PUERTO RICAN CEMENT CO INC, DEF 14A, 1998-03-31

PUERTO RICAN CEMENT CO INC
DEF 14A, 1998-03-31
CEMENT, HYDRAULIC

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

Puerto Rican Cement Company, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2

PUERTO RICAN CEMENT COMPANY, INC.

---------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

MAY 6, 1998

---------------------

The annual meeting of stockholders of Puerto Rican Cement Company, Inc.
(the "Company") will be held at the office of the Company, Amelia Industrial
Park, Guaynabo, Puerto Rico, on Wednesday, May 6, 1998 at 10:00 a.m. Atlantic
Standard Time for the following purposes:

1. The election of five Class II directors for a term of three years
and until election and qualification of their successors.

2. The transaction of such other business as may lawfully come before
the meeting or any adjournment thereof.

Only stockholders of record at the close of business on March 19, 1998 will
be entitled to vote at the meeting.

It is important that your stock be represented at the meeting. If you do
not expect to be present, you are urged to date, sign and mail promptly the
enclosed proxy. For your convenience, we enclose a self-addressed envelope to
which no postage need be affixed if mailed in the United States or Puerto Rico.

The Company's executive office is located in Guaynabo, Puerto Rico. Its
mailing address is PO Box 364487, San Juan, Puerto Rico 00936-4487. It is
anticipated that the proxy material will be mailed to stockholders on or about
March 31, 1998.

By Order of the Board of Directors

Etienne Totti Del Valle
Secretary

Guaynabo, Puerto Rico
March 31, 1998
<PAGE> 3

PUERTO RICAN CEMENT COMPANY, INC.

---------------------

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS, MAY 6, 1998

---------------------

The enclosed proxy is being solicited by the Board of Directors of the
Company for the annual meeting of stockholders to be held on May 6, 1998. This
proxy statement and the accompanying Notice of Annual Meeting of Stockholders
and proxy card are being mailed to stockholders beginning on or about March 31,
1998. In addition to solicitation by mail, solicitation of proxies may be made
personally or by telephone or other means by the Company's regular employees. If
the proxy is executed and returned in time for voting, the shares represented
thereby will be voted. Stockholders have the right to revoke their proxies at
any time prior to the time their shares are actually voted. If revocation is
made by mail, it should be sent to Jose O. Torres, Assistant Secretary, Puerto
Rican Cement Company, Inc., PO Box 364487, San Juan, Puerto Rico 00936-4487.

The cost of solicitation will be paid by the Company. The Company has
retained the services of Georgeson & Co., Inc., New York, New York, to assist in
the solicitation of proxies at a cost of $6,500.00. Brokers, nominees and other
similar record holders will be requested to forward proxies and proxy materials
to the beneficial owners of the shares and will be reimbursed by the Company for
their expenses.

VOTING SECURITIES

As of March 19, 1998, the Company had outstanding 5,384,074 shares
(exclusive of 615,926 treasury shares) of Common Stock, par value $1 per share.
Each outstanding share of Common Stock is entitled to one vote. Only
stockholders of record at the close of business on March 19, 1998 will be
entitled to vote at the meeting. For information regarding principal holders of
the Company's Common Stock, see "Information about Nominees, Directors, and
Principal Stockholders" below.

ELECTION OF DIRECTORS

The current Class I directors are Waldemar Del Valle Armstrong, Luis
Alberto Ferre Rangel, Oscar A. Blasini, Miguel A. Nazario and Hector del Valle.
The current Class II directors are Rosario J. Ferre, Esteban D. Bird, Federico
F. Sanchez, Jorge L. Fuentes and Juan A. Albors. The Class III directors are
Antonio Luis Ferre, Alberto M. Paracchini, Jose J. Suarez, Carlos del Rio,
Emilio J. Venegas and Antonio Luis Ferre Rangel. Each class serves a three-year
term, which terms are currently to expire on the date of the respective annual
meetings as follows: Class I, 2000; Class II, 1998; and Class III, 1999. At the
Board meeting held on December 17, 1997, Mr. Federico M. Stubbe resigned as a
Class II director. At its meeting of January 28, 1998, the Board reduced the
number of directors which presently constitute the Board to sixteen.

It is anticipated that each proxy will be voted for the individual nominees
for Class II directors named below, unless authority is withheld to vote for all
or any of such individuals as indicated on the proxy card. The names of the
nominees for Class II directors are: Rosario J. Ferre, Esteban D. Bird, Federico
F. Sanchez, Jorge L. Fuentes and Juan A. Albors. All nominees currently are
directors of the Company and were elected
<PAGE> 4

at the annual meeting in 1995 as Class II directors. Pursuant to the Company's
By-Laws, the election of any director requires an affirmative vote of a majority
of the votes of the Company's Common Stock represented at the Annual Meeting in
person or by proxy and entitled to vote. Votes cast by proxy or in person at the
Annual Meeting will be counted by the persons appointed by the Company to act as
election inspectors for the meeting. The election inspectors will treat shares
represented by proxies that reflect abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
Abstentions, however, will constitute a vote "against" any proposal. The
election inspectors will treat "broker non-votes" (i.e., shares held by brokers
or nominees as to which instructions have not been received from the beneficial
owners or persons entitled to vote and with respect to which the broker or
nominee does not have discretionary power to vote on a particular matter) as if
the broker never voted.

Each Class II director elected at this meeting shall serve from the time of
election and qualification until the third annual meeting following election and
until a successor shall have been elected and shall have qualified. If any
nominee is unable to serve as a director, an event which the Company does not
now anticipate, the proxy will be voted for a substitute nominee.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE CLASS
II DIRECTOR NOMINEES NAMED ABOVE.

