-----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, F5pVKUUl0XsbYZ5Z8CS1aLkcu+qXyYCajanGVKBqwxBRy/42kpJUXc1YgT/1ya0v 2Ukh0FIkgBtDu3vTbmbdWg== 0000950144-96-005558.txt : 19960816 0000950144-96-005558.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950144-96-005558 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: CSX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUERTO RICAN CEMENT CO INC CENTRAL INDEX KEY: 0000081076 STANDARD INDUSTRIAL CLASSIFICATION: CEMENT, HYDRAULIC [3241] IRS NUMBER: 516601895 STATE OF INCORPORATION: PR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04753 FILM NUMBER: 96613576 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 364887 CITY: SAN JUAN STATE: PR ZIP: 09336-4487 10-Q 1 PUERTO RICAN CEMENT COMPANY, INC. FORM 10-Q 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 June 30, 1996 ------------- 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 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 -------------- 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 --- --- 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 -------------------------------------------------------- 2 PUERTO RICAN CEMENT COMPANY, INC. INDEX
PAGE NO. -------- Part I - Financial Information Consolidated Balance Sheet as of June 30, 1996 and December 31, 1995 1 - 2 Consolidated Statement of Income Three months and six months ended on June 30, 1996 and 1995 3 Consolidated Statement of Cash Flows Six months ended on June 30, 1996 and 1995 4 Notes to Consolidated Financial Statements 5 Management's Discussion and Analysis of Financial Condition and Results of Operations 6 - 9 Part II - Other Information 9 Signatures 10
3 PUERTO RICAN CEMENT COMPANY, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED)
JUNE DECEMBER ASSETS 30, 1996 31, 1995 ------------ ------------ CURRENT ASSETS Cash and Cash Equivalents $ 10,123,986 $ 11,599,636 ------------ ------------ Investments available-for-sale 4,397,841 4,473,536 ------------ ------------ Short-term investments 3,180,875 974,073 ------------ ------------ Notes and accounts receivable-net of allowance for doubtful accounts of $1,613,613 in 1996 and $1,539,788 in 1995 28,161,612 24,526,385 ------------ ------------ Inventories: Finished products 1,862,314 2,207,360 Work in process 4,116,355 3,521,451 Raw materials 2,866,887 4,651,699 Maintenance & operating supplies 21,395,671 21,339,303 Land held for sale including development costs 502,602 502,602 ------------ ------------ Total inventories 30,743,829 32,222,415 ------------ ------------ Prepaid expenses 5,499,561 4,752,187 ------------ ------------ TOTAL CURRENT ASSETS 82,107,704 78,548,232 PROPERTY, PLANT & EQUIPMENT - Net of accumulated depreciation, depletion and amortization of $61,313,444 in 1996 and $55,980,727 in 1995 143,200,507 142,567,213 LONG-TERM INVESTMENTS 29,706,124 31,228,541 OTHER ASSETS 3,204,843 2,670,882 ------------ ------------ TOTAL $258,219,178 $255,014,868 ============ ============
See notes to consolidated financial statements. 1 4 PUERTO RICAN CEMENT COMPANY, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED)
JUNE DECEMBER LIABILITIES AND STOCKHOLDERS' EQUITY 30, 1996 31, 1995 ------------ ------------ CURRENT LIABILITIES Notes payable $ - $ 4,100,000 Current portion of long-term debt 7,545,072 7,649,853 Accounts payable 8,984,244 8,440,255 Accrued liabilities 5,721,563 7,452,614 Income taxes payable 476,111 334,664 ------------ ------------ TOTAL CURRENT LIABILITIES 22,726,990 27,977,386 ------------ ------------ LONG-TERM LIABILITIES Long-term debt, less current portion 57,348,061 57,549,475 Deferred income taxes 32,433,284 30,808,654 Postretirement benefits liability 2,918,017 2,873,430 ------------ ------------ 92,699,362 91,231,559 ------------ ------------ 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 June 30, 1996, 5,504,722 shares as of December 31, 1995 6,000,000 6,000,000 Additional paid-in capital 14,702,914 14,482,054 Unrealized gain (loss) on investments available-for-sale (21,029) 74,313 Retained earnings 132,550,238 126,216,785 ------------ ------------ 153,232,123 146,773,152 Less: Shares of common stock in treasury, at cost (472,926 shares as of June 30, 1996 and 495,278 shares as of December 31, 1995) 10,439,297 10,967,229 ------------ ------------ STOCKHOLDERS' EQUITY NET 142,792,826 135,805,923 ------------ ------------ TOTAL $258,219,178 $255,014,868 ============ ============
