies (such



                                7



as  municipal water systems) and from its own drilled wells.  The
Company  obtains all of its sugar requirements from a  number  of
independent  suppliers  and distributors located  in  the  United
States  and Puerto Rico.  The Company does not directly  purchase
low  calorie sweetener for use in diet soft drinks because  these
sweeteners   are  already  contained  in  the  diet  soft   drink
concentrates purchased by the Company.  The Company purchases its
supplies  of  carbon  dioxide gas from a  number  of  independent
suppliers  in  Puerto Rico and elsewhere.  The Company  purchases
plastic bottles used in the bottling process principally from its
plastics  operation  and  from  other  independent  suppliers  as
needed.   The  Company  also  manufactures  preforms  which   are
utilized in bottle manufacture.  Plastics were also sold to BAESA
during  the  first  quarter of 1996.  All  bottles  used  in  the
bottling process of Cristalia are purchased by the Company from a
number  of  independent  suppliers.  The  Company  purchases  its
aluminum can requirements from Crown Cork & Seal.

     None of the raw materials or supplies used by the Company is
currently  in  short  supply, although the  available  supply  of
certain  materials could be adversely affected in the future  due
to reasons outside the Company's control.

      The  following table sets forth the principal raw materials
utilized in the soft drink production process and the approximate
percentage  of the Company's total cost in the fiscal  year  1996
represented by each of them.

                                         Percentage of
                                         Fiscal Year
Raw Material                             1996 Cost
------------                             -------------
                                                 
                                         
Packaging..................................  45.8%
Concentrate................................  29.9
Sugar/fructose.............................  16.9
Carbon dioxide gas.........................   1.1
Other......................................   6.3
                                            -----
          Total............................ 100.0%
                                            =====

      The  Company  produces bottled water  under  its  Cristalia
trademark  at  a  facility located in Ponce.  The water  obtained
from  a  spring and several wells is passed through  purification
tanks containing sand filters and carbon filters and subjected to
reverse  osmosis treatment to filter out impurities  and  certain
minerals.   After  the water is passed through  an  ozonator  for
further   treatment,  it  is  bottled  in  one-  and  five-gallon
containers.

      The Company currently produces soft drinks at its plant  in
Toa  Baja  and bottled water at a leased facility in Ponce.   The
Company  moved its manufacturing operations from Rio  Piedras  to
Toa  Baja  during  the third quarter of fiscal  year  1996.   The
following   chart  shows  the  approximate  effective  production
capacity, number of shifts and bottling lines, and average fiscal
year 1996 capacity utilization for the Toa Baja plant:

               Approximate Effective      Number of      Average 1996
Plant          Production Capaity(1)   Bottling Lines Capacity Utilization(2)
-----          ---------------------   -------------- -----------------------
                                                          
Toa Baja......      44,347(2 shifts)        3                   65%

----------------
(1)  Approximate effective production capacity is expressed in thousands of
     cases per year, assuming the number of shifts indicated.  Effective
     production capacity is a plant's theoretical installed capacity,
     adjusted for seasonal variations in demand as well as regular
     maintenance and repair.
(2)  Actual production in fiscal year 1996 expressed as a percentage of
     approximate effective production capacity.

      The  Company expects to produce substantially  all  of  its
products during fiscal year 1997 in its soft drink plant  in  Toa
Baja  or  in  its water plant in Ponce (the "Water Plant").   The
remaining volume is purchased from outside sources.  The Toa Baja
plant is located approximately 15 miles west of San Juan and  the
Water  Plant is located on the southern portion of the island  of
Puerto  Rico.   The  Rio Piedras plant has been  cleared  of  all
producing equipment and is currently on the market for sale.



                                8



Distribution

      Once the bottling process is complete, the Company packages
its   soft   drink  products  in  cases,  tanks  and  boxes   for
distribution  throughout its franchise  territory.   The  Company
uses  two  primary  methods of distribution for  its  soft  drink
products: conventional routes and bulk presell delivery.  In  the
conventional route form of distribution, a truck owned or  leased
by the Company is loaded with the Company's beverage products and
visits   each  of  the  Company's  customers  along  an  assigned
distribution  route.   The  customer places  orders  and  accepts
delivery of the amount of the Company's products needed  at  that
time.   The drivers and sales persons which deliver the Company's
products along the conventional route system are employees of the
Company   in  Puerto  Rico.   The  conventional  route  form   of
distribution is the main form of distribution currently  used  by
the Company in Puerto Rico.

     Under the bulk presell method of distribution, the Company's
account  representatives  and  key  account  salespersons   visit
customers  assigned to their route and fill out order  forms  for
the  Company's  products.   These orders  are  processed  at  the
Company's  plant and the products are delivered the next  day  in
trailer loads by independent truck drivers or in bulk (less  than
trailer  loads)  by the Company's employees in  Company-owned  or
leased  trucks.   The  bulk presell method  is  mostly  used  for
wholesalers and large retailers.

      The Company intends to emphasize the "route presell" method
of  distribution  for its conventional routes where  feasible  to
capitalize  on  its  planned introduction  of  new  products  and
packaging formats.  Under the route presell method, employees  of
the  Company  visit customers assigned to their  route  and  take
orders  which are processed at the end of the day.   The  ordered
products  are  then  delivered the  next  day  by  the  Company's
employees  in  Company-owned or leased trucks.  The  Company  has
conducted  pilot tests for the route presell method  in  the  San
Juan  metropolitan area and these tests indicate that  the  route
presell  method  of distribution is preferred  by  the  Company's
customers.   In  addition,  this  method  provides  better  route
coverage   in   densely  populated  areas  and  facilitates   the
distribution of the Company's existing products as  well  as  the
introduction of new products.

      As of September 30, 1996, the Company had approximately 112
distribution  routes  (conventional, bulk and  presell)  and  its
transportation fleet consisted of approximately 125 trucks.   The
Company's products are also distributed to restaurants  and  soda
fountains in post-mix form.

      In  addition,  the Company has approximately 1,250  "single
service"  and  1,500  "full service" vending machines  throughout
Puerto  Rico.  In the "single service" format, the proprietor  of
the  location  of the machine purchases a minimum amount  of  the
Company's  products  while  in the  "full  service"  format,  the
Company  pays  a  commission to the proprietor and  supplies  and
retains the profit from sales from the machines.  The Company  is
responsible for refurbishing and maintaining the vending machines
and there is no charge for installation and maintenance or rental
fees  for  the vending machines.  The Company's bottled water  is
distributed  to  customers  in  private  homes,  businesses   and
government agencies some of which have coolers installed  by  the
Company.   The Company receives a rental payment for each  cooler
installed by the Company.

      In the fiscal year 1996, approximately 52% of the Company's
net  sales  was to supermarkets and grocery stores,  29%  was  to
"cash  and carries" (small, high-volume wholesalers) and  similar
businesses, 12% was to restaurants and soda fountains and 7%  was
through   other   distribution  channels.    The   Company   also
distributes its products through vending machines and is  in  the
process  of  rapidly expanding its placement of vending  machines
throughout  Puerto Rico.  The Company's Cristalia  brand  bottled
water  is  distributed  to  private  homeowners,  businesses  and
government  agencies.  Most sales to the Company's customers  are
on  a  credit basis, with payment due approximately 30 days after
delivery.    Credit   sales   and  cash   sales   accounted   for
approximately  81% and 19%, respectively, of the Company's  total
sales in the fiscal year 1996.

Marketing

      The Company has entered into a cooperative advertising  and
marketing  agreement with affiliates of PepsiCo in  Puerto  Rico.
This arrangement provides for advertising of Pepsi-Cola and other
PepsiCo  soft  drink products on television and  radio  stations,
billboards,  newspapers and other media.  The total amount  spent


                                9


by  the  Company  on  advertising pursuant  to  this  cooperative
arrangement in any year is determined by the amount set forth  in
that year's cooperative marketing agreement.

      A  primary  basis of competition among soft drink  bottling
companies  is  sales promotion activities, including  television,
radio   and   billboard  advertising  and  "point  of   purchase"
promotional  devices, such as display racks  and  cases,  clocks,
neon  signs and other merchandise and equipment bearing the Pepsi
logo  and  placed in retail outlets where the Company's  products
are sold.

      The Company also uses point-of-purchase promotional devices
approved  by  PepsiCo in marketing its products.  These  products
consist  primarily of prominent in-store displays such  as  racks
and  cases.   These  products  are  delivered  to  the  Company's
customers   by   distribution  trucks  along  with   soft   drink
deliveries.   The  Company  shares the cost  of  these  point-of-
purchase  promotional  devices,  excluding  design  costs,   with
PepsiCo.   PepsiCo reimburses the Company for PepsiCo's share  of
its marketing expenditures.  PepsiCo may from time to time during
the  year  pay  for marketing expenditures directly,  subject  to
agreement  with  the  Company, and  will  be  credited  for  such
payments toward PepsiCo's share of marketing expenditures.

     The Company has entered into long-term arrangements to offer
discounts  to  selected customers, such as the major  supermarket
chains  in  Puerto  Rico.   The Company  has  also  entered  into
cooperative  marketing agreements with its customers relating  to
special  displays  and promotional campaigns  for  the  Company's
products.

      The  Company frequently uses promotional campaigns such  as
concerts  and sports events, merchandise giveaways, contests  and
similar  programs  to  increase sales  of  its  products.   These
programs  are typically heavily advertised and frequently  result
in  increased  sales  and higher per capita  consumption  of  the
Company's  products  during  the  time  the  program   is   being
conducted.

      The  Company sells its soft drink and water products  in  a
variety of non-returnable bottles, both glass and plastic, and in
cans,  in  a variety of sizes.  The Company currently  sells  its
products   in  15  different  packaging  formats.   The   Company
continually examines sales data and customer preferences in order
to  develop  a  mix  of  packaging formats which  consumers  will
consider most desirable in order to increase sales and per capita
consumption of the Company's products.  All the packaging formats
utilized  by the Company for soft drink products are  subject  to
the approval of PepsiCo.

     A primary basis of competition in the soft drink industry in
Puerto Rico is the "image" that a particular soft drink has among
consumers.  The Company intends to continue to promote the  image
of  PepsiCo products among consumers in Puerto Rico by  means  of
advertising which depicts PepsiCo products as the preferred  soft
drink products among consumers.

     The Company uses its management information systems in order
to  evaluate sales data for purposes of forecasting future  sales
and  establishing  sales  quotas and  forecasts.   Based  on  the
information  compiled in the Company's historical sales  records,
the  Company  may initiate one or more of the marketing  programs
described  above in order to increase sales volume or per  capita
consumption of its soft drink products.

Competition

       The   soft  drink  industry  in  Puerto  Rico  is   highly
competitive.  In addition, during fiscal 1996, the Company  faced
intense  price competition resulting in substantially  lower  net
prices.   The Company's principal competitors in Puerto Rico  are
the  local  bottlers and distributors of Coca-Cola  in  the  cola
market  and  Seven-Up  in the flavored soft  drink  market.   The
Company's other competitors include bottlers and distributors  of
nationally  and regionally advertised and marketed  products,  as
well as bottlers of smaller private label soft drinks, which  the
Company  believes have historically represented less than  4%  of
total  soft drink sales in Puerto Rico.  During fiscal year  1996
the Coca-Cola franchise was sold to an investor group headed by a
Florida-based businessman and the Seven-Up Company  was  sold  in
part  to its management group in a leveraged buy-out transaction.
These two transactions have resulted in a significant increase in
competition in the Puerto Rican soft drink market, increasing the
Company's marketing and discount expenditures during fiscal  year
1996.



                                 10



      Carbonated  soft  drink products compete with  other  major
commercial beverages, such as coffee, milk and beer, as  well  as
non-carbonated  soft drinks, citrus and non-citrus  fruit  drinks
and other beverages.

      The  principal  methods of competition in  the  soft  drink
industry  in  Puerto  Rico are pricing, advertising  and  product
image.  In addition, the Company provides discounts to certain of
its  large customers such as supermarket chains, fast food chains
and other retail outlets which carry PepsiCo soft drink products.

      The  following charts compare the market share  of  PepsiCo
soft  drink  products and Coca-Cola soft drink  products  in  the
Puerto  Rican  soft  drink take-home market at  the  end  of  the
periods indicated.

                                       Soft Drinks Take-Home Market Share(1)
                                       -------------------------------------
       Calendar Year                   PepsiCo Products  Coca-Cola Products
       -------------                   ----------------  ------------------
       1990............................      47.3%             29.7%
       1991............................      47.8              24.5
       1992............................      53.1              28.7
       1993............................      49.1              33.0
       1994............................      49.3              33.0
       1995 (for the twelve-month           
       period ended August 31, 1995)...      49.4              32.3
       1996 (for the twelve-month        
       period ended August 31, 1996)...      47.3              32.6

----------------
(1)  Source: Asesores

Plastic Products

      Beverage  Plastics Company, a subsidiary  of  the  Company,
manufactures  and  sells  non-returnable  plastic   bottles   and
preforms.   In  1996,  the plastic bottles manufactured  by  that
subsidiary  were  used  entirely  in  the  Company's  soft  drink
production and distribution business, and the preforms  were  all
used  in  the  manufacture of plastic  bottles  or  sold  to  the
Argentine and Brazilian operations of BAESA.  Sales to BAESA were
discontinued in early 1996.

Government Regulation

      The  Company's  operations are subject  to  the  regulatory
oversight of the U.S. Department of Agriculture and Department of
Labor,  the Food and Drug Administration, the Occupational Safety
and  Health  Administration, the Environmental Protection  Agency
and the Puerto Rico Environmental Quality Board.

     The Company is required to obtain municipal licenses for its
bottling  plants.   The Company is currently in  compliance  with
such  requirements.  Additionally, the Company routinely  obtains
the   necessary  approvals  to  operate  certain  machinery   and
equipment,  such as boilers, steamers, compressors and  precision
instruments, from municipal authorities.

     Environmental Regulation

      The Company has entered into a stipulation, dated September
11,  1990  (the "Stipulation") with the Puerto Rico Aqueduct  and
Sewer  Authority ("PRASA") with respect to the discharge of waste
water in excess of pretreatment permit limitations.  Pursuant  to
the  terms of the Stipulation, PRASA and the Company agreed on  a
compliance  plan by which the Company would invest  approximately
$1.0  million  for  the construction of a waste  water  treatment
plant  in its bottling facilities and would pay an administrative
penalty  to  PRASA.  The Company also entered into  a  settlement
with PRASA covering surcharges to be paid by the Company for  the
discharge  of  waste water in excess of surcharge limits.   Under
the  terms of the settlement, the Company agreed to pay PRASA the
amount  of  $60,000 in accord and satisfaction for any surcharges
which might have been computed and notified on or before June  1,
1991.   The  settlement  provides for prospective  surcharges  as
follows: (a) $48,000 for the period from June 1, 1991 to December
31,  1991;  (b) $10,000 per month for the period from January  1,


                                11



1992  through and until June 30, 1993; and (c) $12,500 per  month
for  the  period  from July 1, 1993 through and until  the  waste
treatment facility at the Toa Baja plant is completely built  and
operational.    The  settlement  also  provides  for   additional
surcharges if certain limits are exceeded.  The Company  received
a  permit from PRASA to operate its Toa Baja plant until June 28,
1997  while a PH Equalization Facility is being placed in service
and  the discharge of waste water is characterized.  This process
will  provide  the  information needed to  obtain  the  permanent
permit.   The   Company   hopes   that   the   results   of   the
characterization of the discharge of waste water will  permit  it
to make use of a municipal waste treatment facility, for which it
would  pay a monthly fee, and thereby avoid the need to construct
a  separate waste water treatment plant adjacent to its Toa  Baja
manufacturing  facility.  The Company places a high  priority  on
quality control and industrial safety and believes that it is  in
material  compliance with all other applicable regulations.   The
Company received the Quality Award from PepsiCo in 1993 and 1994.
The  International Bottled Water Association's Quality Award  has
been  received  by the Company's Water Plant for 1994,  1995  and
1996.

     Taxation

      The Puerto Rican government currently imposes an excise tax
on  carbonated  beverages of 5% of the "taxable price  in  Puerto
Rico."   The  "taxable  price  in  Puerto  Rico"  for  a  product
manufactured  in  Puerto Rico is effectively  defined  under  the
Puerto  Rico Excise Act as 72% of the manufacturer's sales price.
The Company is thus subject to an excise tax at an effective rate
of  3.6%  (or  5%  of 72%) of the sales price of its  soft  drink
products.

Employees

      At  September  30,  1996,  the Company  had  477  full-time
employees, approximately 65% of which were represented by a labor
union.   The  Company  believes that its  relationship  with  its
employees  and  their unions is excellent.  The Company  has  not
experienced  any  strike or work stoppage since the  Company  was
acquired  in  1987.   Labor relations are generally  governed  by
union  agreements  entered into from time  to  time  between  the
Company  and its employees.  The Company has entered  into  three
such  agreements,  with its union employees in its  manufacturing
and  distributing subsidiaries, its plastics subsidiary  and  its
bottled  water division, respectively.  The Company's  agreements
relating  to  its  manufacturing  and  distributing  subsidiaries
expires  on  December 31, 1997.  The agreement  relating  to  its
plastics  subsidiary  expired on October 1,  1996.   The  Company
currently  is  in  the process of renegotiating  this  agreement.
Each  of  the  agreements  relating  to  the  manufacturing   and
distributing  subsidiaries  and the  agreement  relating  to  the
plastics   subsidiary  are  subject  to  automatic  renewal   for
additional  one-year terms unless terminated by either  party  in
writing.   The Company's agreement relating to the bottled  water
division  became effective January 1995 and expires  on  December
31, 1998.  The Company and the labor union are in the process  of
renegotiating  the  agreement relating to its  manufacturing  and
distribution  subsidiaries  with  the  intention  of   increasing
efficiencies   and   lowering  the  operating   costs   in   both
subsidiaries.