INFORMATION ABOUT NOMINEES, DIRECTORS AND PRINCIPAL STOCKHOLDERS

2
<PAGE> 5

<TABLE>
<CAPTION>
NUMBER OF SHARES
AND PERCENTAGE OF
OUTSTANDING SHARES
SERVED AS OF COMMON STOCK
PRINCIPAL OCCUPATION DIRECTOR OWNED BENEFICIALLY
NAME AGE FOR THE LAST FIVE YEARS SINCE(A) AT MARCH 19, 1998
---- --- ----------------------- --------- ------------------
<S> <C> <C> <C> <C>
Miguel A. Nazario 50 President and Chief Executive Officer of 1994 1,000(b)
the Company since January 1995 and
Vice President of the Company from
August 1994 through December 1994;
Process Manager for Worldwide
Manufacturing of Digital Equipment
Corp. (computer company) from 1993 to
1994; Manager for U.S. and Latin
American Operations of Digital
Equipment Corp. from 1992 to 1993;
President and General Manager of
Puerto Rican Operations of Digital
Equipment Corp. from 1987 to 1992.
Hector del Valle 60 Vice Chairman of the Board of the 1987 None
Company since January 1, 1995;
President of the Company from 1988 to
December 1994; Director since 1987 and
Senior Vice President -- Finance and
Secretary of the Company from 1983 to
1987.
Luis Alberto 31 Co-editor since 1996, Business Editor 1996 32,651(d)
Ferre Rangel since February 1995, Assistant News (0.61%)
Editor 1994 and Reporter from February
1990 to July 1994 of El Dia, Inc.
(newspaper publishing company) (an
adult son of Antonio Luis Ferre).
CLASS II DIRECTORS AND NOMINEES
Rosario J. Ferre 59 Second Vice President since 1983 and 1992 32,688(c)
Director since 1960 of Luis A. Ferre (0.61%)
Foundation, Inc. and Ponce Museum of
Art (non-profit foundation) (adult
daughter of Luis A. Ferre and sister
of Antonio Luis Ferre).
Esteban D. Bird 66 President of Bird Construction Company 1973 200(b)
(general contractors) since 1964;
Director of Popular, Inc. (bank
holding company) and of Banco de Ponce
(commercial bank) from 1989 to 1990;
Director of Banco Popular de Puerto
Rico (commercial bank) since 1991.
Federico F. Sanchez 56 President of Federico F. Sanchez and 1982 366(b)
Co., Inc. since 1977; President of
Interlink Group, Inc. (real estate
consultants, brokers and developers)
since 1986.
</TABLE>

3
<PAGE> 6

4
<PAGE> 7

5
<PAGE> 8

<TABLE>
<CAPTION>
NUMBER OF SHARES
AND PERCENTAGE OF
OUTSTANDING SHARES
SERVED AS OF COMMON STOCK
PRINCIPAL OCCUPATION DIRECTOR OWNED BENEFICIALLY
NAME AGE FOR THE LAST FIVE YEARS SINCE(A) AT MARCH 19, 1998
---- --- ----------------------- --------- ------------------
<S> <C> <C> <C> <C>
Alberto M. Paracchini 65 Vice Chairman of the Board of the 1968 None
Company since 1968; Chairman of the
Board and Chief Executive Officer from
1983 to 1990 and President from 1980
to 1990 of Banco de Ponce (commercial
bank); President from 1984 to 1990 and
Director and Chairman of the Board
from 1985 to 1993 of Popular, Inc.
(bank holding company); Chairman of
the Board from 1986 to 1993 of Vehicle
Equipment Leasing Corp. (automobile
leasing company); Director since 1991
and Chairman of the Board from 1991 to
1993 of Banco Popular de Puerto Rico
(commercial bank), Popular Leasing &
Rental, Inc. (leasing company) and
Popular Consumer Services, Inc.
(consumer finance company); Director
of HDA Management Corporation since
December 1993, Equus Management
Company, Inc. since August 1994 and
Venture Capital Fund since March 1994
(all financing companies).
Carlos Del Rio 48 Senior Vice President and COO of MOVA 1996 None
Pharmaceutical Corporation
(pharmaceutical company) since 1996;
Senior Vice President of Worldwide
Technical Operations of SmithKline
Beecham (pharmaceutical company) from
1992 to 1996; and President and
General Manager (Puerto Rican
Operations) of SmithKline Beecham from
1986 to 1995.
Emilio J. Venegas 70 President of Sanson Corp. (rock and 1977 43,000
concrete products) since 1983; (0.80%)
Secretary of Venegas Construction
Corp. (general contractors) since
1989; Director of Popular, Inc. (bank
holding company) since 1984 and Banco
de Ponce (commercial bank) from 1973
to 1990.
</TABLE>

6
<PAGE> 9

- ---------------

(a) Dates refer to periods served as a director of either the Company or Ponce
Cement Corp., which was merged into the Company on March 14, 1963.
(b) Number of shares set forth represents in each case less than 0.10% of the
outstanding shares of Common Stock.
(c) 32,688 shares (0.61%) of the Company's Common Stock are held as follows: (1)
direct ownership by Rosario J. Ferre, director of the Company, of 2,688
shares (.05%) of the Company's Common Stock; and (2) through her 100%
ownership of R.F.T. Investment Corp., a Puerto Rico corporation, which owns
of record 30,000 shares (0.56%) of the Company's Common Stock. In addition,
Rosario J. Ferre has shared voting and investment power regarding 537,174
shares (9.98%) of the Company's Common Stock held of record by South
Management Corporation. Mrs. Ferre has a 25% ownership interest in South
Management Corporation and shared voting and investment power with Mr. Luis
A. Ferre and Mr. Antonio Luis Ferre who hold 50% and 25% ownership
interests, respectively, in South Management Corporation.
(d) Includes 282,854 shares (5.25%) of the Company's outstanding Common Stock
held by Ferre Investment Fund, Inc., a Puerto Rico corporation wholly owned
by Antonio Luis Ferre, a director of the Company since 1959, his spouse and
five adult children. Of this amount, Antonio Luis Ferre Rangel and Luis
Alberto Ferre Rangel, adult sons of Antonio Luis Ferre, each claim
beneficial ownership of 8,418 shares (0.16%). Antonio Luis Ferre retains
sole voting power with respect to all of the shares owned by Ferre
Investment Fund, Inc. and claims beneficial ownership of the remaining
266,018 shares (4.94%). Antonio Luis Ferre's total also includes 3,800
shares (.07%) which are held by Alfra Investment Corp., a Puerto Rico
corporation wholly owned by the five adult children of Antonio Luis Ferre.
Of this total, Antonio Luis Ferre Rangel and Luis Alberto Ferre Rangel,
adult sons of Antonio

