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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993 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 1-4753
PUERTO RICAN CEMENT COMPANY, INC.
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(Exact Name of Registrant as Specified in its Charter)
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COMMONWEALTH OF PUERTO RICO 51-A-66-0189525
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
PO BOX 364487 - SAN JUAN, PUERTO RICO 00936-4487
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(Address of Principal Executive Offices) (Zip Code)
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(809) 783-3000
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(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on which Registered
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Common Stock, $1.00 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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(Cover page 1 of 2 pages)
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. /X /
The aggregate market value of the voting stock held by non-
affiliates of the registrant is $169,178,301 (exclusive of shares respecting
which affiliates have either sole or shared voting and dispositive power).
This market value was computed by reference to the closing price of the stock
on The New York Stock Exchange on March 18, 1994.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the close of the period covered by
this report:
Common Stock, $1.00 par value 5,807,700 shares
Documents Incorporated by Reference
1. Annual Report to security holders for the fiscal year ended
December 31, 1993, which is incorporated into Parts I and II.
2. Definitive Proxy Statement filed pursuant to Regulation 14A
which is incorporated into Part III.
(Cover page 2 of 2 pages)
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CROSS REFERENCE SHEET AND TABLES OF CONTENTS
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PAGE NUMBER
OR
(REFERENCE)
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PART I.
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Item 1. Business.................................... 5 (1)
a) General Development of Business.......... 5
b) Financial Information About
Industry Segments ....................... 5 (2)
c) Narrative Description of Business........ 5
d) Financial Information about Foreign and
Domestic Operations and Export Sales..... 9
e) Executive Officers of the Registrant..... 9
Item 2. Properties.................................. 10 (3)
Item 3. Legal Proceedings........................... 11 (4)
Item 4. Submission of Matters to a Vote of
Security Holders............................ 12
PART II.
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Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters............. (5)
Item 6. Selected Financial Data..................... (6)
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................. (7)
Item 8. Financial Statements and Supplementary Data. (8)
Item 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure...... 12
PART III.
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Item 10. Directors of the Registrant.................
a) Identification of Directors.............. 12 (9)
Item 11. Executive Compensation...................... 12 (10)
Item 12. Security Ownership of Certain Beneficial
Owners and Management....................... 12 (11)
Item 13. Certain Relationships and Related
Transactions................................ 13 (11)
PART IV.
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Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K.................... 13
a) Financial Statements....................
b) Reports on Form 8-K.....................
c) Exhibits................................
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(1) Information incorporated by reference to the
Registrant's Annual Report to Stockholders for the
year ended December 31, 1993 ("Annual Report") and
the Board of Directors Proxy Statement for use in
connection with the Registrant's annual meeting of
stockholders to be held May 4, 1994 ("Proxy
Statement").
(2) Annual Report, page 22, section entitled "Notes to
Consolidated Financial Statements, Note 12 /Financial
Data by Industries".
(3) Annual Report, page 18, section entitled "Notes to
Consolidated Financial Statements, Note 4 /Property,
Plant and Equipment", and page 22, section entitled
"Notes to Consolidated Financial Statements, Note 13
/Lease Commitments".
(4) Annual Report, page 23, section entitled "Notes to
Consolidated Financial Statements, Note 16 /
Contingent Liabilities and Other Commitments".
(5) Annual Report, page 28, section entitled "Common
Share Prices and Dividends Per Share", page 26,
section entitled "Five-Year Statistical Comparison",
and page 19, section entitled "Notes to Consolidated
Financial Statements, Note 9 /Long-term Debt".
(6) Annual Report, page 11, section entitled "Selected
Financial Data".
(7) Annual Report, pages 9 to 11, section entitled
"Management's Discussion and Analysis of Financial
Condition and Results of Operations".
(8) Annual Report, pages 12 to 26, sections entitled
"Consolidated Balance Sheet", "Consolidated Statement
of Income and Retained Earnings", "Consolidated
Statement of Cash Flows", "Notes to Consolidated
Financial Statements", "Report of Independent
Accountants", "Financial Results by Quarter",
"Consolidated Fourth Quarter Results", and "Five-Year
Statistical Comparison".
(9) Proxy Statement, pages 2 to 9, section entitled
"Information about Nominees, Directors and Principal
Stockholders".
(10) Proxy Statement, pages 10 to 12, sections entitled
"Executive Compensation" and "Executive Separation
Policy".
(11) Proxy Statement, pages 12 to 17, sections entitled
"Certain Transactions with Management" and
"Compensation Committee Interlocks and Insider
Participation".
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PART I
Item 1. BUSINESS
(a) General Development of Business
Puerto Rican Cement Company, Inc. (the "Registrant"), a corporation
organized under the Laws of the Commonwealth of Puerto Rico in 1938, has been
engaged in three principal industry segments, namely, cement and related
products, paper and packaging and realty operations since the beginning of the
fiscal year for which this report is filed.
Since the beginning of fiscal year 1993, there were no major
changes in the industry segments of the Registrant, nor was the Registrant or
any of its subsidiaries subject to any significant change in its form or
organization.
(b) Financial Information About Industry Segments
Information on industry segments of the Registrant for the last
three fiscal years, including the amounts of revenue, operating profit and
identifiable assets attributable to each of the Registrant's industry segments
is included as part of the Registrant's Annual Report to Stockholders for the
year ended December 31, 1993 (the "Annual Report"), page 22 section entitled
"Notes to Consolidated Financial Statements, Note 12 /Financial Data by
Industries", which includes the financial statements and schedules furnished
pursuant to Item 14 and is incorporated herein by reference.
(c) Narrative Description of Business
(i) Principal Products or Services
The principal products or services rendered by the Registrant are:
(A) Cement and related products
1. Portland grey cement, Type I, manufactured under
specifications of the American Society for Testing Materials
("A.S.T.M.")
2. Hydrated lime
(B) Paper and packaging
1. Multiwall paper bags
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(C) Realty operations
The Registrant's products are sold principally on the island of Puerto Rico.
Portland grey cement is used primarily in the construction of
residential, commercial and public buildings and in the construction of
highways. During the fiscal year ended December 31, 1993, the Registrant sold
4,550,738 barrels of grey cement. Substantially all of these sales were made to
customers in Puerto Rico.
During the fiscal year ended December 31, 1993, approximately 28.7% of
the production of hydrated lime was sold to the construction and agricultural
industry and the remaining 71.3% was sold to other industries for chemical
usage, both locally and in export markets. Approximately 43.7% of total sales of
hydrated lime, mostly for chemical water purification, were made to the local
Government or its agencies.
Multiwall paper bags produced by the Registrant's St. Regis Paper and
Bag Division were marketed almost exclusively in Puerto Rico and were used by
the following customers: 38% by the Registrant and its subsidiaries for packing
its products; 2% for packing of cement and related products by other producers;
10% by sugar producers; 42% by the grain and animal feed industry; and 8% for
coffee, chemical, rice, fertilizers and other miscellaneous uses.
The Registrant and Desarrollos Multiples Insulares, Inc., a wholly-owned
subsidiary, own and hold for sale approximately 532 acres of land throughout
Puerto Rico.
Total Revenue
Total revenue for each of the last three fiscal years contributed by any
class of similar products which accounted for 10% or more of consolidated net
sales (in thousands of dollars) in any of those fiscal years is given below:
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PORTLAND CONSOLIDATED
GREY CEMENT NET SALES
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1993 $73,895 $84,028
1992 70,060 80,022
1991 68,434 77,969
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Methods of Distribution
The Registrant sells and distributes cement (both in bulk and
bagged) and related products in Puerto Rico to customers on a direct basis and
to independent local distributors, which include ready mix concrete producers,
building material dealers, concrete products manufacturers, government agencies,
sugar refineries (in the case of lime) and to general and highway contractors.
(ii) New Products
The Registrant made no public announcements and otherwise has not
made public information about a new product or industry segment that is
material.
(iii) Raw Materials
The Registrant owns in fee properties containing limestone and sand
deposits which directly adjoin or are close to its cement and hydrated lime
plant sites. The Registrant also owns properties near such plants which contain
clay deposits. The Registrant has not conducted a systematic exploratory
drilling program ordinarily considered necessary for the establishment of
limestone and other raw materials reserves and, accordingly, makes no tonnage
estimate of the availability of such raw materials. However, on the basis of
scattered drilling results on deposits of substantial depths, and past and
present production from the Registrant's properties, the Registrant believes
that the availability of limestone and other raw materials presents no
foreseeable problem. There have been no recent material mining changes in the
exploitation of the principal raw material deposits and none are expected. The
Registrant purchases raw gypsum in the open market from sources outside Puerto
Rico. Coal for firing the kilns is purchased from Carbones de Colombia, S.A., a
Colombian supplier, under a long-term supply contract. Electricity is purchased
from the Puerto Rico Electric Power Authority; and water is obtained from wells
on the Registrant's properties.
(iv) Patents and Trademarks
St. Regis Paper and Bag Division has the right to use until
December 31, 1994 certain trademarks, tradenames and patents of Stone
Container Corporation (formerly owned by St. Regis Paper Company of New York,
which were acquired by Champion International during 1985, and thereafter sold
to Stone Container Corporation). The Registrant is negotiating, on an annual
basis, for renewal of this agreement for continued utilization of such
trademarks, tradenames and patents. The Registrant believes that failure to
renew such agreement will have no material impact on this segment of its
business.
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(v) Seasonal Effect on Sales
Demand for cement and related products is largely dependent on the
requirements of the construction industry. The requirements of the construction
industry in Puerto Rico and in the Caribbean area are not necessarily "seasonal"
because of the normally favorable climatic conditions of the area; however, the
requirements of the construction industry depend to some extent on general
economic conditions.
(vi) Credit and Working Capital Practices
As of December 31, 1993, the Registrant had invested approximately
17% of its total assets in inventory, mainly operating supplies and repair
parts for its equipment. Due to geographical locations of the Registrant's
manufacturing facilities with respect to its major suppliers, this is
considered normal by industry standards. No significant amounts of finished
goods are required to be maintained in inventory to meet rapid delivery
requirements of customers. The Registrant sells its products to customers
under normal commercial open account payment terms.
(vii) Customers
During fiscal year 1993, 40% of the Registrant's total dollar
sales in the cement and related products segment were made to 10 unrelated
customers. One of these customers, Concreto Mixto, Inc., accounted for
approximately 10% of the Registrant's Consolidated Sales.
(viii) Backlog
In the opinion of the Registrant, backlog is not a relevant
consideration in the type of business in which it is engaged.
(ix) Government Contracts
No material portion of the business of the Registrant is subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.
(x) Competition
The Registrant is the principal producer of cement, hydrated lime
and multiwall paper bags in Puerto Rico. During 1993 the other cement
manufacturing company in Puerto Rico, San Juan Cement Company, Inc., which
began production at the end of May 1970, accounted for approximately 41.2% of
the total bags of cement sold in Puerto Rico. There was no import of cement to
the Puerto Rico market during 1993. The Registrant competes on the basis of
price and quality of its products.
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(xi) Research and Development
Other than the conversion of its principal kiln number 6 to the
dry process of cement manufacturing, completed in the second half of 1991, and
the project of converting two slurry mills to cement grinding, the Registrant
has not spent any material amounts in any research and development activities
relating to the development of new products, services or techniques or the
improvement of existing products, services or techniques during the last three
fiscal years for itself or any of its customers.
