-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IEWdJ6GvqQUCZ8G1phbk//2sTnpAb7o9eTBc3SvMssfPyzHhSILNCOPv++KlR3iD gGJkZJzMalln4h/Ngd2TEA== /in/edgar/work/0000950144-00-013672/0000950144-00-013672.txt : 20001115 0000950144-00-013672.hdr.sgml : 20001115 ACCESSION NUMBER: 0000950144-00-013672 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUERTO RICAN CEMENT CO INC CENTRAL INDEX KEY: 0000081076 STANDARD INDUSTRIAL CLASSIFICATION: [3241 ] IRS NUMBER: 516601895 STATE OF INCORPORATION: PR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04753 FILM NUMBER: 763164 BUSINESS ADDRESS: STREET 1: P.O.BOX 364487 CITY: SAN JUAN STATE: PR ZIP: 00936-4487 BUSINESS PHONE: 8097833000 MAIL ADDRESS: STREET 2: POST OFFICE BOX 364487 CITY: SAN JUAN STATE: PR ZIP: 09336-4487 10-Q 1 g65063e10-q.txt PUERTO RICAN CEMENT COMPANY, INC. 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 September 30, 2000 ------------------ 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. -------------------------------- (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 Identification No.) Incorporation or Organization) P.O. 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 -------------- Not Applicable -------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) 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 [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common stock, $1.00 Par Value: 5,186,274 Shares Outstanding ----------------------------------------------------------- 2 PUERTO RICAN CEMENT COMPANY, INC. INDEX
PAGE NO. -------- Part I - Financial Information Item 1 - Financial Statements Consolidated Balance Sheet as of September 30, 2000 and December 31, 1999............................................................. 3 - 4 Consolidated Statement of Income for the three-month and nine-month periods ended on September 30, 2000 and 1999.................................. 5 Consolidated Statement of Cash Flows for the nine-month periods ended on September 30, 2000 and 1999.................................. 6 Notes to Consolidated Financial Statements.................................... 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations........................................... 8 - 11 Item 3 - Quantitative and Qualitative Disclosures About Market Risk................................................................... 12 Part II - Other Information............................................................. 12 Signatures.................................................................... 13
2 3 PART I. FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS Puerto Rican Cement Company, Inc. Consolidated Balance Sheet (Unaudited)
September December 30, 2000 31, 1999 --------- -------- (In thousands) Assets Current assets Cash and cash equivalents $ 1,008 $ 1,631 - -------------------------------------------------------------------------------------------------- Short-term investments 17,624 6,001 - -------------------------------------------------------------------------------------------------- Notes and accounts receivable - net of allowance for doubtful accounts of $903 in 2000 and $1,101 in 1999 37,363 34,968 - -------------------------------------------------------------------------------------------------- Inventories: Finished products 2,810 2,435 Work in process 6,839 7,026 Raw materials 4,839 3,894 Maintenance and operating supplies 23,016 22,023 Land held for sale, including development costs 615 923 - -------------------------------------------------------------------------------------------------- Total inventories 38,119 36,301 - -------------------------------------------------------------------------------------------------- Prepaid expenses 7,995 5,580 - -------------------------------------------------------------------------------------------------- Total current assets 102,109 84,481 Property, plant and equipment - net of accumulated depreciation, depletion and amortization of $103,917 as of September 30, 2000 and $93,331 as of December 31, 1999 169,915 168,650 Long-term investments 29,530 39,712 Other assets 14,705 11,746 - -------------------------------------------------------------------------------------------------- Total $316,259 $304,589 ==================================================================================================
See notes to consolidated financial statements. 3 4 Puerto Rican Cement Company, Inc. Consolidated Balance Sheet (Unaudited)