7
<PAGE> 10

Luis Ferre, each claim beneficial ownership of 760 shares (.014%). Antonio
Luis Ferre retains sole voting power with respect to all of the shares owned
by Alfra Investment Corp. and his five adult children claim beneficial
ownership of the shares. Antonio Luis Ferre's total also includes 379,096
shares (7.04%) of the Company's outstanding Common Stock held by El Dia,
Inc., a Puerto Rico corporation. Antonio Luis Ferre, his spouse and five
adult children owns 90.14% of the shares of El Dia, Inc. Of this amount,
Antonio Luis Ferre Rangel and Luis Alberto Ferre Rangel, adult sons of
Antonio Luis Ferre, each claim beneficial ownership of 23,473 shares
(0.44%). Antonio Luis Ferre retains voting power with respect to the total
shares owned by El Dia, Inc. and claims beneficial ownership of 332,149
shares (6.17%). In addition, Antonio Luis Ferre has shared voting and
investment power regarding 537,174 shares (9.98%) of the Company's
outstanding Common Stock held of record by South Management Corporation. Mr.
Antonio Luis Ferre has a 25% ownership interest in South Management
Corporation and shared voting and investment power with Mr. Luis A. Ferre
and Mrs. Rosario J. Ferre who hold 50% and 25% ownership interests,
respectively, in South Management Corporation.
(e) All of the directors and executive officers of the Company as a group,
including officers not listed, own 812,566 shares (15.09%) of the Company's
Common Stock and, as described above, Antonio Luis Ferre and Rosario J.
Ferre share voting and investment power regarding 537,174 shares (9.98%) of
the Company's Common Stock held of record by South Management Corporation.

8
<PAGE> 11

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

In addition to the directors listed above who beneficially own more than 5%
of the outstanding shares of the Company's Common Stock, the following persons
beneficially own 5% or more of the outstanding shares of Common Stock.

<TABLE>
<CAPTION>
NUMBER OF SHARES AND PERCENT OF
BENEFICIAL OWNERSHIP OUTSTANDING
NAME AND ADDRESS AS OF MARCH 19, 1998 SHARES
---------------- -------------------- -----------
<S> <C> <C>
Luis A. Ferre
PO Box 6108
San Juan, Puerto Rico 00936 485,247(a)* 9.01%(a)*
Herman Ferre Roig
Hato Rey Tower
Floor 18 Suite 1804
Ave. Munoz Rivera 268
Hato Rey, Puerto Rico 00919 564,540(b)* 10.48%(b)*
Charles M. Royce
Royce & Associates Inc.
Royce Management Company
1414 Avenue of the Americas
New York, New York 10019 414,300(c) 7.69%(c)
Franklin Resources, Inc.
Charles B. Johnson
Rupert H. Johnson, Jr.
Franklin Mutual Advisers, Inc.
51 John F. Kennedy Parkway
Short Hills, N.J. 07078 526,700(d) 9.78%(d)
Capital Research and
Management Company
333 South Hope Street
Los Angeles, California 90071 371,000(e) 6.89%(e)
T. Rowe Price Associates, Inc.
T. Rowe Price Small Cap
Value Fund Inc.
100 East Pratt Street
Baltimore, Maryland 21202 523,900(f) 9.73%(f)
</TABLE>

- ---------------

(a) As of March 19, 1998, Mr. Luis A. Ferre (father of Antonio Luis Ferre and
Rosario J. Ferre), while not directly owning of record any shares of the
Company's outstanding Common Stock, had a beneficial interest in 485,247
shares (9.01%) of the Company's outstanding Common Stock through the Luis A.
Ferre Foundation, Inc., a charitable foundation, respecting which Mr. Ferre,
as its President, votes the Company's Common Stock owned of record by the
Foundation. In addition, Mr. Luis A. Ferre has shared voting and investment
power regarding 537,174 shares (9.98%) of the Company's outstanding Common
Stock held of record by South Management Corporation. Luis A. Ferre has a
50% ownership interest in South Management Corporation and has shared voting
and investment power with Antonio

9
<PAGE> 12

Luis Ferre and Rosario J. Ferre who each hold an additional 25% ownership
interest in South Management Corporation.
(b) As of March 19, 1998, Herman Ferre Roig (a first cousin of Antonio Luis
Ferre and Rosario J. Ferre) owned directly 94,866 shares (1.76%) of the
outstanding Common Stock of the Company. In addition, Herman Ferre Roig and
his wife and children have a beneficial interest in and investment power
regarding 469,674 shares (8.72%) of the Company's outstanding Common Stock
held of record by Brim Incorporado, a Puerto Rico corporation owned by Mr.
Herman Ferre Roig, his wife and children, as a result of their 100%
ownership interest in Brim Incorporado. Mr. Ferre Roig has sole voting and
dispositive power regarding the shares held by Brim Incorporado.
(c) Charles M. Royce, a U.S. citizen, Royce & Associates Inc.("Royce"), a New
York corporation, and Royce Management Company ("RMC"), a Connecticut
general partnership, as a group, are the beneficial owners of 414,300 shares
(7.69%) of the Company's outstanding Common Stock. Mr. Charles M. Royce is
deemed to be a controlling person of RMC and Royce. Royce has 396,500 shares
(7.36%) of the Company's outstanding Common Stock registered in its name and
RMC has 17,800 shares (0.33%) of the Company's outstanding Common Stock
registered in its name. Both are registered investment advisers. Royce and
RMC have sole dispositive and voting power regarding their respective
portions of the Company's outstanding Common Stock.
(d) Franklin Resources, Inc and its subsidiary Franklin Mutual Advisers, Inc.,
both Delaware corporations, and controlling persons Charles B. Johnson and
Rupert H. Johnson Jr., both U.S. citizens, are the beneficial owners of
526,700 shares (9.78%) of the Company's outstanding Common Stock. Franklin
Mutual Advisers, Inc., holds sole voting control and dispositive power over
the shares held by this group.
(e) Capital Research and Management Company ("CRMC"), a registered investment
adviser and an operating subsidiary of The Capital Group Companies, Inc.,
exercises investment discretion with respect to 371,000 shares (6.89%) of
the outstanding Common Stock of the Company, which are owned by various
institutional investors. CRMC has no power to direct the voting of the
shares but holds sole dispositive power over all shares registered in its
name.
(f) T. Rowe Price Associates, Inc. ("TRPA") is the beneficial owner of 523,900
shares (9.73%) of the Company's outstanding Common Stock. T. Rowe Price
Associates, Inc. is a registered investment adviser and one or more of its
clients is the legal owner of the Company's outstanding Common Stock
registered in the name of TRPA. The largest among these holdings is that of
T. Rowe Price Small Cap Value Fund, Inc., a Maryland corporation. TRPA holds
sole voting control over 18,000 shares (.33%) of the outstanding Common
Stock of the Company and dispositive power over all shares registered in its
name. T. Rowe Price Small Cap Value Fund, Inc. holds sole voting control
over 470,000 shares (8.73%) of the outstanding Common Stock of the Company.