(xii) Environmental Control Expenditures
During 1978, the Registrant completed the installation of air
pollution control equipment in its Ponce cement and lime plants at an aggregate
approximate cost of $17,000,000 to comply with regulations established by the
Environmental Quality Board of Puerto Rico and with the terms of a consent order
signed in August 1974 (as amended in July 1976 and February 1978) with the
Federal Environmental Protection Agency.
The Registrant financed the cost of the pollution abatement program
through a loan obtained in 1975 from the Government Development Bank for Puerto
Rico. This loan was extinguished in 1985 as fully described in Form 8-K filed
for the month of September 1985.
The Registrant's plants are in compliance with existing
environmental regulations. No significant expenditures for pollution control
equipment are expected in the near future.
(xiii) Employees
As of December 31, 1993, the Registrant and its subsidiaries had
533 employees.
(d) Financial Information about Foreign and Domestic
Operations and Export Sales
None of the Registrant's industry segments depend to any material
extent on foreign operations.
(e) Executive Officers of the Registrant
1. Carlos J. Suarez, age 69, Chairman of the Board and Chief
Executive Officer of the Registrant since April 1, 1985; President from October
1983 to December 31, 1987; Executive Vice President from June 1982 to October
1983; Senior Vice President from 1980 to June 1982; Vice President of
Operations from 1973 to 1980. Mr. Suarez has announced his intention to
retire after the completion of the actual project of converting two slurry
mills to cement grinding.
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2. Hector del Valle, age 56, President of the Registrant since January
1, 1988; Senior Vice President in charge of Finance from October 1983 to
December 31 1987; Secretary from January 1984 to December 31, 1987; Vice
President of Finance and Treasurer from June 1982 to October 1983; Assistant
Vice President of Finance from 1976 to June 1982; Treasurer from 1973 to 1976.
3. Jose J. Suarez, age 58, Executive Vice President in charge of
Operations of the Registrant since January 1, 1988; Senior Vice President in
charge of Operations from October 1983 to December 31, 1987; Vice President of
Operations from June 1982 to October 1983.
4. Jose O. Torres, age 48, Treasurer and Vice President of Finance of
the Registrant since January 1, 1988; Vice President and Treasurer from October
1983 to December 31, 1987; Vice President of Sales from 1982 to October 1983;
Treasurer from 1976 to 1982.
5. Angel M. Amaral, age 60, Vice President and Controller of the
Registrant since June 1982; Controller from 1976 to June 1982.
6. Rene Di Cristina, age 43, Vice President of Sales of the Registrant
since October 1983.
7. Juan A. Carbonell, age 72, Vice President and General Manager of St.
Regis Paper and Bag Division since January 1984.
8. Benito del Cueto, age 59, Vice President of Desarrollos Multiples
Insulares, Inc., a wholly-owned subsidiary, since 1973.
9. Daniel R. Dominguez, age 48, Secretary of the Registrant since June
1992.
All officers are elected to serve for a term of one year and until the
election and qualification of their successors.
ITEM 2. PROPERTIES
Used in cement and related products segments
The Registrant owns in fee a cement plant located in Ponce, Puerto Rico
on a 25-acre site. It also owns in fee a hydrated lime manufacturing plant that
is located within the Ponce cement plant premises. During the last fiscal year
the Ponce Cement plant was operated under the dry process at 90% of its actual
kiln capacity and produced approximately 4,560,600 barrels of cement. The lime
plant produced 30,488 tons of lime and was operated at approximately 66% of its
capacity.
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During 1992 the Registrant purchased a 67-acre tract of land located
next to the cement plant and a 149-acre tract of land adjacent to one of the
Registrant's quarries for future quarry operations.
During 1993 the Registrant continued the repairs and maintenance program
on its plants. The Registrant believes that its plants are presently in good
condition and properly maintained.
The Registrant owns in fee properties containing adequate deposits of
limestone and other raw materials (See Item 1.1 (c) (iii) and above under this
caption) which directly adjoin or are close to the plant sites.
The Registrant leases a parcel of land under a long-term lease with the
municipality of Ponce, on which it installed certain facilities for coal
receiving and handling. The coal received through said facilities is used as
fuel in the Registrant's cement and hydrated lime manufacturing operations.
Used in paper and packaging segment
The manufacturing plant of the St. Regis Paper and Bag Division is
located on a site owned by it in fee in Ponce, Puerto Rico. The Registrant
believes the plant to be in good condition and properly maintained.
Used in realty operations
The Registrant and one of its subsidiaries own in fee, and hold for
future development and sale, approximately 532 acres of land throughout Puerto
Rico. (See Item 1.1 (c) (i)).
Used for office facilities
The Registrant and its subsidiaries own a one story building housing its
executive offices located in the Amelia Industrial Park, Guaynabo, Puerto Rico.
Information about leased properties is incorporated by reference from
the Annual Report, page 22, section entitled "Notes to Consolidated Financial
Statements, Note 13 /Lease Commitments".
ITEM 3. LEGAL PROCEEDINGS
There are presently pending against the Registrant the legal proceedings
described in the Annual Report, page 23, section entitled "Notes to Consolidated
Financial Statements, Note 16 /Contingent Liabilities and Other Commitments",
furnished pursuant to Item 14, to which reference is hereby made and which is
incorporated by reference herein.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders,
through the solicitation of proxies or otherwise, during the fourth quarter of
the fiscal year covered by this report.
PART II
Part II of this report, Items 5 through 8, is omitted as
permitted by General Instruction G (2) since the information required herein
is contained in the Registrant's Annual Report and is incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
NONE
PART III
ITEM 10. DIRECTORS OF THE REGISTRANT
(a) Identification of Directors
Information required herein is contained in a definitive Proxy
Statement for use in connection with the Registrant's Annual Meeting of
Stockholders to be held on May 4, 1994 filed with the Commission pursuant to
Regulation 14 A (the "Proxy Statement") pages 2 to 10, section entitled
"Information about Nominees, Directors and Principal Stockholders", and is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information required by Item 11 is contained in the Proxy
Statement, pages 10 to 17, sections entitled "Executive Compensation",
"Executive Separation Policy" and "Certain Transactions with Management", and is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by Item 12 is contained in the Proxy
Statement, pages 2 to 10, sections entitled "Information about Nominees,
Directors and Principal Stockholders" and "Security Ownership of Certain
Beneficial Owners" and is incorporated herein by reference.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 13 is contained in the Proxy
Statement, pages 16 to 17, sections entitled "Certain Transactions with
Management" and "Compensation Comitte Interlocks and Insider Participation",
and is incorporated herein by reference.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial statements and exhibits filed as part of the
Annual Report are as follows:
1. Financial Statements, pages 12 to 23.
2. Financial statement schedules and supplementary data
required by Item 8 of this Form.
The financial statement schedules required by paragraph (d)
of this Form are excluded since the Registrant is primarily an operating
company. All subsidiaries included in the consolidated financial statements
being filed, in the aggregate, do not have minority equity interest and/or
indebtedness to any person other than the Registrant or the consolidated
subsidiaries in amounts which together exceed 10% of the total consolidated
assets at December 31, 1993.
(b) Reports on Form 8-K: NONE
(c) Exhibits required by Section 601 Regulation S-K:
3. Certificate of Incorporation and By-Laws
3.1 Certificate of Incorporation and amendment thereto
filed as an Exhibit to Form S-1 on March 25, 1963, with amendment dated May 16,
1983 and amendments dated May 6, 1987 filed as an Exhibit to Form 10-Q as of
June 30, 1987 and with amendment dated May 5, 1993 increasing the number of
authorized shares of common stock from 10 million to 20 million, included as
an Exhibit to Form 10-K as of December 31, 1993.*
3.2 By-Laws of the Registrant, as amended, filed as an
Exhibit to Form 10-K as of December 31, 1987, with amendment dated January
1993 included as an Exhibit to Form 10-K as of December 31, 1993.*
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10. Material contracts
10.1 Coal Purchase/Sale Agreement between Registrant and Carbones
de Colombia, S. A. dated as of December 14, 1982 filed as an exhibit to Form
10-K for the year ended December 31, 1982.* Copy of addendum No. 5 which
changed the quantity of coal purchases to 100,000 tons per year through the
year 2000, was filed as an exhibit to Form 10-Q as of March 31, 1992.*
10.2 (a) Consolidated and restated loan agreement dated as of September
27, 1985 among Registrant, Registrant's Guarantors and the Government
Development Bank for Puerto Rico for approximately $18.3 million encompassing
all outstanding debt to the bank as of that date.*
(b) Indenture trust agreement dated September 27, 1985 between
Registrant as grantor and Banco de Ponce as trustee for the benefit of the
Government Development Bank for Puerto Rico.*
(All documents listed under this paragraph 10.2 were filed as exhibits
to Form 8-K for the month of September, 1985 and are related to the early
extinguishment of debt transaction described therein.)
10.3 Loan agreement between the Registrant and Lincoln National Pension
Insurance Company, The Lincoln National Life Insurance Company, First
Penn-Pacific Life Insurance Company and Security Connecticut Life Insurance
Company for the amount of $15,000,000 dated as of August 1, 1987 submitted as
exhibits to Form 8-K for the month of August 1987.*
10.4 Loan agreement between the Registrant and Banco Popular de Puerto
Rico for the amount of $10,000,000 dated as of November 6, 1987 submitted as an
Exhibit to Form 8-K for the month of November 1987.* Copy of letter dated
January 17, 1992, that modifies certain terms of this agreement which include a
reduction in the interest rate and a change in the original repayment schedule
from quarterly payments to annual payments, was filed as an Exhibit to Form 10-K
for the year ended December 31, 1991.*
10.5 Sample of Golden Parachute Agreement executed by the Registrant
during the third quarter of 1989 with a consultant and 18 of the Registrant's
key officers, submitted as an Exhibit to Form 10-Q as of September 30, 1989.*
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10.6 Loan agreement between the Registrant and Banco de Ponce (now
merged into Banco Popular de Puerto Rico) for the amount of $10,000,000 dated
as of December 6, 1989 submitted as an exhibit to Form 10-K as of December
1989. Subsequently, effective July 1991, Scotia Bank of Puerto Rico acquired
said loan under the same terms and conditions from Banco Popular de Puerto
Rico.* Copy of a letter from the new lender dated August 23, 1991, that
modifies certain terms of this agreement which includes a reduction in the
interest rate and a change in the original repayment schedule from quarterly
payments to annual payments was submitted as exhibit in Form 10-K for the year
ended December 31, 1991.*
10.7 Loan agreement between the Registrant and Banco Popular de
Puerto Rico for the amount of $8,000,000 dated as of December 8, 1993 to be
used to finance the conversion to cement grinding of two existing slurry mills.
Terms and conditions of this loan are included in Note 9 to the Consolidated
Financial Statements for the year ended December 31, 1993.*
10.8 Loan agreement between the Registrant and The Bank of Nova
Scotia for the amount of $16,000,000 dated as of February 26, 1993 to be used
in the financing of the conversion of two existing slurry mills to cement
grinding. Terms and other conditions of this loan are included in Note 9 to
the Consolidated Financial Statements for the year ended December 31, 1993.*
10.9 Loan agreement between the Registrant and Banco Popular de
Puerto Rico for the amount of $6,000,000 dated August 2, 1993 to pay a $3
million scheduled installment and an optional $3 million payment on a
long-term debt due in August, 1993. Terms and other conditions of this loan
are included in Note 9 to the Consolidated Financial Statements for the year
ended December 31, 1993.*
13. Annual Report to security holders for the year ended December
31, 1993.