September December 30, 2000 31, 1999 --------- -------- (In thousands) Liabilities and stockholders' equity Current liabilities Notes payable $ 5,775 $ 654 Current portion of long-term debt 4,076 3,806 Accounts payable 14,117 9,665 Accrued liabilities 10,062 9,233 Income taxes payable 999 4,075 - -------------------------------------------------------------------------------------------- Total current liabilities 35,029 27,433 - -------------------------------------------------------------------------------------------- Long-term liabilities Long-term debt, less current portion 80,389 81,365 Deferred income taxes 30,926 30,788 Other long-term liabilities, including postretirement benefits 3,064 3,105 - -------------------------------------------------------------------------------------------- Total long-term liabilities 114,379 115,258 - -------------------------------------------------------------------------------------------- Total liabilities 149,408 142,691 - -------------------------------------------------------------------------------------------- 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 5,186,274 shares as of September 30, 2000 and December 31, 1999 6,000 6,000 Additional paid-in capital 14,703 14,703 Retained earnings 169,174 164,221 - -------------------------------------------------------------------------------------------- 189,877 184,924 Less: Shares of common stock in treasury, at cost (813,726 shares as of September 30, 2000 and December 31, 1999) 23,026 23,026 - -------------------------------------------------------------------------------------------- Stockholders' equity - net 166,851 161,898 - -------------------------------------------------------------------------------------------- Total $316,259 $304,589 ============================================================================================
See notes to consolidated financial statements. 4 5 Puerto Rican Cement Company, Inc. Consolidated Statement of Income (Unaudited)
Three months ended Nine months ended September 30, September 30, 2000 1999 2000 1999 - ----------------------------------------------------------------------------------------------------------------- (In thousands, except share data) Net sales $ 39,828 $ 43,417 $ 123,342 $ 136,109 Revenue from real estate operations 128 27 684 79 - ----------------------------------------------------------------------------------------------------------------- 39,956 43,444 124,026 136,188 Cost of sales 30,154 33,418 94,625 98,296 - ----------------------------------------------------------------------------------------------------------------- Gross margin 9,802 10,026 29,401 37,892 Selling, general & administrative expenses 6,073 6,170 17,742 20,479 - ----------------------------------------------------------------------------------------------------------------- Income from operations 3,729 3,856 11,659 17,413 - ----------------------------------------------------------------------------------------------------------------- Other (credits) charges: Interest and financial charges 1,637 1,337 4,753 4,417 Interest income (1,005) (860) (2,941) (2,692) Other expenses (366) (188) (291) 404 - ----------------------------------------------------------------------------------------------------------------- Total other charges 266 289 1,521 2,129 - ----------------------------------------------------------------------------------------------------------------- Income before income tax 3,463 3,567 10,138 15,284 Provision for income tax 890 1,008 2,229 4,446 - ----------------------------------------------------------------------------------------------------------------- Net income $ 2,573 $ 2,559 $ 7,909 $ 10,838 ================================================================================================================= Net income per share $ 0.50 $ 0.48 $ 1.53 $ 2.05 ================================================================================================================= Average common shares outstanding 5,186,274 5,293,385 5,186,274 5,293,385 =================================================================================================================
See notes to consolidated financial statements. 5 6 Puerto Rican Cement Company, Inc. Consolidated Statement of Cash Flows (Unaudited)
For the nine months ended September 30, 2000 1999 - ------------------------------------------------------------------------------------------ (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 7,909 $ 10,838 - ------------------------------------------------------------------------------------------ Adjustments to reconcile net income to cash flows from operating activities: Depreciation, depletion and amortization 11,091 10,490 Accretion of discount on investments (1,494) (1,782) Provision for deferred income taxes 139 (440) Postretirement benefits cost (19) (26) (Gain) loss on sale of fixed assets (170) 13 Changes in assets and liabilities: Increase in notes and accounts receivable (2,813) (6,943) (Increase) decrease in inventories (1,818) 2,026 Increase in prepaid expenses (2,415) (3,027) Increase in other long-term assets (2,066) (467) Increase in accounts payable 4,448 3,261 Increase in accrued liabilities 829 1,159 (Decrease) increase in income taxes payable (3,076) 1,824 Decrease in long-term liabilities (23) -- - ------------------------------------------------------------------------------------------ Total adjustments 2,613 6,088 - ------------------------------------------------------------------------------------------ Cash provided by operations 10,522 16,926 - ------------------------------------------------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (12,555) (16,318) Increase in long-term notes receivable (516) (3,872) Redemption of long-term investments 1,053 14,037 Purchase of investments (1,000) (5,160) Proceeds from sale of fixed assets 411 109 - ------------------------------------------------------------------------------------------ Cash used in investing activities (12,607) (11,204) - ------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Increase in short-term borrowings 3,000 -- Proceeds from loans 2,400 5,249 Repayment of long-term debt (3,106) (2,134) Purchase of treasury stock -- (6,411) Dividends paid (2,953) (3,043) Increase in notes payable 2,121 335 - ------------------------------------------------------------------------------------------ Cash provided by (used in) financing activities 1,462 (6,004) - ------------------------------------------------------------------------------------------ (Decrease) in cash and cash equivalents (623) (282) Cash and cash equivalents - beginning of period 1,631 7,481 - ------------------------------------------------------------------------------------------ Cash and cash equivalents - end of period $ 1,008 $ 7,199 ==========================================================================================
See notes to consolidated financial statements. 6 7 PUERTO RICAN CEMENT COMPANY, INC. (Unaudited) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Financial Statements: In the opinion of Puerto Rican Cement Company, Inc. (the "Company," "Registrant" or "PRCC"), the accompanying unaudited financial statements contain all adjustments necessary to present fairly its financial position at September 30, 2000 and December 31, 1999; the results of operations for the nine-month and three-month periods ended September 30, 2000 and 1999; and its cash flows and changes in stockholders' equity for the nine-month periods ended September 30, 2000 and 1999. The results of operations for this interim period are not necessarily indicative of the results to be expected for the full year. 2. Comprehensive income: Other comprehensive income includes, among other things, net realized and unrealized gains and losses on investments in available-for-sale securities. The Company had no item reported as comprehensive income during the third quarters of 2000 and 1999. 3. Segment information: The Company has identified three reportable segments: cement operations, ready mix concrete operations and all others, which includes the lime, realty, financing, and paper and packaging operations. Segment detail for the nine-month period is summarized as follows (000's omitted):
Ready Mix All Cement Concrete Others Total -------- --------- -------- -------- September 30, 2000 Revenues Total revenues $ 71,618 $ 69,656 $ 8,680 $149,954 Less - Intersegment revenues 22,098 -- 3,830 25,928 -------- -------- -------- -------- Net revenues $ 49,520 $ 69,656 $ 4,850 $124,026 ======== ======== ======== ======== Total assets $181,524 $ 63,660 $ 71,075 $316,259 ======== ======== ======== ======== Ready Mix All Cement Concrete Others Total -------- --------- -------- -------- September 30, 1999 Revenues Total revenues $ 83,760 $ 74,563 $ 10,091 $168,414 Less - Intersegment revenues 28,489 -- 3,737 32,226 -------- -------- -------- -------- Net revenues $ 55,271 $ 74,563 $ 6,354 $136,188 ======== ======== ======== ======== Total assets $169,378 $ 64,444 $ 75,559 $309,381 ======== ======== ======== ========
7 8 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Cash and cash equivalents decreased $600,000 from $1.6 million as of December 31, 1999 to $1.0 million as of September 30, 2000. Short-term and long-term investments held to maturity increased $1.5 million to $47.2 million at September 30, 2000 from $45.7 million at December 31, 1999. This was mainly the result of the $1.1 million accretion in the value of the investment in zero-coupon notes intended to pay at maturity notes issued by the Company to certain institutional investors. The shift from long-term investment to short-term investment was principally due to a reclassification to short-term of those investments that matured in less than one year. Notes and accounts receivable increased by $2.4 million to $37.4 million as of September 30, 2000 from $34.9 million as of December 31, 1999. This increase is considered seasonal as historically volume of sales and consequently the related receivables tend to decrease in the last quarter of the year. Inventories increased $1.8 million to $38.1 million as of September 30, 2000 from $36.3 million as of December 31, 1999 due to increases of $570,000 in coal and $547,000 in spare parts inventories. The increase of $2.4 million in prepaid expenses is mainly due to higher balances in prepayments related to property and municipal taxes, as well as insurance, and the timing of their scheduled payments. These prepayments will be fully amortized by year-end. Total current liabilities increased by $7.6 million to $35.0 million as of September 30, 2000 from $27.4 million as of December 31, 1999. The increase was mainly due to a $5.1 million increase in notes payable on borrowings used for short-term working capital needs. In addition, there was a $5.3 million increase in accounts payable and accrued liabilities. The increase in accounts payable resulted mainly from a greater amount of purchases of raw materials in the third quarter of 2000 as compared to the last quarter of 1999. Accrued liabilities increased due to certain liabilities, such as the Christmas bonus, which are accrued during the year and paid at the end of the year. At its September 27, 2000 meeting, the Board of Directors of PRCC declared a $0.19 per share dividend on its common stock, payable on November 10, 2000 to stockholders of record on October 6, 2000. As of September 30, 2000, PRCC had 5,186,274 shares of common stock outstanding. 