See notes to consolidated financial statements. 2 5 PUERTO RICAN CEMENT COMPANY, INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended June 30 June 30 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Net sales $40,986,865 $25,169,746 $78,366,920 $47,887,764 Revenue from real estate operations 23,224 30,925 46,448 55,199 ----------- ----------- ----------- ----------- 41,010,089 25,200,671 78,413,368 47,942,963 Cost of sales 29,096,525 15,289,923 56,136,728 30,033,596 ----------- ----------- ----------- ----------- Gross margin 11,913,564 9,910,748 22,276,640 17,909,367 Selling, general & administrative expenses 4,812,297 3,193,716 9,454,556 6,336,974 ----------- ----------- ----------- ----------- Income from operations 7,101,267 6,717,032 12,822,084 11,572,393 ----------- ----------- ----------- ----------- Other charges (credits): Interest and financial charges 1,113,133 522,793 2,250,969 1,048,780 Interest income (655,653) (608,883) (1,260,404) (1,211,659) Other income (223,041) (468,992) (340,703) (504,039) ----------- ----------- ----------- ----------- Total other charges (credits) 234,439 (555,082) 649,862 (666,918) ----------- ----------- ----------- ----------- Income before income tax 6,866,828 7,272,114 12,172,222 12,239,311 Provision for income tax 2,362,028 2,543,982 3,974,208 4,218,159 ----------- ----------- ----------- ----------- Net income $ 4,504,800 $ 4,728,132 $ 8,198,014 $ 8,021,152 =========== =========== =========== =========== Income per share: Net income $ 0.82 $ 0.87 $ 1.48 $ 1.47 =========== =========== =========== =========== Common Shares Outstanding 5,527,074 5,456,700 5,527,074 5,456,700 =========== =========== =========== ===========
See notes to consolidated financial statements. 3 6 PUERTO RICAN CEMENT COMPANY, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED (UNAUDITED)
JUNE 30, 1996 1995 ------------ ----------- Cash flows from operating activities: Net income $ 8,198,014 $ 8,021,152 ------------ ----------- Adjustments to reconcile net income to cash flows from operating activities: Depreciation, depletion and amortization 5,382,612 3,432,609 Accretion of discounts on investments (734,401) (768,733) Provision for deferred income taxes 1,624,630 2,084,055 Postretirement benefits cost 48,362 222,701 Gain on sale of fixed assets (142,861) (421,427) Changes in assets and liabilities: Increase in notes & accounts receivable (3,635,227) (3,540,972) Decrease in inventories 1,478,586 21,382 Increase in prepaid expenses (747,374) (722,073) Decrease in accounts payable (399,414) (374,630) (Decrease) increase in accrued liabilities (46,431) 994,239 Increase (decrease) in income taxes payable 141,447 (457,676) (Increase) decrease in other long-term assets (563,423) 21,951 ------------ ----------- Total adjustments 2,406,506 491,426 ------------ ----------- Cash provided by operations 10,604,520 8,512,578 ------------ ----------- Cash flows from investing activities: Capital expenditures (6,025,183) (6,369,009) Redemption of long-term investments 2,256,818 1,747,291 Purchase of short-term investments (2,206,802) (2,028,894) Purchase of investments available-for-sale (19,647) - Proceeds from sale of fixed assets 181,600 436,545 ------------ ----------- Cash used in investing activities (5,813,214) (6,214,067) ------------ ----------- Cash flows from financing activities: Repayment of long-term debt and notes payable (15,806,195) - Dividends paid (1,860,761) (1,858,466) Proceeds from loans 11,400,000 4,220,430 Purchase of treasury stock - (2,181,000) Decrease in short-term borrowing - (2,420,000) ------------ ----------- Cash used in financing activities (6,266,956) (2,239,036) ------------ ----------- (Decrease) increase in cash and cash equivalents $ (1,475,650) $59,475 ============ =========== Cash and cash equivalents - beginning of year $ 11,599,636 $ 114,702 Cash and cash equivalents - end of period 10,123,986 174,177 ------------ ----------- (Decrease) increase in cash and cash equivalents $ (1,475,650) $ 59,475 ============ ===========
See notes to consolidated financial statements. 4 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, 1996 and December 31, 1995, and the results of operations for the three months and six months ended June 30, 1996 and 1995, and cash flows for the six months ended June 30, 1996 and 1995. The results of operations are not necessarily indicative of the results to be expected for the full year. Aggregated cash and cash equivalents and investments (short-term, available-for-sale and long-term investments) totaled $47.4 million at June 30, 1996 compared with $48.2 million at December 31, 1995, a decrease of $800,000. Investments consisted principally of short-term obligations and obligations of the U.S. Government or its agencies with maturities ranging from more than one year to up to seven years. Notes and accounts receivables totaled $28.2 million as of June 30, 1996 compared with $24.5 million as of December 31, 1995. The increase of $3.6 million resulted principally from a higher balance in accounts receivable-trade at the end of the second quarter of 1996 attributable to a higher volume of cement and lime sales during the second quarter of 1996 than during the last quarter of 1995. Receivables' turnover was maintained at normal levels during the second quarter of 1996, with an average collection period below 60 days. Consolidated inventories decreased $1.5 million from $32.2 million as of December 31, 1995 to approximately $30.7 million as of June 30, 1996. The decrease was partially attributable to a decline in gypsum (a raw material used in the production of cement) because of timing of shipments and paper bags inventory because of the increased level of cement sales; a reduction of $819,000 in raw material inventory in the Registrant's paper bags subsidiary resulting from increased effectiveness in inventory control; and, finally, a decrease of $273,000 in limestone inventory used in the manufacturing of lime as a result of a