<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act
of 1934
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from TO
--------- ---------
For Quarter Ended Commission file number 1-4753
--------------- ------
PUERTO RICAN CEMENT COMPANY, INC.
(Exact name of registrant as specified in its charter)
COMMONWEALTH OF PUERTO RICO 51-A-66-0189525
- --------------------------- ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
PO Box 364487 - San Juan, P.R. 00936-4487
- ------------------------------ ----------
(Address of principal executive offices) (Zip Code)
(809) 783-3000
--------------
(Registrant's telephone number, including area code)
NONE
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the Registrant (1) has filed reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
------ -------
COMMON STOCK -$1.00 PAR VALUE 5,419,200 SHARES
<PAGE> 2
PUERTO RICAN CEMENT COMPANY, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
<S> <C> <C>
Part I - Financial Information
Consolidated Balance Sheet as of
September 30, 1995 and December 31, 1994 1 - 2
Consolidated Statement of Income
Third quarter ended on
September 30, 1995 and 1994 3
Consolidated Statement of Cash Flows
Nine months ended on
September 30, 1995 and 1994 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6 - 7
Part II - Other Information 8
Signatures 8
</TABLE>
<PAGE> 3
PUERTO RICAN CEMENT COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER
ASSETS 30, 1995 31, 1994
-------- --------
<S> <C> <C>
CURRENT ASSETS
Cash $ 625,983 $ 114,702
Short-term investments 8,013,495
------------ ------------
Cash and Cash Equivalents 8,639,478 114,702
------------ ------------
Notes and accounts receivable-net of allowance for
doubtful accounts of $1,035,117 in 1995 and
$1,094,003 in 1994 14,035,440 14,358,827
------------ ------------
Inventories:
Finished products 1,659,435 1,964,131
Work in process 3,770,964 3,561,875
Raw materials 4,681,611 4,202,704
Maintenance & operating supplies 21,243,999 18,880,858
Land held for sale including development costs 307,382 307,382
------------ ------------
Total inventories 31,663,391 28,916,950
------------ ------------
Prepaid expenses 4,982,009 3,907,844
------------ ------------
TOTAL CURRENT ASSETS 59,320,318 47,298,323
------------ ------------
PROPERTY, PLANT & EQUIPMENT - Net of
accumulated depreciation, depletion and amortization
of $56,513,032 in 1995 and $51,388,740 in 1994 115,091,872 111,688,573
------------ ------------
OTHER ASSETS
Long-term investments 37,587,570 42,030,507
Investments in real estate 704,987 704,987
Other long-term assets 148,893 147,364
------------ ------------
38,441,450 42,882,858
------------ ------------
TOTAL $212,853,640 $201,869,754
============ ============
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 4
PUERTO RICAN CEMENT COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER
30, 1995 31, 1994
-------- --------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowing $ - $ 2,420,000
Current portion of long-term debt 4,653,571 6,178,571
Accounts payable 4,802,010 4,739,970
Accrued liabilities 4,153,307 2,868,989
Income taxes payable 16,296 664,509
------------ ------------
TOTAL CURRENT LIABILITIES 13,625,184 16,872,039
------------ ------------
LONG-TERM LIABILITIES
Long-term debt, less current portion 36,795,910 31,696,403
Deferred income taxes 30,610,479 27,722,814
Postretirement benefit liability 2,899,293 2,607,162
------------ ------------
70,305,682 62,026,379
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, authorized 2,000,000
shares of $5.00 par value each; none issued
Common stock authorized 20,000,000
shares of $1.00 par value each; issued
6,000,000 shares, outstanding 5,419,200 shares 6,000,000 6,000,000
Additional paid-in capital 14,367,927 14,367,927
Retained earnings 122,272,935 114,140,497
------------ ------------
142,640,862 134,508,424
Less: 580,800 (1994 -505,800) shares of common
stock in treasury, at cost 13,718,088 11,537,088
------------ ------------
STOCKHOLDERS' EQUITY NET 128,922,774 122,971,336
------------ ------------
TOTAL $212,853,640 $201,869,754