8 9 LIQUIDITY AND CAPITAL RESOURCES Working capital at September 30, 2000, increased to $67.0 million from $57.0 million at December 31, 1999, but the current ratio decreased to 2.91 to 1 as of September 30, 2000, from 3.08 to 1 as of December 31, 1999. The reduction in the current ratio was due mainly to the increase in current liabilities as described above. Property, plant and equipment increased by $1.2 million to $169.9 million as of September 30, 2000 from $168.7 million as of December 31, 1999 due to capital expenditures of $12.6 million net of depreciation and amortization of $11.1 million. The capital expenditures were primarily related to improvements to machinery and equipment at the cement and ready mix concrete plants. Total long-term debt as of September 30, 2000 decreased to $84.5 million from $85.2 million as of December 31, 1999. The decrease was due to $3.1 million in debt repayment, net of $2.4 million in proceeds from new loans. As of September 30, 2000, the approximate aggregate maturities of long-term debt for the remainder of 2000 and thereafter are as follows (000's omitted): 2000 $ 1,073 2001 5,089 2002 4,747 2003 2,436 2004 and thereafter 71,120 ------- Total $84,465 =======
Loan agreements with term lenders impose certain restrictions on the Company concerning working capital, indebtedness, dividends, investments and certain advances, among other restrictions. As of September 30, 2000, the Company complied with the provisions of the loan agreements. The Company's long term debt includes $70 million in notes issued pursuant to a loan agreement to several institutional investors. These notes require no payment of principal until their maturity date and are secured by a $70 million zero-coupon U.S. Treasury bond pledged as collateral. The Company has available credit facilities in the aggregate amount of $42,000,000 with commercial banks for short-term financing and discount of trade paper from customers. These short-term facilities are renewable annually at the discretion of the banks, which at this time do not require any commitment fees. The average borrowing outstanding for the quarter and the maximum aggregate short-term borrowing outstanding at any month-end during the third quarter of 2000 was $5,775,000. 9 10 RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 1999 Net income for the third quarter of 2000 totaled $2,573,000, or $0.50 per share, compared with $2,559,000, or $0.48 per share, in the comparable quarter of 1999. Consolidated net revenues were $39,956,000 during the third quarter in 2000 compared with $43,444,000 for the same period in 1999. The Company's cement sales for the third quarter of 2000 amounted to 270,000 tons as compared to 349,000 tons sold in the same quarter of 1999, a decrease of 23%. The cement industry of the Island continues to be impacted by higher imports of cement. Ready mix concrete sales decreased to 343,000 cubic yards for the third quarter of 2000 from 381,000 cubic yards sold during the same period of 1999. Consolidated cost of sales for the third quarter of 2000 decreased 9.8% to $30.2 million from $33.4 million for the comparable period of 1999. The reduction was principally due to lower sales volume as mentioned above. On a per unit basis, cost of sales reflect lower cement production costs during the third quarter of 2000 compared to the third quarter of 1999 due to the unfavorable effect of clinker import to the cost of production. Gross margin for the third quarter improved from 23.1% in 1999 to 24.5% in 2000. The increase in gross margin was the result of lower production cost for cement plus the effect of a 5% increase in the selling price for ready mix concrete beginning in May 2000. Selling, general and administrative expenses decreased slightly to $6.1 million during the third quarter of 2000 from $6.2 million over the comparable quarter of 1999. The provision for income taxes as a percentage of income before taxes decreased from 28% for the third quarter of 1999 to 26% for the same period of 2000. NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 1999 Net income for the nine-month period ended September 30, 2000 totaled $7,909,000, or $1.53 per share, compared with $10,838,000, or $2.05 per share, for the comparable period of 1999. Consolidated net revenues decreased $12.2 million from $136,188,000 during the nine-month period ended September 30, 1999 compared with $124,026,000 for the same period in 2000. The reconstruction efforts related to damages caused by Hurricane Georges drove up demand for cement and ready mix concrete in 1999. Demand for cement has returned to normal levels in 2000. The Company's cement sales in the nine-month period ended September 30, 2000 were 846,000 tons compared to 995,000 tons over the comparable 1999 period. Our ready mix concrete subsidiary sold 1,078,000 cubic yards during the nine months period ended September 30, 2000 compared with 1,182,000 cubic yards during the same period of 1999. The 9% decrease resulted from a strong construction activity in 1999 driving sales to extraordinary levels during that period. 