significant increase in lime sales. Total current liabilities decreased $5.2 million from $27.9 million as of December 31, 1995 to $22.7 million as of June 30, 1996. The decrease was principally attributable to (i) the payment of the $4.1 million promissory note outstanding as of December 31, 1995 related to the acquisition of the ready-mixed concrete companies and (ii) a decrease of $1.7 million in accrued liabilities as a result of the making of the final payment for the shares of Ready Mix Concrete. At its June 26, 1996 meeting, the Board of Directors of the Registrant declared a 17 cents per share dividend on its common stock, payable on August 17, 1996 to stockholders of record on July 15, 1996. As of June 30, 1996, the Registrant had 5,527,074 shares of common stock issued and outstanding as compared with 5,456,700 as of June 30, 1995. 5 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources Working capital at June 30, 1996 was $59.4 million compared with $50.6 million at December 31, 1995. The current ratio increased to 3.61 to 1 as of June 30, 1996 from 2.81 to 1 as of December 31, 1995. The change resulted from the decrease in current liabilities attributable to the payment of the $4.1 million note as well as the decrease in accrued liabilities and the higher balance in receivables, as previously discussed. During the six-month period ended on June 30, 1996, net cash provided by operating activities totaled $10.6 million. This amount was principally used to finance additions to property, plant and equipment for $6.0 million and to pay $4.1 million in notes payable. As mentioned above, capital expenditures for the six-month period ended on June 30, 1996 were approximately $6.0 million. This amount included $3.5 million of expenditures by the Company's ready-mixed concrete subsidiaries, principally for the acquisition of new trucks. Depreciation expense for the six-month period ended on June 30, 1996 totaled $5.4 million. During the second quarter of 1996, the Company refinanced $11.3 million of its long-term debts with a new $11.4 million loan. Additionally, a principal payment of $400,000 was made during the six-month period ended on June 30, 1996. The approximate aggregate maturities of long-term debt for the remainder of 1996 and thereafter are as follows: 1996 $ 7,249,853 1997 13,600,423 1998 10,205,357 1999 7,819,907 2000 and thereafter 26,017,593 ----------- Total $64,893,133 ===========
Loan agreements with term lenders impose certain restrictions on the Company concerning working capital, indebtedness, dividends, investments and certain advances, among others restrictions. 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. There were no outstanding balances under these credit facilities at any month-end during the first six months of 1996. During such period the facilities were used to secure payment of $180,000 of discounted notes. These short-term facilities are renewable annually at the discretion of the banks. Currently, no commitment fees are payable under these credit facilities. -6- 9 Results of Operations THREE MONTHS ENDED JUNE 30, 1996 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1995 Consolidated net sales for the second quarter of 1996 increased $15.8 million, or 63%, to $40.1 million from $25.1 million for the second quarter of 1995. In 1996, consolidated net sales benefited from $13.9 million (net of $7.5 million of intercompany sales) of additional sales contributed by the ready-mixed concrete subsidiaries. To a lesser degree, second quarter sales benefited from increases of (i) 493,000 in total bags of cement sold and (ii) 8,700 tons of lime sales made principally to export markets. Consolidated cost of sales totaled $29.1 million in the second quarter of 1996, an increase of $13.8 million over the $15.3 million reported for the second quarter of 1995. Cost of sales for the second quarter of 1996 included $11.5 million from the ready-mixed concrete subsidiaries not reflected in the second quarter of 1995. Gross margin figures for the quarter, excluding ready-mixed operations, was 36.5% in 1996 compared with 39.3% in 1995. The decrease was due to (i) an increase in the cost of cement shipments caused by a revision in the freight tariff, and (ii) an increase in repairs expense due to the shutdown of the Registrant's cement kiln for maintenance work. Selling, general and administrative expenses increased $1.6 million to $4.8 million in the second quarter of 1996 compared with $3.2 million in the second quarter of 1995. This increase was principally attributable to $1.3 million of expenses related to the ready-mixed concrete operations. During the second quarter of 1996, interest expense was $590,000 higher than in the same period of 1995 because (i) the interest on the loans related to the mills' conversion project was capitalized during 1995 but expensed in 1996 and (ii) interest expense increased as a result of the increase in outstanding long-term debt associated to the acquisition of the ready-mixed companies. Compared with 1995, other income decreased by $246,000. Although the 1996 figure reflects for the first time other income from the ready-mixed concrete subsidiaries totaling $287,000, the 