<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 June 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
June 30, 1995 and December 31, 1994 1 - 2
Consolidated Statement of Income
Second quarter ended on
June 30, 1995 and 1994 3
Consolidated Statement of Cash Flows
Six months ended on
June 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 7
Signatures 8
</TABLE>
<PAGE> 3
PUERTO RICAN CEMENT COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE DECEMBER
ASSETS 30, 1995 31, 1994
<S> <C> <C>
CURRENT ASSETS
Cash $ 174,177 $ 114,702
Short-term investments 2,028,894
------------ ------------
Cash and Cash Equivalents 2,203,071 114,702
------------ ------------
Notes and accounts receivable-net of allowance for
doubtful accounts of $1,093,809 in 1995 and
$1,094,003 in 1994 19,519,341 14,358,827
------------ ------------
Inventories:
Finished products 1,545,719 1,964,131
Work in process 2,443,752 3,561,875
Raw materials 4,238,964 4,202,704
Maintenance & operating supplies 20,359,751 18,880,858
Land held for sale including development costs 307,382 307,382
------------ ------------
Total inventories 28,895,568 28,916,950
------------ ------------
Prepaid expenses 4,629,917 3,907,844
------------ ------------
TOTAL CURRENT ASSETS 55,247,897 47,298,323
------------ ------------
PROPERTY, PLANT & EQUIPMENT - net of
accumulated depreciation, depletion and amortization
of $54,805,925 in 1995 and $51,388,740 in 1994 114,609,855 111,688,573
------------ ------------
OTHER ASSETS
Long-term investments 39,432,407 42,030,507
Investments in real estate 704,987 704,987
Other long-term assets 125,413 147,364
------------ ------------
40,262,807 42,882,858
------------ ------------
TOTAL $210,120,559 $201,869,754
============ ============
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 4
PUERTO RICAN CEMENT COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 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 6,178,571 6,178,571
Accounts payable 4,302,152 4,739,970
Accrued liabilities 3,863,228 2,868,989
Income taxes payable 206,833 664,509
------------ ------------
TOTAL CURRENT LIABILITIES 14,550,784 16,872,039
------------ ------------
LONG-TERM LIABILITIES
Long-term debt, less current portion 35,916,833 31,696,403
Deferred income taxes 29,806,869 27,722,814
Postretirement benefit liability 2,889,863 2,607,162
------------ ------------
68,613,565 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 5,494,200 shares 6,000,000 6,000,000
Additional paid-in capital 14,367,927 14,367,927
Retained earnings 120,306,371 114,140,497
------------ ------------
140,674,298 134,508,424
Less: 580,800 (1994 - 505,800) shares of common
stock in treasury, at cost 13,718,088 11,537,088
------------ ------------
STOCKHOLDERS' EQUITY NET 126,956,210 122,971,336
------------ ------------
TOTAL $210,120,559 $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 Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $25,169,746 $24,762,612 $47,887,764 $47,274,946
Revenue from real estate operations 30,925 24,274 55,199 48,548
----------- ----------- ----------- -----------
25,200,671 24,786,886 47,942,963 47,323,494
Cost of sales 15,289,923 15,492,563 30,033,596 29,981,136
----------- ----------- ----------- -----------
Gross margin 9,910,748 9,294,323 17,909,367 17,342,358
Selling, general & administrative expenses 3,193,716 2,943,191 6,336,974 5,404,523
----------- ----------- ----------- -----------
Income from operations 6,717,032 6,351,132 11,572,393 11,937,835
----------- ----------- ----------- -----------
Other charges (credits):
Interest and financial charges 522,793 579,538 1,048,780 1,155,492
Interest income (608,883) (553,035) (1,211,659) (1,040,001)
Other income (468,992) (24,203) (504,039) (61,361)
----------- ----------- ----------- -----------
Total other charges (credits) (555,082) 2,300 (666,918) 54,130
----------- ----------- ----------- -----------
Income before income tax 7,272,114 6,348,832 12,239,311 11,883,705
Provision for income tax 2,543,982 2,256,024 4,218,159 4,219,052
----------- ----------- ----------- -----------
Net income $ 4,728,132 $ 4,092,808 $ 8,021,152 $ 7,664,653
=========== =========== =========== ===========
Income per share:
Net income $ 0.87 $ 0.70 $ 1.47 $ 1.32
=========== =========== =========== ===========
Average Common Shares Outstanding 5,456,700 5,801,033 5,456,700 5,801,033