Executive Officers of the Company

      The  executive officers of the Company are elected  by  the
Board  of  Directors and serve at its discretion.   There  is  no
family relationship among any of the officers or directors.

     The following table sets forth certain information regarding
the executive officers of the Company.

Name                  Age  Position                    Officer Since
----                  ---  ---------                   -------------
Rafael Nin............ 52  President and Chief           1996
                           Executive Officer
C. Leon Timothy....... 61  Senior Vice President-        1990
                           Investor Relations
David Cuthbertson..... 55  Vice President -              1990
                           Operations
Manuel Bonilla........ 46  Vice President -  Sales       1996
                           and Marketing
Reinaldo Rodriguez.... 51  Vice President -  Human       1996
                           Resources
David Lee Virginia.... 46  Vice President - Finance      1996
                           Officer
Jose Gonzalez          39  Vice President -  Internal    1996
                           Audit



                                12



      On June 11, 1996, Rafael Nin, one of the Company's founding
shareholders  and  a  member of the Board  of  Directors  of  the
Company replaced Charles H. Beach as the Company's President  and
Chief  Executive  Officer.  Effective  August  8,  1996,  Charles
Beach,  the  Chairman  of  the Board of  Directors,  and  Michael
Gerrits,  who together were then the controlling shareholders  of
the  Company,  resigned as Board members.   The  Company  further
restructured its Board of Directors under the leadership of a new
Chairman,  John W. Beck.  Beck is the retired chairman and  chief
executive  officer  of First National Bank, Orlando/Winter  Park,
Florida  and has been a Director of the Company since 1987.   The
Board also appointed Richard Reiss, a certified public accountant
and  well known business consultant in Puerto Rico, to chair  the
Audit Committee.

      In  connection with his continued service as President  and
Chief  Executive Officer, Mr. Nin requested, and was  granted  by
the  Company's controlling stockholders, a ten-year voting  trust
agreement  which  entitles him to vote, but not  own,  5  million
Class  A shares, a controlling interest in the Company.  Mr.  Nin
was   granted  a  two-year  option  at  $1  per  share  on  these
controlling shares, to be exercised for the exclusive benefit  of
the  Company.   At his request, this option may not be  exercised
for his own benefit.  See "Business-Franchise Arrangements".  All
remaining 9.5 million founding shares, not subject to the option,
are  free  from  shareholder agreement trading  restrictions.   A
prior  option to purchase a substantial interest in the  Company,
previously  reported as granted to Nin upon  his  appointment  as
chief  executive  officer,  was never formalized,  and  has  been
withdrawn by mutual agreement.

      The  following  is  a  brief description  of  the  business
background of each of the executive officers of the Company.

      Rafael  Nin  has been a Director of the Company  since  May
1987.   He  was elected President and Chief Executive Officer  in
June  1996.  He has been a Director of Bestov Foods S.A., a Pizza
Hut franchise in Argentina since 1992, and has acted as President
and  Chief  Executive Officer of Kana Development, Inc.,  a  land
development company, since 1983.

      C.  Leon  Timothy has been a Senior Vice President  of  the
Company  since February 1990 and a Director of the Company  since
December 1992.  He was a Director of BAESA from April 1990  until
July  1996  and a Senior Vice President of BAESA responsible  for
shareholder relations until July 1996.

      David  Cuthbertson has been a Vice President of the Company
in charge of operations since July 1990.  He was a regional Sales
Manager for Crown Cork and Seal Company from 1979 to June 1990.

      Manuel Bonilla has been a Vice President of the Company  in
charge of Sales and Marketing since September 1996.  He was  Vice
President of Sales for Philip Morris Latin America from  1987  to
August 1996.

     Reinaldo Rodriguez has been Vice President of the Company in
charge  of  Human  Resources since September 1996.  He  was  Vice
President  in  charge of Human Resources for BAESA form  1990  to
July  1996,  and he was Personnel Director for Pepsi Cola  Puerto
Rico Bottling Company from 1982 to 1990.

     David Lee Virginia has been Vice President of the Company in
charge of Finance since September 1996.  He was Planning Director
for Pepsi Cola Engarrafadora Ltda from 1994 to 1996.  He was with
BAESA  in  a  number  of  positions including  Vice  President  -
Treasurer  from 1992 to September 1994 and he was Vice  President
in charge of Finance for Pepsi Cola Puerto Rico Bottling Co. from
1987 to 1992.

      Jose  Gonzalez has been a Vice President of the Company  in
charge  of  Internal Audit since October 1996.  He was previously
Audit  Manager,  since  December 1995.   He  was  Controller  and
Operations  Manager for The West Company from 1993  to  1995  and
Assistant  Controller for Nypro Puerto Rico  Inc.  from  1992  to
1993.   Previous positions include Senior Accountant for Motorola
of  Puerto  Rico and Senior Auditor for Coopers &  Lybrand,  from
1988 to 1992.


                                13


Investment in BAESA

      On July 1, 1996, voting control of BAESA was transferred to
PepsiCo with the result that the Company no longer exercises  any
significant influence or control over BAESA.  As a result of this
change,  the Company's investment in BAESA may cause the  Company
to  be an investment company under the Investment Company Act  of
1940,  as  amended (the "Investment Company Act").  In  order  to
avoid  being required to register as an investment company, which
the  Company believes would impose burdensome restrictions on its
future operations, the Company's Board of Directors has expressed
its  intention to take steps as soon as reasonably possible which
are  intended  to  result in the Company not  being  required  to
register as an investment company.  The Company expects  to  file
with the Securities and Exchange Commission an application for an
exemptive  order  from registration under the Investment  Company
Act.   There can be no assurances, however, that the Company will
be  successful  in  obtaining such an  exemptive  order  or  will
otherwise  find  a  way to avoid registration,  or  that  if  the
Company is ultimately required to register, it will not adversely
affect the Company's future business operations.

Item 2.        PROPERTIES

Properties

     The properties of the Company primarily consist of bottling,
warehouse,   distribution,   plastic   production   and    office
facilities,  located  in  Puerto  Rico.   The  Company  owns  the
property  previously used as a bottling plant in Rio Piedras  and
one  bottling  plant  in  Toa Baja.   Substantially  all  of  the
Company's  real  property, machinery and  equipment  are  pledged
pursuant to the terms of a Credit Agreement among the Company and
its subsidiaries and Banco Popular de Puerto Rico.  See "Item  7.
Management's  Discussion and Analysis of Financial Condition  and
Results  of  Operations  - The Company -  Liquidity  and  Capital
Resources."  The principal offices of the Company are located  in
Toa  Baja.   The  Company leases two warehouse  and  distribution
facilities  in Ponce, Mayaguez and the production facilities  for
Cristalia bottled water in Ponce.  The remainder of the Company's
properties is held in fee.

      At  September  30, 1996, the net book value  of  all  land,
buildings,  machinery,  and equipment owned  by  the  Company  in
Puerto  Rico  was approximately $53.7 million.  The total  annual
rent  paid by the Company for the year ended September  30,  1996
for its leased production, distribution and office facilities and
equipment in Puerto Rico was approximately $1.4 million.


Item 3.        LEGAL PROCEEDINGS

      Nine  putative  class actions alleging  federal  securities
violations by the Company and others have been filed since August
14, 1996:

      1.    Robert  and  Ilene  Weiss v. Pepsi-Cola  Puerto  Rico
Bottling  Co.,  Charles  H.  Beach and  Rafael  V.  Farace,  U.S.
District Court for the Southern District of Florida, Civil Action
No. 96-2290, filed 8/14/96, Judge Moore.

      2.  Louis Goldstein v. Pepsi-Cola Puerto Rico Bottling Co.,
Charles  H. Beach, Michael J. Gerrits and Rafael V. Farace,  U.S.
District Court for the Eastern District of New York, Civil Action
No. 96-4010, filed 8/14/96, Judge Gleeson.

      3.    The   Great   Neck  Capital  Appreciation  Investment
Partnership,  L.P. and Sam Tave v. Charles H. Beach,  Michael  J.
Gerrits,  Rafael  V. Farace and Pepsi-Cola Puerto  Rico  Bottling
Company,  U.S.  District  Court  for  the  Southern  District  of
Florida, Civil Action No. 96-8578, filed 8/15/96, Judge Moore.

      4.    Luis  A.  Rivera  Pomales, Rosa  I.  Quintana,  Frank
Fernandez,   Tallaboa  Heavy  Equipment  Corp.,  Rafael   Tamayo,
Internal  Medicine Corp., Nelson Capote, Myrta Oceguera,  Evencio
Rodrigues  v. Pepsi-Cola Puerto Rico Bottling Co., Paine  Webber,
Incorporated,  Oppenheimer & Co., Inc. KPMG  Peat  Marwick,  KPMG

                                14



Peat  Marwick, LLP, KPMG Finsterbusch Pickenhayn Sibille, Charles
H.  Beach,  Michael J. Gerrits, James C. Keavney, John  W.  Beck,
Charles  R. Krauser, Anton Schedlbauer, C. Leon Timothy,  Raymond
Ulrich, ABC Inc., DEF, Inc. Mr. X and Mrs. Y, U.S. District Court
for  the District of Puerto Rico, Civil Action No. 96-1997, filed
8/16/96, Judge Dominguez.

      5.   Joseph Singer v. Charles H. Beach, Michael J. Gerrits,
Rafael  V.  Farace  and Pepsi Cola Puerto Rico Bottling  Company,
U.S.  District Court for the Southern District of Florida,  Civil
Action No. 96-2459, filed 8/29/96, Judge Moore.

      6.    Annabella  Sykes Ray.  On behalf of herself  and  all
others  similarly  situated v. Pepsi-Cola  Puerto  Rico  Bottling
Company,  a Delaware corporation, Charles H. Beach and Rafael  V.
Farace, U.S. District Court for the Southern District of Florida,
Civil Action No. 96-8590, filed 8/20/96, Judge Moore.

      7.    Sweetwater Investments, Inc. On behalf of itself  and
all  others similarly situated v. Pepsi Cola Puerto Rico Bottling
Co., Charles H. Beach, Michael J. Gerrits, James C. Keavney, John
W.  Beck, Charles R. Krauser, Angel Collado-Schwatz, Rafael  Nin,
Anton Schedlbauer, C. Leon Timothy, Raymond Ulrich and Rafael  V.
Farace, U.S. District Court for the Southern District of Florida,
Civil Action No. 96-8671, filed 9/26/96, Judge Moore.

      8.    Turabo  Medical Center, Harzan Mortgage,  Sara  Pons,
Virgilio  Cardona de la Obra, Charlie La Costa, Miguel  A.  Ortiz
Flores,  Trustee of Miguel A. Ortiz Flores Keogh  Plan,  Hipolito
Miranda,  Cesar  A.  Cruz, David W. Tsao  and  Vivien  Chen,  Luz
Correa,  Hector  Velez, Pedro Zervignon, Elsa Castro  Perez,  Dr.
Robreto Rodriguez Velez, Oscar Rivera and Anabel A. Rivera, Diana
Nazario,  Kau  Shing  Fung  and Mui Chun  Wong,  Orlando  Marrero
Santiago, Marcos Bandrich, Alfredo Garcia Sasco and Wilma  Bordoy
Otero,  Ernesto Iglesias, Rodfam Investments, Inc. v. Charles  H.
Beach, Michael J. Gerrits, Rafael V. Farace and Pepsi-Cola Puerto
Rico  Bottling Company, U.S. District Court for the  District  of
Puerto  Rico,  Civil  Action No. 96-2250, filed  10/11/96,  Judge
Dominguez.

      9.    Joseph  Shanken on behalf of himself and  all  others
similarly  situated v. Pepsi-Cola Puerto Rico  Bottling  Company,
Charles  H.  Beach, Michael J. Gerrits and Rafael V. Farace,  U.S
District  Court  for the Southern District of  Florida  (Northern
Division), Civil Action No. 96-8712, filed 10/18/96, Judge Moore.

      All nine actions allege violations of Sections 10(b) and 20
of  the Securities Exchange Act of 1934 and Rule 10b-5 thereunder
based  on  accounting  irregularities in the  Company's  reported
financial  results  for  its  first  and  second  quarters  ended
December  31, 1995, and March 31, 1995, respectively.   Three  of
the  nine  actions  (the Pomales, Sweetwater and  Shanken  cases)
further  claim violations of the Securities Act of 1933; i.e.,  a
fraudulent   scheme  to  misrepresent  the  Company's   financial
condition,  beginning with misrepresentations  in  the  Company's
September 19, 1995 initial public offering and continuing in  its
quarterly  financial  reports.  One  of  the  nine  actions  (the
Pomales case) additionally alleges a claim for "Fault, Negligence
and  Tort-Recklessness" based on the same allegations  underlying
the federal securities claims.

      Plaintiffs in all the actions seek, inter alia, unspecified
money  damages.  Plaintiffs in the Pomales case seek, inter alia,
rescissory  or  compensatory damages  which  are  alleged  to  be
estimated  to  exceed  $70,000,000,  together  with  pre-judgment
interest;  and judgment declaring null and void the sale  of  the
Company's  common  shares initially sold to  the  public  in  the
Company's  September  19, 1995 initial public  offering  and  all
subsequent  trading in such shares. Similarly, plaintiff  in  the
Sweetwater Investments, Inc., case seeks inter alia, recision  of
the stock purchases.  The Company's time to respond to any of the
complaints has not yet expired.

      On  or  about  October  15, 1996, The  Great  Neck  Capital
Appreciation  Investment  Partnership,   L.P.,   Singer,   Weiss,
Sweetwater Investment and Ray plaintiffs  each  separately  filed
motions to consolidate all actions against the Company pending in
Florida  (other than the Shanken action which had  not  yet  been
filed),  to  appoint  a  lead  plaintiff,  and  to  appoint  lead
plaintiffs'  counsel.   All  Florida  plaintiffs,  including  the
plaintiff  in the Shanken case, seek to transfer the consolidated
actions  to the District of Puerto Rico.  The Company has opposed
this effort, and the issue remains sub judice.


                                15




     On or about October 18, 1996, the Pomales and Turabo Medical
Center  plaintiffs  in the actions pending  in  the  District  of
Puerto  Rico  moved for consolidation, which was granted  by  the
court  on  November 4, 1996.  On November 13, 1996, the Company's
motion  to  Consolidate  and Transfer  Actions  to  the  Southern
District  of  Florida  was  filed  with  the  Judicial  Panel  on
Multidistrict  Litigation, and briefing by the parties  has  been
completed.   A  hearing on the Company's motion is scheduled  for
January  24,  1997.  In November 1996, plaintiffs in the  Florida
actions  moved  for class certification.  The Company's  time  to
respond to the class certification motion has not yet expired.

      The  Company  intends to defend these lawsuits  vigorously.
However,  there  can  be  no assurance that  there  will  not  be
developments  with respect to these lawsuits adversely  affecting
the  Company's financial condition.  Also, accounting  and  legal
fees  incurred  by  the  Company are likely  to  continue  to  be
excessive in the foreseeable future.

       In   addition,   in   connection   with   the   accounting
irregularities, the Securities and Exchange Commission has issued
an Order Directing Private Investigation and Designating Officers
to Take Testimony, styled In the Matter of Pepsi-Cola Puerto Rico
Bottling  Company, File No. HO-3199.  The Staff  of  the  SEC  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
recently  advised  by the insurance carrier  that  based  on  the
allegations contained in the complaints relating to the  lawsuits
described  above,  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 not be covered.  The Company intends to
vigorously  contest this interpretation of the  policies  by  the
insurance  carrier,  but  there can  be  no  assurance  that  any
coverage  ultimately will be available to the Company  under  the
policies with respect to some or all of the claims under these or
similar lawsuits.


Item 4. SUBMISSION  OF  MATTERS TO  A  VOTE  OF  SECURITY HOLDERS

     There were no matters submitted to a vote of securityholders
during the fourth quarter of the fiscal year ended September  30,
1996.



                                16



                            PART II

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

      As of December 19, 1996, there were (i) 5,000,000 shares of
Class  A  Common Stock, par value $.01 per share  (the  "Class  A
Shares"),  issued and outstanding and held by 29 shareholders  of
record,  and (ii) 16,500,000 shares of Class B Common Stock,  par
value $.01 per share (the "Class B Shares" and together with  the
Class  A Shares, the "Common Stock"), issued and outstanding  and
held  by  730  registered shareholders of record.  The  principal
market  for  the Company's Class B Shares is the New  York  Stock
Exchange,  Inc. (the "NYSE").  The Class A Shares are not  listed
for trading on any securities exchange.

     The Company's Class B Shares have been listed for trading on
the  NYSE  since  September 20, 1995 under the symbol  PPO.   The
following table sets forth, for the periods indicated,  the  high
and  low sales prices of the Company's Class B Shares on the NYSE
as  reported  in  the consolidated transaction reporting  system.
The  closing  sale price of the Company's Class B Shares  on  the
NYSE  on  December  19,  1996, as reported  in  the  consolidated
transaction reporting system, was $4.25.