1995 figure reflects income of $415,000 from the sale of idle equipment reported in the second quarter of 1995. SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1995 Consolidated net sales increased $30.5 million, or 64%, to $78.3 million for the six-month period ended June 30, 1996 compared with consolidated net sales of $47.9 million for the six-month period ended June 30, 1995. The improvement from last year resulted from: - An increase in net cement sales of $3.7 million due primarily to 1.1 million additional cement bags sold for this period. - An increase of $1.7 million in lime sales, resulting from the Company's effort, attributable to substantial sales to the export market, in which 17,700 tons had been sold as of June 30, 1996. There were no export sales during the first half of 1995. - The contribution of $24.9 million (net of $14.6 million of intercompany sales) in sales by the ready-mixed concrete subsidiaries compared to none in 1995. -7- 10 Consolidated cost of sales increased $26.1 million from $30.0 million as of June 30, 1995 to $56.1 million as of June 30, 1996. Of this increase, $21.2 million (net of intercompany charges) were related to additional cost associated with the ready-mixed concrete operations bought in November 1995. Other increases, principally in the cement and lime operations, were caused by increased repair and maintenance work and the effect of the increased sales volume experienced throughout the first six months of 1996. Gross margin for the period, excluding the ready-mixed concrete operations, decreased from 37.4% in 1995 to 34.8% in 1996 as the result of the increased repair and maintenance works. Selling, general and administrative expenses increased $3.1 million in the first six months of 1996 compared with the first six months of 1995. The ready-mixed concrete subsidiaries were responsible for $2.7 million, or 87%, of such increase. Interest and financial charges increased to $2.2 million for the six-month period ended June 30, 1996 compared with $1.0 million for the six-month period ended June 30, 1995. The increase of $1.2 million was primarily due to (i) interest charges resulting from the $16.0 million financing facilities of the ready-mixed concrete subsidiaries, (ii) interest expense on the loans related to the mills' conversion project the capitalization of which ended in the third quarter of 1995 and (iii) additional interest expense resulting from the notes payable to the former owners of the ready-mixed concrete companies. READY-MIXED CONCRETE SUBSIDIARIES Net sales for the quarter ended June 30, 1996 totaled $13.2 million (excluding intercompany transactions) compared with $11.6 million for the quarter ended March 31, 1996. The increase of $1.6 million was the result of a higher volume of sales. Gross margin for the quarter decreased from 4.6% in March 1996 to 3.0% in June 1996 as the result of increases in the cost of aggregates used in the production of the ready-mixed. As of June 30, 1996, $46.8 million or 18% of the Company's total consolidated assets were attributable to the ready-mixed concrete subsidiaries. LEGAL PROCEEDING INVOLVING SAN JUAN CEMENT The Registrant and its two ready-mixed concrete subsidiaries, Concreto Mixto, Inc. and Ready Mix Concrete, Inc. (the "Defendants") are currently defendants in a lawsuit brought by San Juan Cement, Inc. in the United States District Court for the District of Puerto Rico seeking rescission of the acquisition by the Registrant of the ready-mixed concrete subsidiaries or divestiture of such companies. The suit alleges that the acquisition violates the federal antitrust laws. A motion made by the Defendants to dismiss the complaint for lack of subject matter jurisdiction was denied. The Registrant's petition to the Court of Appeals for the First Circuit asking that it accept the question of subject matter jurisdiction for interlocutory review was also denied. The case is continuing and is currently in the discovery phase. While there can be no certainty, the Registrant believes that an adverse final ruling in the lawsuit brought by San Juan Cement, Inc. is not reasonably likely to have a material adverse effect on the Registrant's financial condition or results of operations. In addition, the Registrant believes that the cost of the defense of such litigation will not have a material adverse effect on the Registrant's financial condition or results of operations. -8- 11 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) -9- 12 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: 08/13/96 ---------- By: /s/ Angel Amaral --------------------------------------- Angel Amaral Vice President and Controller Date: 08/13/96 ------------ By: /s/ Jose O. Torres --------------------------------------- Jose O. Torres Vice President of Finance and Treasurer -10- EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1996 JUN-30-1996 10,123,986 7,578,716 29,775,225 1,613,613 30,743,829 82,107,704 204,513,951 61,313,444 258,219,178 22,726,990 57,348,061 0 0 6,000,000 136,792,826 258,219,178 78,366,920 78,413,368 56,136,728 65,591,284 649,862 0 0 12,172,222 3,974,208 8,198,014 0 0 0 8,198,014 1.48 0
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