============ ============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 5
PUERTO RICAN CEMENT COMPANY, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $22,375,156 $23,541,842 $70,262,920 $70,816,788
Revenue from real estate operations 23,574 24,273 78,773 72,821
----------- ----------- ----------- -----------
22,398,730 23,566,115 70,341,693 70,889,609
Cost of sales 14,907,359 16,570,557 44,940,955 46,551,693
----------- ----------- ----------- -----------
Gross margin 7,491,371 6,995,558 25,400,738 24,337,916
Selling, general & administrative expenses 3,161,210 2,957,582 9,498,184 8,362,105
----------- ----------- ----------- -----------
Income from operations 4,330,161 4,037,976 15,902,554 15,975,811
----------- ----------- ----------- -----------
Other charges (credits):
Interest and financial charges 491,751 592,808 1,540,531 1,748,300
Interest income (637,133) (620,512) (1,848,792) (1,660,513)
Other income (3,379) (30,068) (507,418) (91,429)
----------- ----------- ------------ ----------
Total other charges (credits)
(148,761) (57,772) (815,679) (3,642)
----------- ----------- ----------- ----------
Income before income tax 4,478,922 4,095,748 16,718,233 15,979,453
Provision for income tax 1,591,094 1,235,965 5,809,253 5,455,017
----------- ----------- ----------- ----------
Net income $ 2,887,828 $ 2,859,783 $10,908,980 $10,524,436
=========== =========== =========== ==========
Income per share:
Net income $ 0.53 $ 0.50 $ 2.00 $ 1.82
=========== =========== =========== ===========
Average Common Shares Outstanding 5,419,200 5,782,275 5,444,200 5,767,899
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 6
PUERTO RICAN CEMENT COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $10,908,980 $10,524,436
----------- -----------
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation, depletion and amortization 5,171,504 5,209,702
Accretion of discounts on investments (2,776,972)
Provision for deferred income taxes 2,887,665 2,701,501
Postretirement benefit cost 232,130 (98,979)
Gain on sale of property & equipment (420,635)
Changes in assets and liabilities:
Decrease (increase) in notes & accounts receivable 1,942,929 (3,524,448)
(Increase) decrease in inventories (2,746,441) 5,844,772
Increase in prepaid expenses (1,074,165) (1,603,743)
Increase in accounts payable 125,228 836,111
Increase in accrued liabilities 1,284,318 2,181,148
Decrease in income taxes payable (648,213) (279,440)
(Increase) decrease in other long-term assets (1,529) 31,478
----------- -----------
Total adjustments 3,975,819 11,298,102
----------- -----------
Cash provided by operations 14,884,799 21,822,538
----------- -----------
Cash flows from investing activities:
Capital expenditures (8,590,712) (8,399,600)
Proceeds from sale of property & equipment 436,545
Increase in other short-term investments (8,013,495) (1,074,195)
Decrease (increase) in long-term investments 5,600,367 (7,910,210)
----------- -----------
Cash used in investing activities (10,567,295) (17,384,005)
----------- -----------
Cash flows from financing activities:
Proceeds from loan 11,199,507 15,438,747
Payment of principal on long-term debt (7,625,000) (10,892,859)
Decrease in short-term borrowing (2,420,000)
Purchase of treasury stock (2,181,000) (5,414,750)
Dividends paid (2,779,730) (2,606,370)
----------- -----------
Cash used in financing activities (3,806,223) (3,475,232)
----------- -----------
Increase in cash and cash equivalents $ 511,281 $ 963,301
=========== ===========
Cash and cash equivalents - beginning of year $ 114,702 $ 431,293
Cash and cash equivalents - end of period 625,983 1,394,594
----------- -----------
Increase in cash and cash equivalents $ 511,281 $ 963,301
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 7
PUERTO RICAN CEMENT COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of the Registrant, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly its financial
position at September 30, 1995 and December 31, 1994, and the results of
operations and cash flows for the nine months ended September 30, 1995 and
1994. The results of operations are not necessarily indicative of the results
to be expected for the full year.