                                      High                Low
                                      ----                ---
1995
----
Fourth Quarter (from September 20)..   $14.00             $12.75
1996
----
First Quarter.......................   $14.00             $11.00
Second Quarter......................   $13.12              $9.00
Third Quarter.......................   $10.125            $7.875
Fourth Quarter......................   $ 7.875             $4.50
First Quarter (from October 1,                                  
1996 through December 19, 1996).....   $ 5.50              $4.25

      The  Company's  Board of Directors from time  to  time  may
declare,  and  the Company may pay, dividends on its  outstanding
shares  of  Common  Stock in the manner and upon  the  terms  and
conditions provided by law.  Pursuant to the terms of the  Credit
Agreement, 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.

      The  Company does not expect to pay any dividends  for  the
foreseeable future.

      The  following table sets forth the cash dividends paid  by
the  Company  with  respect to the Common  Stock  for  the  dates
indicated.   Dividend per share amounts prior to  September  1995
have  been adjusted to give retroactive effect to the stock split
on  August 14, 1995 and are calculated on the basis of 18,000,000
shares  of Common Stock outstanding on the date of each  payment.
No  stock  dividends  have  been paid.   The  dividends  paid  on
April  4,  1994  were paid out of the proceeds  received  by  the
Company  through its sales of shares of BAESA to  the  public  in
underwritten  secondary  offerings.   The  Company  completed  an
initial public offering in September 1995 whereby 3,500,000 Class
B shares of Common Stock were issued.

                                         Dividends Paid
Date                                        Per Share
----                                     --------------
                                                 
October 1993...........................     $0.28
April 4, 1994..........................     $0.90
December 14, 1994......................     $0.14
December 16, 1994......................     $0.11
December 27, 1995......................     $0.24


                                17



Item 6.        SELECTED FINANCIAL DATA

Presentation of Financial Information

      The following tables present summary consolidated financial
information of the Company and reflect the results of  operations
of  the  Company and its equity interest in the net  earnings  of
BAESA.    This  data  has  been  derived  from  the  Consolidated
Financial Statements of the Company and its subsidiaries and from
information  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  provided by BAESA.  At the present  time,  the
Company does not control, or have significant influence over, the
management  or  operations  of BAESA.   For  further  information
regarding  BAESA,  investors  should  consult  information   made
publicly   available   by   BAESA  to  its   shareholders.    The
Consolidated   Financial  Statements  of  the   Company   as   of
September 30, 1995 and 1996 and for each of the three years ended
September  30, 1996 have been audited by KPMG Peat  Marwick  LLP,
independent  public  accountants.   The  Consolidated   Financial
Statements of BAESA as of September 30, 1995 and for each of  the
two  years  ended  September 30, 1995 have been audited  by  KPMG
Finterbush   Pickenhayn  Sibille.   The  consolidated   financial
statements  of BAESA as of September 30, 1996 and  for  the  year
then  ended  are unaudited.  Prior to 1992, Puerto Rico  Plastics
("PRP"), and the Company did not have an equity interest in  each
other.   However, PRP and the Company were entities under  common
control  since they were owned by the same group of  shareholders
in  the  identical ownership percentage.  During 1992, PRP merged
with   the  Company  and,  accordingly,  fiscal  year  1992   and
thereafter are presented on a consolidated basis.

      On August 14, 1995, the Company approved a stock split (the
"Stock  Split"),  pursuant  to which the  Essential  Shareholders
received  5,000,000 Class A Shares and 5,200,000 Class B  Shares,
and  the  Non-Essential Shareholders received 7,800,000  Class  B
Shares,  in  exchange for their holdings of Common Stock  of  the
Company.  The per share information included through August  1995
has  been adjusted to give retroactive effect to the Stock  Split
and  is  calculated on the basis of 18,000,000 shares  of  Common
Stock  outstanding.   The  Company completed  an  initial  public
offering  in September 1995 whereby 3,500,000 Class B  Shares  of
common  stock  were  issued.    On  June  8,  1992,  the  Company
purchased  and  retired  6,000,000 shares  of  Common  Stock  (as
adjusted  for  the  Stock Split).  As a  result,  the  per  share
information included below for periods prior to June 8,  1992  is
calculated  on  the basis of 24,000,000 shares  of  Common  Stock
outstanding.



                                18




            PEPSI-COLA PUERTO RICO BOTTLING COMPANY
<TABLE>                               
<CAPTION>               Period   
                     from December    
                       29, 1991         Fiscal Year Ended
                        through            September 30,
                       September  ---------------------------------
                       30, 1992    1993     1994     1995     1996
                       ---------  ------  -------  -------  -------
<S>                       <C>       <C>     <C>      <C>      <C>
Income Statement Data:
Net sales............. $68,956  $98,010  $104,048 $114,301 $102,891
Cost of sales.........  43,408   58,562    60,574   67,846   74,956
                       -------  -------  -------- -------- --------
   Gross profit.......  25,548   39,448    43,474   46,455   27,935
Selling and marketing
  expenses............  20,044   27,432    30,497   30,458   42,456
Administrative
 expenses.............   9,129   11,254    10,528    6,262    9,606
Restructuring Charges       -         -         -        -    2,700
Intangibles and fixed    
  asset write-offs          -         -     2,886        -        -
                       -------  -------   -------  -------  -------
  Income (loss) from                                      
    operations........  (3,625)     762      (437)   9,735  (26,827)
                       -------  -------   -------  -------  -------
Gain on sale by PCPRB
  of Class B BAESA
  Shares, net.........  60,915   22,746   15,924         -        -
Gain on early              
  termination of                                             
  supply agreement....       -        -        -         -    2,111 
Interest expense......  (2,199)  (1,457)  (1,237)   (1,215)  (1,523)
Interest income.......     140      402      147       207    2,418
Other income, net.....    (966)      32     (332)      391     (256)
                       -------  -------   -------  -------  -------  
   Total other income                                       
      (expenses)......  57,890   21,723   14,502      (617)   2,750
                       -------  -------   -------  -------  -------
   Income (loss) before                                     
      income tax 
      benefit (expense)
      and equity in
      net earnings
      (loss) of BAESA.  54,265   22,485   14,065     9,118  (24,077)
Income tax expense                                          
  (benefit)...........  22,125     (880)   6,243      (297)  (1,205)
                       -------  -------   -------  -------  -------
Income (loss) before                                        
  equity in net
  earnings (loss) of
  BAESA...............  32,140   23,365    7,822     9,415  (22,872)
Equity in net earnings                                      
  of BAESA, net of
  income taxes........  10,755    9,414    9,753     5,638  (51,458)
                       -------  -------   -------  -------  -------
Net income/(loss)      $42,895  $32,779  $17,575   $15,053 $(74,330)
                       =======  =======  ========  =======  =======
Earnings Per Share (1)                                      
  Income (loss) before
   equity in net
   earnings of BAESA,
   net of income taxes.  $1.49    $1.30    $0.43     $0.52   $(1.06)
  Net Income...........  $1.99    $1.82    $0.98     $0.83   $(3.46)
Dividends declared per                                      
   share of Common
   Stock(1)............  $0.47    $1.34    $1.18     $0.27    $0.24
Weighted average number                                     
   of shares of
   Common Stock
   outstanding (in
   thousands).......... 21,531   18,000   18,000    18,105   21,500

-----------------                        
(1) Earnings   per share     of     Common Stock   and   dividends
    declared   per    share of   Common  Stock  are determined by dividing
    net   income by the weighted average number of common shares outstanding
    during each period  and dividends declared by the number of shares
    of Common Stock  outstanding at the  time  of  dividend declaration,
    respectively. The number  of  shares of Common Stock outstanding
    at the time of dividend declaration  was 24,000,000 in 1991 and 1992,
    18,000,000 in 1993 and 1994, 18,105,000 in 1995 and 21,500,000 in 1996.
</TABLE>

                                19



                 PEPSI-COLA PUERTO RICO BOTTLING COMPANY
<TABLE>
<CAPTION>
                                               
                                                September 30,
                                     ----------------------------------------------------                       
                                       1992        1993       1994       1995      1996
                                     -------    --------  ---------   ---------  --------
<S>                                    <C>         <C>       <C>        <C>        <C>
Balance Sheet Data (at end of period):
Assets:
  Cash and cash equivalents....... $  14,691    $  7,348  $   1,347   $  46,091  $ 18,614
  Short Term Investment...........         0           0          0           0    12,904
  Accounts receiveable, net.......    12,614      13,871      11,881     16,427    14,562
  Notes receivable................         -         473           -          -         -
  Accounts  receivable from                                   
   affiliates and intercompany
   advances.......................     1,882       9,366       3,729      2,913         -
   Inventories....................     4,545       3,994       5,452      4,542     4,495
   Deferred Income Taxes..........         -           -           -          -       187
   Other current assets...........     2,637       2,275       1,216      2,516     1,857
                                    --------    --------   ---------  ---------  --------
          Total current assets....    36,369      37,327      23,625     72,489    52,619
   Investment in BAESA............    41,852      39,892      69,870     74,128         -
   Deferred income tax long-term..         -           -           -          -     2,076
   Long-lived assets for sale;
     principally land and building.        -           -           -          -     3,805
   Property, plant and equipment,
     net...........................   32,878      33,355      32,397     36,445    49,936
   Notes receivable................    1,593           -           -          -         -
   Intangible assets, net..........    4,446       3,509       2,293      2,163     1,459
   Other assets....................    1,607       1,067         693        441        86
                                    --------   ---------   ---------  ---------  ---------
          Total assets............ $ 118,745   $ 115,150  $  128,878  $ 185,666  $ 109,981
                                   =========   =========  ==========  =========  =========
Liabilities:
   Current installments of long-
     term debt...................  $     587   $     933  $    1,549  $   1,550  $   1,550
   Current installments of
     capital lease obligations...      2,042       2,409       2,537      1,204        341
   Notes payable to bank.........      3,000           -       4,250      4,600     25,000
   Accounts payable - trade......     11,688       8,472       7,469     12,536     16,619
   Notes and accounts payable -
     affiliates..................        167       5,000       2,078      1,181         50
   Income taxes payable..........     22,038       1,455         229        123        115
   Other accrued taxes and
     expenses....................      6,803      12,071       3,678      7,007      8,672
                                    --------   ---------   ---------  ---------  ---------
      Total current liabilities..     46,325      30,340      21,790     28,201     52,347
  Long-term debt, excluding
     current installments........      1,086       9,595       7,915      6,365      4,813
  Capital lease obligations,
     excluding current
     installments................      6,669       4,999       2,070        848        871
  Deferred income taxes, net.....     10,884       7,661      18,273     18,732          0
  Other liabilities..............      1,597       2,610       2,899      2,871      2,593
                                    --------   ---------   ---------  ---------  ---------
       Total liabilities.........     66,561      55,205      52,947     57,017     60,624
                                    --------   ---------   ---------  ---------  ---------
Shareholders' equity:
  Class A Shares.................         50          50          50         50         50
  Class B Shares.................        130         130         130        165        165
  Additional paid in capital.....     28,033      28,033      47,967     90,738     90,738
  Retained  earnings.............     24,352      32,931      29,307     39,472    (40,232)
  Cumulative transation
    adjustment...................          -           -           -       (232)         0
  Pension liability adjustment...       (381)     (1,199)     (1,523)    (1,544)    (1,364)
                                    --------   ---------   ---------  ---------  ---------
    Total shareholder's equity...     52,184      59,945      75,931    128,649     49,357
                                    --------   ---------   ---------  ---------  ---------
    Total liabilities and
      shareholders' equity.......  $ 118,745   $ 115,150   $ 128,878  $ 185,666  $ 109,981
                                   =========   =========   =========  =========  =========
      Other Data:
  Depreciation and amorization...      3,674       4,954       4,917      4,781      5,589
  Capital expenditures(1)........      3,796       2,075       3,961     10,418     24,237
  Case sales volume(2)...........     19,581      27,937      28,781     30,684     32,073
-----------------
(1) Capital expenditures represent purchases of property, plant and equipment.
(2) Case sales volume information is unaudited.

</TABLE>
                                        20

 




Item 7.   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 Consolidated  Financial
Statements of the Company, and the Notes thereto, for the  fiscal
year  ended  September 30, 1994  (the "fiscal  year  1994"),  the
fiscal year ended September 30, 1995 (the "fiscal year 1995") and
the  fiscal  year  ended  September 30, 1996  (the  "fiscal  year
1996").

     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.  See "Item  1.
Business-Investment   in  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.


     Accounting Irregularities

      The  Company  recently discovered accounting irregularities
that  required it to restate its financial results for the  first
and  second quarters ended December 31, 1995 and March 31,  1996.
These irregularities resulted in a substantial understatement  of
certain  expenses, primarily discounting and marketing  expenses,
and  a  corresponding  overstatement of operating  income.   This
restatement resulted in an operating loss in both quarters.

       After  discovering  the  accounting  irregularities,   the
Company's  Board  of  Directors  retained  Rogers  &   Wells   as
independent    counsel  to  conduct  an  investigation   of   the
circumstances  which  resulted in the irregularities.   Rogers  &
Wells,  working  with the independent accounting  firm  of  Price
Waterhouse,  which was retained to assist with the investigation,
conducted a thorough investigation of these circumstances and has
made its report to the Company's Board of Directors.  Taking into
consideration   the   findings  of  the  investigation   and   in
consultation  with  the Company's independent auditors  regarding
their  materiality, the Company concluded that the irregularities
did   not  have  a  material  effect  on  any  Company  financial
statements prior to the first and second quarters of fiscal 1996,
and thus that no restatements for any prior periods are required.

      Based  on the Company's investigation, the Company believes
that  the accounting irregularities involved a series of  entries
made in the Company's accounting records by certain employees  of
the  Company which had the effect of improperly recording certain
expenses (primarily marketing and discounting expenses)  as  non-
chargeable  items,  or  of not recording such  expenses  at  all.
These  entries resulted in a corresponding overstatement  of  the
Company's operating income.

     In consultation with its auditors, and with Price Waterhouse
LLP,  which  assisted with the independent counsel  investigation
into   the  accounting  irregularities,  the  Company  has  taken
definitive   steps  to  insure  that  internal   management   and
accounting    controls    will    prevent    future    accounting
irregularities.  Certain employees who the Company believes  were
principally involved in causing the accounting irregularities are
no  longer  employed  by  the  Company  or  remain  under  strict
supervision.   In addition, the Company has replaced  the  senior
officer  in  charge of the Company's accounting records  with  an
individual  whose integrity is not in question.  The Company  has
adopted  a comprehensive series of strict new internal management
and   accounting  controls  including  implementation  of  strict
control over preparation, review and documentation of all entries
to  the Company's books of account, monthly review of all journal
entries by the Company's independent internal audit function  and
adoption  of  a corporate code of ethics.  Also, the Company  has



                                21



created  the  position of financial account analyst who  will  be
charged  with monthly review of all significant account balances.
There is, as well, a heightened level of awareness on the part of
the  internal audit committee.  The chairmanship of the committee
has  been  assigned to a person very experienced in the field  of
public  accounting.  Analysis of sensitive and critical  accounts
is   being   reviewed  at  the  highest  levels  of   management.
Furthermore,  implementation  of procedures  to  liquidate  those
accounts related to credits and discounts granted to customers on
a timely basis, so as to reduce the level of uncertainty inherent
in  estimating the appropriate balance accrued at the end of each
month,  have  been  implemented.  Finally, a  process  of  mutual
reconciliation with the Company's franchisor in so far as amounts
due from and to it at the end of each month has been implemented.


     Seasonality

     The historical results of operations of the Company have not
been  significantly  seasonal.  The Company  believes  that  this
could  have  been  attributable to existing capacity  constraints
while  operating out of the old plant which prevented the Company
from meeting increased demand during peak periods.  However,  the
Company anticipates that its results of operations in the  future
may be increasingly seasonal in the summer and holiday season now
that it has additional capacity in its new plant.

     Carbonated Beverage Tax

      Prior to May 1991, carbonated beverages were not subject to
any  excise  taxes  in Puerto Rico.  From May  24,  1991  through
December  31,  1993,  the  Puerto Rican  government  imposed  the
Carbonated Beverage Tax of 13.5 cents per liter on all carbonated
beverages manufactured in, or imported to, Puerto Rico, including
extracts  or  syrups used as raw material for the manufacture  of
finished products.  The imposition of the Carbonated Beverage Tax
had  a  material  adverse  effect on the  operations,  sales  and
profits  of  soft  drink bottlers in Puerto Rico,  including  the
Company, due to the resulting depressed level of demand  and  the
Company's inability to pass on the full effect of the tax to  its
customers.   As of January 1, 1994, the Carbonated  Beverage  Tax
was repealed and carbonated beverages were subjected to the lower
general excise tax imposed on most consumer goods in Puerto Rico.
The  current  excise tax on carbonated beverages  is  5%  of  the
"taxable  price in Puerto Rico," which is defined as 72%  of  the
manufacturer's  sales price for products manufactured  in  Puerto
Rico.  The Company is thus currently subject to an excise tax  at
an  effective rate of 3.6% (or 72% of 5%) of the sales  price  of
its  soft drink products which represents approximately 1.5 cents
per liter.

      The  amount  of  excise taxes paid by the  Company  on  its
products  is  deducted from the Company's gross sales;  thus  the
Company's  net  sales reflect this deduction.  The Company's  net
sales  decreased significantly during the periods  in  which  the
Carbonated Beverage Tax was in effect.  The amount of excise  tax
paid  by  the Company was $17.6 million in the fiscal year  1993,
$6.0  million in the fiscal year 1994, $2.3 million in the fiscal
year 1995, and $2.5 million in the fiscal year 1996 corresponding
to   approximately  12%,  4%,  2%  and  2.4%  of   gross   sales,
respectively.

