P U EANNUAL RTO R ICAN 1964 REPORT CEMENT COMPANY i

! "

Ml

COVER

"El Merendero Bacardi "

When Barcardi International expanded its operations in San Juan, a most striking concrete open-air meeting hall was built. The cement used for this parabolic hyperboloid structure was supplied by our San Juan Cement Plant.

Massive concrete buildings in the Condado Area, one of the ever-growing sections in the city of San Juan, fronting the Caribbean.

DIRECTORS
Jose A. Ferr6 Co-Chairman Luis A. Ferre Co-Chairman Herman Ferre Vice-Chairman Antonio Luis Ferre Manuel A. Mayoral Chairman of Finance Committee Rafael Carrion, Jr. Maurice A. Ferre Antonio H. Ferre Roberto de Jesus Toro Guillermo Rodriguez Angel A. Sanz Nicanor Ferrer

OFFICERS
Antonio Luis Ferre President Oscar M. Girod Vice-President Horacio Subira Vice-President Manuel A. Mayoral Treasurer Jorge Bartolomei, Esq. Secretary Andres Bermiidez Comptroller and Assistant Secretary

Transfer Agent
The Chase Manhattan Bank New York, N.Y. and San Juan, Puerto Rico

Registrar
First National City Bank New York, N.Y. and San Juan, Puerto Rico

Executive Offices
Ponce, Puerto Rico

FINANCIAL HIGHLIGHTS 1960 NET SALES INCOME BEFORE TAXES NET INCOME AFTER TAXES $16,116,000 3,093,000 2,038,000 1961 $18,110,000 3,782,00*0 2,462,000 1962 $20,265,000 4,897,000 3,139,000 1963 $22,222,000 5,317,000 3,415,000 1964 $25,634,000 6,189,000 3,951,000

Antonio Luis Ferre, President

To our Stockholders: Your Company experienced a record year in 1964. Earnings were 3.951 million dollars, or $1.98 per share, a 15.7% increase over earnings of 3.415 million dollars and $1.71 per share during 1963. Sales amounted to 25.634 million dollars during 1964, 15.4% higher than sales during 1963. At the end of this outstanding year, the Company finds itself in a strong financial condition, with a current assets to current liabilities ratio of 5.7 to 1. This position permits the Puerto Rican Cement Company, Inc. to be well prepared both for expansion and for future contingencies. One of the main reasons for our successful performance was the vigorous growth of the Puerto Rican economy as a whole. During the fiscal year that ended on June 30,1964, Commonwealth net income increased by over 10% to 2.096 billion dollars. This is a remarkable rate of growth, and represents the fourth consecutive year in which Puerto Rico's net income increased by at least 10%. Another factor in our successful year was the dynamic performance of the construction industry in Puerto Rico. In the fiscal year ended June 1964, construction on the Island increased by over 16%, to a record level of 376 million dollars. The vitality of the construction industry manifested itself in record expenditures for commercial and industrial buildings, for public works and for housing. A third element which has contributed to our good performance in 1964 is the efficiency achieved in the manufacturing and distribution of our products, which has kept our Company keenly competitive. In order to keep this competitive impetus, the Company invested 4.596 million dollars this year in modernizing and improving its facilities. Among the major modernization and expansion programs carried out were the

enlargement and modernization of Kiln No. 1 at the Ponce Plant, as well as the introduction of labor saving machinery and of new electronic instruments. To reduce costs and provide better service to customers, important expenditures were also made for new bulk cement carriers and silos. The new Lime Plant performed excellently in its first full year of operation, obtaining a major portion of the market. The modern multiwall Bag Plant also made a good showing, establishing a record performance during 1964. The projected construction of a white cement plant has been postponed temporarily because foreign white cement at lower prices makes this venture unattractive, at least for the time being. At this writing, our Board of Directors has authorized an expansion program of 2.5 million barrels, which will bring our total capacity to 10.5 million barrels by the end of 1966. This move was decided upon in order to meet the anticipated demand of cement in the rapidly growing Puerto Rican economy. Total cost of the expansion is preliminarily estimated at 12 million dollars and will be largely financed from internally generated funds. In general, the economic outlook of Puerto Rico looks very healthy for 1965. The Puerto Rico Planning Board has forecasted another 10% increase in net income for the fiscal year ending June 30, 1965. Barring an unexpected recession on the mainland, 1965 would seem to be a favorable year for the Commonwealth and for your Company as well. In closing, I wish to take this opportunity to express, on behalf of the Board of Directors and Management and on my own behalf, our sincere appreciation to our stockholders, our employees and our customers for their cooperation and support which made possible the achievements of this year.

Antonio Luis Ferre President

The new headquarters in Puerto Rico of one of the leading banking institutions on the Island, recently dedicated, shows a tasteful use of the unique construction qualities of prestressed concrete.