21. Subsidiaries of the Registrant included as part of the Annual
Report to security holders, page 28, section entitled "Subsidiaries". All of
the Registrant's subsidiaries are incorporated under the laws of the
Commonwealth of Puerto Rico, except for Caribbean Cement Carriers Corporation,
which is incorporated under the laws of the Republic of Panama, and Ferre
Export Corporation, which is incorporated under the laws of the state of New
York.
23. Consent of Price Waterhouse, independent public accountants.
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* Incorporated herein by reference.
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S I G N A T U R E S
Pursuant to the requirements of Section 13 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)
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Date: 3/23/94 By: /s/ CARLOS J. SUAREZ
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Carlos J. Suarez
Chief Executive Officer, Chairman of
the Board of Directors and Director
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Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated:
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Date: 3/23/94 By: /s/ ANTONIO LUIS FERRE
----------------------------
Antonio Luis Ferre
Director and Vice Chairman of the Board
Date: 3/23/94 By: /s/ ALBERTO M. PARACCHINI
----------------------------
Alberto M. Paracchini
Director and Vice Chairman of the Board
Date: 3/23/94 By: /s/ HECTOR DEL VALLE
----------------------------
Hector del Valle
President and Director
Date: 3/23/94 By: /s/ JOSE J. SUAREZ
----------------------------
Jose J. Suarez
Executive Vice President in Charge
of Operations and Director
Date: 3/23/94 By: /s/ JOSE O. TORRES
----------------------------
Jose O. Torres
Vice President of Finance,
Assistant secretary and Treasurer
Date: 3/23/94 By: /s/ ANGEL M. AMARAL
----------------------------
Angel M. Amaral
Vice President and Controller
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Date: 3/23/94 By: /s/ DANIEL R. DOMINGUEZ
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Daniel R. Dominguez
Secretary
Date: 3/23/94 By: /s/ WALLACE GONZALEZ OLIVER
----------------------------
Wallace Gonzalez Oliver
Director
Date: 3/23/94 By: /s/ ESTEBAN D. BIRD
----------------------------
Esteban D. Bird
Director
Date: 3/23/94 By: /s/ EMILIO J. VENEGAS
-----------------------------
Emilio J. Venegas
Director
Date: 3/23/94 By: /s/ OSCAR A. BLASINI
----------------------------
Oscar A. Blasini
Director
Date: 3/23/94 By: /s/ HECTOR PUIG RAMIREZ
----------------------------
Hector Puig Ramirez
Director
Date: 3/23/94 By: /s/ ROSARIO J. FERRE
----------------------------
Rosario J. Ferre
Director
Date: 3/23/94 By: /s/ FEDERICO F. SANCHEZ
----------------------------
Federico F. Sanchez
Director
Date: 3/23/94 By: /s/ JORGE L. FUENTES
----------------------------
Jorge L. Fuentes
Director
Date: 3/23/94 By: /s/ SALVADOR E. CASELLAS
----------------------------
Salvador E. Casellas
Director
</TABLE>
-17-
<PAGE> 18
<TABLE>
<S> <C>
Date: 3/23/94 By: /s/ MARIANO J. MIER
----------------------------
Mariano J. Mier
Director
Date: 3/23/94 By: /s/ JUAN A. ALBORS
----------------------------
Juan A. Albors
Director
Date: 3/23/94 By: /s/ FEDERICO STUBBE
----------------------------
Federico Stubbe
Director
Date: 3/23/94 By: /s/ ANTONIO L. FERRE RANGEL
----------------------------
Antonio L. Ferre Rangel
Director
</TABLE>
-18-
<PAGE> 19
PUERTO RICAN CEMENT COMPANY, INC.
AND SUBSIDIARY COMPANIES
***********
FINANCIAL STATEMENTS AND SCHEDULES
AND
REPORT OF INDEPENDENT ACCOUNTANTS
******
PREPARED FOR FILING AS PART OF
ANNUAL REPORT (FORM 10K)
TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 1993
******
-19-
<PAGE> 20
The Chase Manhattan Bank Building Telephone 809 754 9090
PO Box 363566
San Juan PR 00936-3566
PRICE WATERHOUSE
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of
Puerto Rican Cement Company, Inc.
Our audits of the consolidated financial statements referred to in our
report dated February 18, 1994 appearing on page 12 of the 1993 Annual Report
to Shareholders of Puerto Rican Cement Company, Inc. (which report and
consolidated financial statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the Financial Statement
Schedules listed in Item 14(a) of this Form 10-K. In our opinion these
Financial Statement Schedules present fairly, in all material respects, the
information set forth therein when read in conjuction with the related
consolidated financial statements.
/s/ Price Waterhouse
- --------------------
PRICE WATERHOUSE
San Juan, Puerto Rico
February 18, 1994
-20-
<PAGE> 21
SCHEDULE V
PUERTO RICAN CEMENT COMPANY,INC. AND SUBSIDIARY COMPANIES
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1991, 1992 AND 1993
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
BALANCE AT BALANCE AT
BEGINNING ADDITION (1) END OF
CLASSIFICATIONS OF YEAR AT COST RETIREMENTS TRANSFERS YEAR
<S> <C> <C> <C> <C> <C>
1991
Land and quarries $ 2,879,321 $ - $ 239,725 $ - $ 2,639,596
Buildings 16,097,649 58,670 323,012 11,827,609 27,660,916
Machinery and equipment 49,459,155 370,410 4,846,540 44,671,864 89,654,889
Pollution control equipment 22,476,163 - 138,955 5,264,268 27,601,476
Construction in progress 42,568,516 19,374,187 - (61,763,741) 178,962
Total $133,480,804 $19,803,267 $5,548,232 $ - $147,735,839
1992
Land and quarries $ 2,639,596 $ 1,642,779 $ 198 $ - $ 4,282,177
Buildings 27,660,916 (100,000) 258,516 772,538 28,074,938
Machinery and equipment 89,654,889 208,483 1,501,097 1,074,585 89,436,860
Pollution control equipment 27,601,476 - 66,269 909,897 28,445,104
Construction in progress 178,962 2,578,058 - (2,757,020) -
Total $147,735,839 $ 4,329,320 $1,826,080 $ - $150,239,079
1993
Land and quarries $ 4,282,177 $ 17,298 $ - $ - $ 4,299,475
Buildings 28,074,938 - 222,894 391,764 28,243,808
Machinery and equipment 89,436,860 270,882 2,161,579 1,630,539 89,176,702
Pollution control equipment 28,445,104 22,967 218,325 434,158 28,683,904
Construction in progress - 8,825,821 - (2,456,461) 6,369,360
Total $150,239,079 $ 9,136,968 $2,602,798 $ - $156,773,249
</TABLE>
(1) Retirements relate mainly to the cost of fully depreciated assets no
longer in use.
-21-
<PAGE> 22
SCHEDULE VI
PUERTO RICAN CEMENT COMPANY, INC. AND SUBSIDIARY COMPANIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT &
EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1991, 1992, AND 1993
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
BALANCE ADDITIONS BALANCE
AT CHARGED TO AT
BEGINNING COSTS AND (1) END OF
DESCRIPTION OF YEAR EXPENSES RETIREMENTS TRANSFERS YEAR
<S> <C> <C> <C> <C> <C>
1991
Land and quarries $ 396,903 $ 11,058 $ - $ - $407,961
Buildings 5,261,741 411,501 234,866 - 5,438,376
Machinery and equipment 22,547,102 3,494,697 3,188,404 - 22,853,395
Pollution control equipment 9,755,220 1,065,494 138,065 - 10,682,649
Total $37,960,966 $4,982,750 $3,561,335 $ - $39,382,381
1992
Land and quarries $ 407,961 $11,248 $ - $ - $419,209
Buildings 5,438,376 593,921 258,518 - 5,773,779
Machinery and equipment 22,853,395 5,041,097 1,499,789 (518,580) 25,876,123
Pollution control equipment 10,682,649 1,287,327 66,269 518,580 12,422,287
Total $39,382,381 $6,933,593 $1,824,576 $ - $44,491,398
1993
Land and quarries $ 419,209 $11,397 $ - $ - $430,606
Buildings 5,773,779 587,765 222,894 - 6,138,650
Machinery and equipment 25,876,123 5,035,005 2,161,580 - 28,749,548
Pollution control equipment 12,422,287 1,281,879 218,324 - 13,485,842
Total $44,491,398 $6,916,046 $2,602,798 $ - $48,804,646
</TABLE>
(1) Retirements relate mainly to accumulated depreciation of fully
depreciated assets.
-22-
<PAGE> 23
SCHEDULE VIII
PUERTO RICAN CEMENT COMPANY, INC. AND SUBSIDIARY COMPANIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1991, 1992, AND 1993
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS ADDITIONS DEDUCTIONS FROM
BALANCE AT CHARGED TO CHARGED RESERVES WRITE-OFF BALANCE AT
BEGINNING COST AND TO OF UNCOLLECTIBLE END OF
DESCRIPTION OF YEAR EXPENSES OTHER ACCOUNTS YEAR
<S> <C> <C> <C> <C>
Allowance
for doubtful accounts
1991 $1,308,987 $411 $93,724 $1,215,674
1992 $1,215,674 $50,110 $62,283 $1,203,501
1993 $1,203,501 $1,492 $83,392 $1,121,601
</TABLE>
-23-
<PAGE> 24
SCHEDULE IX
PUERTO RICAN CEMENT COMPANY, INC. AND SUBSIDIARY COMPANIES
SHORT TERM BORROWING
FOR THE YEARS ENDED DECEMBER 31, 1991, 1992, and 1993
<TABLE>
<CAPTION>
OUTSTANDING DURING
BALANCE WEIGHTED THE PERIOD WEIGHTED AVERAGE
CATEGORY AT END AVERAGE MAXIMUM AVERAGE INTEREST RATE
OF BORROWING OF PERIOD INTEREST RATE* AMOUNT AMOUNT DURING THE PERIOD
<S> <C> <C>
1991
Banks and other financial
institutions:
Under line of credit None None
1992
Banks and other financial
institutions:
Under line of credit None None
1993
Banks and other financial
institutions:
Under line of credit None None
</TABLE>
* Weighted average interest rate computation: Annual interest expense
divided by average balance outstanding in each category of
short-term borrowing.
** Total annual interest expense divided by total weighted average
balance outstanding.
-24-
<PAGE> 25
SCHEDULE X
PUERTO RICAN CEMENT COMPANY, INC.
AND SUBSIDIARY COMPANIES
SUPPLEMENTARY INCOME STATEMENTS INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
<TABLE>
<CAPTION>
ITEMS 1993 1992 1991
<S> <C> <C> <C>
Maintenance and repairs $3,683,584 $3,754,347 $3,238,247
Depreciation and amortization of
intangible assets, pre-operating
costs and similar deferrals (1) (1) (1)
Taxes, other than payroll and
income taxes:
Excise taxes $1,505,312 $1,492,675 $1,468,460
Property taxes 3,222,074 2,607,055 2,002,176
Other 116,523 128,045 119,451
$4,843,909 $4,227,775 $3,590,087
Royalties (1) (1) (1)
Advertising costs (1) (1) (1)
</TABLE>
(1) Amount is not disclosed as it is lower than the minimum required for
reporting as per rule 12-11 of Regulations S-X.