* The shared voting and investment power regarding shares of the Company's
Common Stock attributable to Antonio Luis Ferre (described in footnote (d) on
page 7), Rosario J. Ferre (described in footnote (c) on page 7), and Luis A.
Ferre (described in footnote (a) on page 9), arises by reason of their
holdings of South Management Corporation, a Puerto Rico corporation, which
holds of record 537,174 shares (9.98%) of the Company's outstanding Common
Stock. Each of said persons disclaims that he or she is acting as a group with
regard to such shared voting and investment power.

10
<PAGE> 13

EXECUTIVE COMPENSATION

Set forth below is the compensation paid by the Company during each of the
last three fiscal years ended December 31, 1997 to its President and Chief
Executive Officer, and the Company's four other most highly paid executive
officers whose aggregate remuneration exceeded $100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------- OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
--------------------------- ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
Miguel A. Nazario 1997 $349,024(2) $80,000 $14,160
President, Director 1996 $288,000 $75,000 $13,589
and Chief Executive Officer 1995 $256,000 $86,000 $12,431
Hector del Valle 1997 $295,440 $63,900 $12,124
Vice Chairman 1996 $236,640 $60,300 $ 9,073
of the Board 1995 $257,297 $56,880 $10,169
Jose O. Torres 1997 $138,385 $30,525 $ 9,172
Vice President of Finance 1996 $130,592 $41,188 $11,887
and Treasurer 1995 $122,650 $34,688 $11,048
Rene Di Cristina 1997 $128,241 $30,993 $ 6,597
President, Ready 1996 $115,462 $38,000 $ 5,185
Mix Concrete (wholly 1995 $108,571 $30,375 $ 8,998
owned subsidiary)
Jose E. Rosich 1997 $124,337 $27,225 $ 7,719
Director of Industrial 1996 $122,717 $23,500 $ 7,451
Relations & Personnel 1995 $114,758 $22,250 $17,782
Administration
</TABLE>

- ---------------

(1) The Company furnished automobiles to its executive officers, including the
five individuals named above. Other Annual Compensation reflects cost to
the Company of furnishing such automobiles to the listed officers and
paying related expenses.
(2) Salary figures for Mr. Nazario include compensation in lieu of forgone
vacation time in the amount of $29,024

Named officers received no compensation other than that presented in the
Summary Compensation Table included herein. The column of the table marked as
"salary" includes cash payments for vacation time not used by the executive.

11
<PAGE> 14

PENSION PLAN TABLE

The following table illustrates estimated annual benefits payable under the
Company's pension plan upon normal retirement to persons with the specified
combination of remuneration (base salary) and years of credited service. Amounts
are based on straight life annuities.

YEARS OF CREDITED SERVICE(a)

<TABLE>
<CAPTION>
HIGHEST FIVE
YEAR AVERAGE
COMPENSATION (B) 10 15 20 25 30 35 40
- ---------------- ------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 65,000 $ 8,578 $12,867 $ 17,156 $ 21,770 $ 26,384 $ 30,997 $ 35,611
90,000 12,328 18,492 24,656 31,270 37,884 44,497 51,111
115,000 16,078 24,117 32,156 40,770 49,384 57,997 66,611
140,000 19,828 29,742 39,656 50,270 60,884 71,497 82,111
165,000 23,578 35,367 47,156 59,770 72,384 84,997 97,611
190,000 27,328 40,992 54,656 69,270 83,884 98,497 113,111
215,000 31,078 46,617 62,156 78,770 95,384 111,997 128,611
240,000 34,828 52,242 69,656 88,270 106,884 125,497 144,111
265,000 38,578 57,867 77,156 97,770 118,384 138,997 159,611
290,000 42,328 63,492 84,656 107,270 129,884 152,497 175,111
315,000 46,078 69,117 92,156 116,770 141,384 165,997 190,611
340,000 49,828 74,742 99,656 126,270 152,884 179,497 206,111
365,000 53,578 80,367 107,156 135,770 164,384 192,997 221,611
390,000 57,328 85,992 114,656 145,270 176,884 206,497 237,111
</TABLE>

- ---------------

(a) As of December 31, 1997, Miguel A. Nazario had 3 years of credited service,
would have had $569,000 average final remuneration covered by the plan and
would be entitled to a yearly pension benefit of $145,000 at normal
retirement age; Hector del Valle had 40 years of credited service, would
have had $285,000 average final remuneration and would be entitled to a
yearly pension benefit of $193,000 at normal retirement age; Jose O. Torres
had 20 years of credited service, would have had $226,000 average final
remuneration covered by the plan and would be entitled to a yearly pension
benefit of $109,000 at normal retirement age; Rene Di Cristina had 14 years
of credited service, would have had $270,000 average final remuneration and
would be entitled to a yearly pension benefit of $121,000 at normal
retirement age; and Jose E. Rosich had 24 years of credited service and
would be entitled to a yearly pension benefit of $38,000. His average final
remuneration, for pension benefits purposes, would be calculated based on
what would have been his normal retirement at age 65.

All estimated pension benefit information assumes average salary increases
of 5% up until normal retirement at age 65, except for Mr. Jose E. Rosich
who is more than 65 years old.