     Income Taxes

      The  Company's  income  is subject to  various  methods  of
taxation.   Certain  of the Company's wholly  owned  subsidiaries
qualify   and   have  elected  to  be  treated  as  Section   936
Corporations.  Pursuant to such election, the majority of  income
derived  from the Puerto Rico operations of such subsidiaries  is
entitled  to  a tax credit for purposes of U.S. income  taxation.
Nevertheless,  such  operations  are  subject  to  Puerto   Rican
taxation  (at  graduated  statutory rates  between  22%  and  45%
through  June  30,  1995 and between 22% and 43%  for  tax  years
beginning  after June 30, 1995).  However, the Company  has  been
subject  to  a lower effective Puerto Rican tax rate due  to  the
availability  of  net  operating losses  from  its  Puerto  Rican
operations  which  offset Puerto Rican taxable earnings  and  the
availability  of  certain tax exemptions granted  by  the  Puerto
Rican  tax  authority  with  respect to  the  Company's  plastics
operations.

      In  this  connection, on August 20, 1996, the U.S. Congress
adopted,  and  President  Clinton  signed  into  law,  the  Small
Business Job Protection Act which generally repealed the  Section
936  tax reductions.  A ten year phase out of the Section 936 tax



                                22



credit  was adopted for existing credit claimants and the  credit
was   eliminated  for  companies  establishing  new  Puerto  Rico
operations  and  for existing companies that add substantial  new
lines of business within Puerto Rico.  This Act is effective  for
tax  years beginning after December 31, 1995.  Existing claimants
may  elect  to  utilize [reduced credit bases] on the  applicable
percentage   limitations  or  utilize   the   economic   activity
limitations.   The  Company  has  been  utilizing  the   economic
activity  limitations  and  does  not  anticipate  changing   its
election.

      As  of September 30, 1995, the Company and its subsidiaries
had approximately $48.0 million in net operating losses available
to  offset  against future earnings for purposes of Puerto  Rican
taxation and $24.7 million in U.S. net operating losses.  The net
operating losses belong to the Company and its manufacturing  and
distributing  subsidiaries.   For  Puerto  Rican  and  U.S.   tax
purposes,  related entities such as the Company and  its  wholly-
owned  subsidiaries may not join in the filing of a  consolidated
income tax return.  As a result, the net operating losses of  one
entity  may  not  be absorbed or utilized to offset  the  taxable
income  of  any  other  related entity.   Only  the  entity  that
generated  losses may use such losses to offset  its  own  future
taxable  income.   See  Note  7  to  the  Consolidated  Financial
Statements of the Company.

The Company

     General

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

                                               Fiscal Year
                                       ------------------------------
                                          1996      1995      1994
                                       ---------  ---------  --------
Net Sales............................     100.0%    100.0%   100.0%
Cost of Sales........................      72.8      59.4     58.2
Gross Profit.........................      27.2      40.6     41.8
Selling and Marketing Expenses.......      41.3      26.6     29.3
Administrative Expenses..............       9.3       5.5     10.1
Intangibles and Fixed Asset Write-       
  offs and Restructuring Charges.....       2.6         0      2.8
Income (Loss) from Operations........     (26.1)       8.5    (0.4)

     Fiscal Year 1996 Compared to Fiscal Year 1995

      Net  Sales.   Net  sales  for the Company  decreased  $11.4
million  or  10.0% for the fiscal year 1996 from the fiscal  year
1995  to $102.9 million.  This decrease was primarily the  result
of  the  significant increase in discounts provided to  customers
partially  offset  by a 4.5% increase in sales volume  in  fiscal
1996  as  compared  to  fiscal 1995.  The increase  in  discounts
resulted  from  intense competitive activity.   The  average  net
sales  price on an eight ounce serving equivalent basis decreased
during  fiscal 1996 by approximately 14.5% as compared to  fiscal
1995.

     Cost of Sales.  Cost of sales for the Company increased $7.1
million, or 10.5%, for the fiscal year 1996 from the fiscal  year
1995 to $75.0 million.  This increase resulted primarily from the
increase  in sales volume, the increase in the costs  of  certain
raw  materials, the costs associated with the start-up of the new
manufacturing  facility  in  Toa  Baja,  and  the  inefficiencies
associated  with operating both manufacturing facilities,  during
the  transition  period to the new plant which  occurred  in  the
third quarter.

      Gross  Profit.  Gross profit for the Company  decreased  by
$18.5  million  to $27.9 million for the fiscal  year  1996  from
$46.5  million in the fiscal year 1995.  As a percentage  of  net
sales,  gross profit decreased to 27.2% in the fiscal  year  1995
from  40.6%  in the fiscal year 1995 due to the higher  discounts
provided   to   customers,  increased   sales   volume   at   the
corresponding  lower average net selling prices, and  the  higher
cost  of  sales  due  to  raw material  price  increases,  higher
temporary costs of production associated with the start-up of the
new  manufacturing plant in Toa Baja, and the operation  of  both
the  old and new production facilities during the start-up of the
Toa Baja manufacturing facility.



                            23




      Selling and Marketing Expenses.    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  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  increased
$12.0  million,  or 39.4%, to $42.5 million for the  fiscal  year
1996  from the fiscal year 1995.  This increase is primarily  the
result  of increased marketing activities during the fiscal  year
1996   resulting  primarily  from  a  significant   increase   in
competition,  expenses  associated with the  launch  of  Teem,  a
lemon/lime soft drink, which was launched during October 1995, as
well as additional marketing activities undertaken to promote the
Company's  products.  This increase also resulted from  expensing
in  fiscal year 1996 certain prepaid marketing and expense  items
carried over from prior periods.

      Administrative  Expenses. Administrative expenses  for  the
Company increased $3.3 million or 53.4% for the fiscal year  1996
from  the  fiscal year 1995, to $9.6 million.  This  increase  is
primarily a result of the cost of increased professional services
associated  with  the  Company being a  public  company  and  the
transition  to  the  new management of $1.4  million,  legal  and
accounting  costs associated with the restatement  of  first  and
second  quarter  results and professional  fees  associated  with
certain  civil litigation of $0.9 million, a $0.5 million expense
incurred  in  connection  with  the  accelerated  transition   of
management control of BAESA to PepsiCo, effective July  1,  1996,
and  $0.5 million in expenses associated with the Company's study
of   expansion  opportunities  within  Western  Europe.    As   a
percentage  of  net sales, administrative expenses  increased  to
9.3% during fiscal year 1996 from 5.5% in fiscal year 1995.

     Restructuring Charges.   The Company's results of operations
for the fiscal year 1996 have been affected by the incurrance  of
several   non-recurring  restructuring  charges  totalling   $2.7
million.   These charges were comprised of the following:  (i)  a
$1.4  million  fixed  asset write-down  related  to  closing  all
bottling operations in the Company's old bottling plant, which is
now  for  sale and (ii) $1.3 million in pension asset  write-offs
and costs associated with employee terminations.

      Income  (Loss)  from  Operations.      Income  (loss)  from
operations  for  the Company decreased to $(26.8) million  during
the fiscal year 1996, from $9.7 million for the fiscal year 1995.
The  decrease  is  the  result of lower average  net  sales,  the
increased discounts offered to customers, a significant  increase
in  selling and marketing expenditures, higher professional fees,
the restructuring charges of $2.7 million, and the recognition of
certain charges, including marketing and other expenses, and, the
write-off of prepaid tax carried over from prior periods.

      Gain on Early Termination of Supply Agreement.    This item
consists of gain realized from the cancellation  of  the  preform 
supply agreement with BAESA and corresponding  extinguishment  of 
any debt due to BAESA.  See Note 8 to the Consolidated  Financial
Statements.

     Equity in Net Earnings (Loss) of BAESA. Based on information
disseminated after July 1, 1996 by BAESA, equity in net  earnings
(loss)  of BAESA, net of income tax, amounted to $(51.5)  million
during  the  fiscal year 1996, compared to $5.6  million  in  the
fiscal  year  1995.  The decrease is attributable to  the  losses
incurred by BAESA for the fiscal year 1996 as reported in BAESA's
public  announcement.  The Company's equity in the loss  reported
by  BAESA has 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 fiscal year
1996  was  $(74.3) million, compared to $15.1 million during  the
fiscal  year  1995.   Net  (loss) during  the  fiscal  year  1996
primarily  reflects loss before equity in net earnings (loss)  of
BAESA of $(22.9) million, and equity in net loss of BAESA, net of
income  tax  of  $(51.5) million, as compared  to  income  before
equity  in  net earnings of BAESA of $9.4 million and  equity  in
earnings of BAESA of $5.6 million during the fiscal year 1995.

     Fiscal Year 1995 Compared to Fiscal Year 1994


                                24




      Net  Sales.   Net  sales  for the Company  increased  $10.3
million,  or 9.9%, for the fiscal year 1995 from the fiscal  year
1994  to $114.3 million.  This increase was primarily the  result
of  a  4.3% increase in case sales volume of soft drinks, a 21.8%
increase in case sales volume of Cristalia water over the  fiscal
year  1994  and  an  increase  in  the  average  sales  price  of
approximately 6% effective January 1, 1995 which accounted for  a
$1.3  million increase in net sales during fiscal year 1995  over
fiscal  year  1994.   Furthermore, as of  January  1,  1994,  the
Carbonated  Beverage Tax was replaced by a lower  general  excise
tax.  This led to a reduction in excise taxes paid by the Company
of  approximately  $3.7 million during the fiscal  year  1995  as
compared  to the fiscal year 1994.  As a result of the  reduction
in  the excise tax, the Company was able to realize a higher  net
selling price for soft drinks in the fiscal year 1995.

     Cost of Sales.  Cost of sales for the Company increased $7.3
million, or 12.0%, for the fiscal year 1995 from the fiscal  year
1994  to  $67.8 million.  This increase is primarily attributable
to  an increase in sales volume in the fiscal year 1995 over  the
fiscal  year  1994 and the increase in the cost  of  certain  raw
materials,   principally  aluminum  and  resin,  used   for   the
production of cans, plastic bottles and preforms.

      Gross  Profit.  Gross profit for the Company  increased  by
$3.0  million to $46.5 million in the fiscal year 1995 from $43.5
million  in the fiscal year 1994.  As a percentage of net  sales,
gross  profit  decreased to 40.6% in the fiscal  year  1995  from
41.8%  in  the  fiscal year 1994 due to the higher  cost  of  raw
materials incurred during the fiscal year 1995.

      Selling  and  Marketing Expenses.   Selling  and  marketing
expenses for the Company amounted to $30.5 million in the  fiscal
years  1995  and  1994.   Selling  and  marketing  expense  as  a
percentage of net sales for the Company decreased to 26.6% in the
fiscal  year  1995  from  29.3% in the fiscal  year  1994.   This
decrease resulted from greater efficiencies achieved in marketing
and  selling efforts and the higher net selling price during  the
fiscal year 1995.

      Administrative Expenses.  Administrative expenses  for  the
Company decreased $4.3 million, or 40.5%, in the fiscal year 1995
from  the fiscal year 1994, to $6.3 million.  See Note 8  to  the
Consolidated Financial Statements of the Company.

     Intangible and Fixed Asset Write-offs.  Intangible and fixed
asset  write-offs for the Company were $2.9 million in the fiscal
year  1994,  consisting of write-offs of $1.0 million of  certain
intangibles  and $1.9 million of certain fixed assets  that  were
either unrecoverable or obsolete.

       Income   (Loss)  from  Operations.   Income  (loss)   from
operations  for  the  Company increased to $9.7  million  in  the
fiscal  year  1995, from a loss of ($0.4) million in  the  fiscal
year 1994.  The increase is the result of higher net sales, lower
administrative  expenses  during  fiscal  year   1995   and   the
recognition  of  certain intangibles and fixed  asset  write-offs
during the fiscal year 1994.

      Gain  on Sale by the Company of Class B BAESA Shares.   The
Company  sold 1.3 million Class B BAESA Shares during the  fiscal
year  1994 and thereby recognized a gain of $15.9 million in  the
fiscal  year  1994.   See  Note 5 to the  Consolidated  Financial
Statements of the Company.

      Income  Tax Expense (Benefit).  Income tax expense for  the
Company decreased in the fiscal year 1995 to ($0.3) million  from
$6.2  million  in the fiscal year 1994.  The income  tax  expense
recorded  during the fiscal year 1994 was primarily  attributable
to  the  gain of $15.9 million recognized in connection with  the
sale of Class B BAESA Shares by the Company.

      Equity in Net Earnings of BAESA, Net of Income Tax.   Based
on  information provided to the Company by BAESA, equity  in  net
earnings  of  BAESA, net of income tax, amounted to $5.6  million
during  the  fiscal year 1995, compared to $9.8  million  in  the
fiscal  year 1994.  The decrease is attributable to the  decrease
in the Company's interest in BAESA.  During fiscal year 1994, the
Company's  interest in BAESA ranged from 17% to 23%,  while  this
ownership  interest remained at approximately 17%  during  fiscal
year 1995.



                                25



      Net  Income.   Net  Income  for the  Company  decreased  to
$15.1  million in the fiscal year 1995 from $17.6 million in  the
fiscal  year  1994.  Net income for fiscal year 1994  includes  a
gain of $15.9 million realized in connection with the sale by the
Company of 1.3 million Class B BAESA Shares, partially offset  by
the income tax expense relating to such gain.

     Liquidity and Capital Resources

     At September 30, 1996, the Company had $31.5 million of cash
and cash equivalents and short-term investments, and indebtedness
for borrowed money, including short-term and long-term borrowings
and capital lease obligations, of $32.6 million.

      The  Company has announced that its current priority is  to
restore   profitability  with  respect  to   its   Puerto   Rican
operations.  In that connection, the Company has made a  decision
not  to  proceed  further with a possible  expansion  in  Western
Europe, and has determined to set aside its other expansion plans
temporarily.   Also, as of September 30, 1996,  the  Company  has
used  approximately $17.1 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  was $(6.8) million for the fiscal year 1996 as  compared
with  $16.5  million for the fiscal year 1995 and $(7.9)  million
for  the  fiscal year 1994.  The decrease was mainly a result  of
the  net  loss  of  $(74.3) million incurred during  fiscal  1996
compared  to  net income of $15.1 for fiscal 1995  and  $17.6  in
fiscal  1994.   As of September 30, 1996, the Company  had  $48.4
million in net operating loss carry forwards available to  offset
future Puerto Rican income taxes.  The Company believes that  its
strong   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 $33.0 million for the fiscal year 1996, as  compared
with $5.9 million for the fiscal year 1995 and $22.7 million  for
the   fiscal  year  1994.   Purchases  of  property,  plant   and
equipment,  net,  amounted to $(24.2) million during  the  fiscal
year  1996  as compared with $(10.4) million during  fiscal  year
1995  and  $(4.0) million during fiscal year 1994.  Purchases  of
short  term  investments were $(12.9) million during fiscal  year
1996  as  compared to $0.0 for fiscal year 1995 and  fiscal  year
1994.   These  short  term  investments  consist  of  short  term
discount  notes which the Company expects to hold until maturity.
During fiscal year 1994, proceeds from the sale of Class B  BAESA
Shares  contributed $23.5 million towards the  cash  provided  by
investing activities as compared to $0.0 for fiscal year 1995 and
fiscal year 1996.  Dividends received from BAESA amounted to $2.8
million in fiscal year 1996, as compared  with  $2.8  million  in 
fiscal year 1995 and $3.2 million in fiscal year  1994.  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  were  $12.3 million for the  fiscal  year  1996  as
compared with $34.2 million for the fiscal year 1995 and  $(20.8)
million  for  the  fiscal year 1994.  The  significant  financing
activities  for the Company in fiscal year 1996 were the  payment
of  dividends and the issuance of notes payable of $47.9  million
offset   by  the  repayment  of  debt  of  $27.5  million.    The
significant  financing activities of the Company in  fiscal  year
1995  were from the issuance of 3.5 million Class B Common Shares
in a primary offering in the Company's initial public offering as
well as the payment of dividends and the repayment of debt.   The
significant financing activities of the Company during the fiscal
year  1994  were  the payment of dividends and the  repayment  of
debt.   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 by Banco Popular.  The Company  does  not
expect to pay any dividends for the foreseeable future.



                                26




      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
to  $10.0  million.  As of September 30, 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 $6.0  million  and  non-revolving
loans  in an aggregate principal amount of $15.0 million.   These
loans  mature on March 30, 1997, September 10, 2000, and  January
10,  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 September 30, 1996, the 936 Rate was 5.3%.

      The  weighted average interest rate on such borrowings  was
7.4%  for the fiscal year 1996.  "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  0.60,
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 4.0, 3.0 and 2.0 to 1, respectively, for the fiscal
year 1996, 1997 and thereafter, and (iii) a minimum Tangible  Net
Worth  of $15 million through the end of fiscal year 1996 and  of
$18   million,  $21.5  million,  $25  million  and  $30  million,
respectively,  through the end of fiscal  1997,  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 the  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.  See "Business of the Company -  Franchise
Arrangements."

      Capital expenditures for the Company totaled $24.2  million
in  the  fiscal year 1996, $10.4 million in the fiscal year  1995
and  $4.0 million in the fiscal year 1994.  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 Company  for  the
fiscal  years 1997 and 1998 may be approximately $4  million  and
$4 million, respectively.


                                27




Item 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The  following  information is submitted  pursuant  to  the
requirements of Item 8.