-25-
<PAGE> 1
EXHIBIT 13
Puerto Rican Cement Company, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
This section represents Management's discussion and analysis of the
Company's consolidated financial condition and results of operations.
It should be read in conjunction with the accompanying financial
statements.
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
FOR YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
Income before cumulative effect of changes in accounting principles
was $12,436,000 or $2.14 per share, in 1993, compared to $10,107,000
or $1.74 per share, in the prior year. During 1993 the Company adopted
Statements of Financial Accounting Standards (SFAS) Nos. 106 and 109.
The adoption of these two statements decreased net income for the year
to $11,880,000, or $2.05 per share.
Consolidated net sales increased by 4% in 1993 due mainly to an
increase of 5% or $0.25 cents per bag in average cement selling prices
which became effective in April 1993. Consolidated net sales for 1992
were $2,700,000 higher than in 1991 as a result of increased sales in
both the cement and paper bags divisions. Cement bags sold increased
moderately from 18,130,000 bags in 1992 to 18,203,000 in 1993. In 1991
cement sales totalled 17,697,000 bags.
Gross margin improved slightly to 36.6% in 1993 from 34.4% in 1992 and
34.7% in 1991. In 1993 consolidated cost of sales did not change
substantially from the prior year. A small increase of 1.4% or
$759,000 was principally attributed to changes in property tax rates.
Cost of sales for 1992 increased to $52,532,000 from $50,946,000 in
1991. During 1993 and 1992 economies in the Grey Cement Division were
generated by the use of the dry process. Some of these savings were
partially offset by increases in depreciation, taxes and insurance.
Consolidated selling, general and administrative expenses were $10.4
million, $9.8 million and $9.4 million in 1993, 1992 and 1991,
respectively, an increase of 6% in 1993 and 4% in 1992.
In 1993 interest and financial charges of $2,654,000 were $318,000 or
10.7% lower than 1992 due principally to the repayment of principal on
various debts. Interest on loans related to the cement grinding
conversion project were capitalized during 1993. In 1991, interest
related to the financing of the dry process conversion was capitalized
until the month of July when the project was completed. During 1992
interest was charged to expense during the whole year, thus resulting
in a $1.3 million increase in this charge.
Interest income resulted principally from investments primarily in
U.S. Government securities of excess funds generated from operations.
The $607,000 increase in 1993 reflected the combined effect of
securities bearing a higher rate of interest and a bigger average
investment portfolio than in the prior year. Decreases in 1992 of
$481,000 when compared to 1991 resulted from low interest rates
prevailing during that year plus a smaller average investment
portfolio.
- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1993 the Company had cash and cash equivalents
totalling $431,000 compared to $5,474,000 at December 31, 1992. Working
capital declined from $43,897,000 at December 31, 1992 to $33,934,000
at December 31, 1993. These decreases were due principally to efforts
made by the Company to improve the rate of return on its investments
by pursuing long-term maturities in securities with higher interest
yields. This investment policy is a continuation of the policy
implemented during 1992 and has resulted in an increase of $23,645,000
in long-term investments from the $8,867,000 invested in this kind of
9
<PAGE> 2
Puerto Rican Cement Company, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
- --------------------------------------------------------------------------------
securities at December 31, 1992. Management believes that the quality
and excellent secondary market for these long-term investments in U.S.
Government securities ensure their liquidity.
Current ratio decreased to 3.0 to 1 in 1993 from 4.1 to 1 in 1992
chiefly from the decrease in short-term investments caused by the
previously explained change to long-term investments and an increase
in current liabilities. In Management's opinion, future cash flows
generated from operations, actual cash and cash equivalent balances
and the short-term borrowing resources available to the Company will
be sufficient to provide for the Company's cash requirements in the
foreseeable future.
An increase in notes and accounts receivable of $2,664,000 resulted
from two principal factors: the increase in average cement selling
price decreed in 1993 and higher cement sales during 1993's fourth
quarter as compared to the last quarter of 1992. The decline of
$2,631,000 in inventories was due to decreases in: a) clinker
(work-in-process), as a result of a higher cement production during
this year, b) coal, as a result of an increase in the consumption of
this material and timing of shipments, and c) gypsum (raw materials),
since no shipment of this material was received during the year 1993.
Current liabilities increased $3,308,000 due to an increase in current
maturities of long-term debt, accounts payable and accrued
liabilities. Accounts payable and accrued liabilities were $1,997,000
higher than in 1992 due primarily to an increase in the amount due on
coal shipments as of the end of the year.
Capital spending totalled $9,137,000 and was mainly attributable to the
conversion of two existing slurry mills to cement grinding. This
project, with an estimated cost of $16 million, is an integral part of
the Company's long-term capital improvement program directed to
achieve maximum efficiency through modern and technologically advanced
facilities. Funding of this project has been obtained from commercial
banks.
Long-term debt increased from $24,500,000 on December 31, 1992 to
$26,633,000 on December 31, 1993. This increase in long-term debt
resulted from proceeds from the mills conversion loans.
The increase of $2,153,000 in deferred income taxes is the net result
of the use of the accelerated flexible depreciation method for tax
purposes, the deferred tax effect of the accrual of postretirement
benefit obligations and the effect of the adoption of SFAS 109.
As discussed in Note 8 to the Consolidated Financial Statements, the
Company had available credit facilities for short-term borrowing and
discount of trade notes receivable of $12.6 million at December 31,
1993.
The Company's Board of Directors declared a quarterly dividend of
$0.15 per common share at its December 1993 meeting, an increase of
2.5 cents per share over previous quarters. Dividends declared in 1993
totalled $0.525 per common share.
10
<PAGE> 3
NEW ACCOUNTING STANDARD
As further discussed in Note 1 to the Consolidated Financial
Statements, the Company will adopt in 1994 the provisions of FASB's
Statement No. 115, "Accounting for Certain Investments in Debt and
Equity Securities". The Company's policy is to hold its investments to
maturity; therefore, management does not expect a significant impact
from the adoption of this standard.
Puerto Rican Cement Company, Inc
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1993 1992 1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating revenues(1)................. $84,027,588 $80,021,520 $77,968,505 $81,993,050 $79,336,097
Income before income tax.............. 19,145,787 15,426,354 14,666,908 17,922,924 19,525,009
Tax provision ........................ 6,710,065 5,319,720 4,388,418 5,851,873 6,211,806
Effect of change in accounting for
postretirement benefits other than
pensions (net of tax of $1,020,600). (1,409,400)
Cumulative effect of change in
accounting for income tax............ 853,410
Net income............................ 11,879,732 10,106,634 10,278,490 12,071,051 13,313,203
Net income per share(2)............... 2.14 1.74 1.77 2.08 2.28
Current assets ....................... 51,207,564 57,862,068 58,209,916 63,946,232 55,442,789
Current liabilities................... 17,273,306 13,965,498 12,072,586 12,672,238 11,958,748
Working capital ...................... 33,934,258 43,896,570 46,137,330 51,273,994 43,484,041
Current ratio......................... 2.96 4.14 4.82 5.05 4.64
Property, plant and equipment......... 107,968,603 105,747,681 108,353,458 95,519,838 81,061,275
Cash restricted for use in the dry
process conversion project........... 942,009 13,809,540
Long-term investments................. 32,512,367 8,866,765
Total assets.......................... 193,283,596 174,185,209 168,294,577 162,141,277 152,270,177
Long-term debt (exclusive of
current portion)..................... 26,633,080 24,500,000 30,357,143 33,375,000 35,707,494
Deferred income taxes ................ 26,028,233 23,875,370 21,755,663 20,182,252 18,972,580
Postretirement benefit liability...... 2,673,947
Stockholders' equity-net.............. 120,675,030 111,844,341 104,109,185 95,911,788 85,631,355
Dividends per share................... 0.53 0.41 0.36 0.31 0.31
Cement sales in barrels............... 4,550,738 4,532,476 4,424,466 4,679,424 4,502,904
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes revenue from realty operations: 1993-$653,721; 1992-$119,634;
1991-$816,503; 1990-$437,258; 1989-$707,640
(2) Excluding, in 1993, the cumulative effect of changes in accounting for
postretirement benefits and income taxes of ($0.24) and $0.15,
respectively.
11
<PAGE> 4
Puerto Rican Cement Company, Inc.
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
PRICE WATERHOUSE
February 18, 1994
To the Board of Directors
and Stockholders of
Puerto Rican Cement Company, Inc.
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income and retained earnings and of
cash flows present fairly, in all material respects, the financial
position of Puerto Rican Cement Company, Inc. and its subsidiaries at
December 31, 1993 and 1992, and the results of their operations and
their cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, the
Company changed its methods of accounting for postretirement health
benefits and income taxes in 1993.
/s/ PRICE WATERHOUSE
--------------------
Certified Public Accountants
(OF PUERTO RICO)
License No. 10 Expires Dec. 1, 1995
Stamp 1185773 of the P.R. Society of
Certified Public Accountants has been
affixed to the file copy of this report.
12
<PAGE> 5
Puerto Rican Cement Company, Inc.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales ...................................................... $ 83,373,867 $79,901,886 $77,152,002
Revenue from realty operations - net ........................... 653,721 119,634 816,503
- ------------------------------------------------------------------------------------------------------------------------------
84,027,588 80,021,520 77,968,505
- ------------------------------------------------------------------------------------------------------------------------------
Cost and expenses:
Cost of sales ................................................ 53,290,853 52,531,736 50,945,790
Selling, general and administrative expenses ................. 10,396,754 9,843,764 9,430,640
- ------------------------------------------------------------------------------------------------------------------------------
63,687,607 62,375,500 60,376,430
- ------------------------------------------------------------------------------------------------------------------------------
Income from operations ..................................... 20,339,981 17,646,020 17,592,075
- ------------------------------------------------------------------------------------------------------------------------------
Other charges (credits):
Loss on disposition of idle equipment and spare parts ........ 2,576,465
Interest and financial charges, net of
interest charged to construction ........................... 2,654,054 2,971,529 1,620,451
Interest income .............................................. (1,238,858) (632,030) (1,112,827)
Other income.................................................. (221,002) (119,833) (158,922)
- ------------------------------------------------------------------------------------------------------------------------------
1,194,194 2,219,666 2,925,167
- ------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative
effect of accounting changes ............................... 19,145,787 15,426,354 14,666,908
Provision for income taxes ..................................... 6,710,065 5,319,720 4,388,418
- ------------------------------------------------------------------------------------------------------------------------------
Income before cumulative
effect of accounting changes ............................... 12,435,722 10,106,634 10,278,490
Effect of change in accounting
for postretirement benefits other than pensions
(net of income tax benefit of $1,020,600)..................... (1,409,400)
Cumulative effect of change in accounting
for income taxes ............................................. 853,410
- ------------------------------------------------------------------------------------------------------------------------------
Net income.................................................... 11,879,732 10,106,634 10,278,490
Retained earnings at beginning of year.......................... 93,060,910 89,325,754 81,128,357
Common stock split ............................................. (4,000,000)
Cash dividends declared $0.53, $0.41
and $0.36 per share in 1993, 1992
and 1991, respectively ....................................... (3,049,043) (2,371,478) (2,081,093)
- ------------------------------------------------------------------------------------------------------------------------------
Retained earnings at end of year................................ $101,891,599 $93,060,910 $89,325,754
==============================================================================================================================
Earnings per share:
Income before cumulative effect of
accounting changes ........................................... $ 2.14 $ 1.74 $ 1.77
Effect of change in accounting for
postretirement benefits other than pensions .................. (0.24)
Cumulative effect of change in accounting for income taxes ..... 0.15
- ------------------------------------------------------------------------------------------------------------------------------
Net income per share ........................................... $ 2.05 $ 1.74 $ 1.77
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of this statement.
