UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934. For the quarterly period ended September 30, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. For the transition period from
________________ to ________________.
Commission File Number 0-23880
---------
Monroc, Inc.
Delaware 87-0436697
- ------------------------ ------------------
(State of incorporation) (I.R.S. Employer
Identification Number)
P.O. Box 537, 1730 Beck Street, Salt Lake City, Utah 84110
- ------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number 801-359-3701
---------------------
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 requirement for the past 90 days. Yes X No _____
-----
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding in each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at September 30, 1997
- -------------------------- -----------------------------------
Common Stock, $0.01 par value 4,507,500 shares
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MONROC, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
1997 1996
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 808,320 $ 1,189,631
Accounts receivable, net of allowance for discounts
and doubtful accounts of $344,940 at September 30,
1997 and $301,624 at December 31, 1996 11,494,889 13,201,601
Costs and estimated earnings in excess of billings
on uncompleted contracts 228,957 181,634
Inventories 4,449,348 3,977,274
Prepaid expenses 1,237,523 1,305,491
------------- ------------
Total current assets 18,219,037 19,855,631
PROPERTY, PLANT AND EQUIPMENT, AT COST 29,463,399 27,310,062
Less accumulated depreciation and amortization 12,130,526 11,802,432
------------- ------------
17,332,873 15,507,630
AGGREGATE DEPOSITS 2,477,154 2,477,154
Less accumulated depletion 414,912 337,595
------------- ------------
2,062,242 2,139,559
LAND 2,685,819 2,352,155
OTHER ASSETS, at cost, less accumulated
amortization of $413,114 at September 30,
1997 and $363,660 at December 733,823 783,277
------------- ------------
TOTAL ASSETS $ 41,033,794 $40,638,252
============= ============
(Continued)
The accompanying notes are an integral part of these statements
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<PAGE>
MONROC, INC.
CONSOLIDATED BALANCE SHEETS (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
CURRENT LIABILITIES:
Notes payable $ 4,943,813 $ 5,354,688
Current maturities of long-term obligations 1,286,000 1,131,289
Trade accounts payable 4,188,682 6,328,925
Accrued liabilities 2,378,109 1,549,652
Billings in excess of costs and estimated
earnings on uncompleted contracts 217,816 690,254
------------- ------------
Total current liabilities 13,014,420 15,054,808
LONG-TERM OBLIGATIONS, less current maturities 5,221,965 5,161,743
DEFERRED COMPENSATION 739,322 779,263
DEFERRED INCOME TAXES 971,855 971,855
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 1,000,000
shares authorized; none issued
Common stock, $0.01 par value; 20,000,000
shares authorized; issued and outstanding
4,507,500 shares September 30, 1997; issued
and outstanding 4,467,500 shares
December 31, 1996 45,075 44,670
Capital in excess of par value 24,474,988 24,481,864
Accumulated deficit (1,509,785) (3,331,905)
------------- ------------
23,010,278 21,194,629
Less unpaid principal of Employee Stock
Ownership Plan note receivable (1,924,046) (2,524,046)
------------- ------------
TOTAL STOCKHOLDERS' EQUITY 21,086,232 18,670,583
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 41,033,794 $40,638,252
============ ============
The accompanying notes are an integral part of these statements.