                                                                Page
Pepsi-Cola Puerto Rico Bottling Company and Subsidiaries        ----

  Independent Auditors' Report...............................    29
  Consolidated Balance Sheets at September 30, 1996 and 1995.    30
  Consolidated Statements of Income/(Loss) for the Years Ended
    September 30, 1996, 1995 and 1994........................    32
  Consolidated Statements of Shareholders'Equity for the Years
    Ended September 30, 1996, 1995 and 1994..................    34
  Consolidated Statements of Cash Flows for the Years Ended
    September 30, 1996, 1995 and 1994........................    35
  Notes to Consolidated Financial Statements.................    37
  Schedule II - Valuation and Qualifying Accounts............    60









                                28



                  Independent Auditors' Report

The Board of Directors
Pepsi-Cola Puerto Rico Bottling Company
  and Subsidiaries:


We  have audited the accompanying consolidated balance sheets  of
Pepsi-Cola  Puerto Rico Bottling Company and subsidiaries  as  of
September  30,  1996  and  1995,  and  the  related  consolidated
statements of income/(loss), shareholders' equity and cash  flows
for  each  of the years in the three-year period ended  September
30,  1996.   These  consolidated  financial  statements  are  the
responsibility  of the Company's management.  Our  responsibility
is   to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to
above  present  fairly, in all material respects,  the  financial
position   of   Pepsi-Cola  Puerto  Rico  Bottling  Company   and
subsidiaries as of September 30, 1996 and 1995, and  the  results
of their operations and their cash flows for each of the years in
the  three-year  period ended September 30, 1996,  in  conformity
with generally accepted accounting principles.

                                   /s/ KPMG Peat Marwick LLP


December 9, 1996

Stamp No. 1354169 of the Puerto Rico
Society of Certified Public Accountants
was affixed to the record copy of this report.









                                29


           PEPSI-COLA PUERTO RICO BOTTLING COMPANY
                  CONSOLIDATED BALANCE SHEET
        (U.S. Dollars in thousands, except share date)

                                         September 30,  September 30,
                                            1996           1995
                                         -------------  -------------
ASSETS                                                           
Current Assets:                                                  
 Cash and cash equivalents                $   18,614   $   46,091

 Short term investments                       12,904            -

 Accounts Receivable:

 Trade, less allowance for doubtful          
  accounts of $1,158 and $1,458 in
  1996 and 1995, respectively                 11,262       16,086

 Due from PepsiCo, Inc. and affiliated       
  companies                                      877        2,913

  Other                                        2,423          341

 Inventories                                   4,495        4,542

 Deferred income taxes                           187            -

 Prepaid expenses and other current                    
  assets                                       1,857        2,516
                                          ----------   ----------

  Total current assets                    $   52,619   $   72,489

Investment in BAESA                                -       74,128

Deferred income tax, long-term                 2,076            -

Long-lived assets for sale principally       
  land and building                            3,805            -

Property, plant and equipment, net            49,936       36,445

Intangible assets, net of accumulated        
  amortization                                 1,459        2,163

Other assets
                                                  86          441
                                          ----------   ----------
  Total assets                            $  109,981   $  185,666



                                30

                                                                 


                                             September 30,  September 30,
                                                 1996           1995
                                             -------------  -------------
LIABILITIES AND SHAREHOLDERS' EQUITY                             

Current liabilities:

  Current installments of long-term debt    $    1,550   $    1,550

  Current installments of capital lease          
    obligations                                    341        1,204

  Notes payable to bank                         25,000        4,600

  Accounts Payable:

       Trade                                    16,619       12,536

       Affiliates                                   50        1,181

  Income Taxes Payable                             115          123

  Accrued payroll                                2,951        2,376

  Accrued other taxes                              701          260

  Deferred income taxes                              0          530

  Other accrued expenses                         5,020        3,841
                                            ----------    ---------

       Total current liabilities               $52,347      $28,201

Long-Term debt, excluding current            
  installments                                 4,813        6,365

Capital lease obligations, excluding            
  current installments                           871          848

Accrued pension cost, long-term                2,593        2,871

Deferred income tax, net                           -       18,732
                                            ----------    ---------
       Total liabilities                     $60,624      $57,017
                                            ==========    =========
Shareholders' equity:                                            

  Class A common shares, $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 in 1996
    and 1995                                     165          165

  Additional paid-in capital                  90,738       90,738

  Retained earnings/(deficit)                (40,232)      39,472

  Cumulative translation adjustment                0         (232)

  Pension liability adjustment               (1,364)       (1,544)
                                            ----------    ---------
       Total shareholder's equity            49,357       128,649
                                            ----------    ---------
       Total liabilities and shareholders'
         equity                            $109,981      $185,666
                                           ===========   ==========



                               31




              PEPSI-COLA PUERTO RICO BOTTLING COMPANY
             CONSOLIDATED STATEMENTS OF INCOME/(LOSS)
             (U.S. Dollars, except per share amounts)

                                          Fiscal Year Ended  
                              -----------------------------------------
                              September 30, September 30, September 30,
                                  1996          1995          1994 
                              ------------- ------------- ------------- 
Net Sales                        $102,891     $114,301       $104,048

Cost of Sales                      74,956       67,846         60,574
                                   ------       ------         ------

  Gross profit                     27,935       46,455         43,474
                                                                 
Selling and marketing expenses     42,456       30,458         30,497

Administrative expenses             9,606        6,262         10,528

Restructuring Charges               2,700           -               -

Intangible and fixed asset            
  write-offs                            -           -           2,886
                                   ------       ------         ------

  Income (loss) from operations   (26,827)       9,735           (437)
                                                                 
Other income (expenses):                                         

  Gain on sale by PCPRBC of            
  Class B common shares of
  BAESA, net                            -           -          15,924

  Gain on early termination of      2,111           -           -
   supply agreement

  Interest expense                 (1,523)     (1,215)         (1,237)

  Interest income                   2,418         207             147

  Other, net                         (256)        391            (332)
                                   ------       ------         ------

     Total other income/(expense)   2,750        (617)         14,502

     Income (loss) before income  (24,077)      9,118          14,065
     tax benefit/(expenses) and
     equity in net earnings/(loss)
     of BAESA

Income tax benefit/(expense)        1,205         297         (6,243)
                                   ------       ------         ------
                                                                 
Income/(loss) before equity     $ (22,872)     $9,415         $7,822
in net earnings/(loss) of
BAESA


                                        32




              PEPSI-COLA PUERTO RICO BOTTLING COMPANY
             CONSOLIDATED STATEMENTS OF INCOME/(LOSS)
             (U.S. Dollars, except per share amounts)



Equity in net earnings/(loss)    (51,458)       5,638         9,753
   of BAESA, net of income tax
   benefit/(expense) of $20,062
   ($1,657) and ($716) in 1996,
   1995 and 1994, respectively

   Net income/(Loss)             (74,330)     $15,053       $17,575
                                                                 
Earnings/(Loss) per common       
share:  Income/(loss) before
  equity in net earnings/(loss)
  of BAESA, net of income taxes.. ($1.06)       $0.52       $0.43

  Net income/(loss)               ($3.46)       $0.83       $0.98

Weighted average number of       
shares outstanding
(thousands)                        21,500      18,105      18,000












                                 33




<TABLE>
<CAPTION>
                     Pepsi-Cola Puerto Rico Bottling Company
                 Consolidated Statements of Shareholders' Equity
                           (U.S. Dollars in thousands)
              Fiscal Years Ended September 30, 1996, 1995 and 1994

                                        Class  Class  Additional                           
                                          A      B       Paid-     Retained   Cumulative   Pension        Total
                                        Common Common     in       Earnings   Translation  Liability  Shareholders'
                                        Shares Shares   Capital    (Deficit)  Adjustment   Adjustment     Equity
                                        ------ ------   --------   ---------  -----------  ---------- ------------
<S>                                       <C>   <C>       <C>         <C>         <C>         <C>         <C>
Balances at September 30, 1993          $   50 $  130   $ 28,032   $ 32,932   $   -        ($ 1,199)  $ 59,945

  Cash dividends on Common shares           
  declared in October 1993
  (per share $0.28)                         -       -        -       (5,040)      -             -       (5,040)
  
  Cash dividends on common shares   
  declared in April 1994
  (per share $0.90)                         -       -        -      (16,160)      -             -      (16,160)
                                                                                    
  Equity adjustment to recognize                                                             
  minimum pension liability                 -       -        -          -         -            (324)      (324)

  Adjustment related to issuance of                                    
  BAESA Shares, net of tax effect                                                                      
  of $8,124                                 -       -     19,935        -         -          19,935

  Net Income                                -       -        -       17,575       -             -       17,575
                                        -------  -------- --------  --------- ---------  ----------- ----------
  Balances at September 30, 1994        $    50  $    130 $ 47,967  $29,307   $      0    ($ 1,523)  $  75,931   

Cash dividends on common shares             
  declared in December 1994                                               
  (per share $0.25)                         -       -        -       (4,888)      -             -       (4,888)

Equity adjustment to recognize minimum  
pension liability                           -       -        -          -         -           (21)         (21)

  Class B common shares issuance, net       -         35    42,771      -         -             -       42,806

  Translation adjustment                    -       -        -          -       (232)           -         (232)

  Net Income                                -       -        -       15,053       -             -       15,053
                                        -------  -------- --------  --------- ---------  ----------- ----------
Balances at September 30, 1995          $    50  $    165 $ 90,738  $39,472   ($ 232)     ($1,544)    $128,649

Cash dividends on common shares         
  declared in December 1995                 
  (per share $0.24)                        -        -        -       (5,374)      -             -       (5,374)
  
Equity adjustment to recognize minimum                                        
  pension liability                        -        -        -          -         -           180          180

    Translation adjustment                 -        -        -          -         232          -           232
                                                                            
  Net Income                               -        -        -      (74,330)      -            -        (74,330)
                                        -------  -------- --------  --------- ---------  ----------- ----------
Balances at September 30, 1996         $    50   $    165 $ 90,738 ($40,232)   $    0      ($1,364)   $  49,357
                                       ========  ======== ======== =========   =========   ========   =========

</TABLE>


                                        34



    PEPSI-COLA PUERTO RICO BOTTLING COMPANY AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF CASH FLOWS
                  (U.S. Dollars in thousands)

<TABLE>
<S>                                                  <C>       <C>           <C>
                                                            Fiscal Year Ended
                                                -----------------------------------------
                                                September 30, September 30, September 30,
                                                    1996          1995          1994
                                                ------------- ------------- -------------
Cash flows from operating activities:                            

  Net income/(Loss)                               $(74,330)      $15,035       $17,575
                                                                   
  Adjustments to reconcile net earnings to                         
  net cash provided by(used in) operating
  activities:

  Gain on early termination of supply agreement     (2,111)          -         - 

  (Gain)/Loss on sale by PCPRBC of class                             
  B common shares of BAESA, net                        -             -         (15,924)       

  (Gain)/Loss on sale of property, plant    
  and equipment                                       (675)           17         1,549            

  Impairment on long-lived assets                    1,134           -             -

  Intangible asset write-off                           624           -           2,886

  Depreciation and amortization                      5,589         4,781         4,917

  Deferred income taxes                             (1,462)         (377)        2,315

  Equity in net (earnings)/losses of BAESA          51,458        (5,638)       (9,753)

  Changes in assets and liabilities:                               

     Accounts receivable                             4,778        (3,730)       (1,739)

     Inventories                                        47           910        (1,458)
                                                                
     Prepaid expenses and other current assets         659        (1,335)       (1,037)

     Accounts payable                                5,063         4,170        (8,130)

     Other liabilities and accrued expenses          2,195         2,594        (1,455)
                                                                
     Income tax payable                                 (8)         (106)          517

     Other, net                                        247           158         1,836
                                                    =======       ======        ======

  Net cash provided by (used in) operating
  activities                                        (6,792)       16,497        (7,901)
                                                                
                                                                
Cash flows from investing activities:                            

  Proceeds from sale of Class B common                 -             -          23,524
  shares of BAESA, net

  Proceed from sale of property, plant
   and equipment                                     1,347         1,662           -
              
  Purchases of property, plant and                 (24,237)      (10,418)       (3,961)
   equipment                                                     

  Short term investments                           (12,904)          -             -
                                              
  Dividends received from affiliate                  2,839         2,839         3,152

  Net cash provided by (used in) investing
   activities                                      (32,955)       (5,917)       22,715
</TABLE>

                                        35

<TABLE>
<S>                                                  <C>           <C>           <C>
                                                            Fiscal Year Ended
                                                     -------------------------------------
                                                September 30,  September 30,  September 30,   
                                                                 
                                                     1996          1995          1994
                                                     ----          ----          ----
                                                           
Cash flows from financing activities:                            

  Proceeds from issuance of Class B common     
   stock, net                                          -          42,806           -

  Proceeds from short-term borrowings               47,900           350         4,250

  Repayment of short-term borrowings               (27,500)          -             -
                                              
  Repayment of long-term debt                       (1,552)       (1,549)       (3,865)
                                            
  Repayment of capital lease obligations            (1,204)       (2,555)          -

  Dividends paid                                    (5,374)       (4,888)      (21,200)
                                                    -------       -------      --------
                                           
  Net cash provided by (used in) financing
    activities                                      12,270        34,164       (20,815)
                                             
                                                                 
Net increase in cash and cash equivalents          (27,477)       44,744        (6,001)
                                            
Cash and cash equivalents at beginning                           
of period                                           46,091         1,347         7,348
                                                    ------        ------        ------
Cash and cash equivalents at the end of
period                                             $18,614       $46,091        $1,347
                                                   =======       =======        ======                                           
Supplemental cash flow disclosures:

  Cash paid for:                                                   

     Interest                                       $2,416        $1,550        $1,457

     Income taxes                                      186           175         5,524

     Non-cash transaction

  Purchases of vehicles through capital leases amounting to $364

</TABLE>

                                        36




                PEPSI COLA PUERTO RICO BOTTLING
                    COMPANY AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (U.S. Dollars in thousands except share data)
      Fiscal Years ended September 30, 1996, 1995 and 1994


NOTE 1.  DESCRIPTION OF BUSINESS

Pepsi  Cola  Puerto  Rico  Bottling  Company  ("PCPRBC"  or  "the
Company") bottles, sells and distributes beverages sold primarily
under the Pepsi Cola ("PepsiCo") trademark in the Commonwealth of
Puerto  Rico.  The Company's division of Cristalia Premium Water,
("Cristalia"), is engaged in extracting processing, bottling  and
distributing  bottled  water in Puerto Rico.   Beverage  Plastics
Company  ("BEV"), a wholly-owned subsidiary, manufactures plastic
preforms and plastic bottles in Puerto Rico, primarily for use by
the  Company.   The  Companies operate under  exclusive  bottling
appointments  and franchise agreements with the franchisor  which
include operating and marketing commitments, term limitations and
extensions,  and  conditions  for  termination.   The   Exclusive
Bottling Appointments have ten-year terms expiring on November 5,
2003.    Each   of  the  Exclusive  Bottling  Appointments   will
automatically  be  extended  for  an  additional  five-year  term
expiring on November 5, 2008, provided PCPRB is not in breach  of
any provisions of the franchise arrangement.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  A.  Consolidation and Organization

  The  consolidated  financial statements include  the  financial
  statements   of   PCPRB   and  its  wholly-owned   subsidiaries
  operating  in  Puerto  Rico  and  the  accounts  for  Argentine
  Bottling  Associates ("ABA"), a general partnership  and  BAESA
  Shareholder   Associates   ("BSA"),   a   general   partnership
  (collectively,  the  "Company").  As  of  September  30,  1996,
  PCPRB  had  a  51.93%  interest in  ABA,  which  had  a  58.99%
  interest in BSA, which in turn had a 55.06% interest in  BAESA.
  As  of September 30, 1995, PCPRB had a 51.89% interest in  ABA,
  which  had a 59.24% interest in BSA, which in turn had a 55.40%
  interest  in  BAESA.  As of September 30,  1994,  PCPRB  had  a
  51.07% interest in ABA, which in turn had a 59.62% interest  in
  BSA  which  in  turn  had  a 55.93% interest  in  Buenos  Aires
  Embotelladora S.A. and subsidiaries ("BAESA").  BSA was  formed
  in  1994  in  connection with "Southern Cone"  acquisitions  by
  BAESA  (see  note  5).  The Company's resulting  investment  in
  BAESA  of approximately 17%, as of September 30, 1996 and 1995,
  is  accounted  for under the equity method of accounting.   All
  balances    and   transactions   have   been   eliminated    in
  consolidation,  including significant  intercompany  profit  on
  assets remaining within the group.

  B.  Inventories

  Inventories  are  stated at the lower of cost (first-in  first-
  out method) or net realizable value.

  C.  Property, Plant and Equipment

  Property,  plant  and equipment are stated at  cost.   Property
  and  equipment under capital leases are stated at  the  present
  value  of  minimum lease payments.  Depreciation  on  property,
  plant  and  equipment  is  calculated using  the  straight-line
  method  at  rates based on the estimated useful  lives  of  the
  related assets.  Plant and equipment held under capital  leases
  and  leasehold  improvements are amortized  straight-line  over
  the  shorter of the lease term or the estimated useful life  of
  the asset.

  The   estimated  useful  lives  (in  years)  of  the  Company's
  property, plant and equipment are as follows:




                                37



                                          Useful Life
                                          -----------
          Building and Improvements          40

          Machinery and Equipment         10 and 15

          Plastic returnable bottles         4

          Cases and Shells                5 and 10

          Furniture and Fixtures          5 to 10

  The  cost of maintenance and repairs is charged to expenses  as
  incurred.   The  cost of significant renewals and  improvements
  is  added  to  the  carrying amount  of  the  respective  fixed
  assets.  The carrying amounts and accumulated depreciation  for
  assets  sold  or  retired are eliminated  from  the  respective
  accounts  and  gains  or  losses realized  on  disposition  are
  reflected in the consolidated statement of income/(loss).