13
<PAGE> 6
Puerto Rican Cement Company, Inc.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
December 31, 1993 1992
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash .............................................. $ 431,293 $ 130,782
Time Deposits...................................... 5,342,720
- ------------------------------------------------------------------------------------------------------
Cash and cash equivalents ....................... 431,293 5,473,502
Short-term investments............................. 520,000 2,727,937
Notes and accounts receivable, net ................ 13,626,159 10,961,829
Inventories........................................ 33,141,836 35,773,103
Prepaid expenses................................... 3,488,276 2,925,697
- ------------------------------------------------------------------------------------------------------
Total current assets ............................ 51,207,564 57,862,068
Property, plant and equipment-net.................... 107,968,603 105,747,681
Long-term investments ............................... 32,512,367 8,866,765
Other assets......................................... 1,595,062 1,708,695
- ------------------------------------------------------------------------------------------------------
$193,283,596 $174,185,209
======================================================================================================
</TABLE>
14
<PAGE> 7
Puerto Rican Cement Company, Inc.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
December 31, 1993 1992
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ..................... $ 7,491,735 $ 5,857,143
Accounts payable ...................................... 3,785,341 2,408,518
Accrued liabilities.................................... 4,500,812 3,880,461
Dividends payable ..................................... 871,155 725,963
Income taxes payable .................................. 624,263 1,093,413
- ------------------------------------------------------------------------------------------------------
Total current liabilities ........................... 17,273,306 13,965,498
- ------------------------------------------------------------------------------------------------------
Long-term liabilities:
Long-term debt, less current portion .................. 26,633,080 24,500,000
Deferred income taxes ................................. 26,028,233 23,875,370
Postretirement benefit liability ...................... 2,673,947
- ------------------------------------------------------------------------------------------------------
Total long-term liabilities ......................... 55,335,260 48,375,370
- ------------------------------------------------------------------------------------------------------
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; 6,000,000 shares issued..... 6,000,000 6,000,000
Additional paid-in capital............................. 14,367,927 14,367,927
Retained earnings...................................... 101,891,599 93,060,910
- ------------------------------------------------------------------------------------------------------
122,259,526 113,428,837
LESS - 192,300 shares of common stock in treasury, at cost. 1,584,496 1,584,496
- ------------------------------------------------------------------------------------------------------
Total stockholders' equity ............................ 120,675,030 111,844,341
- ------------------------------------------------------------------------------------------------------
Commitments and contingent liabilities...................
======================================================================================================
$193,283,596 $174,185,209
======================================================================================================
</TABLE>
The accompanying notes are an integral part of this statement.
15
<PAGE> 8
Puerto Rican Cement Company, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Income ..................................................... $11,879,732 $10,106,634 $10,278,490
- ----------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income
to net cash provided by operating activities:
Effect of change in accounting for postretirement benefits
other than pensions (net of income tax benefit of $1,020,600). 1,409,400
Cumulative effect of change in accounting for income taxes...... (853,410)
Depreciation, depletion and amortization........................ 6,916,046 6,934,608 4,982,751
Provision for deferred income taxes ............................ 4,026,873 2,119,707 1,573,411
Provision for postretirement benefits........................... 390,000
Postretirement benefits paid.................................... (146,053)
Loss on disposition of idle equipment and spare parts .......... 2,576,465
Gain on sale of land ........................................... (22,454) (175,276)
Loss on sale of short-term investments ......................... 5,534
Gain on sale of long-term investments........................... (103,613)
Changes in assets and liabilities:
(Increase) decrease in notes and accounts receivable .......... (2,664,330) 1,615,886 (543,076)
Decrease (increase) in inventories............................. 2,631,267 (4,568,410) (1,477,635)
Increase in prepaid expenses .................................. (562,579) (111,403) (72,817)
Decrease in other assets ...................................... 113,633 22,508 1,995
Increase (decrease) in accounts payable ....................... 1,376,823 (2,221,931) (233,204)
Increase (decrease) in accrued liabilities..................... 620,351 704,446 (423,538)
(Decrease) increase in income taxes payable.................... (469,150) 1,083,794 (427,483)
- ----------------------------------------------------------------------------------------------------------------------
Total adjustments............................................. 12,690,792 5,556,751 5,781,593
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities ..................... 24,570,524 15,663,385 16,060,083
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Decrease (increase) in short-term investments................... 2,202,403 (2,727,937)
Capital expenditures ........................................... (9,136,968) (4,329,320) (19,803,268)
Decrease in cash restricted for dry process
conversion project ........................................... 942,009
Proceeds from sale of land...................................... 22,943 423,987
Purchase of long-term investments............................... (40,892,391) (8,866,765)
Proceeds from sale of long-term investments .................... 17,350,402
- ----------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities......................... (30,476,554) (15,901,079) (18,437,272)
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from loans............................................. 12,624,815
Payment of principal on long-term debt ......................... (8,857,143) (3,482,143) (2,678,571)
Dividends paid.................................................. (2,903,851) (2,419,875) (1,935,805)
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities........... 863,821 (5,902,018) (4,614,376)
- ----------------------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents............................. (5,042,209) (6,139,712) (6,991,565)
Cash and cash equivalents at beginning of year ................... 5,473,502 11,613,214 18,604,779
- ----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year.......................... $ 431,293 $ 5,473,502 $11,613,214
=======================================================================================================================
</TABLE>
The accompanying notes are an integral part of this statement.
16
<PAGE> 9
Puerto Rican Cement Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1--REPORTING ENTITY AND SUMMARY OF ACCOUNTING POLICIES:
The Company was organized in 1938 under the laws of the Commonwealth of Puerto
Rico. It is engaged primarily in the production of cement and related products.
Summary of accounting policies
The following summarizes the most significant accounting policies judged by
management to be the most appropriate in the circumstances to present the
Company's consolidated financial position, results of operations and cash
flows in conformity with generally accepted accounting principles.
Principles of consolidation
The consolidated financial statements include the accounts of the Company and
all of its subsidiaries. All material intercompany accounts and transactions
have been eliminated in consolidation.
Statement of cash flows
For purposes of the statement of cash flows, interest bearing deposits and
other investments with maturities of less than three months at the time of
acquisition are considered cash equivalents.
Investments
Investments are carried at cost, adjusted for amortization of premiums or
accretion of discounts. Short-term investments consist primarily of bank time
deposits, U.S. Treasury Bills, and other U.S. government securities. Long-term
investments consist primarily of U.S. government and agencies securities with
maturities over one year. The Company has both the intent and ability to hold
these investments to maturities.
In 1993 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting for Certain
Investments in Debt and Equity Securities". This statement will be adopted in
1994.
This new standard addresses the accounting and reporting for investments in
equity securities that have readily determinable fair values and for all
investments in debt securities. Those investments are to be classified in three
categories and accounted for as follows:
- - Debt securities that the enterprise has the positive intent and ability to
hold to maturity are classified as held-to-maturity securities and reported
at amortized cost.
- - Debt and equity securities that are bought and held principally for the
purpose of selling them in the near term are classified as trading
securities and reported at fair value, with unrealized gains and losses
included in earnings.
- - Debt and equity securities not classified as either held-to-maturity or
trading securities are classified as available-for-sale securities and
reported at fair value, with unrealized gains and losses excluded from
earnings and reported in a separate component of shareholders' equity.
Management does not expect a significant impact from the adoption of SFAS
115 as it continues the policy of holding investments to maturity.
Inventories
Inventories are stated at the lower of average cost or market. Inventory cost
includes the related material, labor and overhead cost.
Land for sale includes the original cost of land and all development costs
incurred to bring land to a saleable condition.
Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciation is provided on
the straight-line basis over the estimated useful life of each type of asset.
Depletion of quarries is calculated on the units-of-production method.
Maintenance and repair costs which do not extend the life or improve
productive capacity of the respective assets are expensed as incurred. Cost of
renewals and betterments is capitalized. When assets are sold, retired or
otherwise disposed of, their cost and related accumulated depreciation are
removed from the accounts, and any gain or loss is credited or charged to
income.
Interest charged to construction
The Company capitalizes interest as a component of the cost of construction.
Interest capitalized totaled $88,800 and $1,940,000 in 1993 and 1991,
respectively. No interest was capitalized in 1992.
Goodwill
Goodwill, included in other assets, was acquired before November 1, 1970 and,
as permitted by generally accepted accounting principles, will be amortized
only when there has been a reduction in value.
Income taxes
As discussed in Note 10, the Company adopted, in January 1993, Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income
Taxes". This standard requires an asset and liability approach to the
recognition of the tax consequences of differences between the tax basis of
assets and liabilities and their reported amounts in financial statements.
Certain expenses, primarily depreciation, are reported for tax
purposes in different periods from those in which they are reported in the
financial statements. Deferred taxes are provided on these and other temporary
differences between the tax basis of assets and liabilities and their reported
amounts in financial statements.
The financial statements for 1992 and 1991 have not been restated for the
adoption of SFAS 109. For those years, deferred taxes resulting from timing
differences were accounted for by the net change method in accordance with
Accounting Principles Board Opinion No. 11 (APB 11).
Employee benefit plans
The Company has a trusteed non-contributory retirement plan. Pension costs are
computed on the basis of accepted actuarial methods. The Projected Unit Credit
method is used to determine pension expense. Pension expense includes service
cost for benefits earned during the period, interest cost and amortization of
unrecognized prior service cost, of gains and losses on plan assets and of the
transition amount over a 15-year period. The Company's funding policy is to
contribute annually the maximum amount that can be deducted for income tax.
17
<PAGE> 10
- ------------------------------------------------------------------------------
The Company also offers post-retirement medical and life insurance
benefits. This plan is not funded and expenses were recognized as paid until
1992. As discussed in Note 11, the Company adopted, in January 1993, Statement
of Financial Accounting Standards No. 106 (SFAS 106), "Employers' Accounting
for Postretirement Benefits Other than Pensions" (OPEB), which requires the
recognition of the expected cost of providing post-retirement health care
benefits to an employee or its beneficiaries over their service period.
In November of 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 112 (SFAS 112), "Employers'
Accounting for Postemployment Benefits". SFAS 112, which must be adopted in
1994, requires employers to accrue the cost of postemployment benefits
(including salary continuation, severance and disability benefits, job training
and counseling and continuation of benefits such as health care and life
insurance coverage) to former or inactive employees. The adoption of SFAS 112
will not have a significant impact on the Company's financial position and
results of operations.
Earnings per share
Earnings per share are computed on the basis of the weighted average number of
shares of common stock outstanding during the year. Earnings per share for
1991 has been retroactively restated for the effect of the stock split effected
in 1992. The weighted average number of shares outstanding during the year,
after stock split, was 5,807,700 in 1993, 1992 and 1991.
Profit recognition on sale of real estate
Land and development costs are allocated to lots sold proportionately based on
area and total project cost. Income on sale of land is recognized at the time
of sale except where the collectibility is not reasonably assured and revenue
therefore is not measurable.