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<PAGE>
MONROC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
Sales $16,192,520 $22,245,881 $47,457,951 $50,866,298
Costs and expenses
Cost of sales 13,330,382 19,563,374 39,951,592 44,900,857
General and administrative 1,463,864 1,441,218 4,669,757 4,352,555
Contribution to ESOP 200,000 200,000 600,000 600,000
Restructuring Expense 0 1,500,000 0 1,500,000
----------- ----------- ----------- -----------
14,994,246 22,704,592 45,221,349 51,353,412
----------- ----------- ----------- -----------
Operating profit (loss) 1,198,274 (458,711) 2,236,602 (487,114)
Other income (expense)
Gain on sale of property, plant, equipment
and land 108,767 2,235 314,181 47,913
Interest income 10,766 8,984 25,333 62,071
Interest expense (266,929) (209,453) (753,996) (549,064)
----------- ----------- ----------- -----------
(147,396) (198,234) (414,482) (439,080)
----------- ----------- ----------- -----------
Earnings ( Loss) before income taxes 1,050,878 (656,945) 1,822,120 (926,194)
Income taxes 0 0 0 0
----------- ----------- ----------- -----------
NET EARNINGS (LOSS) $ 1,050,878 ($656,945) $ 1,822,120 ($926,194)
=========== =========== ============ ==========
Primary earnings (loss) per common share and
common equivalent $0.21 ($0.15) $0.34 ($0.21)
Fully diluted earnings (loss) per common share
and common equivalent $0.18 ($0.15) $0.32 ($0.21)
=========== =========== ============ ==========
Weighted average common shares outstanding:
Primary 4,904,871 4,467,000 5,379,064 4,467,000
Fully Diluted 5,708,150 4,467,000 5,683,767 4,467,000
</TABLE>
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<PAGE>
MONROC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
1997 1996
------------ ------------
Cash flows from operating activities:
Net income (loss) $1,822,120 ($926,194)
Adjustments to reconcile net income (loss) to
net cash generated (used) in operating activities
Depreciation and amortization of property,
plant & equipment 1,709,402 1,805,538
Provision for contribution to ESOP 600,000 600,000
Amortization of other assets 49,454 60,625
Depletion of aggregate deposits 77,317 57,353
Restructuring expenses 0 1,500,000
Gain (loss) on sale and abandonment of
property, plant, and equipment 314,181 (53,394)
Changes in assets and liabilities: 0 0
Accounts receivable 1,706,712 (7,264,220)
Costs and estimated earnings in excess of
billings on uncompleted contracts (47,323) (343,713)
Inventories (472,074) (415,631)
Prepaid expenses 67,968 (845,388)
Trade accounts payable (2,140,243) 1,432,059
Accrued liabilities 828,457 1,061,042
Billings in excess of costs and estimated
earnings on uncompleted contracts (472,438) (9,507)
Deferred compensation (39,941) 55,832
------------ -----------
Net cash generated (used) in
operating activities 4,003,592 (3,285,598)
Cash flows from investing activities:
Additions to property, plant and equipment (3,848,826) (4,327,661)
Proceeds from sale of property, plant,
equipment and land 0 (10,139)
Land (333,664) (561,588)
------------ -----------
Net cash used in investing activities (4,182,490) (4,899,388)
(Continued)
The accompanying notes are an integral part of these statements.
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<PAGE>
MONROC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Nine Months Ended
September 30
1997 1996
------------ -----------
Cash flows from financing activities:
Net increase (decrease) in notes payable (410,875) 4,821,050
Principal payments on long-term obligations (1,791,152) (2,707,304)
Purchase of Monroc Stock Warrants (185,786) 0
Issurance of Common Stock 179,315 0
Issuance of long-term obligations 2,006,085 1,335,129
----------- -----------
Net cash generated (used) in financing
activities (202,413) 3,448,875
----------- -----------
Net decrease in cash and cash equivalents (381,311) (4,736,111)
Cash and cash equivalents at beginning of period 1,189,631 6,506,751
----------- -----------
Cash and cash equivalents at end of period $ 808,320 $1,770,640
=========== ===========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 692,082 $ 647,240
Income taxes 960 26,410
The accompanying notes are an integral part of these statements.
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<PAGE>
MONROC, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements of Monroc,
Inc. (the "Company") have been prepared in accordance with generally accepted
accounting principles ("GAAP"). Financial statements prepared in accordance
with GAAP require management to make estimates and assumptions that affect
amounts reported in the financial statements and related notes. Changes in the
estimates may affect amounts reported in future periods. In the opinion of
management, all normally recurring adjustments necessary for a fair
presentation of the financial information have been reflected therein. Because
of the seasonality and cyclical nature of the Company's businesses, the
operating results for the nine months ended September 30, 1997 are not
necessarily indicative of the results that may be expected for future periods,
including for the year ending December 31, 1997. The revenues and net
earnings for any interim period are not necessarily indicative of results that
may be expected for the entire year.
These statements should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
Note 2. Environmental Matters
The Company is currently the owner of property located in Murray, Utah
that contains mining slag previously deposited by the former owner. The slag
contains certain heavy metals including lead and arsenic that may have leached
from the slag into the environment. This and adjoining properties have been
proposed by the Environmental Protection Agency ("EPA") for listing on the
National Priorities List for cleanup of the slag and potential groundwater
contamination. Although the Company did not generate the slag material, under
the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), the current owner of a property may be liable for cleanup costs.
In such case, the Company would have a claim against the former owner for its
respective share of these costs. On October 6, 1997, the EPA proposed a draft
Remedial Design/Remedial Action Consent Decree ("CD"). As proposed, the CD
requires the Company, to (i) contribute a certain amount of its property for
the roadway as its share of the clean up costs, (ii) participate in a local
improvement district for the installation of a curb, gutter and sidewalks
along the proposed roadway, and (iii) implement certain institutional controls.
