<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 1-4753
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PUERTO RICAN CEMENT COMPANY, INC.
---------------------------------
(Exact name of registrant as specified in its charter)
COMMONWEALTH OF PUERTO RICO 51-A-66-0189525
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(State or other jurisdiction of incorporation) (I.R.S. Employer ID No.)
PO Box 364487 - San Juan, P.R. 00936-4487
- ------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (787) 783-3000
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NONE
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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
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Common stock, $1 Par Value; 5,527,074 Shares Outstanding
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<PAGE> 2
PUERTO RICAN CEMENT COMPANY, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Part I - Financial Information
Consolidated Balance Sheet as of March 31, 1997
and December 31, 1996............................................. 1-2
Consolidated Statement of Income for the three months
ended on March 31, 1997 and 1996 ...................... 3
Consolidated Statement of Cash Flows for the three months
ended on March 31, 1997 and 1996 ................................. 4
Notes to Consolidated Financial Statements........................ 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations............................... 6-8
Part II - Other Information................................................... 8
Signatures.......................................................... 9
</TABLE>
<PAGE> 3
Puerto Rican Cement Company, Inc.
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
March December
31, 1997 31, 1996
-------- --------
(In Thousands)
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 3,100 $ 14,809
-------- --------
Investments available-for-sale 4,627 4,596
-------- --------
Short-term investments 2,963 1,918
-------- --------
Notes and accounts receivable-net of allowance for
doubtful accounts of $1,576 in 1997 and
$1,539 in 1996 31,272 27,410
-------- --------
Inventories:
Finished products 2,159 2,219
Work in process 6,678 4,510
Raw materials 3,667 3,544
Maintenance & operating supplies 24,392 22,667
Land held for sale including development costs 503 503
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Total inventories 37,399 33,443
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Prepaid expenses 4,755 4,625
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Total current assets 84,116 86,801
Property, Plant & Equipment - net of
accumulated depreciation, depletion and amortization
of $67,140 in 1997 and $64,163 in 1996 143,368 143,088
Long-term investments 46,464 46,980
Other assets 7,612 4,334
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Total $281,560 $281,203
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 4
Puerto Rican Cement Company, Inc.
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
March December
31, 1997 31, 1996
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(In Thousands)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities
Current portion of long-term debt $ 8,354 $ 15,401
Accounts payable 10,712 7,799
Accrued liabilities 6,765 6,350
Income taxes payable 2,786 931
-------- --------
Total current liabilities 28,617 30,481
-------- --------
Long-term Liabilities
Long-term debt, less current portion 66,823 67,023
Deferred income taxes 32,818 33,323
Other long-term liabilities 2,974 2,955
-------- --------
Total long-term liabilities 102,615 103,301
-------- --------
Total liabilities 131,232 133,782
-------- --------
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 5,527,074 shares
as of March 31, 1997 and 5,504,722 as of December 31, 1996 6,000 6,000
Additional paid-in capital 14,703 14,703
Unrealized gain on investments available-for-sale 123 110
Retained earnings 139,941 137,047
-------- --------
160,767 157,860
Less: Shares of common stock in treasury, at cost
(472,926 shares as of March 31, 1997 and 495,278 shares
as of December 31, 1996) 10,439 10,439
-------- --------
Stockholders' Equity - Net 150,328 147,421
-------- --------
Total $281,560 $281,203
======== ========
</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
March 31,
1997 1996
---- ----
(In Thousands, except share data)
<S> <C> <C>
Net sales $ 37,188 $ 37,380
Revenue from real estate operations 24 23
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37,212 37,403
Cost of sales 26,563 27,040
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Gross margin 10,649 10,363
Selling, general & administrative expenses 4,774 4,642
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Income from operations 5,875 5,721
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Other charges (credits):
Interest and financial charges 1,323 1,138
Interest income (841) (605)
Other income 104 (117)
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Total other charges (credits) 586 416
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Income before income tax 5,289 5,305
Provision for income tax 1,346 1,612
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Net income $ 3,943 $ 3,693
======== ========
Income per share:
Net income $0.71 $0.67
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Common shares outstanding 5,527,074 5,504,722
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</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 6
Puerto Rican Cement Company, Inc.