(b) A participant's pension under the Company's program is based upon such
participant's "pensionable earnings". Pensionable earnings are computed by
annualizing the average monthly eligible compensation received by the
participant from the Company during the 60-month period in which the
participant received his highest eligible compensation. Eligible
compensation is equal to "Salary" as reported in the "Summary Compensation
Table" not including bonuses (reported separately in such table as "Bonus")
or overtime payments, if any.

12
<PAGE> 15

The Company's pension plan covers all salaried employees of the Company who
are not subject to the terms of a union contract and who complete at least 1,000
hours of service with the Company during the 12-month period beginning with the
date of employment or during any subsequent calendar year.

Effective January 1, 1994, the Company amended the pension plan to modify
the benefit formula for determining an active participant's basic benefit. The
new formula produces a benefit at normal retirement age equal to 1.1% of the
participant's average monthly compensation up to "Covered Compensation" and 1.5%
of average monthly earnings in excess of "Covered Compensation" multiplied by
the first 20 years of "Credited Service," plus 1.2% of average monthly
compensation up to Covered Compensation and 1.6% of average monthly earnings in
excess of "Covered Compensation," multiplied by "Credited Service" in excess of
20 years. "Covered Compensation" is as defined in Section 401 (1) (5) (E) of the
United States Internal Revenue Code of 1986, as amended.

For unmarried retired participants the normal retirement benefit is paid in
the form of a monthly straight life annuity commencing at retirement. For
married retired participants the normal retirement benefit generally is an
actuarially adjusted monthly joint and surviving spouse annuity commencing at
retirement and continuing for the participant's life with 50% of such benefit
continuing for the life of the participant's surviving spouse, if any. "Average
monthly compensation" under the plan is the highest average monthly base salary
(including commissions, but excluding bonuses, overtime and other payments that
are not predetermined) during any five consecutive years in the ten-year period
immediately preceding the participant's actual retirement date.

The minimum monthly retirement benefit for participants who were
participants in the plan on December 31, 1975 is not less than the sum of (a)
1.2% of average monthly compensation for each of the first 10 years of credited
service plus (b) 1.5% of such compensation for each year of credited service
prior to age 65 in excess of 10, with the maximum benefit equal to 72% of
average monthly compensation after 40 years of credited service. In computing
the minimum retirement benefit, compensation is assumed to remain unchanged
since December 31, 1975.

Effective August 1, 1986, any participant retiring under the plan shall
receive monthly benefits of not less than $5.00 for each year of credited
service. In addition to annual retirement benefits, the plan provides benefits
for disability, death and other terminations of employment after 10 years of
credited service. Early retirement is provided, with unreduced benefits, for
participants who are at least 55 years of age and whose age plus years of
service equal at least 85, and with reduced benefits for participants who are at
least 60 years of age with at least 10 years of service.

SUBSIDIARY PENSION PLAN

During 1995, the Company acquired a wholly owned subsidiary, Ready Mix
Concrete, Inc. (the "Subsidiary"), which carried its own pension program (the
"Subsidiary's Pension Plan"). The Subsidiary's Pension Plan covers all salaried
employees of the subsidiary who are not subject to the terms of a union contract
and who complete at least 1,000 hours of service with the Subsidiary during the
12-month period beginning with the date of employment or during any subsequent
plan year. A participant's pension is based upon such participant's plan
compensation. Plan compensation is equal to regular salary or wages, plus
overtime, commissions, and bonuses.

Effective June 28, 1994, the Subsidiary amended the pension plan to modify
the benefit formula for determining an active participant's basic benefit. The
new program produces a career-average benefit at

13
<PAGE> 16

normal retirement age equal to 0.75% of annual plan compensation up to the
Social Security Taxable Wage Base, and 1.25% of annual plan compensation in
excess of the Taxable Wage Base, for each year of service after June 28, 1994.

For service until June 27, 1994, the Subsidiary's Pension Plan provides a
frozen benefit at normal retirement age equal to 20% of "average annual
compensation" plus 20% of average annual compensation in excess of $4,800 (the
total reduced by 1/15th for each year of service less than 15), and 0.5% of such
average annual compensation for each year of service exceeding 15. "Average
Annual Compensation" is the highest average plan compensation during any five
consecutive plan years in the ten-year period ending June 27, 1994.

Effective January 1, 1997, coverage under the Subsidiary's Pension Plan was
extended to employees of another subsidiary of the Company, Concreto Mixto,
Inc., that was merged with the Subsidiary. All service with Concreto Mixto, Inc.
is recognized for purposes of determining eligibility and vesting under the
Subsidiary's Pension Plan, but benefit accruals begin no earlier than January 1,
1997 under the career-average formula described above.

For unmarried retired participants the normal retirement benefit is paid in
the form of a monthly life annuity with 120 payments guaranteed commencing at
retirement. For married retired participants the normal retirement benefit
generally is an actuarially adjusted monthly joint and surviving spouse annuity
commencing at retirement and continuing for the participant's life with 50% of
such benefit continuing for the life of the participant's surviving spouse, if
any.

Normal retirement benefits under the Subsidiary's Pension Plan are payable
upon attainment of age 65. In addition to annual retirement benefits, the
Subsidiary's Pension Plan provides benefits for disability, death, and other
terminations of employment after 5 years of credited service. Early retirement
is provided, with reduced benefits, for participants who are at least 55 years
of age with at least 10 years of service.

In addition to the Subsidiary's Pension Plan, the Subsidiary offers a
Savings Plan for all salaried employees who are not subject to the terms of a
union contract and who complete at least 1,000 hours of service with the
Subsidiary during the 12-month period beginning with the date of employment or
during any subsequent plan year. The Savings Plan was effective July 1, 1994,
and coverage was extended to employees of Concreto Mixto, Inc. effective January
1, 1997. Contributions to the Savings Plan are based upon each participant's
plan compensation. Plan compensation is equal to regular salary or wages, plus
overtime, commissions, and bonuses.

Participants may elect to make basic contributions of from 1% to 4% of plan
compensation on a before-tax basis, and supplemental contributions of an
additional 1% to 4% of plan compensation also on a before-tax basis. The
Subsidiary makes annual matching contributions of 50% of participant basic
contributions, up to $2,000 per participant. In addition, the Subsidiary may
make discretionary profit-sharing contributions at the end of each year. Such
profit-sharing contributions are allocated to all eligible employees, whether or
not they elect to contribute to the plan.