In return, the Company will receive contribution protection and a covenant
not to sue. Until approval of a final CD, it is still uncertain as to the
full financial impact on the Company and the nature of the institutional
controls.
The Company has been participating with the EPA, the former owner, Murray
City and the other current landowners to develop a plan that would result
in the remediation of the problems described above. An Agreement in
Principle was signed among all parties on May 5, 1997.
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<PAGE>
Prior to learning of the potential presence of lead in the slag from the
Murray site, the Company sold some of the slag for use in road base and
railroad fill. The Company may be liable for cleanup costs if it is
determined that the lead from this slag poses an environmental hazard. The
Company has not received any notice of government or private action on this
matter. The potential cost to the Company, if any, is not ascertainable at
the present time. The Company's management believes that there are
economically reasonable methods of containing the slag should this become
necessary.
On May 5, 1997, the Company entered into an agreement to sell its total
acreage in Murray, Utah to The Boyer Company, L.C. for a total purchase price
of approximately $1.9 million. The agreement is subject to the purchaser
obtaining necessary zoning and permits. Pursuant to the agreement, the
purchaser will also assume the Company's liabilities under the agreement in
principle and the CD described above. Subject to certain conditions, the
Company expects the sale of the Murray property to close on of before
January 1, 1999.
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<PAGE>
Note 3. Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, "Earnings per Share". This standard establishes standards for
computing and presenting earnings per share (EPS). SFAS No. 128 simplifies
the approach for computing both basic and diluted EPS previously found in
Accounting Principles Board Opinion (APB) Opinion No. 15.
Under the new statement, basic EPS excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock.
SFAS No. 128 is effective for financial statements issued for periods
ending after December 15, 1997 including interim periods with earlier
application not permitted. Implementation will not have a material effect of
the Company's financial statements.
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130 "Reporting Comprehensive Income" which establishes standards for
reporting and display of comprehensive income and its components (revenue,
expenses, gains, and losses) in a full set of general-purpose financial
statements. SFAS No. 130 requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence
as other financial statements. It does not require a specific format for that
financial statement but requires that an enterprise display an amount
representing total comprehensive income for the period in that financial
statement. SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997. Reclassification of financial statements for earlier
periods provided for comparative purposes is required. The impact on FSCO of
the adoption of SFAS No. 130 has not yet been fully determined.
In June 1997, the Financial Accounting Standards Board issued SFAS No.
131 "Disclosures About Segments of an Enterprise and Related Information"
which establishes standards for the way that public businesses report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. SFAS No. 131
also established standards for related disclosures about products and
services, geographical areas, and major customers. It supersedes SFAS No. 14
but retains the requirement to report information about major customers. It
amends SFAS No. 94 to remove the special disclosure requirements for
previously unconsolidated subsidiaries.
-8-
<PAGE>
SFAS No. 131 is effective for financial statements for periods beginning
after December 15, 1997. In the initial year of application, comparative
information for earlier years is to be restated. It need not be applied to
interim financial statements in the initial year of its application, but
comparative information for interim periods in the initial year of application
is to be reported in financial statements for interim periods in the second
year of application. The adoption of SFAS No. 131 will result in additional
disclosures but is no expected to have a material impact on FSCO's results of
operations of financial condition.
-9-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
unaudited Consolidated Financial Statements and related Notes included in Item
1 of this report. Also, the discussion should be read in conjunction with
the audited consolidated Financial Statements and related Notes thereto and
Management's Discussion and Analysis of Financial Conditions and Results of
Operations for the year ended December 31, 1996 contained in the Company's
1996 Annual Report to Shareholders which is incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996. See
"Risks and Uncertainties" and "Seasonality" for trends and uncertainties
known to the Company that could cause reported financial information not to be
necessarily indicative of the future, including discussion of the effects of
seasonality on the Company.
Results of Operations - Three Months Ended September 30, 1997
- -------------------------------------------------------------
Sales for the three month period ended September 30, 1997 ("the 1997
period"), were $16,192,520 compared to $22,245,881 for the three month ended
September 30, 1996 ("the 1996 period"). Sales for the Prestress Division
decreased by $5,758,588 as a result of the completion of the Company's Snake
River Correctional Facility contract in Ontario, Oregon in May 1997. Sand and
Gravel sales increased by 15% in the 1997 period compared to the 1996 period
due to strong demand in the Salt Lake City market. Ready Mix Concrete sales
continue to be strong throughout the company. The Company's Boise, Idaho and
Park City, Utah operations are experiencing month to month sales increases
compared to the same 1996 period because of strong economic conditions in
those areas.