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 6
PUERTO RICAN CEMENT COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 8,021,152 $ 7,664,653
------------- --------------
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation, depletion and amortization 3,432,609 3,467,667
Accretion of discounts on investments (2,388,275)
Provision for deferred income taxes 2,084,055 2,115,948
Postretirement benefit cost 222,701 (131,656)
Gain on sale of property & equipment (421,427)
Changes in assets and liabilities:
Increase in notes & accounts receivable (3,540,972) (4,347,367)
Decrease in inventories 21,382 2,987,218
Increase in prepaid expenses (722,073) (1,424,845)
(Decrease) increase in accounts payable (374,630) 1,094,858
Increase in accrued liabilities 994,239 2,023,828
Decrease in income taxes payable (457,676) (103,423)
Decrease in other long-term assets 21,951 20,116
------------- --------------
Total adjustments (1,128,116) 5,702,344
------------- --------------
Cash provided by operations 6,893,036 13,366,997
------------- --------------
Cash flows from investing activities:
Capital expenditures (6,369,009) (5,663,602)
Proceeds from sale of property & equipment 436,545
Increase in other short-term investments (2,028,894) (2,208,058)
Decrease (increase) in long-term investments 3,366,833 (5,099,794)
------------- --------------
Cash used in investing activities (4,594,525) (12,971,454)
------------- --------------
Cash flows from financing activities:
Proceeds from loan 4,220,430 2,375,185
Decrease in short-term borrowing (2,420,000)
Purchase of treasury stock (2,181,000) (1,181,950)
Dividends paid (1,858,466) (1,742,310)
------------- --------------
Cash used in financing activities (2,239,036) (549,075)
------------- --------------
Increase (decrease) in cash and cash equivalents $ 59,475 $ (153,532)
============= ==============
Cash and cash equivalents - beginning of year $ 114,702 $ 431,293
Cash and cash equivalents - end of period 174,177 277,761
------------- --------------
Increase (decrease) in cash and cash equivalents $ 59,475 $ (153,532)
============= ==============
</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 June 30, 1995 and December 31, 1994, and the results of operations
and cash flows for the six months ended June 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 of approximately $2.2 million as of June 30,
1995 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. These investments resulted from excess
funds generated from operations.
Consolidated notes and accounts receivable at June 30, 1995 were $5.1
million higher than the $14.4 million balance at December 31, 1994. Higher
volume on sales during the second quarter of 1995 when compared to the prior
year's last quarter, resulted in a comparative increase in accounts
receivable-trade. Receivables' turnover has been maintained within normal
historical levels.
Consolidated inventory balances as of June 30, 1995 and December 31,
1994, respectively, remained at approximately $29.9 million. Prepaid
expenses increased to $4.6 million as of June 30, 1995 compared to $3.9 million
as of December 31, 1994 due principally to property tax prepayments scheduled
for this period.
Long-term investments decreased $2.6 million from $42 million in
December 1994 to $39.4 million in June 1995. This decrease resulted from the
maturity of various of these investments during this period, amount which was
reinvested almost entirely in short-term investments.
Total current liabilities decreased approximately $2.3 million when
compared to the $16.9 million balance outstanding on December 31, 1994. The
repayment of $2.4 million in short-term borrowing was the principal reason of
this decline.
At its June 21, 1995 meeting, the Board of Directors of the Registrant
declared a 17 cents per share dividend on its common stock, payable on August
11, 1995 to stockholders of record on July 14, 1995. As of June 30, 1995, the
Registrant has 5,419,200 shares of common stock issued and outstanding. This
compares with 5,767,700 outstanding shares as of March 31, 1994.
-5-
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
Working capital, for the period, reached the figure of $40.7 million
at June 30, 1995 compared to $30.4 million at December 31, 1994, with current
ratio growing from 2.8 to 1 in December 1994 to 3.8 to 1 in June 1995.