NOTE 2--NOTES AND ACCOUNTS RECEIVABLE:
Notes and accounts receivable consist of:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
1993 1992
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Notes receivable:
Trade ......................................... $ 3,317 $ 109,937
Other ......................................... 89,131 69,672
- ------------------------------------------------------------------------------------------------------------
92,448 179,609
- ------------------------------------------------------------------------------------------------------------
Accounts receivable:
Trade ......................................... 13,566,340 11,474,959
Employees and affiliated
companies ................................... 19,789 42,423
Other ......................................... 1,069,183 468,339
- ------------------------------------------------------------------------------------------------------------
14,655,312 11,985,721
Less - Allowance for
doubtful accounts ........................... 1,121,601 1,203,501
- ------------------------------------------------------------------------------------------------------------
13,533,711 10,782,220
- ------------------------------------------------------------------------------------------------------------
$13,626,159 $10,961,829
============================================================================================================
</TABLE>
NOTE 3--INVENTORIES:
Inventories consist of:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
1993 1992
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Finished products ............................... $ 2,127,413 $ 1,859,816
Work-in-process ................................. 6,231,167 7,152,121
Raw materials ................................... 3,276,157 4,723,762
Coal and fuel oil ............................... 3,171,069 4,564,303
Maintenance and
operating supplies ............................ 17,684,450 16,813,199
Land for sale ................................... 651,580 659,902
- ------------------------------------------------------------------------------------------------------------
$ 33,141,836 $35,773,103
============================================================================================================
</TABLE>
NOTE 4--PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consist of:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Useful life
in years 1993 1992
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Land and quarries...... $ 4,299,475 $ 4,282,177
Buildings and
structures........... 50 27,590,284 27,421,414
Machinery and
equipment............ 5-20 88,202,303 88,450,030
Pollution control
equipment............ 25 28,683,904 28,445,104
Automobiles and trucks. 3-10 974,399 986,830
Rental property........ 10 653,524 653,524
Construction in
progress............. 6,369,360
- ------------------------------------------------------------------------------------------------------------
156,773,249 150,239,079
Less - Accumulated
depreciation,
depletion
and amortization... 48,804,646 44,491,398
- ------------------------------------------------------------------------------------------------------------
$107,968,603 $105,747,681
============================================================================================================
</TABLE>
NOTE 5--INVESTMENTS:
The carrying and market values of investments at December 31, 1993 and 1992 are
as follows:
<TABLE>
<CAPTION>
1993 1992
- --------------------------------------------------------------------------------------------------------------------
Carrying Market Carrying Market
Value Value Value Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS
U.S. Treasury securities... $ 520,000 $ 538,824 $2,727,937 $2,727,937
====================================================================================================================
LONG-TERM INVESTMENTS
U.S. Treasury securities... $28,403,577 $29,420,309 $7,761,520 $7,892,132
Municipal and other U.S.
government agency
securities............... 4,108,790 5,023,551 1,105,245 1,105,669
- --------------------------------------------------------------------------------------------------------------------
$32,512,367 $34,443,860 $8,866,765 $8,997,801
====================================================================================================================
</TABLE>
During 1993 the Company sold securities for a total of $17,350,000 and realized
a gain of $104,000. The Company has $2,814,000 in municipal bonds classified
as long term which are callable in 1994.
NOTE 6--OTHER ASSETS:
Other assets consist of:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
1993 1992
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment in real estate................. $ 704,987 $ 704,987
Goodwill.................................. 697,770 697,770
Other long-term assets.................... 192,305 305,938
- ------------------------------------------------------------------------------------------------------------
$ 1,595,062 $ 1,708,695
============================================================================================================
</TABLE>
18
<PAGE> 11
Puerto Rican Cement Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 7 -- ACCRUED LIABILITIES:
Accrued liabilities consist of:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
1993 1992
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accrued taxes
other than income ............................... $1,969,933 $1,260,281
Accrued payroll expenses ............................... 1,821,371 1,625,845
Accrued interest expense ............................... 435,779 636,407
Other accrued liabilities............................... 273,729 357,928
- -----------------------------------------------------------------------------------------------------------
$4,500,812 $3,880,461
===========================================================================================================
</TABLE>
NOTE 8 -- SHORT-TERM BORROWING:
The Company has lines of credit available for short-term borrowing and discount
of trade notes receivable in the aggregate amount of $12,600,000. However,
under other loan agreements with financial institutions, the Company may incur
unsecured short-term borrowing up to $10,000,000 and may discount trade notes
receivable up to $5,000,000 through 1997.
There was no short-term borrowing outstanding at any month-end during 1993 or
1992.
NOTE 9 -- LONG-TERM DEBT:
Long-term debt consists of:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
1993 1992
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
9.9% dry process
conversion loan, payable in
five equal annual installments
beginning in 1993 ................................. $ 9,000,000 $15,000,000
7.0% dry process
conversion loan, payable in
either twenty-three
consecutive quarterly installments
of $357,143 or five annual
installments of $1,428,571
and a final payment of
$1,071,428 on September 1997 ...................... 5,357,143 6,785,714
Term loan for dry process
conversion, payable in five
annual installments of
$1,428,571 and the remaining
balance payable in 1997.
Interest ranges from 7.23%
to 9.125% ......................................... 7,142,857 8,571,429
6.25% term loan, payable in five
equal annual installments
beginning in 1994 ................................. 6,000,000
$16 million revolving line of
credit, convertible, on
December 1995, into a
five-year term loan ............................... 3,148,083
6.25% term loan, payable over
a five-year period through 1998 .................... 3,476,732
- ----------------------------------------------------------------------------------------------------------
Total ............................................. 34,124,815 30,357,143
LESS - Current portion ................................. 7,491,735 5,857,143
- ----------------------------------------------------------------------------------------------------------
Total long-term debt .............................. $26,633,080 $24,500,000
==========================================================================================================
</TABLE>
Financing facilities, of up to $24 million, have been obtained for the
conversion of two existing slurry mills to finished cement grinding. The
expected cost of this project is estimated at $16 million. One of the
facilities is a $16 million credit agreement which provides for interest at 1%
over the bank's 936 funds rate, subject to availability, or 1% over the bank's
London Interbank Offer Rate (LIBOR) as adjusted, or 1% over the bank's base
rate in the City of New York. The Company has the option to fix the interest
rate on the full amount or a portion of the loan up to the term of the loan.
Applicable rates for advances on this line of credit ranged from 4.32% to 4.62%
at December 31, 1993. The second facility is an $8 million unsecured term loan
bearing interest at a fixed rate of 6.25% with principal payable over a 5 year
period. At December 31, 1993, the Company had a $17.4 million available under
these lines of credit.
In 1993 the Company also entered into a $6 million five-year loan
agreement with a commercial bank which bears interest at a fixed rate of 6.25%.
Proceeds from this loan were used to pay the $3 million scheduled installment
and a $3 million prepayment on the 9.9% dry process conversion loan.
In September 1985, the Company restructured the terms of all of its
outstanding debt with the Government Development Bank for Puerto Rico (GDB).
The maturity date on the four loans with GDB was extended to September 2002,
and the annual interest was fixed at 10% for two loans and 11% for the others.
No interest or principal payments are required before maturity. Simultaneously,
the Company placed U.S. government securities, with a cost of $8 million and a
maturity value of $49.8 million, in an irrevocable trust. The principal and
interest of these securities will be sufficient to fund the scheduled principal
and interest payments on the Company's debt with the GDB. Accordingly, such
debt was considered to be extinguished in 1985 and is not included as a
liability in the consolidated balance sheet. The total balance of debt with
GDB not included in the consolidated balance sheet, consisting of principal
plus accumulated interest, amounted to $33 million at December 31, 1993
(1992 - $31.2 million).
The loan agreements with banks and other financial institutions impose
certain restrictions on the Company. The most important restrictions are
limitations on unsecured short-term borrowing and on discounting with recourse
of trade paper from customers (Note 8), maintaining working capital in excess
of certain defined minimums and limitations on funded debt and other
indebtedness. The agreements also impose certain prepayment penalties. In
1993, the Company paid the maximum amount that may be paid under these loan
agreements without triggering the prepayment penalties.
Other restrictions under such loan agreements relate to investments in
and advances to subsidiaries and other persons, disposition of fixed assets,
and payment of dividends. At December 31, 1993, the Company was in compliance
with the provisions of the loan agreements.
Aggregate maturities of long-term debt at December 31, 1993 are as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Years Amount
- -----------------------------------------------------------
<S> <C>
1994 ................................ $ 7,491,735
1995 ................................ 10,639,818
1996 ................................ 7,491,735
1997 ................................ 5,563,163
1998 ................................ 2,938,364
- -----------------------------------------------------------
$ 34,124,815
===========================================================
</TABLE>
19
<PAGE> 12
Puerto Rican Cement Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------
Note 10--Income Taxes:
Consolidated tax returns are not permitted under the Puerto Rico Income tax
Act; therefore, losses, if any, of subsidiaries can not be used to offset
taxable income of other members of the consolidated group.
As discussed in Note 1, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", effective January
1, 1993. The cumulative effect of adopting this standard was a reduction of
$853,400 ($0.15 per share) in the deferred income tax liability. The
cumulative effect reflects the impact of the lower rates currently in effect.
The impact of adopting SFAS 109 on the income tax provision for 1993 was not
significant.
The 1993 amounts presented below were determined in accordance with
SFAS 109, the 1992 and 1991 amounts were determined in accordance with APB 11.
The Puerto Rico Income Tax Act allows an accelerated flexible
depreciation method, whereby a taxpayer may claim depreciation at any rate
without reference to useful lives. Such depreciation, however, is limited to
an amount not greater than income before taxes (determined without taking into
consideration the depreciation deduction). Deferred income taxes $26,028,233
(1992-$23,875,370) have been accumulated primarily as a result of using this
accelerated deprecation method for tax purposes only. The benefits available
under this accelerated depreciation method are limited by the alternative
minimum tax (AMT) provisions of the income tax law. The AMT is based on 22%
of regular taxable income with certain adjustments for preference items, one of
which relates to the flexible depreciation method. Any AMT paid may be used to
reduce the regular tax liability of future years. The AMT will be the minimum
tax liability for any given year.
The provisions for income taxes consists of:
<TABLE>
- ----------------------------------------------------------------------------------------
1993 1992 1991
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred income taxes................ $4,026,873 $2,119,707 $1,573,411
Current income taxes................. 2,683,192 3,200,013 2,815,007
- ----------------------------------------------------------------------------------------
Income tax provision................. $6,710,065 $5,319,720 $4,388,418
========================================================================================
</TABLE>
The increase in the deferred tax liability during 1993 was the result of
the following:
<TABLE>
- ----------------------------------------------------------------------------------------
<S> <C>
Deferred income tax provisions for the year ............................. $4,026,873
Cumulative effect of adoption of SFAS 109 ............................. (853,410)
Deferred tax effect of adoption of SFAS 106 ............................. (1,020,600)
- ----------------------------------------------------------------------------------------
$2,152,863
========================================================================================
</TABLE>
Deferred income taxes consist of the following:
<TABLE>
- ------------------------------------------------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income tax applicable to:
Flexible depreciation
taken during the year ......................... $5,355,405 $3,578,526 $2,496,900
Reversal of flexible depreciation
taken in prior years .......................... (1,732,359) (1,561,990) (1,752,298)
Postretirement
benefit obligation............................. (102,458)
Difference between pension
credits and amounts
deductible for tax ............................ 122,840 87,678
Interest charged
to construction .............................. 37,308 815,027
Other timing differences ........................... 346,137 15,493 13,782
- -----------------------------------------------------------------------------------------------
$4,026,873 $2,119,707 $1,573,411
===============================================================================================
</TABLE>
One of the consolidated subsidiaries enjoys a tax exemption grant under
the provisions of the Puerto Rico Tax Incentives Act of 1987. Under this
grant, the exemption rates applicable to income, property and municipal taxes
range from 50% of 90% through year 2008.