THE CONTINUING STRENGTH OF THE PUERTO RICAN ECONOMY During 1964 the Company operated within the environment of economic progress of the Puerto Rican economy. The extraordinary vitality of the Commonwealth economy was once again demonstrated in the course of the fiscal year ending June 30, 1964. It was the fourth consecutive year of vigorous growth. During this period, net income grew by over 10% to 2.0% billion dollars. The strong impetus exerted by manufacturing was a principal factor in the progress of the economy during 1964. As new factories continued to be established, industrial profits and wages increased. Net income from manufacturing advanced by 10.6%, to 486 million dollars. Tourism experienced another year of vibrant growth as new hotels opened for business and Puerto Rico continued to be a popular vacation area. Net income from tourism rose to 96.4 million dollars in 1964, an 18% upswing that provided strong support to the economy. Approximately 517,000 persons visited our lovely Island in the 1964 fiscal year. The general climate of the Puerto Rican economy is one of confidence. With a proven and steadfast government, an alert business community, and a policy of economic expansion, it would seem that the economy of Puerto Rico should continue its progress into 1965 and beyond.

THE STRENGTH OF THE CONSTRUCTION INDUSTRY Within this pictures of solid economic growth, the construction industry, of which we are an integral part, was a major contributor to progress and, at the same time, a major beneficiary of such progress. Modern housing developments and office buildings, as well as shopping centers for a new middle class, made it possible for the construction industry to achieve a record year in 1964. Total construction activity increased by over 16% during fiscal 1964 to reach 376 million dollars, compared to 323 million dollars in 1963. Construction for housing was the backbone of the industry. As a new middle class develops, modern housing is one of its primary concerns in the effort to improve its standard of living. Total expenditures for private housing increased to 140 million dollars in fiscal year 1963-64, a 22% rise. Commercial and industrial construction also provided a strong thrust. This segment of the industry has increased sharply to a level of 80 million dollars in fiscal 1964. In summary, the construction industry of the Commonwealth showed marked strength and vitality in 1964 and has, indeed, been a key factor in our developing economy.

SELECTED ECONOMIC INDEXES OF PUERTO RICO FISCAL YEARS 1959-1964 (in Million Dollars)
1959 1960 1961

.xsI>vX1962 1963

V."":";-Xv."\*'x''<X-.X-

1964

Gross National Product Gross National Product (at 954 prices) Net Income Net Income (at 1954 prices) Net Income Per Capita Net Income Per Capita (at 1954 54 prices) prices) Gross Manufacturing Product t Gross Construction Product Tourist Expenditures
Source: Puerto Rico Planning Board

1,496.1 1,391.5 1,236.6 1,162.2 538.6 506.2

301.5 91.3 47.0

1,690.5 1,534.4 1,398.0 1,275.5

601.5

1,851.7 1,621.2 1,545.4 1,379.8 654.0 584.0 399.6

129.3 55.7

2,035.3 1,721.2 1,715.6 1,508.9

711.0

2,293.2 1,868.1 1,906.6 1,636.6 772.8 663.4 505.5

163.8 81.9

2,531.5 2,026.7 2,096.7 1,782.9 830.4

706.1

549.0 358.8
113.0 58.1

625.3 458.9
144.1 67.9

557.0
180.2 96.4

The simplicity of "El Monte," a towering all-concrete apartment building, winner of several design prizes in Puerto Rico and abroad, enhances the new subdivisions flourishing in Hato Rey, center of much of San Juan's current development.

SALES This year 1964 was a new record year for your Company. Sales amounted to 25.634 million dollars, an increase of 15.4% over the 1963 figure of 22.222 million dollars. Local sales were 22.006 million dollars in 1964, compared to 17.893 million dollars in 1963. This represents an increase of 23%. The Company supplied approximately 94% of Puerto Rico's cement requirements during 1964.

EARNINGS Your Company also established a new record for earnings during the year 1964. Net Income before taxes was 6.189 million dollars, an increase of 16.4% over the 5.317 million dollars recorded in 1963. Net Income after taxes amounted to 3.951 million dollars, an increase of 15.7% over the 3.415 million dollars after taxes earned in 1963. In 1964, net income per share after taxes was $1.98 on 2,000,000 shares outstanding as compared with $1.71 per share in 1963, computed on the same number of shares. This constitutes an increase of 15.8%.

The versatility of modern concrete techniques proves that cement can be adapted to almost any type of structure. This church in the heart of San Juan metropolitan area, u-ith its unique belltower, is a fine example.

The Ashford Medical Center, a physician's office building constructed by tenants pooling resources in a cooperative project. Cement was used to achieve a solid structure and a most beautiful exterior.

structures and designs need not appear massive in Kze as shown by the soft and delicate pattern of this sun deflector grill at the San Juan Nursing School Building.

Shapes and forms in concrete can be as classic as yesterday and as modern as tomorrow, or a perfect balance of both, as in these very harmonious exterior columns.

ECONOMIC HIGHLIGHTS OF THE PUERTO RICAN CONSTRUCT (in Million Dollars)

^Hf&* Fiscal Year

1959 1960 1961 1962 1963 1964

Gross Product Contributed

91.3 113.0 129.3 144.1 163.8 180.2

Total Investment
163.0
227.0 252.6 306.7 322.8

376.1

Source: Puerto Rico Planning Board