Cash and cash equivalents increased to $8.6 million at September 30,
1995 from $115,000 at December 31, 1994 when the Company decided to shift part
of its long-term investments to shorter maturities as part of its strategic
plan to purchase two ready-mixed concrete companies. These investments
consisted principally of short-term obligations of the U.S. Federal Government
or its agencies. Long-term investments were principally obligations of the
U.S. Federal Government or its agencies with maturities ranging from more than
one year to up to 7 years. All these investments resulted from excess funds
generated from operations.
Consolidated inventories of $31.7 million at September 30, 1995 were
9% higher than the $28.9 million balance at December 31, 1994. Increases in
coal inventories of $877,000, as the result of the timing of shipments
received, and in spare parts' inventories of $1.6 million, mostly from
equipment related to the mills' conversion project, contributed significantly
to this fluctuation.
Prepaid expenses increased 27% to approximately $5.0 million as of
September 30, 1995 compared with $3.9 million as of December 31, 1994. The
increase mainly resulted from prepayments of property tax, municipal license
and other taxes scheduled during the second quarter of the year. The balances
of these prepayments will be fully amortized at year-end.
The decrease of $1.5 million in the current portion of long-term debt
reflected the refinancing of the 9.9% dry process conversion loan. Accrued
liabilities increased $1.3 million due mainly to accruals related to the
Christmas Bonus payable in December to the Company's employees.
In September 1995, the Board of Directors of the Company declared a 17
cents per share dividend on its common stock, payable on November 13, 1995 to
stockholders of record on October 13, 1995. As of September 30, 1995, the
Company had 5,419,200 shares of common stock issued and outstanding.
5
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Working capital increased from $30.4 million at December 31, 1994 to
$45.7 million at September 30, 1995 as the result of the previously mentioned
increase in short-term investments. The current ratio increased from 2.8 to 1
at December 31, 1994 to 4.4 to 1 at September 30, 1995.
Net cash provided by operations totaled $14.9 million for this period.
This cash was principally used to: a) pay $2.8 million in dividends, b) repay
$2.4 million in short-term borrowing, c) increase total investments by $2.4
million and d) repurchase, in April 1995, 75,000 shares of the Company's common
stock for $2.2 million.
During the nine-month period ended on September 30, 1995, the Company
invested $8.6 million in new capital additions, including $6.3 million on the
mills' conversion project. These capital additions were offset by $5.2 million
in depreciation for the period.
The net increase in long-term debt (including the current portion) of
$3.6 million was due principally to proceeds from loans related to the mills'
conversion project. Approximate aggregate maturities of long-term debt for the
remainder of 1995 and thereafter are as follows:
<TABLE>
<S> <C>
1995 $ 2,428,571
1996 4,653,571
1997 4,296,429
1998 8,475,000
1999 and thereafter 21,595,910
------------
Total $ 41,449,481
============
</TABLE>
Loan agreements with term lenders impose certain restrictions on the
Company, including restrictions concerning working capital, indebtedness,
dividends, investments and certain advances.
The Registrant has available credit facilities with commercial banks
for short-term financing and discount of trade paper from customers in the
aggregate amount of $20,600,000. The maximum aggregate amount of short-term
borrowing outstanding at any month-end during the nine-month period ended on
September 30, 1995 was $2,175,000. There was no outstanding balance as of
September 30, 1995.
-6-
<PAGE> 9
Results of Operations
Consolidated net sales of $22.4 million for the third quarter of 1995
were 5% lower than net sales of $23.5 million for the same period of 1994.
Cement sales in bags declined 8% from 5,230,000 bags during the third quarter
of 1994 to 4,790,000 bags for this quarter. This decline was the result of
interruptions of construction projects during the latter part of the quarter
caused by unfavorable weather conditions, including various hurricane warnings,
in the Caribbean region. For the nine-month period ended in September,
consolidated net sales decreased less than 1% to $70.3 million in 1995 from
$70.8 million for the same period in 1994.