Operating income was $1,198,274 or 7.4% of sales for the 1997 period
compared to a loss of $458,711 or 2.1% of sales in the 1996 period. A
continued emphasis on selling high margin products along with controlling
operating costs have contributed to the improvement in operating income. Net
earnings were $1,050,878 or 21 cents per share for the 1997 period versus a
loss of $656,945 or 15 cents per share for the 1996 period.
Interest expense increased to $266,929 for the 1997 period compared to
$209,453 in the 1996 period due to increased borrowings to support working
capital requirements. These additional funds were borrowed from the CIT Group
under the company's revolving line of credit arrangement. See "Liquidity and
Capital Resources below".
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<PAGE>
Results of Operations - Nine Months Ended September 30, 1997
- ------------------------------------------------------------
Sales decreased 7% from $50,866,298 for the nine months ended September
30, 1996 to $47,457,951 for the nine months ended September 30, 1997. Sales
for the Prestress Division were 20% lower for the 1997 nine month period
compared to the 1996 nine month period primarily due to lower volume related
to production on the $21 million Snake River Correctional Facility contract in
Ontario, Oregon. Work on the Snake River facility was completed in May 1997.
Sand and gravel sales were 18% higher in the 1997 nine month period due to
operation of the Point of the Mountain pit, in Salt Lake County, which
commenced in the third quarter of 1996. This site is providing aggregate
materials for modifications to Interstate 15 in Salt Lake County.
General and administrative costs were $4,669,757 for the 1997 nine month
period compared to $4,352,555 in the 1996 nine month period. This increase
was due to management changes made to improve the operating capability of the
company and additional expenditures to meet increased sales in the Boise and
Salt Lake City markets.
Operating income increased $2,723,716 from an operating loss of
$487,114 in the 1996 nine month period to an operating profit of $2,236,602 in
the 1997 nine month period. The increase in the 1997 nine month period was
attributable to a restructuring of the operations in late 1996 that included a
one-time $1,500,000 restructuring charge. The Company believes the
restructuring has enabled it to focus its efforts in the growing markets of
Boise and Salt Lake City as well as its Aggregate and Ready Mix product lines.
Interest expense increased to $753,996 in the 1997 nine period compared
to $549,064 in the 1996 nine month period due to increased borrowings from the
CIT Group under the Company's revolving line of credit arrangement. The funds
from such borrowings were used primarily to finance capital expenditures in
the Ready Mix and Sand and Gravel divisions. See "Liquidity and Capital
Resources" below.
Net earnings of $1,822,120 or 34 cents per share were realized for the
1997 nine month period compared to a loss of $926,194 or 21 cents per share
for the comparable 1996 nine month period. The increased income resulted from
lower operating costs and improved margins.
Potential Sale of the Company
- -----------------------------
On August 12, 1997 the Company issued a press release announcing that it
has engaged the investment banking firm of Dillon Read & Co. to help the
Company explore various strategic alternatives of capital structuring,
including, but not limited to, a sale of all or part of the Company, strategic
alliances or a merger with a suitable partner. The Company is engaged in
preliminary discussions with several companies who have indicated an interest
in potentially acquiring the company. Any such transactions would be subject
to board and/or stockholder approvals, as required, definitive documentation
and receipt of regulatory approvals.
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<PAGE>
Repurchase of Warrants
- ----------------------
As part of the underwriting agreement when the Company went public in
May of 1994, 60,000 warrants exercisable at $5.50 per common share were issued
to the underwriters. Under the Underwriting Agreement, those shares were not
registered but warrant holders of more than 50% of the warrants could demand
that the company register the shares. From June 1997 to September 1997,
holders of warrants for 58,250 shares requested that the company register the
offering. The Company then exercised its right to buy the warrants at the
difference between the market price as determined by a formula in the
Underwriting Agreement and the exercise price. The warrants were repurchased
at a total cost of $185,732.
Liquidity and Capital Resources
- -------------------------------
The Company has the use of a credit facility provided by the CIT Group
that includes a $15,000,000 line of credit for working capital and term loans.
The Company's liabilities to the CIT Group are secured by liens on
substantially all of the Company's real and personal property. As of
September 30, 1997, total borrowings under the CIT loan agreement totaled
$6,943,813 compared to $7,354,688 at December 31, 1996. Total remaining
availability under the line of credit was $8,056,187 as of September 30, 1997.