  D.  Intangible Assets

  The  cost  in  excess of fair value of net assets of  companies
  acquired  in  purchase  transactions is being  amortized  on  a
  straight-line method over its economic life not  to  exceed  40
  years.   In  1996, the Company wrote-off other  intangibles  of
  $624  due to the loss of value of these.  In 1994, the  Company
  wrote  off  the  unamortized portion of  the  intangible  asset
  related  to  the assembled work force, which was in place  when
  the   Company  was  purchased  in  1987,  due  to  higher  than
  anticipated  employee  turnover levels.   The  costs  had  been
  scheduled to be amortized over a 12 year period.  In 1994,  the
  Company wrote-off its remaining organizational cost related  to
  IBMC, due to the dissolution of IBMC after the sale of its  net
  assets  to  BAESA  (see  note 8).  Other intangibles  are  also
  amortized  on  a  straight-line  method  over  their  estimated
  useful life.  Intangible assets at September 30, 1996 and  1995
  are summarized as follows:

                                                  1996      1995
                                                  ----      ---- 
     Goodwill.................................   $1,277    $1,277

     Trademark (14 Years).....................      300       300

     Water distribution rights (20 years).....      165       165

     Unrecognized prior service cost of             
     pension cost.............................       23        48

     Other....................................      184       772
                                                 ------    ------
                                                 $1,949    $2,562
     Less accumulated amortization                               
                                                  $(490)    $(399)
                                                 ------    ------
                                                 $1,459    $2,163
                                                 ======    ======


                                       38



  Amortization  expense  for  the Company  for  the  years  ended
  September 30, 1996, 1995 and 1994 is summarized as follows:

          1996................................   $  90
          1995................................      90
          1994................................     135

  The  Company periodically reevaluates the recoverability of its
  intangible  assets  as  well as their amortization  periods  to
  determine  whether  an adjustment to the carrying  value  or  a
  revision  to  the estimated useful levies is appropriate.   The
  primary  indicators  of  recoverability  are  the  current  and
  forecasted   operating  cash  flows  which  pertain   to   that
  particular  asset.  An entity that has a deficit  in  its  cash
  flow  from operations for a full fiscal year, in light  of  the
  surrounding economic environment, is viewed by the  Company  as
  a  situation  which  could  indicate an  impairment  of  value.
  Taking  into account the above factors, the Company  determines
  that  an  impairment loss has been triggered  when  the  future
  projected   undiscounted  cash  flows   associated   with   the
  intangible  asset does not exceed its current  carrying  amount
  and  the  amount of the impairment loss to be recorded  is  the
  difference  between the current carrying amount and the  future
  projected  undiscounted cash flows.  The Company  currently  is
  generating  negative  cash flow from  operations  but  believes
  that  the  existing  condition  is  temporary.   Based  on  the
  Company's  policy,  management  believes  that  there   is   no
  impairment  of  value related to the intangible  assets  as  of
  September 30, 1996.

  E.  Investment in BAESA

  Investments  in  less than 50% owned affiliates  are  accounted
  for  under  the equity method.  Under this method of accounting
  a  proportionate share of profits or losses are recorded as  an
  increase  or  reduction of the investments.   In  the  case  of
  losses  these are recorded to the extent of the amount  of  the
  investment  since  the Company does not guarantee  any  of  the
  debts  of the investee nor is committed to provide any  further
  financial support.

  F.  Investment Securities

  Investment  securities at September 30, 1996 consist  of  short
  term  discount  notes.   The Company classifies  its  debt  and
  equity   securities  in  one  of  three  categories:   trading,
  unavailable-for-sale, or held-to-maturity.  Trading  securities
  are  bought  and  held principally for the purpose  of  selling
  them  in the near term.  Held-to-maturity securities are  those
  securities in which the Company has the ability and  intent  to
  hold  the  security until maturity.  All other  securities  not
  included  in  trading  or held-to-maturity  are  classified  as
  available-for-sale.

  Trading and available-for-sale securities are recorded at  fair
  value.   Held-to-maturity securities are recorded at  amortized
  cost,  adjusted for the amortization or accretion  of  premiums
  or  discounts.   Unrealized holding gains and losses  on  trade
  securities are included in earnings.  Unrealized holding  gains
  and  losses,  net  of the related tax effect on  available-for-
  sale securities are excluded from earnings and are reported  as
  a  separate  component of stockholders' equity until  realized.
  Realized  gains  and losses from the sale of available-for-sale
  securities are determined on a specific identification basis.

  A  decline  in  the  market value of any available-for-sale  or
  held-to-maturity  security below cost  that  is  deemed  to  be
  other  than temporary results in a reduction in carrying amount
  to  fair  value.  The impairment is charged to earnings  and  a
  new  cost basis for the security is established.  Premiums  and
  discounts  are  amortized or accredited over the  life  of  the
  related  held-to-maturity security as an  adjustment  to  yield
  using  the  effective interest method.  Dividend  and  interest
  income are recognized when earned.

  All  of  the Company's investment securities are considered  to
  be held-to-maturity.


                                39
 


  G.  Income Taxes

  The  Company accounts for income taxes under the provisions  of
  Statement   of   Financial   Accounting   Standards   No.   109
  ("Statement 109"), "Accounting form Income Taxes".   Under  the
  assets  and  liability method of Statement  109,  deferred  tax
  assets  and liabilities are recognized for the estimated future
  tax   consequences  attributable  to  differences  between  the
  financial  statement  carrying amounts of existing  assets  and
  liabilities  and  their  respective tax  bases.   Deferred  tax
  assets and liabilities are measured using enacted tax rates  in
  effect  for  the year in which those temporary differences  are
  expected to be recovered or settled.  Under Statement 109,  the
  effect  on  deferred tax assets and liabilities of a change  in
  tax  rates  is  recognized  for  income  for  the  period  that
  includes the enactment date.

  H.  Cooperative Marketing Agreement

  The  Company  and  PepsiCo  are required  under  the  franchise
  arrangement  to  spend  a  specified  amount,  based  on  prior
  calendar  year  volume, on the marketing  of  PepsiCo  beverage
  products.   The  Company  and PepsiCo have  historically  spent
  significantly  more  on  marketing  than  called  for  by   the
  franchise  arrangement.  Furthermore, the Company  and  PepsiCo
  develop  a  Cooperative Marketing Agreement (CMA) on an  annual
  basis  to  promote PepsiCo beverage products in  the  Company's
  franchise  territory.  The total amount spent  by  the  Company
  and   PepsiCo  on  advertising  pursuant  to  this  cooperative
  arrangement in any year is determined by the amount  set  forth
  in  that  year's CMA, which may be adjusted subject  to  mutual
  agreement  by the parties.  The CMA provides for,  among  other
  things,  marketing  related  asset  investments,  as  well   as
  expenditures   for   advertising   and   promotions.    PepsiCo
  reimburses  the  Company for PepsiCo's share of  the  marketing
  expenditures,  which have been paid directly  by  the  Company.
  The   reimbursements   are  reflected   in   the   consolidated
  statements  of  income/(loss) as a  reduction  of  selling  and
  marketing expenses.

  During 1995, the Company implemented Statement of Position  No.
  93-7,  "Reporting on Advertising Costs", ("SOP  93-7"),  issued
  by  the Accounting Standards Executive Committee.  The adoption
  of  SOP  93-7  did not have a material effect on the  Company's
  financial position or results of operations.

  The  Company expenses production costs of advertising the first
  time  the  advertising takes place.  All other advertising  and
  promotional costs are expended when incurred.  Advertising  and
  marketing    expenditures   reflected   in   the   accompanying
  consolidated  statements of income/(loss)  amount  to  $11,396,
  $4,220 and $3,565 in 1996, 1995 and 1994, respectively.

  I.  Issuance of BAESA Shares

  Increases  and decreases in the Company's investment  in  BAESA
  resulting  from  BAESA's issuance of newly  issued  shares  are
  reflected as adjustments to additional paid-in capital  to  the
  extent  that the proceeds to BAESA exceed or are less that  the
  Company's carrying value in the shares.

  J.  Cash Equivalents

  Cash  equivalents of $17,647 at September 30, 1996  consist  of
  discount notes with an initial term of less than three  months.
  For  purposes  of  the  statement of cash  flows,  the  Company
  considers  all  highly  liquid debt instruments  with  original
  maturities of three months or less to be cash equivalents.

  K.  Recapitalization

  In   connection   with  the  Company's  public  offering   (the
  "offering")  of  7,000,000 Class B common shares  in  September
  1995,  the  Company changed its capital structure to  5,000,000
  authorized shares of $0.01 par value Class A common shares  and
  35,000,000 authorized shares of $0.01 par value Class B  common
  shares.

                                40


  In  connection  with the offering, the Company  sold  3,500,000
  Class   B   common  shares  while  certain  of  the   principal
  shareholders  sold  3,500,000 Class  B  common  shares  of  the
  Company.   The  shares  were sold at  $14.00  per  share.   The
  Company  did  not  receive any proceeds from the  sale  by  the
  principal shareholder.

  On  August 14, 1995, the Company's Board of Directors  declared
  a  24,000  to  1  stock split effective concurrently  with  the
  effective  date of the Offering.  The par value of  each  share
  is  $0.01.  A total of $179 was reclassified from the Company's
  additional  paid-in capital account to the  Company's  Class  A
  and  B  common share accounts.  All share and per share amounts
  have  been  restated to retroactively reflect the stock  split.
  Earnings/(loss) per common share is determined by dividing  net
  income/(loss)  by the weighted average number of common  shares
  outstanding during each year.

  L.  Adoption of New Accounting Pronouncement.

  During  the year ended September 30, 1996, the Company  adopted
  the  provisions  of  the  Financial Accounting  Standard  Board
  Statement  No.  121,  "Accounting for the Impairment  of  Long-
  Lived  Assets  and  for Long-Lived Assets to be  Disposed  of".
  The  statement  requires  that long-lived  assets  and  certain
  identifiable  intangibles to be held and used by an  entity  be
  reviewed   for  impairment  whenever  events  or   changes   in
  circumstances  indicate that the carrying amount  of  an  asset
  may  not  be  recoverable.  The Company deems an  asset  to  be
  impaired  if  a  forecast  of undiscounted  future  cash  flows
  directly  related to the assets, including disposal  value,  if
  any, is less than its carrying amount.

  As  a result of the implementation of SFAS No. 121, the Company
  revalued certain of its long-lived assets and recorded  a  non-
  cash  charge  of  $1,400.  Of the total impairment  loss,  $600
  represent   the  impairment  of  manufacturing  equipment   and
  furniture,  and  $800  represent  impairment  to  manufacturing
  plant.   Factors leading to the impairment were  the  Company's
  decision,   in   mid-1996,  to  consolidate  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
  impairment  was  calculated using a  recent  appraisal  of  the
  estimated  value  of  the  property  less  estimated  costs  of
  disposition.   The  balance at September 30, 1996  remained  at
  $1,400.

NOTE 3 - INVENTORIES

  Inventories consists of the following:
                                                  1996      1995
                                                  ----      ----
     Raw Materials                               $1,346    $1,247

     Finished Goods                               1,684     2,048

     Spare Parts and Supplies                     1,072     1,037

     Work-in Process                                393       210
                                                 ------    ------
                                                 $4,495    $4,542
                                                 ======    ======



                                     41



NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NET

                                                  1996      1995
                                                  ----      ----
     Land and Improvements...................    $7,057    $1,159

     Building and Improvements...............    14,301     5,592

     Machinery, equipment and vehicles.......    45,931    36,173

     Bottles, cases and shells...............     1,401     1,585

     Furniture and Fixtures..................     1,877     1,833

     Construction in Process.................     1,941    12,224
                                                 ------    ------
                                                 72,508    58,566
     Less accumulated depreciation and
      amortization...........................   (22,572)  (22,121)
                                                --------  -------
     Property, plant and equipment, net         $49,936   $36,445
                                                =======   =======

NOTE 5 - INVESTMENT IN BAESA

  Summarized financial information for this investment, accounted
for under the equity method is as follows:

   The following condensed audited financial information relating
to BAESA as of September 30, 1996 and 1995, (in thousands of U.S.
dollars) has been provided to the Company by BAESA; its inclusion
in  this  report is for disclosure purposes only and the  Company
makes  no  representation as to the accuracy or  completeness  of
such  information.   At the present time, the  Company  does  not
control,  or  have significant influence over, the management  or
operations  of  BAESA. For further information  regarding  BAESA,
investors  should consult information made publicly available  by
BAESA to its shareholders.

                                                  September 30,
                                                  -------------
     ASSETS                                      1996       1995
                                                 ----       ----
     Cash and cash equivalents...............   $27,361    $57,617

     Accounts receivable, net................    64,069    105,478

     Inventories.............................    31,077     56,349

     Deferred income tax, net................     6,681      1,264

     Other current assets....................     8,469     24,669
                                                -------    -------
       Total current assets..................   137,657    245,377

     Property, plant and equipment, net......   586,908    655,414

     Intangible assets, net..................    79,092     88,017

     Investment in joint venture.............   106,918    107,385

     Deferred income tax, net................         -     10,530

     Other assets............................    16,805     21,201
                                                -------   --------
       Total assets..........................  $927,380 $1,127,924
                                                 

                                        42



                                                   September 30,
                                                   -------------
     LIABILITIES                                  1996       1995
                                                  ----       ----
     Current installments of long-term debt
      and captial lease obligations..........   $290,299    $48,457

     Bank loans and overdrafts...............    375,788    182,672

     Accounts payable, income tax payable and  
      accrued expenses.......................    190,981    114,950
                                                 -------    -------
       Total current liabilities.............   $857,068    346,079
                                               
     Long term debt..........................     87,461    323,737

     Deferred income taxes...................      7,740      7,625

     Other long-term liabilities.............      8,385     10,715
                                                 -------    -------

       Total liabilities.....................    960,654    688,156

     Total shareholders' equity/(deficit)....    (33,274)   439,768
                                                --------    -------
                                               
       Total liabilities and shareholders'      
        equity/(deficit).....................   $927,380 $1,127,924
                                                ======== ==========


                                43

 

                                            Year Ended September 30,
                                            ------------------------
                                             1996      1995      1994
                                             ----      ----      ----
     Net Sales                            $680,236   $670,449  $465,071
                                          --------   --------  --------
     Cost and Expenses:

     Cost of sales......................  (472,692)  (345,103) (242,790)
                                  
     Selling and marketing expenses.....  (354,880)  (160,644) (110,973)
                                         
     Administrative expenses............  (192,210)   (93,418)  (41,677)
                               
     Start-up costs in Brazil...........               (3,162)   (7,040)
                                               
      Restructuring costs...............   (34,782)       -       -
                                          --------
                                        (1,054,564) (602,327)  (402,480)
                                        ----------- --------    -------
     Income (loss) from operations......  (374,328)   68,122)    62,591
                                     
      Other income (expenses), net......   (75,459)  (30,785)     3,577
                                           --------  -------      -----
       Income/(loss) before income tax    
       (expense)benefit and equity in net
        earnings of affiliate............ (449,787)   37,337     66,168

     Income/(loss) tax (expense) benefit.   (8,191)    3,079    (17,643)
                                            -------    -----     ------
       Income/(loss) before equity in net 
        earnings of affiliate............ (457,978)   40,416     48,525

     Equity in net earnings of affiliate     5,597     4,359       -

       Net income/(loss)................ $(452,381)  $44,775    $48,525
                                          ========   =======    =======


                                   43


Business

  BAESA  produces,  sells  and distributes  "Pepsi  Products"  in
  various  Argentine provinces, Chile, Uruguay  and  Costa  Rica.
  BAESA  has  been awarded the exclusive rights to produce,  sell
  and  distribute  PepsiCo soft drink products  in  the  Southern
  Brazil  franchise territories and commenced such operations  on
  December 1, 1994.

Foreign Currency Translation and Transaction

  For  purposes of preparation of its financial statement,  BAESA
  uses  local currencies as the functional currencies  except  in
  highly  inflationary  counties  such  as  Brazil  and  Uruguay.
  Assets and liabilities denominated in foreign currencies  other
  than   the   functional  currency  are  translated   into   the
  functional  currency  at  exchange  rates  prevailing  in   the
  exchange market at each balance sheet date.

  Results  of  operations  for foreign subsidiaries,  other  than
  those  located in highly inflationary countries, are translated
  into  U.S. dollars using the average exchange rates during  the
  period,  while assets and liabilities are translated into  U.S.
  dollars  using  current rates in effect at  the  balance  sheet
  date.   Resulting  translation  adjustments  are  recorded   as
  cumulative    translation    adjustments    in    shareholders'
  equity/(deficit).   For  subsidiaries  in  highly  inflationary
  countries, the U.S. dollar is used as the functional  currency.
  Therefore,  non-monetary assets and liabilities are  translated
  at   historical  exchange  rates,  while  monetary  assets  and
  liabilities  are  translated using the current  exchange  rate,
  results  of  operations are translated using a  combination  of
  historical  and  average exchange rates,  and  all  translation
  adjustments  are  reflected in the consolidated  statements  of
  income/(loss).

