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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act
of 1934
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ TO ________________
For Quarter Ended __________________ Commission file number 1-4753
PUERTO RICAN CEMENT COMPANY, INC.
(Exact name of registrant as specified in its charter)
COMMONWEALTH OF PUERTO RICO 51-A-66-0189525
- - --------------------------- ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
PO Box 364487 - San Juan, P.R. 00936-4487
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(Address of principal executive offices) (Zip Code)
(809) 783-3000
--------------
(Registrant's telephone number, including area code)
NONE
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the Registrant (1) has filed reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
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COMMON STOCK -$1.00 PAR VALUE 5,807,700 SHARES
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PUERTO RICAN CEMENT COMPANY, INC.
INDEX
PAGE NO.
Part I - Financial Information
Consolidated Balance Sheet as of
March 31, 1994 and December 31, 1993 1 - 2
Consolidated Statement of Income
First quarter ended on
March 31, 1994 and 1993 3
Consolidated Statement of Cash Flows
Three months ended on
March 31, 1994 and 1993 4
Notes to Consolidated Financial Statements 5 - 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6 - 8
PART II - Other Information 8
Signatures 8
<PAGE> 3
PUERTO RICAN CEMENT COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of the Registrant, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly its financial
position at March 31, 1994 and December 31, 1993, and the results of operations
and cash flows for the three months ended March 31, 1994 and 1993. The results
of operations are not necessarily indicative of the results to be expected for
the full year.
Cash and cash equivalents of $2.7 million as of March 31, 1994
consisted principally of short-term obligations of the U.S. Federal Government
or its agencies. Other short-term, and long-term investments represented also
obligations of the U.S. Federal Government with maturities ranging from over 3
months to up to 7 years. These investments resulted from excess funds
generated from operations.
Notes and accounts receivable increased $3.2 million from $13.6
million at December 31, 1992 to $16.8 million at March 31, 1994 principally
as the result of increases in notes receivable-trade of $871,000, and in
accounts receivable-trade of $2.1 million. Stronger sales during this quarter
when compared to last year fourth quarter were the cause of this increase.
Receivables turnover has been maintained within normal historical levels, with
an average collection period below 60 days.
Consolidated inventories decreased $1.2 million from the $33.1 million
balance at December 31, 1993 to $31.9 million at March 31, 1994. The decline
in this account resulted from decreases in finished products, work-in-process
and raw material inventories, principally caused by higher cement sales during
this period when compared to 1993 last quarter. Cement (finished product) and
clinker (work-in-process) production remained on line with 1993 quantities.
During the first quarter of 1994 a $342,000 adjustment, resulting from
the report by our actuaries, on the Company's pension plan was recorded as an
increase to the prepaid pension cost. This adjustment, plus normal insurance
prepayments scheduled for this period, caused the increase in prepaid expenses
of $640,000.
Property, Plant & Equipment of $108.7 million at March 31, 1994,
includes the accumulation of $1.7 million in depreciation and depletion, and
capitalizations of $2.5 million related principally to the project to convert
to cement grinding of two existing slurry mills.
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In the first quarter of 1994 total current liabilities increased to
approximately $20 million from $17.3 million on December 31, 1993. This
increase resulted from higher income taxes payable resulting from tax
liabilities due in April 1994 in combination with higher accrued liabilities
mostly from the accrued property tax related to the dry process equipment.
Under the Puerto Rico income tax law the Registrant may exercise the
option to claim accelerated depreciation to defer current income tax liability
to future periods. Such depreciation, however, is limited to an amount not
greater than income before taxes (determined without taking into consideration
the depreciation deduction). Benefits available under this accelerated
depreciation method are limited by the alternative minimum tax (AMT) provisions
of the income tax law. In Management's opinion, the Registrant will be subject
to the AMT provisions of the income tax law during the current year.
At its March 23, 1994 meeting, the Board of Directors of the
Registrant declared a 15 cents per share dividend on its common stock, payable
on May 18, 1994 to stockholders of record on April 20, 1994. The Registrant
has 5,807,700 shares of common stock issued and outstanding.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Although current ratio decreased from 2.96 to 1 in December 1993 to a
2.74 to 1 ratio as of March 1994, working capital for the period improved from
$33.9 million in December 1993 to $35.6 million in March 1994, respectively.
Cash provided from operations remained strong at $5.8 million helping to
increase cash and cash equivalents and long-term investments by $2.2 million
and $1.2 million, respectively.
As of March 31, 1994 long-term investments amounted to $33.7 million.
Management believes that the quality and excellent secondary market for these
long-term investments ensure good liquidity in the near future.
The Registrant has available credit facilities with commercial banks
for short-term financing and discount of trade paper from customers in the
aggregate amount of $12,600,000. These credit facilities were unused during
the first quarter of 1994.