As described below under Part II, Item 5, the Company is in negotiations to
sell its Prestress Division to EnCon West. No definitive agreements have been
entered into between the Company and EnCon West, but the parties have agreed
in principle that the purchase price will be the net book value of the
Prestress Division's assets plus $3.5 million. If the Prestress Division sale
is consummated, certain collateral securing the CIT Group Credit facility will
be released. Correspondingly, the Company expects that CIT Group will reduce
the Company's availability under such credit facility. However, the Company
believes its liquidity position will not be materially affected by an off-set
or reduction in the CIT Group credit facility primarily due to the increase in
cash to the Company resulting from the Prestress Division sale.
As of September 30, 1997 the Company had positive working capital of
$5,204,617 compared to a positive working capital balance of $4,800,823 at
December 31, 1996. Cash generated from operations was $4,003,592 for the nine
month 1997 period as compared to cash used of $3,285,598 in the 1996 nine
month period. The improvement in operating cash flow for the 1997 nine
period was the result of a $1.7 million decrease in accounts receivable. Cash
used in investing activities decreased to $4,182,490 for the 1997 nine month
period from $4,899,388 in the 1996 nine month period. Much of the equipment
acquired in the 1996 nine month period was acquired with off-balance sheet
operating leases. Overall, the Company expects investment in equipment to be
significantly lower for year ending 1997 compared to the year ending 1996.
Also, cash used for financing activities was $202,360 for the 1997 period
compared to cash generated in financing activities of $3,448,875 for the 1996
period. In the 1997 nine month period,
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<PAGE>
the Company paid down the CIT revolving credit line by $410,875 compared to an
increase in the credit line of $4,821,050 in the 1996 nine month period.
The Company continues to explore and evaluate various opportunities to
increase shareholder value. Such opportunities may include acquiring other
complimentary businesses or assets. Such acquisitions could impact the
Company's liquidity position if cash were required to fund any such
acquisition or the operations of any acquired business.
Risks and Uncertainties
- -----------------------
Seasonality
- -----------
The Company services the construction industry principally in areas
where construction activity is restricted during the winter. As a result, the
Company experiences reduced revenues generally from December through March and
realizes the substantial part of its revenues during the other months of the
year. The Company generally incurs losses during the winter months and must
have sufficient working capital to fund operations at a reduced level. In
addition, variations in the severity of inclimate weather during the remaining
months of the year could negatively influence the Company's results of
operations.
Financial performance of the Company in any one-quarter of the year
should not be considered a reliable indicator of the anticipated current year
results. The seasonality and variability of weather conditions as well as the
cyclicality of demand in response to factors such as interest rate changes can
cause significant fluctuations in financial results from quarter to quarter
and from year to year.
FORWARD-LOOKING STATEMENTS. This filing includes forward-looking statements.
Investors and prospective investors in the Company should understand that
several factors govern whether any forward-looking statements contained
herein will be or can be achieved. Any one of those factors could cause
actual results to differ materially from those projected or discussed herein.
These forward-looking statements relate to (i) the Company's efforts to find a
buyer for all or part of the Company, (ii) the Company's current negotiations
with EnCon West to sell its Prestress Division, (iii) the status of the
environmental regulatory matters, (iv) management's belief as to the effect
on its financial statements of recently enacted financial accounting standards,
(v) the Company's business plan and demand for the Company's products,
and (vi) the Company's efforts to acquire complimentary businesses or
products, and the Company's efforts to acquire complimentary businesses or
products. The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties. Factors that
could cause actual results to differ from those anticipated include: (a) the
Company may not be able to find a buyer for all or part of its business on
acceptable terms, (b) seasonality and cyclicality may adversely affect results
of operations, (c) the Company may not be able to acquire complimentary
products or businesses on terms acceptable to the
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<PAGE>
Company, and (d) general economic conditions in the Company's market.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. There is
and can be no assurance that the results contemplated in any forward-looking
statement will be realized. The impact of actual experience and business
developments may cause the Company to alter its business plan, which may in
turn affect the Company's results of operations. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of any such statement should not be regarded as a representation by
the Company or any other person that the objectives or plans of the Company
will be achieved. For further discussion of these and other risks, please refer
to Part II - Item 5 herein, and the documents filed by the Company with the
Securities and Exchange Commission.