Southern Cone Acquisitions

  In  November  1993,  BAESA acquired from PepsiCo  its  bottling
  operations in Chile and Uruguay and was granted the  rights  to
  produce,  sell  and distribute PepsiCo soft drink  products  in
  Southern   Brazil   (the  Southern  Cone   acquisitions).    In
  connection  with  the  Southern  Cone  acquisitions,  ABA   and
  PepsiCo  formed BSA.  PepsiCo contributed 100% of  the  capital
  stock  in  its Pepsi Cola bottling and distribution  operations
  in  Chile and Uruguay to BAESA in exchange for 16,372,973 newly
  issued  Class B shares of common stock of BAESA.  Such Class  B
  Shares  are  beneficially owned by PepsiCo  through  BSA.   ABA
  contributed  26,859,135 Class A shares of the common  stock  of
  BAESA to BSA in exchange for a general partnership interest  in
  BSA.

  Pursuant  to the Partnership Agreement between ABA and  PepsiCo
  (the   "Partnership  Agreement"),  the  principal   controlling
  shareholders  of  the Company had the right as  representatives
  of  ABA for a period ending not later than December 1, 1999  to
  vote  all  of  the  BAESA shares held by  BSA  and  by  another
  shareholder  of  BAESA.   These shares represent  approximately
  60.2%  of  BAESA's outstanding capital stock and  approximately
  85.1%  of  the  voting  rights outstanding.   Pursuant  to  the
  Partnership  Agreement,  ABA would cease  to  be,  and  PepsiCo
  would  become the controlling shareholder of BAESA by  December
  1,  1999.   The transfer of voting control to PepsiCo  occurred
  on  July 1, 1996.  For the period that commenced subsequent  to
  July  1,  1996, the Company does not have access to information
  about  BAESA's financial operations other than the  information
  about  BAESA's financial operations other than the  information
  which is made public by BAESA.

  In   November  1994,  BAESA  entered  into  an  agreement  with
  Compania  Cervecerias  Unidas S.A.  ("CCU")  whereby  the  soft
  drink  bottling operations of CCU in Chile were  combined  with
  the  operations  of  Embochile.  The formation  of  this  joint
  venture   required  BAESA  to  contribute  the  operations   of
  Embochile  to  the joint venture in addition to the  equivalent
  of  $50,000  to CCU in exchange for 45% interest of  the  newly
  created  joint venture.  In addition, BAESA has the  option  to


                                44


  acquire  and  additional 4% interest of the joint  venture  for
  $14,000.   The  investment is accounted for  under  the  equity
  method   by   BAESA.   This  transaction  resulted   in   BAESA
  recognizing  an  excess  of  cost  over  fair  value  of  asset
  acquired  of  approximately $60,200. In  connection  with  this
  agreement  with  CCU,  BAESA  made a  capital  contribution  of
  $1,800  to  Embochile during October 1994.  BAESA paid  $10,000
  of  the  total  required  payment,  the  remaining  balance  of
  $40,000 is to be paid over the next four years.  The shares  of
  Embochile  serve  as  collateral for the  outstanding  required
  payment.

Brazil

  BAESA,   pursuant  to  the  Southern  Cone  acquisitions,   was
  scheduled to receive various franchise rights for the  Southern
  brazilian  States of Rio de Janeiro, Rio Grande do  sul,  Santa
  Catarina,  Sao  Paulo  and  Parana  as  they  became  available
  between  September 1994 and November 1996.  However, BAESA  and
  the  previous company holding such franchise rights to produce,
  sell   and   distribute  PepsiCo  products  in   the   southern
  Brazilian  territories,  reached an  agreement  to  accelerate,
  subject  to certain terms and conditions, BAESA's operation  of
  PepsiCo's  bottling franchises in all of the southern Brazilian
  franchise  territories to December 1, 1994.   BAESA  agreed  to
  purchase  certain  assets from the previous  franchise  holder,
  including  returnable glass bottles, plastic cases and  certain
  other  assets.   BAESA  paid $57,000 under  the  agreement,  of
  which  $22,000 was paid in December 1993, $2,900  in  September
  1994  and  the  balance during fiscal year  1995.  The  $24,000
  deposit  has  been classified as a prepayment and therefore  in
  other  assets  in  BAESA's balance sheet as  of  September  30,
  1994.   Total start-up expenses incurred in Brazil amounted  to
  $7,040 and $3,162 in 1994 and 1995, respectively.

  On  May  16,  1995,  PepsiCo,  and BAESA  signed  an  Amendment
  Agreement   (the   "Amendment")  to  the   original   franchise
  agreements  between the parties.  Pursuant  to  the  Amendment,
  effective  on  January  1,  2000,  PepsiCo  will  increase  the
  concentrate price for PepsiCo products for the Southern  Brazil
  territories  to  20% of net wholesale selling  price  ("NWSP").
  In  addition,  pursuant to the Amendment,  PepsiCo  will  grant
  BAESA  the  franchise  rights for the  majority  of  the  Minas
  Gerais  region  in  Brazil  effective  March  25,  1996.    The
  concentrate  price of the Minas Gerais territory shall  be  20%
  of NWSP as soon as BAESA takes over this territory.

Income Taxes

  BAESA  accounts  for income taxes pursuant  to  Statement  109.
  Income  taxes is calculated separately for BAESA  and  each  of
  its  subsidiaries as required by the tax laws  in  which  BAESA
  and  its  subsidiaries  operate.  The  difference  between  the
  computed  expected tax expense based on statutory tax rates  of
  each country of operation and the effective income tax rate  in
  mainly  attributable  to the recognition  of  benefits  arising
  from  tax  leases and the effect of indexing for inflation  for
  tax  purposes.  The statutory tax rate in many of the countries
  in  which  BAESA operates is lower than the U.S. statutory  tax
  rate.

Cooperative Marketing Agreement

  BAESA  and each of this bottling subsidiaries participate  with
  PepsiCo  in  a  CMA  on an annual basis to market  and  promote
  PepsiCo  beverage  products in BAESA's  franchise  territories.
  The  CMA  provides  for among other things,  marketing  related
  asset investments, as well as expenditures for advertising  and
  promotions.   PepsiCo reimburses BAESA for PepsiCo's  share  of
  marketing expenditures.  These reimbursements are reflected  on
  BAESA's  consolidated statements of income/(loss) as  reduction
  of selling and marketing expenses.

  During 1995, BAESA adopted SOP 93-7.  The adoption of SOP  93-7
  did  not  have a material effect on BAESA's financial  position
  or results of operations.

Issuance of BAESA Shares

  In  1994, BAESA completed a secondary public offering (national
  and  international)  whereby  5.8 million  previously  unissued
  Class  B common shares of BAESA were sold at $17.25 per  share.
  Concurrent  with this public offering, PCPRB sold  1.3  million
  shares  of Class B common shares of BAESA.  The total  proceeds
  to  BAESA  from the offering was $138,133, net of  underwriting
  commissions and related expenses.  PCPRB recognized a  gain  of
  $15,924  attributable to the difference between  PCPRB'S  basis
  of  its  interest  in  BAESA and the proceeds  from  the  sale.



                                45



  Furthermore,  PCPRB  increased additional paid  in  capital  by
  $19,935 net of tax effect, attributable to the sale of the  5.8
  million  Class  B  shares mentioned above and the  issuance  of
  16,372,973  Class  B shares in conjunction  with  the  Southern
  Cone  acquisition,  representing  the  difference  between  the
  Company's  equity  interest  in BAESA  after  the  issuance  of
  shares and the historical book value of its interest in BAESA.

NOTE 6 - NOTES PAYABLE TO BANK AND LONG TERM DEBT

In November 1994, the Company and its subsidiaries entered into a
credit  Agreement  with  Banco  Popular.   The  Credit  Agreement
provides  for borrowing 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
to  $10.0  million.  As of September 30, 1996,  the  Company  had
outstanding  under  the Credit Agreement revolving  loans  in  an
aggregate  principal amount of $10.0 million, term loan aggregate
principal  amount of $6.0 million and non-revolving loans  in  an
aggregate  principal amount of $10.0 million, term loan aggregate
principal  amount  of  $6.0 million and  non-revolving  loans  in
aggregate principal amount of $15.0 million.  These loans  mature
on  March  30,  1997,  September 10, 2000 and  January  10,  1997
respectively, and bear interest at a floating rate of 2% over and
above  the cost of Banco Popular of "936 funds" or LIBOR  lending
rates  (ranging  from  6.64% to 7.27%).  The  Agreement  contains
various  covenants  and events of default  typical  of  a  credit
facility  agreement of this size and nature, including additional
debt restrictions and maintaining a minimum level of tangible net
worth.  As  of  September  30,  1996,  the  Company  was  not  in
compliance with some of these covenants but had obtained a waiver
from the lending institution.

Long-term  debt consists of the following at September  30,  1996
and 1995:

     Term Loan of $6,000 in 1996 and $8,800 in                
     1995 to Banco Popular, payable in 78          1996     1995
     monthly payments of $128 excluding            ----     ----
     interest, refinanced under the above        
     mentioned Agreement.  Interest is payable
     monthly in arrears at 936 rate plus 2%...... $6,026   $7,564
                                                           
     Others......................................     337     331
                                                   ------   -----
       Total long-term debt......................   6,363   7,915

     Less current installments...................  (1,550) (1,550)
                                                   ------   -----
       Long-term debt, excluding current          
        installments.............................  $4,813  $6,365
                                                   ======  ======

The  aggregate maturities of long-term debt at September 30, 1996
are as follows:

      1997..............................................   $1,550
      1998..............................................    1,592
      1999..............................................    1,549
      2000..............................................    1,418
      2001..............................................        9
      Thereafter........................................      245
                                                            -----
        Total                                              $6,363
                                                           ======

The Company is negotiating the refinancing of its credit facility
to include a payment schedule which more closely matches the life
of its productive assets.



                                46


NOTE 7 - INCOME TAXES

PCPRB  and  its  subsidiaries are subject to U.S. Federal  income
taxes;  however, each has elected the benefit of Section 936  the
U.S.  Internal  Revenue Code.  Section 936 presently  allows  the
Company  a  tax credit equal to a portion of the amount  of  U.S.
income   tax  expense  attributable  to  earnings  derived   from
operations   within   Puerto  Rico  and  to   certain   qualified
investments  maintained  in  Puerto  Rico  subject   to   certain
limitations.    The  tax  credit against  U.S.  income  taxes  on
possession  business income, as computed under  current  law,  is
subject  to one of two limitations to be chosen by PCPRB and  its
subsidiaries, the Economic Activity Limitation or a credit of 55%
(in  1996 and lesser in subsequent years down to 40% in 1998)  of
their  taxable  income.  PCPRB and its subsidiaries  elected  the
Economic  Activity Limitation to calculate their 1995 and  future
Section  936 credits.  However, the Small Business Job Protection
Act  of  1996  repealed Section 936 and provided  for  a  10-year
phaseout  period.  During the phaseout period,  the  Section  936
credit  must  be computed under the Economic Activity Limitation.
In  addition, during the taxable years commencing after  December
31,  2001, the Section 936 credit will be subject to a net income
limitation.   In  order to utilize income tax  credits  available
under Section 936 each company is required to derive at least 80%
of its gross income from sources within Puerto Rico, and at least
75%  of  gross income must be gross income must be from an active
trade  or  business in Puerto Rico.  Distributing,  Manufacturing
and  BEV  were in compliance with these gross income requirements
for  the years ended September 30, 1996 and 1995.  However, PCPRB
did  not meet these gross income requirements for the years ended
September  30,  1996 and 1995 and, therefore is not  allowed  the
benefit of Section 936 for such years.

The  Company was granted, effective October 1988, a ten-year  tax
exemption  for  its  plastic  preforms  manufacturing  and  sales
operations  (BEV), pursuant to the provisions to the Puerto  rico
Tax Incentives Act of 1987 for certain net industrial development
income.  Under the terms of the grant, the Company received a 90%
exemption from Puerto Rico income tax.  The Company also received
a  full  exemption from Puerto Rico income and municipal  tax  on
interest, rents, dividends and other investments and was  granted
a  60%  exemption  from municipal tax and a  90%  exemption  from
property tax.  In exchange for these tax exemptions, the  Company
agreed  to  manufacture  plastic preforms  and  plastic  bottles,
employ  a  minimum number of persons and maintain  equipment  and
facilities in Puerto Rico.

For  the  years  ended September 30, 1996,  1995  and  1994,  the
combined   income  tax  expense  (benefit)  of  PCPRB   and   its
subsidiaries  attributable to income from  continuing  operations
consisted of the following:

                                              1996      1995      1994
Current:                                      ----      ----      ----
  U.S.                                       $(150)    $(477)    $2,073
  Puerto Rico                                  185       557      1,855
                                              ----     ------    ------
  Total current income tax expense              35        80      3,928
                                              ----     ------    ------
Deferred:                                                        
  U.S.                                        (326)      893      2,315
  Puerto Rico                                 (914)   (1,270)       -
                                              ----    ------
  Total deferred income tax expense
  (benefit)                                 (1,240)     (377)     2,315
                                            ------    ------     ------
  Total income tax expense (benefit        ($1,205)    $(297)    $6,243
                                           =======    ======     ======


                                47



Income   tax  expense  (benefit)  attributable  to  income   from
continuing  operations for the years ended  September  30,  1996,
1995 and 1994 differed from the amounts computed by applying  the
U.S. statutory tax rate of 35% as a result of the following:

                                    Year End       Year End     Year End
                                  September 30,  September 30, September 30,
                                     1996            1995          1994
                                  -------------  ------------- -------------
Computed "expected" tax expense    $(8,209)         $3,191         $4,923

Change in the beginning-of-the-
year balance of the valuation
allowance for deferred tax
assets                              17,734          (2,742)         2,488

Foreign tax credit, net of gross-
up of foreign taxes                   -               (222)            -

Puerto Rico income taxes           (9,668)           2,029          1,855

Possessions tax credit             (1,484)          (2,823)        (3,147)

Other, net                            422              270            124
                                  -------           ------         ------
  Income tax expense (benefit)    $(1,205)           $(297)        $6,243

Current  and  deferred income tax expense (benefit) of  $20,062),
$1,657  and $716 for 1996, 1995 and 1994, respectively, has  been
provided  (credited)  in  connection  with  the  equity  in   net
earnings/(losses) of BAESA.

The   significant  components  of  deferred  income  tax  expense
(benefit)  attributable to income from continuing operations  for
the years ended September 30, 1996, 1995 and 1994 are as follows:

                                    Year End       Year End     Year End
                                  September 30,  September 30, September 30,
                                     1996            1995          1994
                                  -------------  ------------- -------------
                                                       
Deferred tax (benefit) expense     
(exclusive of the effects of
other components listed below)...  $(18,974)         $2,365        $(173)

Increase (decrease) in beginning   
of the year balance of the
valuation allowance for deferred
tax assets.......................    17,734         (2,742)        2,488
                                   --------        --------       ------ 

Total deferred income tax
expense (benefit)                  $(1,240)          $(377)       $2,315
                                   --------        --------       ------





                                        48


The  tax  effects  of temporary differences  that  give  rise  to
significant portions of the deferred tax assets and deferred  tax
liabilities at September 30, 1996 and 1995 are presented below:

                                                       September 30,
                                                       -------------
                                                      1996      1995
Deferred Taxes                                        ----      ----        

  Deferred tax assets:

  Property, plant and equipment principally, due             
  to differences in depreciable lives                $334       $ -

  Federal net operating loss carryforwards          8,633         -

  Puerto Rico net operating loss carryforwards     18,703    10,446

  Accrued expenses                                    763         -

  Past service cost for pension plan                  426       261

  Inventories principally due to additional         
  costs inventoried for tax purposes                  127         -

  Amortization of organizational costs                  -       103

  Accounts receivable, principally due to           
  allowance for doubtful accounts                     405         -

  Other, net                                           66       200
                                                  -------    ------
       Total gross deferred tax assets             29,457    11,010

  Less: valuation allowance                       (27,194)   (9,358)
                                                  -------    ------
       Net deferred tax assets                     $2,263    $1,652
                                                  -------    ------
Deferred tax liabilities:

  Accounts receivable, principally due to             
  allowance for doubtful accounts                       -    ($392)

  Inventories, principally due to additional        
  costs inventoried for tax purposes                    -      (59)

  Property, plant and equipment, principally due     
  to differences in depreciable lives                   -      (73)

  Investment in affiliate                               -  (20,390)

       Total gross deferred tax liabilities             -  (20,914)
                                                  -------  --------
       Net deferred tax asset (liabilities)       $2,263   (19,262)
                                                  =======  ========

The  subsequent  recognition  of  tax  benefits  related  to  the
valuation  allowance for deferred tax assets as of September  30,
1996  and  1995  will  be  allocated to  income  from  continuing
operations,  except for $102 of the September  30,  1995  balance
which will be allocated to equity in net earnings of BAESA.

On  December  31,  1993, PCPRB's manufacturing  and  distributing
divisions  were  contributed  to two newly  formed  subsidiaries,
Manufacturing  and  Distributing.  PCPRB's Puerto  Rico  tax  net
operating  loss carryforwards followed the respective  assets  of
the  divisions.   During  the  year  ended  September  30,  1996,
Manufacturing utilized $3,819 of the prior year Puerto Rican  net
operating loss carryforwards.