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As of March 31, 1994 the Company increased by $990,000 its long-term
debt when compared to December 1993 reflecting the proceeds of advances related
to the $16 million conversion project of two existing slurry mills to cement
grinding.
Approximate aggregate maturities of long-term debt for the remaining
of 1994 and the years 1994 and thereafter are as follows:
1994 $ 7,491,735
1995 11,630,042
1996 7,491,735
1997 5,563,163
1998 2,938,364
-----------
Totals $35,115,039
===========
Loan agreements with term lenders contain certain restrictions
pertaining to working capital, indebtedness, dividends, investments and certain
advances, among others.
Results of Operations
Consolidated net sales for this quarter reported an increase of $2.7
million from last year first quarter. This increase is chiefly attributed to
two significant factors: in the first place, an increase of 8.7% in cement
bags sold from 4,566,000 in 1993 to 4,964,000 in 1994, as the result of an
improvement in our market penetration and, secondly, an increase in the average
cement selling price per bag decreed in April of 1993. Sales on the paper and
bag division remained on line with prior year amount while lime sales declined
$199,000 as a result of a reduction in local sales.
Revenue from real estate decreased because in 1993 a land lot was sold
during the first quarter while no real estate sale has been made in 1994.
Cost of sales as a percentage of net sales remained practically
unchanged at 64% on March 31, 1994 against a 65% on March 31, 1993. Increase
of $1.4 million in the total amount when compared to the prior year was the
result of the strong sales experienced during this quarter when compared to
1993 first quarter. Selling, general and administrative expenses as a
percentage of net sales were 10.9 % in 1994 and 13.1% in 1993.
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Interest and financial charges of $576,000 at March 31, 1994
were almost 20% lower than the $717,000 reported in 1993, in spite of the
increase in long-term debt outstanding. Interest and advances for the
financing of the mills conversion was capitalized to the cost of the project as
permitted by accounting standard and interest on other long-term loans was
lower as a result of the reduction of outstanding balances by required
scheduled payments.
Interest income of $487,000 almost doubled the total for 1993 mainly
because of the increase in long-term investments which totalled $33.7 million
at March 31, 1994 against $13.5 million at March 31, 1993.
New accounting standard
Effective January 1994, the Company adopted the provisions of the
Statement of Financial Accounting Standard No. 115 (SFAS 115), "Accounting for
Certain Investments in Debt and Equity Securities". The adoption of SFAS 115
does not represent a change in the Company's accounting and reporting of this
kind of investments as it continues the policy of holding them to their
maturities.
Part II. OTHER INFORMATION
Item 2. NONE
Item 5. NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
SIGNATURES
Pursuant to the requirement 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.
PUERTO RICAN CEMENT COMPANY, INC.
(Registrant)
Date: 5/10/94 By: /s/ Angel Amaral
---------------- -------------------------------
Angel Amaral
Vice President & Controller
Date: 5/11/94 By: /s/ Jose O. Torres
---------------- -------------------------------
Jose O. Torres
Vice President of Finance
& Treasurer
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PUERTO RICAN CEMENT COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH DECEMBER
ASSETS 31 1994 31 1993
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 161,528 $ 431,293
Short-term investments 2,513,512
------------ ------------
Cash and Cash Equivalents 2,675,040 431,293
------------ ------------
Other short-term investments 520,000 520,000
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Notes and accounts receivable-net of allowance for
doubtful accounts of $1,121,667 in 1994 and
$1,121,601 in 1993 16,870,898 13,626,159
------------ ------------
Inventories:
Finished products 1,663,040 2,127,413
Work in process 5,058,307 6,231,167
Raw materials 3,821,812 3,276,157
Maintenance & operating supplies 20,680,956 20,855,519
Land held for sale including development costs 654,721 651,580
------------ ------------
Total inventories 31,878,836 33,141,836
------------ ------------
Prepaid expenses 4,128,519 3,488,276
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TOTAL CURRENT ASSETS 56,073,293 51,207,564
------------ ------------
PROPERTY, PLANT & EQUIPMENT - Net of
accumulated depreciation, depletion and amortization
of $50,535,893 in 1994 and $48,804,646 in 1993 108,698,789 107,968,603
------------ ------------
OTHER ASSETS
Long-term investments 33,745,832 32,512,367
Goodwill 697,770 697,770
Investments in real estate 704,987 704,987
Other long-term assets 184,006 192,305
------------ ------------
35,332,595 34,107,429
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TOTAL $200,104,677 $193,283,596
============ ============
</TABLE>
See notes to consolidated financial statements.