10 11 Consolidated cost of sales for the nine-month period ended September 30, 2000 decreased $3.7 million to $94.6 million from the comparable period of 1999, partially because of the decrease in sales. However, gross margin percentage declined from 27.8% for the nine months of 1999 to 23.7% for the comparable 2000 period due to higher production costs resulting from increased repair expenses as well as higher fuel and energy costs in all production areas. As mentioned before, increased repair expenses resulted from a scheduled production shutdown of our cement facilities during the first quarter of 2000. Selling, general and administrative expenses during the nine-month period of 2000 decreased 14% to $17.7 million from $20.5 million over the comparable period of 1999. Selling, general and administrative expenses were higher in 1999 principally because of legal fees resulting from the proceedings against local government agencies in federal and local courts. These legal actions were settled during the first half of 1999. The provision for income taxes as a percentage of income before taxes decreased from 29% for the nine-month period of 1999 to 22% for the same period of 2000. This decrease is principally related to a reduction in taxable income during 2000 and the more favorable tax treatment of the gains on the sale of real estate realized during 2000. FORWARD-LOOKING STATEMENTS Certain statements contained in this document, including those in this Management's Discussion and Analysis of Financial Condition and Results of Operations, that are not historical facts constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of the Company and its businesses to be materially different from that expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; political and social conditions; government regulations and compliance therewith; demographic changes; sales mix; pricing levels; changes in sales to, or the identity of, significant customers; changes in technology, including the technology of cement production; capacity constraints; availability of raw materials and adequate labor; availability of liquidity sufficient to meet the Company's needs; the ability to adapt to changes resulting from acquisitions; and various other factors referenced in this Management's and Discussion Analysis. The Company can be particularly affected by weather in Puerto Rico, changes in the Puerto Rico economy, and changes in the Government of Puerto Rico or the manner in which it regulates the Company. The Company assumes no obligation to update forward-looking statements to reflect actual results or changes in or additions to the factors affecting such forward-looking statements. 11 12 ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's investment portfolio is subject to market risk. Market risk is the risk of economic loss arising from adverse changes in market rates and prices, such as interest rates and other relevant market prices. The Company's primary market risk exposure relates to interest rates, as interest rate volatility impacts the value of the Company's investment portfolio. The re-pricing of the Company's financial assets and liabilities also affects interest income and interest expense. The Company manages its interest rate risk exposure to maintain the stability of interest income and interest expense under varying interest rate environments. The Company has taken certain steps to minimize its interest rate risk exposure, which include obtaining long-term financing at fixed interest rates (see discussion under liquidity and capital resources.) At the same time, to minimize its interest rate risk exposure and manage its liquidity needs, the Company invests primarily in securities issued or guaranteed by the US government and its agencies with short-term (one year or less) and medium-term (over 1 through 7 years) maturities. The Company has also invested in a US government security with a 20-year term (due 2017) to serve as collateral and a source of repayment for one of its long-term debts. PART II. OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits required by Item 601 of Regulation S-K 27. Financial Data Schedule . 12 13 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. ------------------------------------------- Registrant Date: November 14, 2000 By: /s/ Jose O. Torres ------------------------------------------- Jose O. Torres Vice President and Chief Financial Officer 13 EX-27 2 g65063ex27.txt FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 1 1,008,245 17,623,766 38,256,871 903,200 38,119,614 102,109,431 273,832,324 103,917,388 316,259,179 35,029,931 80,388,893 0 0 6,000,000 160,850,882 316,259,179 123,341,579 124,025,879 94,623,675 112,367,100 0 453,432 4,752,805 10,138,426 2,229,069 7,909,357 0 0 0 7,909,357 1.53 1.53
-----END PRIVACY-ENHANCED MESSAGE-----