Participants become fully vested in the Subsidiary's Saving Plan's matching
contributions and profit-sharing contributions after 3 years of service.

Withdrawals from the Subsidiary's Savings Plan prior to retirement or other
termination of employment are not permitted except in the case of financial
hardship. Upon retirement, a participant's account balance is distributable in a
lump sum payment or in installments.

14
<PAGE> 17

EXECUTIVE SEPARATION POLICY

The Company has entered into separate ten-year agreements with 27 members
of management including Messrs. Antonio Luis Ferre, Miguel A. Nazario, Antonio
Luis Ferre Rangel, Jose O. Torres, Rene Di Cristina and Jose E. Rosich. Nineteen
of these contracts were ratified by the Company's Board of Directors at its
meeting of August 24, 1988 and eight of these contracts were ratified by the
Board of Directors at its meeting of October 26, 1994. All contracts, among
other things, grant an amount equal to two and a half times compensation based
on average salary plus bonus during the three years prior to the date of a
takeover or change in control of the ownership of the Company. Benefits payable
under the contracts are triggered if, as a result of a change in control, these
executives are (1) laid off or forced to resign or (2) unable to function in the
position held prior to the change in control. A change in control is generally
defined as a third party acquisition of the Company's shares representing 20% or
more of the total number which may be cast for the election of directors.

COMPENSATION COMMITTEE REPORT

The purpose of the following Compensation Committee Report is to inform
shareholders of the Compensation Committee's compensation policies for executive
officers and the rationale for compensation paid to the Chief Executive Officer
("CEO"). This report is submitted by the Compensation Committee for 1997. During
1997, the Compensation Committee consisted of three outside directors of the
Company. The Compensation Committee's overall goal is to develop executive
compensation policies that are consistent with, and linked to, strategic
business objectives and Company values. The Compensation Committee approves the
design of, assesses the effectiveness of, and administers executive compensation
programs in support of, compensation policies. The Compensation Committee
presents its decisions to the Board of Directors for approval and from time to
time seeks and receives information from management.

Compensation Philosophy

The compensation program followed by the Company is based on the
achievement of business objectives. The Company's primary business objective is
to maximize shareholder value over both the near-term and the long-term. To
achieve this objective, the compensation program is designed to relate pay to
performance. Expected corporate and individual performance goals are established
by the Board of Directors at the beginning of each fiscal year. The program also
strives to attract, retain and reward executives who contribute to the overall
success of the Company. Each program element, therefore, is intended to target
compensation levels that are at the median of a comparative market. Offering
market-comparable pay opportunities allows the Company to maintain a stable,
successful management team.

Competitive Pay

Competitive market data is provided by an independent compensation
consultant, Hewitt Associates Caribe Inc. The data provided compares Company
compensation practices to a group of local comparable companies. The Company's
market for compensation comparison purposes is comprised of a group of companies
who tend to have similar philosophies, sales volumes, and operations in Puerto
Rico or multinationally. The Compensation Committee reviews and approves the
selection of companies used for compensation comparison purposes. The companies
chosen for comparison are not in all cases the same companies which comprise the
Peer Group in the Performance Graph included on page 18. The Compensation
Committee believes that, because of geographical and other factors, the
Company's most direct

15
<PAGE> 18

competitors for executive talent are not the same companies that would be
included in a peer group established for comparing shareholder returns.

The key elements of the Company's executive compensation are base salary
and annual incentives. In determining compensation, all elements of an
executive's total compensation package, including pension plans, insurance, and
other benefits are considered.

COMPENSATION VEHICLES

Salary

The Compensation Committee regularly reviews each executive's base salary.
Base salaries for executives are initially determined by evaluating executives'
levels of responsibility, prior experience and breadth of knowledge, as well as
external pay practices. Increases to base salaries are driven primarily by
corporate and individual performances.

Base salaries are targeted at the median of the comparative market. The
comparative market is determined by an objective evaluation of compensation
provided in similar positions in a selected group of peer companies competing in
the local job market. This comparison, which includes local companies in the
same and other industries, is performed on a regular basis by outside personnel
consultants hired for this purpose by the Company. Salaries paid can be adjusted
above or below the median based on individual and corporate performances plus
other factors such as experience in the position. Corporate and individual
performance factors are equally weighted in determining base salaries. Corporate
performance measures include the Company's return on stockholder's equity,
individual performance in securing specific strategic objectives, Company
performance against budget, Company cash flow per share and Company performance
in comparison with peer group cement companies. In 1997, the Company's target
for return on stockholder's equity was met and exceeded. The Company's
objectives regarding cash flow per share were attained and the Company met its
budget for its core ready mix and cement operations in 1997.

Annual Cash Bonus

All employees are eligible for an annual cash bonus. For executives, this
bonus is based on the achievement of pre-established annual corporate and
individual performance goals. This bonus opportunity promotes the Company's
pay-for-performance philosophy. Bonus opportunities are based on a percentage of
base salary. Target bonus opportunities are set at the median of the comparative
market according to position.

Corporate goals are based on the Company's total return on stockholder's
equity, Company performance against budget, cash flow per share and in
performance in comparison with peer group cement companies for the year.
Individual performance is also taken into account. Corporate and individual
performance factors are equally weighted in determining bonuses. Local laws
provide for a minimum bonus to be paid to all employees; this bonus is increased
when predetermined thresholds for corporate performance are met.

The total appropriation for the bonus is approved by the Board of Directors
each year based on the level of achievement of these goals. In 1997, most
corporate goals were achieved or exceeded, and all of the named executive
officers received bonuses.

On an occasional basis, the Compensation Committee recommends to the Board
special bonuses for extraordinary achievement of specific objectives. These
special bonuses are of a non-recurrent nature. Special bonuses were not awarded
in the last fiscal year.