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PUERTO RICAN CEMENT COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH DECEMBER
LIABILITIES AND STOCKHOLDERS' EQUITY 31 1994 31 1993
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 7,491,735 $ 7,491,735
Accounts payable 4,811,183 4,656,496
Accrued liabilities 5,683,278 4,500,812
Income taxes payable 2,466,062 624,263
------------ ------------
TOTAL CURRENT LIABILITIES 20,432,258 17,273,306
LONG-TERM LIABILITIES
Long-term debt, less current portion 27,623,304 26,633,080
Deferred income taxes 26,163,476 26,028,233
Postretirement benefit liability 2,509,919 2,673,947
------------ ------------
56,296,699 55,335,260
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, authorized 2,000,000
shares of $5.00 par value each; none issued
Common stock authorized 20,000,000
shares of $1.00 par value each; issued
6,000,000 shares, outstanding 5,807,700 shares 6,000,000 6,000,000
Additional paid-in-capital 14,367,927 14,367,927
Retained earnings 104,592,289 101,891,599
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124,960,216 122,259,526
Less: 192,300 shares of common
stock in treasury, at cost 1,584,496 1,584,496
------------ ------------
STOCKHOLDERS' EQUITY NET 123,375,720 120,675,030
------------ ------------
TOTAL $200,104,677 $193,283,596
============ ============
</TABLE>
See notes to consolidated financial statements.
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PUERTO RICAN CEMENT COMPANY, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1994 1993
----------- -----------
<S> <C> <C>
Net sales $22,512,334 $19,815,194
Revenue from real estate operations 24,274 580,250
----------- -----------
22,536,608 20,395,444
Cost of sales 14,488,573 12,947,876
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Gross margin 8,048,035 7,447,568
Selling, general & administrative expenses 2,461,332 2,587,423
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Income from operations 5,586,703 4,860,145
----------- -----------
Other charges (credits):
Interest and financial charges 575,954 717,134
Interest income (486,966) (243,612)
Other income (37,158) (39,297)
----------- -----------
Total other charges (credits) 51,830 434,225
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Income before income tax 5,534,873 4,425,920
Provision for income tax 1,963,028 1,225,046
----------- -----------
Income before cumulative effect of changes in
accounting principles 3,571,845 3,200,874
Effect of a change in accounting for
postretirement benefits (net of tax - $1,020,600) (1,409,400)
Cumulative effect of a change in accounting
for income taxes 853,410
----------- -----------
Net income $ 3,571,845 $ 2,644,884
=========== ===========
Income (loss) per share:
Income before cumulative effect of changes in
accounting $ 0.62 $ 0.55
Effect of a change in accounting for postretirement
benefits (0.24)
Cumulative effect of a change in accounting for
income taxes 0.15
----------- -----------
Net income $ 0.62 $ 0.46
=========== ===========
Common Shares Outstanding 5,807,700 5,807,700
=========== ===========
</TABLE>
See notes to consolidated financial statements.
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PUERTO RICAN CEMENT COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED
<TABLE>
<CAPTION>
MARCH 31,
1994 1993
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,571,845 $ 2,644,884
----------- -----------
Adjustments to reconcile net income to
cash flows from operating activities:
Effect of a change in accounting for
postretirement benefits 1,409,400
Cumulative effect of a change in accounting
for income taxes (853,410)
Depreciation, depletion and amortization 1,731,408 1,722,166
Provision for deferred income taxes 135,243 437,949
Postretirement benefit cost (164,028) 97,500
Changes in assets and liabilities:
Increase in notes & accounts receivable (3,244,739) (2,166,644)
Decrease in inventories 1,263,000 444,623
Increase in prepaid expenses (640,243) (400,140)
Increase in accounts payable 154,687 165,895
Increase in accrued liabilities 1,182,466 770,238
Increase in income taxes payable 1,821,799 810,910
Decrease in other long-term assets 8,299 5,749
----------- -----------
Total adjustments 2,247,892 2,444,236
----------- -----------
Cash provided by operations 5,819,737 5,089,120
----------- -----------
Cash flows from investing activities:
Capital expenditures (2,461,594) (535,187)
Decrease in other short-term investments 1,000,000
Purchase of long-term investments (1,233,465) (4,638,951)
----------- -----------
Cash used in investing activities (3,695,059) (4,174,138)
----------- -----------
Cash flows from financing activities:
Proceeds from loan 990,224 846,791
Dividends paid (871,155) (725,963)
----------- -----------
Cash provided by (used in) financing activities 119,069 120,828
----------- -----------
Increase in cash and cash equivalents $ 2,243,747 $ 1,035,810
=========== ===========
Cash and cash equivalents - beginning of year $ 431,293 $ 5,473,502
=========== ===========
Cash and cash equivalents - end of period 2,675,040 6,509,312
----------- -----------
Increase in cash and cash equivalents $ 2,243,747 $ 1,035,810
=========== ===========
</TABLE>
See notes to consolidated financial statements.
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