The reconciliation of the difference between the Puerto Rico statutory tax rate
on income before taxes and the consolidated effective tax rate follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------
% of % of % of
pre-tax pre-tax pre-tax
Amount Income Amount Income Amount Income
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Computed tax provision ..................................... $8,041,231 42.0 $6,479,068 42.0 $6,160,101 42.0
Increase (decrease) in taxes resulting from:
Tax exempt income ................................. (164,729) (0.9) (192,800) (1.2) (200,311) (1.4)
Interest earned on exempt securities .............. (514,190) (2.7) (256,586) (1.7) (453,390) (3.1)
Interest deducted for tax but not for
financial statements............................ (789,241) (4.1) (747,029) (4.8) (693,995) (4.7)
Excess of tax basis over book value of
real estate sold .................................. (102,538) (0.7)
Other items ...................................... 136,994 0.7 37,067 0.2 (321,449) (2.2)
- -----------------------------------------------------------------------------------------------------------------------------
$6,710,065 35.0 $5,319,720 34.5 $4,388,418 29.9
=============================================================================================================================
</TABLE>
<PAGE> 13
- ----------------------------------------------------------------------------
The deferred tax assets and liabilities at December 31, 1993 are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Deferred Deferred
Tax Assets Tax Liabilities
- ---------------------------------------------------------------------
<S> <C> <C>
CURRENT:
Prepaid pension costs .......... $ 1,137,238
AMT credits .................... $ 295,832
NON-CURRENT:
Postretirement benefit
liability.................... 1,123,058
Property, plant and equipment... 26,309,885
- ---------------------------------------------------------------------
Total deferred tax
asset/liability $ 1,418,890 $ 27,447,123
=====================================================================
Net deferred tax liability ..... $ 26,028,233
=====================================================================
</TABLE>
The subsidiaries' aggregate retained earnings amounted to $18,900,000
at December 31, 1993 (1992 - $17,500,000; 1991 - $16,400,000); and arise
substantially from partially tax exempt operations. The subsidiaries' retained
earnings are substantially exempt upon distribution to the Company; therefore,
no income taxes have been provided for such earnings.
NOTE 11 -- EMPLOYEE BENEFIT PLANS:
The Company has a defined benefit pension plan covering substantially all of
its non-union employees. The benefits are based on years of service and the
employee's average compensation during the last five years of employment. The
net periodic pension cost for 1993 resulted in a credit to income of $342,039
(1992 - $292,477; 1991 - $208,756) which increased the prepaid pension cost by
the same amount.
Net pension cost included the following components:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits
earned during the period $ 307,352 $ 326,077 $ 299,317
Interest cost on projected
benefit obligation ..... 1,042,511 1,012,081 903,098
Actual return on the plan
assets ................. (1,452,608) (1,805,618) (2,990,611)
Deferral and amortization
- net .................. (239,294) 174,983 1,579,440
- --------------------------------------------------------------------------
Net periodic
pension income ........ ($342,039) ($292,477) ($208,756)
==========================================================================
</TABLE>
The following table sets forth the plan's obligations and amounts
recognized in the Company's consolidated balance sheet at December 31:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
1993 1992
- --------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit
obligations -
Accumulated benefit obligation,
including vested benefits of
$12,108,330 (1992 - $10,657,183)...... $12,293,647 $10,837,837
==========================================================================
Projected benefit obligation for
service rendered to date $14,783,155 $13,143,146
Plan assets at fair value.................. 20,143,670 19,220,025
- -------------------------------------------------------------------------
Excess of plan assets over
projected benefit
obligation............................ 5,360,515 6,076,879
Unrecognized prior service cost............ 751,870 831,080
Unrecognized net gain...................... (1,788,175) (2,766,480)
Unrecognized portion of transition cost at
January 1, 1987, being recognized
over 15 years......................... (1,274,460) (1,433,768)
- --------------------------------------------------------------------------
Prepaid pension cost included in
prepaid expenses...................... $ 3,049,750 $ 2,707,711
==========================================================================
</TABLE>
The weighted-average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of benefit
obligations and the projected benefit obligation were 7.5% (1992-8.5%) and 5.5%
(1992-6%), respectively. The expected long-term rate of return on assets is
8%. Investments held by the Plan include high grade corporate bonds, U.S.
Treasury Bills, and common stock, including shares of the Company. The plan is
administered by a Board of Trustees composed of five Directors. The Board
utilizes two independent money managers which, within certain established
guidelines, make investment decisions regarding the assets of the plan.
The Company also provides health care and life insurance benefits to
non-union retirees. The employees, upon retirement, have the option to continue
participating in the Company's medical group insurance coverage under the same
terms and conditions as prescribed for active employees. The life insurance
plan coverage decreases, for a period of ten years after the age of 65, at an
annual rate of 7-1/2%.
As discussed in Note 1, effective January 1, 1993, the Company adopted
SFAS 106,"Employers' Accounting for Postretirement Benefits Other Than
Pensions". The Company elected to immediately recognize the transition
obligation for future benefits to be paid related to past employee services,
resulting in a noncash pretax charge of $2,430,000 ($1,409,400 after-tax or
$0.24 per share) that represents the effect of the change in accounting for
prior years. The expense accrued in 1993 of $390,000 exceeded the amount under
the previous accounting method by $243,900 pretax ($141,500 after-tax or $0.02
per share). The Company's cash flows will be unaffected by this accounting
change because it intends to continue its current practice of paying the costs
of these postretirements benefits as the claims are incurred.
The postretirement benefit expense for 1993 included the following
components:
<TABLE>
<S> <C>
Service cost of benefits earned.................... $ 62,966
Amortization and deferral-net...................... 327,034
- ----------------------------------------------------------------------
Postretirement benefit expense..................... $390,000
======================================================================
</TABLE>
The postretirement benefit liability included the following
components:
<TABLE>
<S> <C>
Actuarial present value of postretirement benefit
obligations:
Retirees ......................................... $ 880,331
Fully eligible active plan participants .......... 456,370
Other active plan participants ................... 1,257,241
- ----------------------------------------------------------------------
Accumulated postretirement benefit obligation ...... 2,593,942
Unrecognized actuarial gain ........................ 80,005
- -----------------------------------------------------------------------
Postretirement benefit liability at
December 31, 1993................................... $2,673,947
=======================================================================
</TABLE>
The discount rate used to determine the accumulated postretirement benefit
obligation was 7.5%. The assumed health care cost trend rate used to measure
the accumulated postretirement benefit obligation was 10.5% initially, declining
gradually to 5.5% in year 2018 and thereafter. A one-percentage-point increase
in the assumed health care cost trend rate would have increased the 1993
postretirement benefit
21
<PAGE> 14
Puerto Rican Cement Company, Inc.
NOTES TO CONSOLIDATED STATEMENTS (continued)
- -------------------------------------------------------------------------------
expense by $31,391 and would have increased the 1993 accumulated postretirement
benefit obligation by $274,038.
The cost of postretirement health and life insurance benefits for the
years ended December 31, 1992 and 1991 determined based on actual expenditures
were $133,000 and $107,000, respectively.
NOTE 12 -- FINANCIAL DATA BY INDUSTRIES:
The Company's financial data by industries for the years ended December 31,
1993, 1992 and 1991 is as follows (000's omitted):
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Cement and related products........................ $ 77,796 $ 74,085 $ 72,336
Paper and packaging................................ 5,578 5,817 4,816
Realty operations.................................. 654 120 817
- -----------------------------------------------------------------------------------------------------------------------
$ 84,028 $ 80,022 $ 77,969
=======================================================================================================================
Inter-segment sales:
Paper and packaging................................ $ 3,444 $ 3,028 $ 3,162
=======================================================================================================================
Operating profit:
Cement and related products........................ $ 18,564 $ 16,665 $ 16,032
Paper and packaging................................ 1,122 861 743
Realty operations.................................. 654 120 817
- -----------------------------------------------------------------------------------------------------------------------
$ 20,340 $ 17,646 $ 17,592
=======================================================================================================================
Identifiable assets:
Cement and related products........................ $156,373 $150,216 $149,487
Paper and packaging................................ 2,351 5,460 5,576
Realty operations.................................. 1,256 1,271 1,286
Corporate.......................................... 33,304 17,238 11,946
- -----------------------------------------------------------------------------------------------------------------------
$193,284 $174,185 $168,295
=======================================================================================================================
Depreciation, depletion
and amortization:
Cement and related products........................ $ 6,837 $ 6,856 $ 4,878
Paper and packaging................................ 79 79 105
- -----------------------------------------------------------------------------------------------------------------------
$ 6,916 $ 6,935 $ 4,983
=======================================================================================================================
Capital expenditures:
Cement and related products........................ $ 9,125 $ 4,302 $ 19,618
Paper and packaging................................ 12 27 185
- -----------------------------------------------------------------------------------------------------------------------
$ 9,137 $ 4,329 $ 19,803
=======================================================================================================================
</TABLE>
The Company operates in the cement and related products, and the paper and
packaging industries as well as in realty operations mainly within the island
of Puerto Rico. Operations in the cement and related products industry involve
production and sale of cement and hydrated lime. Operations in the paper and
packaging industry involve production and sale of paper bags. Realty
operations involve the sale and lease of real property.
Operating profit is total revenue less operating expenses. Interest
expense and income taxes have not been deducted in computing operating profit.
Identifiable assets are those that are used in the Company's operations in
each segment. Corporate assets are principally investments and other assets
not used by any industry segment.
In 1993 the Company's largest customer in the cement and related products
segment accounted for 10% of total consolidated sales. Export sales were not
significant.
To reconcile industry information with consolidated amounts, the following
eliminations have been made: $3,444,000 in 1993, $3,028,000 in 1992 and
$3,162,000 in 1991 of inter-segment sales; $47,500 in 1993, $51,000 in 1992 and
$18,000 in 1991 relating to the net change in inter-segment operating profit in
beginning and ending inventories; $5,900 in 1993, $1,200 in 1992 and $4,000 in
1991 of inter-segment operating profit in inventory at December 31; and
$6,957,000 in 1993, $3,127,000 in 1992 and $2,622,000 in 1991 of receivables
arising from inter-segment sales.
NOTE 13 -- LEASE COMMITMENTS:
The Company and its subsidiaries lease certain equipment under operating lease
agreements. Rental expense under such agreements aggregated $1,339,000 in
1993, $1,375,000 in 1992 and $1,224,000 in 1991.
At December 31, 1993, the approximate future minimum lease payments under
noncancellable operating leases were as follows:
<TABLE>
- --------------------------------------------------------------------
Year Operating
- --------------------------------------------------------------------
<S> <C>
1994................................................ $105,060
1995................................................ 108,120
1996................................................ 108,120
1997................................................ 108,120
1998................................................ 108,120
1999 and beyond..................................... 627,096
- --------------------------------------------------------------------
$1,164,636
====================================================================
</TABLE>
NOTE 14 -- FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used to estimate the fair value of
each class of financial instrument:
Cash and cash equivalents
The carrying amount of these assets approximates fair value because of the
short maturity of those instruments.