16
<PAGE> 19

CHIEF EXECUTIVE OFFICER

With respect to the base salary granted to Mr. Miguel A. Nazario (President
and CEO) in 1997, the Compensation Committee took into account a comparison of
base salaries of chief executive officers of local peer companies and the
Company's success in meeting its budget with respect to the Company's
operations. The Company delivered an annual return in 1997 which exceeded
benchmarks of the S&P Industrial Index and almost equaled the peer group. The
Company's total shareholder annual return for 1997 of 64.37% exceeded the S&P
index return of 31.02% for the same year. However, the Company's negative return
reflected for the year 1996 affected the cumulative total shareholder return for
the five-year period ended December 31, 1997. The negative return for 1996
resulted mainly from a slight decrease in the share price of the Company's
common stock at year-end of 1996 as compared to the price at year-end of 1995.
Earnings per share reported at $2.91 for 1997 exceeded by 9.4% the amount of
$2.66 reported in 1996.

Also considered as a goal is cash flow per share. During 1997, in its
assessment of Mr. Nazario's individual performance, the Compensation Committee
placed increased emphasis in operational goals as a means of improving future
return on equity and the improvement in cash flow from operations (which reached
$5.34 per share as compared to $3.71 per share in 1996). Mr. Nazario was granted
a base salary of $320,000 for 1997, an increase of 6.67% over his $300,000 base
salary for 1996.

In 1997, Mr. Nazario's annual bonus payment stressed the level of
achievement of predetermined operational goals. Achievement was measured in
terms of total return on stockholder's equity, performance against budget and
cash flow per share. Based on these factors, Mr. Nazario's annual bonus payment
was $80,000 during 1997.

Compensation Committee:
Jorge L. Fuentes, President
Alberto M. Paracchini
Federico Sanchez

17
<PAGE> 20

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG PUERTO RICAN CEMENT
COMPANY, INC., THE S&P 500 INDUSTRIAL INDEX AND PEER GROUPS.

The graph presented below compares the cumulative total shareholder return
on the Company's Common Stock for the five years ended December 31, 1997, with
the cumulative total shareholder return for such period reflected in the
Standard and Poor's (S&P) 500 Stock Index and in peer group indexes. It includes
comparisons with a peer group index of eight competing cement, ready mix and
aggregates companies (Calmat Co., Florida Rock Industries, Giant Group LTD,
Holnam, Inc., Lafarge Corp., Southdown Inc., Texas Industries, and Vulcan
Materials).

The graph (and the information related to it) was obtained by the Company
from Standard & Poor's Compustat Services. The comparative returns shown in the
graph assume (i) a $100 investment in the Company's Common Stock, the common
stock of the companies included in the S&P 500 stock index and the common stock
of the companies in the peer group at the market close on December 31, 1992 and
(ii) the reinvestment of all dividends on a monthly basis over a five-year
period using 1992 as base year.

All peer group companies are publicly listed on a national stock exchange
in the U.S. with the same or similar business products as the Company. Results
were weighted according to market capitalization. The stock price performance on
the graph below is not necessarily indicative of future price performance.

TOTAL SHAREHOLDER RETURN

<TABLE>
<CAPTION>
PUERTO RICAN S&P
MEASUREMENT PERIOD CEMENT CO. INDUSTRIAL
(FISCAL YEAR COVERED) INC. INDEX PEER GROUP
<S> <C> <C> <C>
DEC 92 100 100 100
DEC 93 100.50 109.03 131.36
DEC 94 117.76 113.19 120.76
DEC 95 141.81 152.35 141.82
DEC 96 136.73 187.33 157.56
DEC 97 224.74 245.43 260.47
</TABLE>

18
<PAGE> 21

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 1997, the Compensation Committee consisted of the following
non-employee directors of the Company: Jorge L. Fuentes, Alberto M. Paracchini
and Federico Sanchez.

As of December 31, 1997, the Company had available from Banco Popular de
Puerto Rico (a commercial bank) lines of credit of $4,000,000 for unsecured
short term borrowings and/or discounting customers' trade paper. A wholly-owned
subsidiary of the Company, Florida Lime Corporation, had available a line of
credit of $600,000 from such bank as of December 31, 1997 for unsecured
short-term borrowings. At such date, the Company and such subsidiary had no
outstanding borrowings under these lines of credit. Mr. Alberto M. Paracchini is
a member of the Board of Directors, Mr. Antonio Luis Ferre is the Vice Chairman
of the Board of Directors and Mr. Juan A. Albors is also a Director of Banco
Popular de Puerto Rico.

During 1997, the Company sold its products, in the normal course of
business, for the aggregate amount of $649,892 to Fuentes Concrete Pile, Inc., a
Puerto Rico corporation of which Mr. Jorge L. Fuentes is Chairman of the Board
of Directors and Chief Executive Officer.

CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS

The following briefly summarizes certain transactions with the Company and
certain transactions relating to the officers, directors, or 5% holders of the
Company. Transactions relating to Compensation Committee members are included
under "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION."

Mr. Jose J. Suarez, a Director of the Company as of December 31, 1997,
received during 1997 the aggregate amount of $125,159 in consulting fees and
expenses related to a Company automobile for work performed for the Company
under a consulting contract. The consulting fees originated from services
performed as a consultant in the management of the daily operations of the
Company and were paid in addition to directors' fees received by Mr. Suarez as a
retainer and for his attendance at Board meetings. The terms of such contract
and consulting fees paid pursuant thereto are competitive with the terms of and
fees paid pursuant to contracts for similar services entered into by the Company
with outside parties. Mr. Suarez occupied the position of Executive Vice
President in charge of Operations of the Company until December 1995.

Mr. Antonio Luis Ferre, Director and Chairman of the Board of the Company
as of December 31, 1997, received during 1997 the aggregate amount of $212,900
in consulting fees, including automobile expenses, for work performed for the
Company under a consulting contract. The consulting fees originated from
services performed as a consultant in the management of the daily operations of
the Company and were paid in addition to directors' fees received by Mr. Ferre
as a retainer and for his attendance at Board meetings. The terms of such
contract and consulting fees paid pursuant thereto are competitive with the
terms of and fees paid pursuant to contracts for similar services entered into
by the Company with outside parties. Mr. Ferre was elected Chairman of the Board
of the Company effective January 1, 1995.

The law firm Parra, Del Valle, Frau & Limeres, in which Mr. Waldemar Del
Valle Armstrong is a Partner, received the aggregate amount of $62,716,
including retainer fees, for legal services to the Company and expenses incurred
during 1997. Mr. Del Valle Armstrong has been a Director of the Company since
1997.