Net cash provided by operations for this period in the amount of $6.9
million was principally used to pay $1.8 million in dividends and to
repurchase, in April 1995, 75,000 shares of the Company's common stock for $2.2
million.
During the first half of 1995, capital expenditures of $6.4 million
were incurred, including $5 million related to the mill conversion project.
This increase in property, plant and equipment was offset by $3.4 million in
depreciation for the period.
Long-term debt increased $4.2 million principally from loans proceeds
related to the mills' conversion project. Approximate aggregate maturities of
long-term debt for the remaining of 1995 and thereafter are as follows:
<TABLE>
<S> <C>
1995 $ 6,178,571
1996 6,178,571
1997 2,821,429
1998 7,000,000
1999 19,916,833
-----------
Totals $39,639,217
===========
</TABLE>
Loan agreements with term lenders impose certain restrictions on the
Company pertaining to working capital, indebtedness, dividends, investments and
certain advances, among others.
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. Maximum aggregate short-term borrowing
outstanding at any month-end during the six-month period ended on June 30, 1995
was $2,175,000, with no outstanding balance as of this date.
Results of Operations
- ---------------------
Consolidated net sales of $25.2 million for the quarter ended on June
30, 1995 resulted in an increase of 1.6% from $24.8 million in sales reached
during the same period of 1994. For the six-month period consolidated net
sales increased 1.3%, or $613,000 from June 30, 1994 to June 30, 1995.
-6-
<PAGE> 9
Gross margins as a percentage of total sales were 39% for the second
quarter of 1995 compared to 37% for the second quarter of 1994. For both of
the six-month periods ended on June 30, 1995 and 1994 gross margins remained at
37%.
Selling, general and administrative expenses increased $251,000 from
$2.9 million in the second quarter of 1994 to $3.2 million in the second
quarter of 1995, and $932,000 from $5.4 million during the six-month period
ended on June 30, 1994 to $6.3 million as of June 30, 1995. This increase
relates principally to higher pension and postretirement benefit expenses plus
normal inflationary increases in salaries, wages and related benefits.
Interest and financial charges of $1 million as of June 30, 1995 and
$523,000 for the quarter ended on that date were 9% lower than the comparable
periods of 1994. These declines resulted principally from the combination of
reduced interest rates on the outstanding loans and the capitalization of all
the interest related to the financing of the mills' conversion project.
Consolidated interest income increased 16% to $1.2 million in 1995
principally due to higher average investments volume outstanding during this
period in addition to improved interest rates on these investments. The
increase of $445,000 in other income represented the gain on the sale of a
piece of idle equipment.
Part II. OTHER INFORMATION.
In July 1995, the Company substantially completed the construction
phase of the mills' conversion project. The equipment was successfully tested
and is actually undergoing the necessary start-up procedures and testing
related to this kind of equipment.
Item 2. NONE
Item 5. NONE
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
27 Financial Data Schedule (for SEC use only)
-7-
<PAGE> 10
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: 08/02/95 By: /S/ Angel Amaral
-------------------- -------------------------------
Angel Amaral
Vice President & Controller
Date: 08/02/95 By: /S/ Jose O. Torres
------------------- --------------------------------
Jose O. Torres
Vice President of Finance
& Treasurer
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF PUERTO RICAN CEMENT COMPANY, INC. FOR THE SIX-MONTHS
ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 174,177
<SECURITIES> 2,028,894
<RECEIVABLES> 20,613,150
<ALLOWANCES> 1,093,809
<INVENTORY> 28,895,568
<CURRENT-ASSETS> 55,247,897
<PP&E> 169,415,780
<DEPRECIATION> 54,805,925
<TOTAL-ASSETS> 210,120,559
<CURRENT-LIABILITIES> 14,550,784
<BONDS> 35,916,833
<COMMON> 6,000,000
0
0
<OTHER-SE> 120,956,210
<TOTAL-LIABILITY-AND-EQUITY> 210,120,559
<SALES> 47,887,764
<TOTAL-REVENUES> 47,942,963
<CGS> 30,033,596
<TOTAL-COSTS> 36,370,570
<OTHER-EXPENSES> (666,918)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 12,239,311
<INCOME-TAX> 4,218,159
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,021,152
<EPS-PRIMARY> 1.47
<EPS-DILUTED> 0
</TABLE>