Consolidated Statement Of Cash Flows
For The Three Months Ended
(Unaudited)
<TABLE>
<CAPTION>
March 31,
1997 1996
---- ----
(In Thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,944 $ 3,693
--------- ---------
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation, depletion and amortization 2,998 2,598
Accretion of discounts on investments (983) (386)
Provision for deferred income taxes (505) 245
Postretirement benefits cost 20 20
Gain on sale of fixed assets (2) (11)
Changes in assets and liabilities:
Increase in notes & accounts receivable (3,862) (2,678)
(Increase) decrease in inventories (3,956) 2,072
(Increase) decrease in prepaid expenses (131) 118
Increase (decrease) in accounts payable 1,863 (278)
Increase in accrued liabilities 1,464 1,411
Increase in income taxes payable 1,855 1,019
Increase in other long-term assets (3,290) (176)
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Total adjustments (4,529) 3,954
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Cash (used in) provided by operations (585) 7,647
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Cash flows from investing activities:
Capital expenditures (3,293) (2,984)
Redemption of long-term investments 1,499 96
Purchase of short-term investments (1,045) (82)
Purchase of investments available-for-sale (18) (42)
Proceeds from sale of fixed assets 30 15
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Cash used in investing activities (2,827) (2,997)
--------- ---------
Cash flows from financing activities:
Repayment of long-term debt and notes payable (57,247) (4,300)
Dividends paid (1,050) (936)
Proceeds from loans 50,000
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Cash used in financing activities (8,297) (5,236)
--------- ---------
Decrease in cash and cash equivalents ($11,709) ($586)
======== =========
Cash and cash equivalents - beginning of year $14,809 $11,600
Cash and cash equivalents - end of period 3,100 11,014
--------- ---------
Decrease in cash and cash equivalents ($11,709) ($586)
======== =========
</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 March 31, 1997 and December 31, 1996, and the results of operations
for the three months ended March 31, 1997 and 1996, and cash flows for the
three months ended March 31, 1997 and 1996. The results of operations are not
necessarily indicative of the results to be expected for the full year.
Total cash and cash equivalents decreased from $14.8 million as of December
31, 1996 to $3.1 million as of March 31, 1997. In January 1997, the Company
paid $7 million of a $17.6 million revolving credit facility outstanding at
December 31, 1996. This payment, together with capital expenditures of $3.3
million and additions in other long-term assets of $3.3 million consisting
principally of equipment related to the aggregates' business contributed to the
decline in the cash and cash equivalents balance during this quarter.
Investments consisted principally of short-term obligations and obligations
of the U.S. Government or its agencies with a maturity ranging from more than
one year to seven years.
Notes and accounts receivable were $31.3 million as of March 31, 1997
compared with $27.4 million as of December 31, 1996, an increase of $3.9
million. The increase resulted from a higher balance of accounts
receivable-trade attributable to stronger cement sales during the first quarter
of the year as compared to sales during the last quarter of 1996. Receivable'
turnover was maintained at normal levels during the first quarter of 1997, with
an average collection period below 60 days.
Consolidated inventories increased $4.0 million to $37.4 million as of
March 31, 1997 compared with $33.4 million as of December 31, 1996. The
increase resulted from $2.2 million in additional work in process inventory
principally due to a higher inventory of clinker and to $1.7 million in
additional coal inventory.
Total current liabilities decreased $1.9 million from $30.5 million as of
December 31, 1996 to $28.6 million as of March 31, 1997. The decrease was
principally attributable to the repayment of $7.0 million of the $17.6 million
revolving credit facility mentioned above, offset by a normal increase in
income taxes payable due in April and an increase in accounts payable-trade
related to the ready-mixed concrete subsidiary.
At its March 26, 1997 meeting, the Board of Directors of the Registrant
declared a 19 cent per share dividend on its common stock, payable on May 16,
1997 to stockholders of record on April 18, 1997. As of March 31, 1997, the
Registrant had 5,527,074 shares of common stock issued and outstanding as
compared with 5,504,722 as of March 31, 1996.
As of March 31, 1997, $47.5 million or 17% of the Company's total
consolidated assets were attributable to the ready-mixed concrete subsidiary.
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<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Working capital at March 31, 1997, improved to $55.6 million compared with
$52.6 million at December 31, 1996. The current ratio increased to 2.94 to 1 as
of March 31, 1997, from 2.85 to 1 as of December 31, 1996. The improvement in
both items resulted from a decrease in current liabilities caused by the
repayment of $7 million of the current portion of long-term debt.
Capital expenditures incurred during the three-month period ended March 31,
1997, totaled $3.3 million. Depreciation expense for this year first quarter
totaled $3.0 million. During this quarter, the Company purchased land near the
cement plant at a cost of $1.8 million. This land will be used in the future as
a quarry for raw material for the production of cement.
The approximate maturities of long-term debt for the remainder of 1997 and
thereafter are as follows (in thousands):
<TABLE>
<S> <C>
1997 $ 8,354
1998 800
1999 11,423
2000 800
2001 and thereafter 53,800
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Total $75,177
=======
</TABLE>
Loan agreements with term lenders impose certain restrictions on the
Company concerning working capital, indebtedness, dividends, investments and
certain advances, among other restrictions.