                                 49


Deferred  tax benefits for the federal and Puerto Rican  tax  net
operating   loss   carryforwards  of  PCPRB,  Manufacturing   and
Distributing have been partially reserved because realization  of
that benefit for tax purposes is dependent upon the existence  of
future   taxable   income.   At  September   30,   1996,   PCPRB,
Manufacturing   and   Distributing  have   net   operating   loss
carryforwards for federal tax purposes of $24,667,  which  expire
in 2011, and for Puerto Rican income tax purposes as follows:

Amount                                 Year of Expiration
-------                                ------------------
$ 3,098...............................        1998
  4,891...............................        1999
  3,642...............................        2000
 11,657...............................        2001                   
 24,657...............................        2002
 ------
$47,955...............................
=======

For  U.S.  income  tax  purposes,  ABA  and  BSA  are  considered
partnerships  and, as a result, do not pay income  tax  on  their
income.   ABA's  and  BSA's income gains, losses  deductions  and
credits flow-through and are recognized proportionately by  their
partners  on  their  U.S. income tax return.   Therefore,  a  tax
provision was not computed on ABA's and BSA's income.

NOTE 8 - RELATED PARTY TRANSACTIONS

The  following are transactions between PCPRB and BAESA that took
place during the years ended September 30, 1996, 1995 and 1994.

                                            1996    1995    1994
                                            ----    ----    ----      
Sale of preforms to BAESA, including      
guaranteed payments.....................   $2,235   4,419   4,852

Charges from PCPRB to BAESA

  Management Fees.......................        -       -   1,467

  Sale of property and equipment and other    
   assets...............................        -       -     935

Sale of machinery to unconsolidated           
  affiliate of BAESA....................        -     208       -

Charges by BAESA to PCPRB for management    
  fee...................................      888     848   4,528

PCPRB  sold  preforms  to BAESA pursuant to  a  long-term  supply
contract.   In management's opinion, the terms of this  long-term
supply  contract were reasonable and, at the time  such  contract
was  entered into, no other comparable long-term supply  contract
was  available  to BAESA from an unrelated interest  due  to  the
hyperinflationary  conditions in Argentina  at  the  time.   This
contract  was  terminated subsequent to September 30,  1996.   As
part of the negotiation which led to the cancellation of the long-
term  preforms  supply contract, outstanding obligations  of  the
Company  to  BAESA and its subsidiaries amounting  to  $2,065,063
were  settled  for a cash payment of $50,000.  In  addition,  the
Company   was  relieved  from  obligations  related  to   certain
operating leases.  This transaction was accounted for as  a  gain
on the early termination of a supply Agreement.

                                50



The  following  are transactions between PCPRB and  subsidiaries,
including  ABA,  with other related parties for the  years  ended
September 30, 1996, 1995 and 1994:

Accounts receivable other includes, $40 and $80 at September 30,
1996 and 1995, respectively, due from two partners of ABA.

As of January 1, 1995, the Company entered into an agreement with
a shareholder and former director who was to provide construction
management services for approximately $200.  No amounts were paid
as  of September 30, 1995 related to these services.  During 1996
$151  was  paid under this agreement (no additional payments  are
contemplated).

PCPRB  paid  approximately $2,105, $2,700 and $4,400 during  1995
and  1994,  respectively in advertising fees to a firm controlled
by a shareholder of the Company.

PCPRB  paid  approximately, $232 and $350 during 1995  and  1994,
respectively for consulting fees to a shareholder of BAESA and  a
former director of the Company.

Certain  members of the Company's Board of Directors and  certain
of  its executive officers were also directors and/or officers of
BAESA until approximately the end of June 1996.

Pursuant to the terms of a ten-year Voting Trust Agreement  (five
year initial term and renewal option for a second five-year term)
and  a  related  Stock Option Agreement, the  5,000,000  Class  A
shares  authorized  and outstanding were  placed  into  a  voting
trust,  the  trustee  of which is the present  President  of  the
Company, who has the unrestricted right to vote such shares for a
period of ten years.  The voting trust provides the President  of
the  Company with an indemnity and hold harmless with respect  to
his duties and functions as trustee.  The President may terminate
the  Voting  Trust  at his will.  Pursuant to  the  Stock  Option
Agreement, the President of the Company has the right to purchase
the  aforementioned 5,000,000 Class A Shares, for  the  exclusive
benefit  of the Company, within a period of two years  ending  on
September 28, 1998, at a price of $1 per share.

PCPRB paid or assumed approximately $133 in 1996, for legal  fees
incurred  by  the  President and the Chairman  of  the  Board  of
Directors  in connection with the issues in litigation  involving
the Company and certain of its directors, and the issues relating
to  the  Stock  Option Agreements and the Voting Stock  Agreement
approved by the Board of Directors.

NOTE 9 - BUSINESS AND CREDIT CONCENTRATIONS

Financial    instruments,   which   subject   the   company    to
concentrations  of  credit  risk  consist  primarily   of   trade
receivables.   Most  of the Company's customers  are  located  in
Puerto  Rico.  Two customers accounted for approximately  28%  of
the  Company's  sales during 1996, 1995 and 1994.   Although  the
Company's exposure to credit risk associated with non payments by
customers  is affected by conditions for occurrences with  Puerto
Rico,  that  risk  is mitigated by the large number  of  entities
comprising  the  Company's customer base.  As  of  September  30,
1996,  no single receivable from a customer exceeded 15%  of  the
company's trade receivables at that date.  The Company reviews  a
customer's  credit history before extending credit.  The  Company
establishes an allowance for doubtful accounts based upon factors
surrounding  the  credit risk of specific  customers,  historical
trend, and other information.

NOTE 10 - PENSION PLANS

The  Company  has  two separate non-contributory defined  benefit
pension plans covering eligible salaried and hourly employees  of
the  company  and its subsidiaries in Puerto Rico.  The  benefits
under the salaried employees' plan are based on years of serviced
and the employees' average earnings during the last five years of
employment.   The benefits under the hourly employees'  plan  are
based  on  a  fixed  amount  times  years/credit  service.    The
Company's  funding policy is to make the annual contributions  as


                                51



required  by applicable regulations.  Contributions are  intended
to  provide for benefits attributed to service to date as well as
for  those  expected to be earned in the future.  Both plans  are
insured  by  the  Pension  benefit Guarantee  Corporation.   This
insurance  requires  all members of the controlled  group  to  be
jointly   and   severally  liable  for   the   unfunded   pension
obligations.  The only event that may trigger a full  payment  of
the  unfunded  liability is a plan termination  which  management
believes is a remote possibility.

In  accordance with the provisions of Accounting Standards  Board
Statement  No.  87,  "Employers  Accounting  for  Pensions",  the
Company  recognized an additional minimum liability, computed  as
the  excess of the accumulated benefit obligation over  the  fair
value  of plan assets of $1,388 and $1,592 at September 30,  1996
and  1995  respectively, with a related intangible asset (limited
to  the unrecognized prior service cost of the related plans)  of
$23 and $48 at September 30, 1996 and 1995 respectively, with the
remainder  being  reflected  as an  adjustment  to  shareholders'
equity.

The following table sets forth the funded status of the plans and
amounts recognized in the balance sheet at September 30, 1996 and
1995.

                                                 1996      1995
                                                 ----      ----        
Actuarial present value of obligations:

  Accumulated benefit obligation, including        
  vested benefits of $7,290 in 1996 and $6,682
  in 1995                                        $7,356    $6,784
                                                 ======    ======
Projected benefit obligations for services        
rendered to date                                  7,711     7,174

Plan assets at fair value, primarily             
consisting of common stocks and time deposits     4,579     3,656
                                                  -----     -----
Projected benefit obligation in excess of plan   
assets                                            3,132     3,518

Unrecognized net loss from past experience     
different from that assumed                     (1,721)   (1,935)

Unrecognized prior service cost                    (23)      (48)

Adjustment to recognize minimum liability         1,388     1,592
                                                  -----     -----
Accrued pension cost at September 30, 1996 and  
1995 ($2,593 and $2,871 respectively, long
term)                                            $2,776    $3,127
                                                 ======    ======
Net pension expense for 1996 and 1995 included                   
the following components:

  Service cost for benefits earned during the      
    period                                         $160     $150

  Interest cost on projected benefit obligation     518      496

  Actual return on plan assets                     (533)    (187)

  Net amortization and deferral                     442       82
                                                   ----     ----
  Net periodic pension cost                        $587     $541
                                                   ====     ====


The  actuarial present value of the projected benefit  obligation
was  determined using a weighted-average discount rate of  7%  at
September  30,  1996 and 1995 and an expected long-term  rate  of
return  on  plan  assets of 9% for the two years.   The  rate  of
increase in future compensation levels for the salaried plan  was
4%.   The  cost  of  retroactive  benefits  resulting  from  plan
amendments  is  amortized over the future worklife expectancy  of
the active participants.


                                52


NOTE 11 - STOCK OPTION PLANS

The  Company  is in the process of establishing two Stock  Option
Plans, subject to the approval by the Board of Directors and  the
shareholders of the Company, for the granting of stock options to
purchase Class B Shares to certain employees and directors of the
Company  and its affiliates who have serviced 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 this stock option plan, 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.  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 in the non-qualified
stock  option plan may be less than the fair market value of  the
Class B shares at the date of grant.  Subsequent to September 30,
1996,  the  Company  granted an option to the  President  of  the
Company  to  acquire 190,000 shares to under the qualified  plan,
subject  to  the constitution and approval of the  plans  by  the
Board  of Directors and shareholders of the Company.  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 a 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.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

A.Operating Leases

  The  Company  and its subsidiaries lease office  and  operating
  facilities under operating leases with unexpired terms  ranging
  from two to nine years.

  Rent  expense under all noncancelable operating leases for  the
  Company and its subsidiaries for the years ended September  30,
  1996, 1995 and 1994 is summarized as follows:

  1996................................................. $1,387
  1995.................................................  1,287
  1994.................................................  1,187

Following  is  a  summary of future minimum lease payments  under
noncancelable  operating leases and the present value  of  future
payments under capital leases as of September 30, 1996.

                                           Total Operating Leases
                                           ----------------------
1997......................................                 $  781
1998......................................                    682
1999......................................                    585
2000......................................                    457
2001......................................                    398
Thereafter................................                    934
  Total minimum lease payments............                 $3,837


                                   53



                                           Total Capital Leases
                                           --------------------
1997.......................................             $  421

1998.......................................                382

1999.......................................                322

2000.......................................                149

2001.......................................                 69

Thereafter.................................                 21
                                                         -----
  Total minimum lease payments.............              1,364

Less amount representing interest at
 10.25% to 12%.............................                152
                                                         -----
  Present value of lease payments..........              1,212

Less current installments..................                341
                                                         -----
  Capital lease obligations, excluding
   current installments....................               $871
                                                         =====

In  1991  the Company entered into an agreement with  the  Puerto
Rico Aqueduct and Sewer Authority (PRASA) to invest approximately
$15,000  to  build  a  new  bottling  facility  and  waste  water
treatment  plant.   The  Company is  required  to  pay  utilities
surcharges of approximately $13 per month until the new  facility
is operational.

B.   Legal Proceedings

The  Company  is  a  defendant  in nine  putative  class  actions
alleging federal securities violations by the Company and various
officers and directors of the Company.  Plaintiffs in all actions
seek   unspecified  money  damages  except  one  case  in   which
plaintiffs  seek  rescissory  or compensatory  damages  that  are
alleged  to  be  estimated in excess of  $70,000,  together  with
judgement  declaring  null and void the  sale  of  the  Company's
common  shares  initially  sold to the public  in  the  Company's
September  19,  1995 initial public offering and  all  subsequent
trading in such shares.

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  November  1995, the Company obtained directors, officers  and
entity  liability  insurance  coverage.   The  Company  has  been
recently  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.

NOTE 13 - 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 September 30, 1996.


                                54


The Company currently does not hold any derivatives.

Under  the  equity method, the Company's investment in BAESA  has
been reduced to zero.  At September 30, 1996, such investment has
an  estimated fair value of $35,500 determined using a basis  The
New  York Stock Exchange quoted closing value per share  on  that
date.

NOTE - 14 INTANGIBLE AND FIXED ASSET WRITE-OFFS

In  1996, the Company recorded a non-cash charge of approximately
$600 in order to write-off an intangible.

In 1994, the Company recorded a charge of approximately $2,900 in
order  to  write-off approximately $1,000 of certain  intangibles
and approximately $1,900 of fixed assets.















                                55




Item 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE

   None.



















                                56



                            PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS

   Information  regarding the Company's Directors is incorporated
by  reference  to  the information contained  under  the  caption
"Proposal  No.  1 - Election of Directors" in the Company's  1996
Proxy  Statement (the "Proxy Statement"), which is  to  be  filed
with  the  Securities and Exchange Commission  in  January  1997.
Information  regarding the Company's Executive  Officers  is  set
forth  in Part I of this Form 10-K pursuant to Instruction  G  of
Form 10-K.


Item 11.  EXECUTIVE COMPENSATION

  Information regarding executive compensation is incorporated by
reference   to  the  information  contained  under  the   caption
"Executive Compensation" in the Company's Proxy Statement.


Item 12.  SECURITY OWNERSHIP OF CERTAIN
          BENEFICIAL OWNERS AND MANAGEMENT

   Information regarding stock ownership of each person known  to
the  Company to be the beneficial owner of more than  5%  of  its
outstanding  Common  Stock is incorporated by  reference  to  the
information  contained under the caption "Security Ownership"  in
the Company's Proxy Statement.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Information  regarding  certain  relationships  and   related
transactions  is  incorporated by reference  to  the  information
contained  under the caption "Certain Relationships  and  Related
Transactions" in the Company's Proxy Statement.

  With the exception of the information specifically incorporated
by  reference, the Company's Proxy Statement is not to be  deemed
filed as part of this report for purposes of this Part III.









                                57




                            PART IV

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

  (a)     Documents filed as part of this report:

                (1)  A list of the financial statements filed  as
          part of this report appears on page 28.

                (2)   A  list  of  financial statement  schedules
          required to be filed as part of this report appears  on
          page 28.

                (3)  The following exhibits are filed as part  of
          this report:



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       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").
9.1       Form  of  Charles  H.  Beach  Voting  Trust
          Agreement (incorporated by reference to Exhibit 9.1  to
          Amendment No. 1 to the S-1 Registration Statement).
9.2       Michael   Gerrits  Voting  Trust  Agreement
          (incorporated by reference to Exhibit 9.2 to  Amendment
          No. 1 to the S-1 Registration Statement).
9.3       Form  of Amendment No. 1 to Michael  Gerrits
          Voting  Trust  Agreement (incorporated by reference  to
          Exhibit  9.3 to Amendment No. 1 to the S-1 Registration
          Statement).
9.4       Charles   Krauser  Voting  Trust  Agreement
          (incorporated by reference to Exhibit 9.4 to  Amendment
          No. 1 to the S-1 Registration Statement).
9.5       Form  of Amendment No. 1 to Charles  Krauser
          Voting  Trust  Agreement (incorporated by reference  to
          Exhibit  9.5 to Amendment No. 1 to 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).


                                58



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

-----------------
     (b)   No  reports on Form 8-K were filed during the  quarter
           ended September 30, 1996.

     (c)   The  exhibits  listed under Item  14(a)(3)  are  filed
           herewith or incorporated herein by reference.

     (d)  The Consolidated Financial Statements and the financial
          statement  schedules listed under Item  14(a)(2)  are  filed
          herewith.








                                   59



<TABLE>
<CAPTION>
                     PEPSI-COLA PUERTO RICO BOTTLING COMPANY
                                AND SUBSIDIARIES
                                        
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (In Thousands)


                                                                      Additions
                                                    -------------------------------------------
            Description                 Balance at   Charged to 
                                        beginning of costs and   Charged to                    Balance at end
                                         period      expenses    other accounts   Deductions(1)   of period
                                        ------------ ----------  --------------   ------------- ------------- 
<S>                                        <C>          <C>             <C>             <C>          <C>
Fiscal Year Ended September 30, 1996:
  Allowance for doubtful accounts           1,458        511             -               (811)     $1,158

Fiscal Year Ended September 30, 1995:
  Allowance for doubtful accounts           1,220        386             -               (148)   $  1,458

Fiscal Year Ended September 30, 1994       
  Allowance for doubtful accounts           1,998        338             -             (1,116)   $  1,220


-----------------
(1)  Uncollectible receivables.

</TABLE>














                                   60



                               SIGNATURES

   Pursuant  to  the requirements of Section 13 or 15(d)  of  the
Securities  Exchange Act of 1934, the Registrant has duly  caused
this  report  to  be  signed on its behalf  by  the  undersigned,
thereunto duly authorized.

                               Pepsi-Cola  Puerto  Rico  Bottling Company

                              By:  /s/ Rafael Nin
                                   -------------------------------
                                   Name:  Rafael Nin
                                   Title: Chief Executive Officer


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

        Signatures                  Title               Date
                                                          
                                                          
/s/ Rafael Nin                 Director and Chief   December 23, 1996
----------------------         Executive Officer
Rafael Nin                  
                                                          
                                                          
/s/ John William Beck          Director             December 23, 1996
----------------------
John William Beck                                      
                                                          
                                                          
/s/ Charles R. Krauser         Director             December 23, 1996
----------------------
Charles R. Krauser
                                                          
                                                          
/s/ Anton Schedlbauer          Director             December 23, 1996
----------------------
Anton Schedlbauer
                                                          
                                                          
/s/ C. Leon Timothy            Director             December 23, 1996
----------------------
C. Leon Timothy
                                                          
                                                          
/s/ Richard Reiss Huyke        Director             December 23, 1996
-----------------------
Richard Reiss Huyke
                                                          
                                                          
/s/ David L. Virginia          Vice President and   December 23, 1996
-----------------------        Chief Financial
David L. Virginia              Officer



                                61