Investments
The fair value of investments are estimated based on quoted market prices for
these or similar investments.
Long-term debt
The fair value of the Company's long-term debt is estimated using discounted
cash flows based on the current rates offered to the Company for debt for the
same remaining maturities not to exceed the amount for which the debt could be
settled currently including any prepayment penalties which may be applicable.
22
<PAGE> 15
- -------------------------------------------------------------------------------
The carrying amount and estimate fair value of these financial
instruments at December 31 are as follows:
<TABLE>
<CAPTION>
1993 1992
- -----------------------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- -----------------------------------------------------------------------------------------------------------
(000's omitted)
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
- -----------------------------------------------------------------------------------------------------------
Cash and Cash equivalents..... $ 431 $ 431 $ 5,474 $ 5,474
Short-term investments........ 520 539 2,728 2,728
Long-term investments......... 32,512 34,443 8,867 8,998
===========================================================================================================
FINANCIAL LIABILITIES
- -----------------------------------------------------------------------------------------------------------
Long-term debt................ $34,125 $34,287 $39,357 $31,662
===========================================================================================================
</TABLE>
NOTE 15--DISPOSITION OF IDLE EQUIPMENT AND SPARE PARTS:
In 1991 the Company wrote-off certain idle equipment and related spare parts
with a book value of $2,576,000 after management decided that such equipment
and spare parts will no longer be used as a result of the conversion to the dry
process. This write-off represented a net after tax reduction in 1991 earnings
per share of $0.26, as restated for the effect of the stock split.
NOTE 16--CONTINGENT LIABILITIES AND OTHER COMMITMENTS:
The Company is obligated to purchase, under a long-term supply contract
renegotiated in January 1992, a minimum of 100,000 metric tons of coal annually
through the year 2000. The purchase price is negotiated annually. Coal
purchases have exceeded the minimum amount required by the contract. Purchases
under the contract amounted to $4,690,000 in 1993, $5,853,000 in 1992 and
$7,667,000 in 1991.
The Company is a defendant in a number of legal proceedings arising in
the normal course of business. Management believes, based on the opinion of
legal counsel, that the final outcome of these matters will not have a material
adverse effect on the Company's financial position and results of operations.
NOTE 17--STOCKHOLDERS' EQUITY:
On May 5, 1993, the stockholders of the Company approved an amendment to the
Certificate of Incorporation, increasing the number of authorized shares of
common stock from 10 million to 20 million.
On May 6, 1992, the Board of Directors declared a three-for-one stock
split on the Company's common stock. The distribution of 4,000,000 shares was
made on June 30, 1992 to shareholders of record on May 29, 1992. The stock
split resulted in an increase of $4 million in common stock (par value $1.00)
and a reduction of the same amount in retained earnings.
All share and per share data in these financial statements have been
restated to give effect to the stock split.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
COMMON STOCK
Number of Retained
shares Cost earnings
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1990 2,000,000 $2,000,000 $ 81,128,357
Net income 10,278,490
Cash dividends declared (2,081,093)
- --------------------------------------------------------------------------------------------------
Balance at December 31, 1991 2,000,000 2,000,000 89,325,754
Net income 10,106,634
Cash dividends declared (2,371,478)
Common stock split 4,000,000 4,000,000 (4,000,000)
- --------------------------------------------------------------------------------------------------
Balance at December 31, 1992 6,000,000 6,000,000 93,060,910
Net income 11,879,732
Cash dividends declared (3,049,043)
- --------------------------------------------------------------------------------------------------
Balance at December 31, 1993 6,000,000 $6,000,000 $101,891,599
==================================================================================================
</TABLE>
NOTE 18--SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash was paid during the year for:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest (net of
amount capitalized)......... $2,855,000 $2,982,000 $1,602,000
Income taxes.................. $3,169,000 $1,930,000 $3,219,000
========================================================================================================
</TABLE>
23
<PAGE> 16
Puerto Rican Cement Company Inc.
CONSOLIDATED FOURTH QUARTER RESULTS
(000's Omitted Except Per Share Amounts)
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
Three months ended Twelve months ended
December 31 December 31
- ----------------------------------------------------------------------------------------------------------------
1993 1992 1993 1992
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenues ................................ $20,122 $18,976 $84,028 $80,022
Cost of sales ..................................... 13,137 12,947 53,291 52,532
- ----------------------------------------------------------------------------------------------------------------
Gross margin ..................................... 6,985 6,029 30,737 27,490
Selling, general and
administrative expenses ........................ 2,554 2,420 10,397 9,844
- ----------------------------------------------------------------------------------------------------------------
Income from operations ............................ 4,431 3,609 20,340 17,646
- ----------------------------------------------------------------------------------------------------------------
Other charges (credits):
Interest and financial
charges ................................... 501 720 2,654 2,971
Interest income ............................. (336) (182) (1,239) (632)
Other income ................................. (129) (34) (221) (120)
- ----------------------------------------------------------------------------------------------------------------
36 504 1,194 2,219
- ----------------------------------------------------------------------------------------------------------------
Income before income taxes ....................... 4,395 3,105 19,146 15,427
Tax provision ..................................... 1,749 948 6,710 5,320
- ----------------------------------------------------------------------------------------------------------------
Income before cumulative
effect of changes in
accounting principles ........................ 2,646 2,157 12,436 10,107
Effect of change in
accounting for
postretirement benefits ..................... (1,409)
Cumulative effect of change
in accounting for income
taxes ....................................... 853
- ----------------------------------------------------------------------------------------------------------------
Net income ....................................... $ 2,646 $ 2,157 $11,880 $10,107
================================================================================================================
Earnings per share of common stock* ............... $ 0.46 $ 0.37 $ 2.05 $ 1.74
================================================================================================================
</TABLE>
*BASED ON WEIGHTED AVERAGE OF OUTSTANDING SHARES: In 1993 and 1992 - 5,807,700.
<PAGE> 17
Puerto Rican Cement Company, Inc.
FINANCIAL RESULTS BY QUARTERS
(000's Omitted Except Per Share Amounts)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Mar. 31 June 30 Sept. 30 Dec. 31 1993 Mar. 31 June 30
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenues................. $ 20,395 $21,835 $21,676 $20,122 $84,028 $19,854 $21,334
=========================================================================================
Gross profit....................... 7,448 7,887 8,417 6,985 30,737 6,893 7,447
=========================================================================================
Income before income tax .......... 4,426 4,766 5,559 4,395 19,146 3,984 4,416
Tax provision...................... 1,225 1,635 2,101 1,749 6,710 1,396 1,572
- ----------------------------------------------------------------------------------------------------------------------------------
Income before cumulative
effect of accounting changes.... 3,201 3,131 3,458 2,646 12,436 2,588 2,844
Effect of a change in accounting
for postretirement benefits .... (1,409) (1,409)
Cumulative effect of change
in accounting for income taxes.. 853 853
- ----------------------------------------------------------------------------------------------------------------------------------
Net income ........................ $ 2,645 $3,131 $3,458 $2,646 $11,880 $2,588 $2,844
- ----------------------------------------------------------------------------------------------------------------------------------
Per share * ....................... $ 0.46(1) $0.53 $0.6 $0.46 $2.05(1) $0.45 $0.49
==================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------
Three Months Ended Sept. 30 Dec. 31 1992
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Operating revenues................. $ 19,858 $18,976 $80,022
================================
Gross profit....................... 7,121 6,029 27,490
================================
Income before income tax........... 3,922 3,105 15,427
Tax provision...................... 1,404 948 5,320
- -------------------------------------------------------------------------
Income before cumulative
effect of accounting changes.... 2,518 2,157 10,107
Effect of a change in accounting
for postretirement benefits
Cumulative effect of change
in accounting for income taxes
Net income ........................ $ 2,518 $2,157 $10,107
- -------------------------------------------------------------------------
Per share * ....................... $ 0.43 $0.37 $1.74
=========================================================================
</TABLE>
*Based on weighted average of outstanding shares of 5,807,700 in 1993 and
1992.
(1) Including a non-cash charge of ($0.24) and a credit of $0.15 per share
for cumulative effects of changes in accounting for postretirement
benefits and income taxes, respectively.
25
<PAGE> 18
Puerto Rican Cement Company, Inc.
FIVE-YEAR STATISTICAL COMPARISON
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Years ended December 31, 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET SUMMARY
Cash........................... $ 431,293 $ 130,782 $ 221,351 $ 184,766 $ 330,712
Short-term investments......... 520,000 8,070,657 11,391,863 18,420,013 12,784,460
Accounts receivable-net........ 13,626,159 10,961,829 12,577,715 12,034,639 13,437,514
Inventories.................... 33,141,836 35,773,103 31,204,693 30,565,337 27,081,853
Prepaid expenses............... 3,488,276 2,925,697 2,814,294 2,741,477 1,808,250
- --------------------------------------------------------------------------------------------------------------
CURRENT ASSETS-TOTAL........... 51,207,564 57,862,068 58,209,916 63,946,232 55,442,789
Property, plant and equipment-
net.......................... 107,968,603 105,747,681 108,353,458 95,519,838 81,061,275
Cash restricted for use in the
dry process conversion
project...................... 942,009 13,809,540
Other assets................... 1,595,062 1,708,695 1,731,203 1,733,198 1,956,573
Long-term investments.......... 32,512,367 8,866,765
- --------------------------------------------------------------------------------------------------------------
$193,283,596 $174,185,209 $168,294,577 $162,141,277 $152,270,177
==============================================================================================================
Notes payable (includes current
portion of long-term debt)... $ 7,491,735 $ 5,857,143 $ 3,482,143 $ 3,142,858 $ 3,447,494
Accounts payable and accrued
liabilities.................. 9,781,571 8,108,355 8,590,443 9,529,379 8,511,254
- --------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES - TOTAL.... 17,273,306 13,965,498 12,072,586 12,672,237 11,958,748
Long-term debt (exclusive of
current portion)............. 26,633,080 24,500,000 30,357,143 33,375,000 35,707,494
Deferred income taxes.......... 26,028,233 23,875,370 21,755,663 20,182,252 18,972,580
Postretirement benefit
liability.................... 2,673,947
Capital stock.................. 18,783,431 18,783,431 14,783,431 14,783,431 14,783,431
Retained earnings.............. 101,891,599 93,060,910 89,325,754 81,128,357 70,847,924
- --------------------------------------------------------------------------------------------------------------
$193,283,596 $174,185,209 $168,294,577 $162,141,277 $152,270,177
==============================================================================================================
STATISTICAL DATA
Book value per share........... $ 20.78 $ 19.26 $ 17.93 $ 16.51 $ 14.74
Shares outstanding at
year-end..................... 5,807,700 5,807,700 5,807,700 5,807,700 5,807,700
Number of stockholders......... 705 729 729 807 807
Average number of employees.... 533 534 555 554 554
Capital expenditures (including
expenditures in mill
conversion in 1993 and dry
process conversion until
1991)........................ $ 9,136,968 $ 4,329,320 $ 19,803,268 $ 18,423,975 $ 18,423,975
==============================================================================================================
</TABLE>
26