Net sales in the paper and bag division for the nine-month period
ended September 30, 1995 grew 12% to $7.3 million from $6.5 million for the
same period in 1994 due to higher sales in the small bags (pockets) department.
However, a major increases in paper costs affected results for the period.
Gross margins as a percentage of total sales improved from 29.7% for
the third quarter of 1994 to 33.4% for the third quarter of 1995 due to a
reduction in the average cost of sales per bag of cement. For the nine-month
period, gross margins improved from 34.3 % in 1994 to 36.1% in 1995. The
decrease in cost of sales per bag resulted mostly from a significant decline in
repairs and maintenance expenses for the period. In 1994 the Company completed
major overall maintenance and replacement work on its dry process equipment.
Selling, general and administrative expenses for the quarter totaled
$3.2 million, an increase of 7% over the third quarter of 1994, resulting
primarily from increases in salaries, wages and related fringe benefits. For
the nine-month period ended on September 30, 1995, selling, general and
administrative expenses increased $1.1 million from the amount in the same
period in 1994 because of increased salaries and related fringe benefits
expenses, higher pension and other postretirement benefits resulting from
changes in the interest rate assumptions used in the actuarial calculations,
and higher consulting fees.
Interest and financial charges for the nine-month period ended
September 30, 1995 decreased 12% to $1.5 million from $1.7 million in the same
period in 1994. For the quarter the decrease of $101,000 in interest and
financial charges represented a reduction of 17% when compared with the same
period of 1994. This reduction resulted principally from lower interest rates
on the Company's outstanding loans. Interest capitalized as part of the mills'
conversion project totaled $804,000 and $385,000 for the first nine months of
1995 and 1994, respectively.
Consolidated interest income increased from $1.6 million for the first
nine months of 1994 to $1.8 million for the first nine months of 1995. This
increase of 11% resulted from the combination of a higher average amount of
investments for the nine-months period and improved interest rates on these
investments. The increase of $416,000 in other income for the nine months
period consisted principally of a gain on the sale of equipment.
-7-
<PAGE> 10
Part II. OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K
b. As previously reported in a Form 8-K to the Securities and
Exchange Commission dated October 4, 1995, incorporated herein by reference,
the Company entered into agreements to purchase two ready-mixed concrete
companies, Concreto Mixto, Inc. and Ready Mix Concrete Inc. The Company is
currently conducting the due diligence review procedures and expects to
complete them in the last quarter of 1995.
-8-
<PAGE> 11
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PUERTO RICAN CEMENT COMPANY, INC.
- ---------------------------------
(Registrant)
Date: 11/01/95 By: /S/ Angel Amaral
-------------------- ------------------------------
Angel Amaral
Vice President & Controller
Date: 11/01/95 By: /S/ Jose O. Torres
--------------------- -------------------------------
Jose O. Torres
Vice President of Finance
& Treasurer
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 625,983
<SECURITIES> 8,013,495
<RECEIVABLES> 15,070,557
<ALLOWANCES> 1,035,117
<INVENTORY> 31,663,391
<CURRENT-ASSETS> 59,320,318
<PP&E> 171,604,904
<DEPRECIATION> 56,513,032
<TOTAL-ASSETS> 212,853,640
<CURRENT-LIABILITIES> 13,625,184
<BONDS> 36,795,910
<COMMON> 6,000,000
0
0
<OTHER-SE> 122,922,774
<TOTAL-LIABILITY-AND-EQUITY> 212,853,640
<SALES> 70,262,920
<TOTAL-REVENUES> 70,341,693
<CGS> 44,940,955
<TOTAL-COSTS> 54,439,139
<OTHER-EXPENSES> (815,679)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 16,718,233
<INCOME-TAX> 5,809,253
<INCOME-CONTINUING> 10,908,980
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,908,980
<EPS-PRIMARY> 2.00
<EPS-DILUTED> 0
</TABLE>