Part II. Other Information
- -------- -----------------
Item 5. Other Information
-----------------
On September 26, 1997 the Company filed a current report on Form 8-K
stating its intent to sale its Prestress concrete division to EnCon West Inc.,
a Colorado corporation. The parties have agreed in principle that EnCon West
will acquire the assets of the Company's Prestress concrete division for the
division's net book value, plus $3.5 million. The closing of the proposed
transaction is subject to negotiation and execution of definitive agreements
and satisfaction of certain preclosing conditions. Currently, negotiations
with EnCon are moving forward and the parties currently expect the
transactions to close in November 1997.
On August 12, 1997 the Company issued a press release announcing that it
has engaged the investment banking firm of Dillon Read & Co. to help the
Company explore various strategic alternatives of capital structuring,
including, but not limited to, a sale of
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<PAGE>
all or part of the Company, strategic alliances or a merger with a suitable
partner. The Company is engaged in preliminary discussions with several
companies who have indicated an interest in potentially acquiring the company.
Any such transactions would be subject to board and/or stockholder approvals,
as required, definitive documentation and receipt of regulatory approvals.
The Company is engaged in negotiations to supply certain materials,
including aggregates and ready mix concrete to Wasatch Constructors for use in
the Interstate 15
("I-15") reconstruction project in Salt Lake County. The Utah Department of
Transportation previously awarded the I-15 reconstruction contract to Wasatch
Constructors. The Company has entered into a preliminary Memorandum of
Understanding with Wasatch Constructors to supply aggregates and other
materials for the project, but the parties have not reached a definitive
agreement. Accordingly, it is not possible to assess what impact I-15 project
may have on the Company's future business and financial performance.
FORWARD-LOOKING STATEMENTS. This Part II includes forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995 (the "1995
Act"). Investors and prospective
investors in the Company should understand that several factors govern whether
any forward-looking statements contained herein will be or can be achieved.
Any one of those factors could cause actual results to differ materially from
those projected herein. These forward-looking statements relate to (i) the
Company's current negotiations with EnCon West to sell its Prestress Division
at an estimated price equal to the Prestress Division's net book value plus
$3.5 million, and (ii) the Company's negotiations to enter into a definitive
agreement with Wasatch Constructors to supply aggregate and other materials.
The forward-looking statements included herein are based on current
expectations and involve a number of risks and uncertainties. Factors that
could cause actual results to differ from those anticipated include. a) the
Company may not be able to successfully sell its Prestress Division on terms
acceptable to the Company and b) the Company may not be able to reach
definitive agreements with purchasers of its products and services, including
with Wasatch Constructors regarding the I-15 construction project.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. There is
and can be no assurance that the results contemplated in any forward-looking
statement will be realized. The impact of actual experience and business
developments may cause the Company to alter its
-15-
<PAGE>
business plan which may in turn affect the Company's results of operations.
In light of the significant uncertainties inherent in the forward-looking
statement included herein, the inclusion of any such statement should not
be regarded as a representation by the Company or any other person that the
objectives or plans of the Company will be achieved. For further discussion
of these and other risks, please refer to the section entitled "Risks and
Uncertainties" herein and the immediate following "Forward-Looking Statements"
section and the documents filed by the Company with the Securities and
Exchange Commission.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 - Calculation of Earnings (Loss) Per Share
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
On September 26, 1997 the Company filed a current report on
Form 8-K stating its intent to sale its Prestress concrete
division to EnCon West Inc., a Colorado corporation.
-16-
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Monroc, Inc.
-------------------
Registrant
Date: November 14, 1997 /s/ L. William Rands
------------------------- -------------------------
L. William Rands
Vice President and Chief
Financial and Accounting
Officer
-17-
<PAGE>
INDEX OF EXHIBITS
-----------------
Exhibit 11 - Calculation of Earnings (Loss) Per Share
Exhibit 27 - Financial Data Schedule
-18-
Exhibit 11
Calculation of Earnings (Loss) Per Share
(in thousands except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------- ------- ------- --------
Weighted average common 4,904 4,467 5,379 4,467
and common equivalent
shares outstanding
Diluted weighted average common 5,708 4,467 5,683 4,467
and common equivalent
shares outstanding
Net Earnings (Loss) $1,050 $(657) $1,822 $(926)
Primary Earnings (Loss) Per $ 0.21 $(.15) $ 0.34 $(.21)
Common Share ------- ------- ------- --------
Diluted Earnings (Loss) Per $ 0.18 $(.15) $ 0.32 $(.21)
Common Share ------- ------- ------- --------
-19-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEPTEMBER
30, 1997 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
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0
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