As indicated in its annual report for 1996, the Company expects to issue
$20 million in Series B Senior Secured Notes at a later date during 1997.
Proceeds from these Notes, at a 7.34% interest rate, will be used to finance
the acquisition of new equipment for the aggregates business and for the
improvement and modernization of the cement plant.
The Company has available credit facilities in the aggregate amount of
$20,600,000 with commercial banks for short-term financing and discount of
trade paper from customers. No amount was outstanding under these facilities at
any month-end during the first quarter of 1997. These short-term facilities are
renewable annually at the discretion of the banks, which at this time do not
require any commitment fees for these credit facilities.
-6-
<PAGE> 9
Results of Operations
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS ENDED
MARCH 31, 1996
Consolidated net sales for the first quarter of 1997 remained at
approximately the same level of 1996 with sales of $37.2 million compared with
$37.4 million in the same quarter of 1996. Total cement sales decreased 3%,
from 261,000 tons in the first quarter of 1996 to 253,000 tons for this year
first quarter. Lime sales for the three month period ended March 31, 1997,
decreased 8,600 tons compared with total sales of 12,500 tons for the same
period of 1996 as no lime export sales were made during this quarter. These
decreases were offset by an increase of 9% in sales by the Company's paper and
bag division attributable to higher sales in the small bags department and
higher ready-mixed concrete sales resulting from an increase in the average
selling price.
Consolidated cost of sales totaled $26.6 million for the first quarter of
1997 compared with $27.0 million for the first quarter of 1996, a decrease of
approximately $400,000. Cost of sales for this period was favorably impacted by
improvements in inventory management and production schedules in both the
cement and the paper and bags division. These favorable adjustments were offset
by an increase in costs in the ready-mixed concrete subsidiary attributable to
increases in the cost of aggregates and in the freight paid to the carriers of
this material.
Selling, general and administrative expenses increased less than 3% to $4.8
million in the first quarter of 1997 compared with $4.6 million in the first
quarter of 1996. This increase was principally attributable to expenses related
to the San Juan Cement legal proceeding. No expenses attributable to this
matter was recorded during last year's first quarter.
Interest and financial charges increased 16% to $1.3 million compared with
$1.1 million for the first quarter of 1996. This increase reflects the effect
of slightly higher interest rates related to the $50 million of Series A Senior
Secured Notes issued in January 1997 as compared to previously existing
indebtedness. In addition, in December 1996 the Company obtained a $17.6
million loan to purchase a zero-coupon bond used to secure the $50 million
Notes. Both interest expense related to the loan and the Notes, and interest
income related to the zero-coupon bond affected the first quarter of 1997.
LEGAL PROCEEDING INVOLVING SAN JUAN CEMENT
As reported in the Company's 1996 annual report, the Company and its
ready-mixed concrete subsidiary are the defendants in a claim filed by San Juan
Cement Company, Inc. before the United States District Court of Puerto Rico. On
April 15, 1997, the parties filed a joint motion requesting a 90-day stay on
the proceedings.
-7-
<PAGE> 10
Part II. OTHER INFORMATION.
Item 2. NONE
Item 5. NONE
Item 6. Exhibits and Reports on Form 8-K
27. Financial Data Schedule (for SEC use only).
-8-
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PUERTO RICAN CEMENT COMPANY, INC.
Date: 05/09/97 By: /s/ Angel Amaral
-------- ---------------------------------------
Angel Amaral
Vice President and Controller
Date: 05/09/97 By: /s/ Jose O. Torres
-------- ---------------------------------------
Jose O. Torres
Vice President of Finance and Treasurer
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 3,099,767
<SECURITIES> 7,589,758
<RECEIVABLES> 32,848,872
<ALLOWANCES> 1,576,426
<INVENTORY> 37,398,931
<CURRENT-ASSETS> 84,116,571
<PP&E> 210,508,265
<DEPRECIATION> 67,139,971
<TOTAL-ASSETS> 281,559,702
<CURRENT-LIABILITIES> 28,616,643
<BONDS> 66,823,200
0
0
<COMMON> 6,000,000
<OTHER-SE> 144,327,391
<TOTAL-LIABILITY-AND-EQUITY> 281,559,702
<SALES> 37,187,144
<TOTAL-REVENUES> 37,211,597
<CGS> 26,562,810
<TOTAL-COSTS> 31,336,709
<OTHER-EXPENSES> 585,727
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,289,161
<INCOME-TAX> 1,345,564
<INCOME-CONTINUING> 3,943,597
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,943,597
<EPS-PRIMARY> 0.71
<EPS-DILUTED> 0
</TABLE>