On March 19, 1998, the Company purchased from Brim Incorporado 68,000
shares (1.26%) of the Company's Common Stock at the price of $48.36 per share,
or $3,288,480 in the aggregate. The purchase was made pursuant to an agreement
signed March 6, 1998 and approved by the Company's Board of Directors. Mr.
Ferre-Roig is the beneficial holder of more than 5% of the Company's outstanding
Common Stock.
19
<PAGE> 22

DATE OF RECEIPT OF STOCKHOLDERS' PROPOSALS

Stockholders who intend to present proposals at the 1999 annual meeting of
stockholders must submit their proposals to the Company on or before November
30, 1998.

DIRECTORS' FEES

Standard remuneration for directors not employed by the Company is a $2,500
quarterly retainer fee and $1,000 for each Board or committee meeting attended.
In addition, the Company pays yearly premiums of approximately $612 on behalf of
each outside director in connection with group life and accident insurance
coverage. The Company paid approximately $5,200 during the fiscal year as
interest for accumulated deferred compensation for one director and compensates
two directors an additional $50 per meeting for costs associated with traveling
from outside the San Juan metropolitan area.

OTHER MATTERS

The Board of Directors of the Company has, among others, the following
committees: an Audit Committee composed during 1997 of outside directors Messrs.
Emilio J. Venegas, Esteban Bird and Juan A. Albors; a Compensation Committee
composed during 1997 of outside directors Messrs. Alberto M. Paracchini,
Federico Sanchez and Jorge L. Fuentes; and a Nominating Committee composed
during 1997 of directors Messrs. Jorge L. Fuentes, Luis Alberto Ferre Rangel and
Alberto Paracchini.

The Audit Committee makes recommendations for the appointment of
independent auditors and, in conjunction with such auditors, makes
recommendations to the Board of Directors concerning the Company's internal
accounting controls and operating procedures, including the review and approval
of internal audit programs.

The Compensation Committee evaluates and makes recommendations to the Board
of Directors regarding the remuneration of directors, officers and salaried
employees. The policies and mission of the Compensation Committee are set forth
in the "Compensation Committee Report" found on page 15.

The Nominating Committee evaluates and makes recommendations to the Board
of Directors on nominees for directors as vacancies arise. These nominations are
submitted to the Board, which votes on the candidates for acceptance as
nominees.

During 1997, the Board of Directors met 12 times, the Nominating Committee
met 1 time, the Audit Committee met 3 times and the Compensation Committee met 3
times. Except for Mr. Luis A. Ferre Rangel, each director attended at least 75%
of the aggregate meetings of the Board and each committee thereof of which he
was a member.

To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the two fiscal years ended December 31, 1997, all
Section 16(a) filing requirements applicable to the Company were complied with,
except for Mr. Antonio Luis Ferre, who filed a late report under Rule 16a-3(f)
of the Securities Exchange Act of 1934 regarding the purchase of 975 shares on
September 1997.

The Board of Directors again selected Price Waterhouse, certified public
accountants, to audit the accounts of the Company for the year 1997. A
representative of Price Waterhouse is expected to be present at the meeting of
stockholders and available to answer stockholders' questions and, if he so
desires, to make a

20
<PAGE> 23

statement. The audit services performed for the Company included the examination
of the annual financial statements and financial information contained in the
Company's report on Form 10-K filed with the Securities and Exchange Commission,
in addition to consultation from time to time with officers of the Company in
connection with various accounting methods and procedures.

The Board of Directors does not intend to bring any other business before
the meeting, nor is it aware that anyone else intends to do so. However, should
any other business come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote as proxies in accordance with their best
judgment.

By Order of the Board of Directors

Etienne Totti Del Valle
Secretary

PUERTO RICAN CEMENT COMPANY, INC.

21
<PAGE> 24
EXHIBIT A

PROXY

PUERTO RICAN CEMENT COMPANY, INC.

PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 6, 1998

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.

The undersigned stockholder of PUERTO RICAN CEMENT COMPANY, INC. (the
"Company") hereby appoints RENE DI CRISTINA, ANGEL AMARAL, and JOSE A. COSTA,
and each of them, proxies of the undersigned, each with power of substitution,
to vote as designated below all shares of common stock of the Company held of
record by the undersigned on March 19, 1998 at the Annual Meeting of
Stockholders to be held at the offices of the Company, Amelia Industrial Park,
Guaynabo, Puerto Rico, on May 6, 1998 at 10:00 o'clock A.M., Atlantic Standard
Time, and at any adjournment thereof, with all powers the undersigned would
possess if personally present.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.

(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)

-FOLD AND DETACH HERE -
<PAGE> 25
Indicated in
this example X

<TABLE>
<CAPTION>
FOR WITHHOLD
all nominees all votes for the
listed below (except as election of all
to the contrary below). nominees listed below

<S> <C> <C> <C>
ELECTION OF CLASS II DIRECTORS 2. In their discretion, the proxies
are authorized to vote upon other
business as may lawfully come
before the meeting or any
adjournment thereof.

Nominees: Rosario J. Ferre, Esteban D. Bird, Federico Sanchez,
Jorge L. Fuentes and Juan A. Albors.

Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name on the space
provided below.)
THIS PROXY WHEN PROPERLY EXECUTED
WILL BE VOTED IN THE MANNER DIRECTED
- ------------------------------------- HEREIN BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION TO VOTE IS MADE
DIRECTLY BY A BENEFICIAL HOLDER, THIS
PROXY WILL BE VOTED FOR THE ELECTION
OF DIRECTORS.

PLEASE SIGN AND DATE WHERE INDICATED
BELOW AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE. NO POSTAGE REQUIRED.

The undersigned hereby acknowledges
receipt of the Annual Report for 1997,
the Notice of Annual Meeting of Stock-
holders and the Proxy Statement
relating to said Annual Meeting, and
hereby revokes any proxy or proxies
heretofore given in respect of the
same shares of stock.

SIGNATURE DATE
------------------------------------------------------------------------------------------------------ -----------------
Signature should agree with name on stock certificate. When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.

FOLD AND DETACH HERE
</TABLE>