==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[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 1-6117
SOUTHDOWN, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
LOUISIANA 72-0296500
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1200 SMITH STREET
SUITE 2400
HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 650-6200
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 periods 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
At July 31, 1996 there were 17.3 million common shares outstanding.
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<PAGE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
INDEX
PAGE
NO.
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheet
June 30, 1996 and December 31, 1995 1
Statement of Consolidated Earnings
Three and Six months ended June 30, 1996 and 1995 2
Statement of Consolidated Cash Flows
Six months ended June 30, 1996 and 1995 3
Statement of Consolidated Revenues and Operating Earnings
by Business Segment
Three and Six months ended June 30, 1996 and 1995 4
Statement of Shareholders' Equity
Six months ended June 30, 1996 4
Notes to Consolidated Financial Statements 5
Independent Accountants' Review Report 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 16
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<CAPTION>
(IN MILLIONS)
---------------------------------------------
JUNE 30, DECEMBER 31,
1996 1995
------------------ -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8.4 $ 7.7
Accounts and notes receivable, less allowance for doubtful
accounts of $9.9 and $8.8 89.0 68.9
Inventories (Note 3) 73.4 69.6
Deferred income taxes 9.5 11.7
Prepaid expenses and other 3.0 3.3
------------------ -----------------
Total current assets 183.3 161.2
Property, plant and equipment, less accumulated depreciation,
depletion and amortization of $338.8 and $330.0 562.3 565.4
Goodwill 78.2 79.3
Other long-term assets:
Long-term receivables 18.9 21.0
Other 50.2 48.6
------------------ -----------------
$ 892.9 $ 875.5
================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 1.3 $ 0.7
Accounts payable and accrued liabilities 83.1 78.7
------------------ -----------------
Total current liabilities 84.4 79.4
Long-term debt (Note 2) 186.9 174.5
Deferred income taxes 117.2 116.9
Minority interest in consolidated joint venture 31.4 30.9
Long-term portion of postretirement benefit obligation 74.5 76.8
Other long-term liabilities and deferred credits 19.4 22.0
------------------ -----------------
513.8 500.5
------------------ -----------------
Shareholders' equity:
Preferred stock redeemable at issuer's option (Note 4) 151.9 151.9
Common stock, $1.25 par value 21.6 21.6
Capital in excess of par value 127.1 127.0
Reinvested earnings 78.5 74.5
------------------ -----------------
379.1 375.0
------------------ -----------------
$ 892.9 $ 875.5
================== =================
</TABLE>
-1-
<PAGE>
<TABLE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED EARNINGS
(UNAUDITED)
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE DATA)
----------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ---------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 178.2 $ 155.0 $ 305.6 $ 274.1
------------ ------------ ------------ ------------
Costs and expenses:
Operating 118.6 108.0 210.5 194.4
Depreciation, depletion and amortization 10.1 9.8 20.2 19.7
Selling and marketing 4.0 3.9 7.9 7.5
General and administrative 9.9 9.1 18.4 18.5
Other income, net (0.2) (1.8) (0.4) (2.7)
------------ ------------ ------------ ------------
142.4 129.0 256.6 237.4
Minority interest in earnings of consolidated joint venture 1.7 1.3 2.0 1.7
------------ ------------ ------------ ------------
144.1 130.3 258.6 239.1
------------ ------------ ------------ ------------
Operating earnings 34.1 24.7 47.0 35.0
Interest, net of amounts capitalized (5.2) (6.8) (11.2) (13.4)
------------ ------------ ------------ ------------
Earnings before income taxes and extraordinary charge 28.9 17.9 35.8 21.6
Federal and state income tax expense (10.0) (5.9) (12.1) (7.1)
------------ ------------ ------------ ------------
Earnings before extraordinary charge 18.9 12.0 23.7 14.5
Extraordinary charge, net of income taxes (Note 2) - - (11.4) -
------------ ------------ ------------ ------------
Net earnings $ 18.9 $ 12.0 $ 12.3 $ 14.5
============ ============ ============ ============
Dividends on preferred stock (Note 4 and Exhibit 11) $ 2.5 $ 2.5 $ 4.9 $ 4.9
============ ============ ============ ============
Earnings (loss) per common share (Note 4 and Exhibit 11):
Primary
Earnings before extraordinary charge $ 0.92 $ 0.54 $ 1.05 $ 0.55
Extraordinary charge, net of income taxes - - (0.63) -
------------ ------------ ------------ ------------
$ 0.92 $ 0.54 $ 0.42 $ 0.55
============ ============ ============ ============
Fully diluted
Earnings before extraordinary charge $ 0.79 $ 0.51 $ 1.05 $ 0.55
Extraordinary charge, net of income taxes - - $ (0.63) -
------------ ------------ ------------ ------------
$ 0.79 $ 0.51 $ 0.42 $ 0.55
============ ============ ============ ============
Average shares outstanding (Exhibit 11)
Primary 17.9 17.6 17.8 17.5
============ ============ ============ ============
Fully diluted 23.9 23.5 17.9 17.6
============ ============ ============ ============
</TABLE>
-2-
<PAGE>
<TABLE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<CAPTION>
(IN MILLIONS)
-------------------------------------
SIX MONTHS ENDED
JUNE 30,
-------------------------------------
1996 1995
------------- --------------
<S> <C> <C>
Operating activities:
Earnings before extraordinary charge $ 23.7 $ 14.5
Adjustments to reconcile earnings before extraordinary charge
to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization 20.2 19.7
Deferred income tax expense 2.5 4.0
Amortization of debt issuance costs 1.4 1.3
Changes in operating assets and liabilities (16.0) (49.6)
Other adjustments 2.5 1.8
Net cash used in discontinued operations (0.7) (1.5)
------------- --------------
Net cash provided by (used in) operating activities 33.6 (9.8)
------------- --------------
Investing activities:
Additions to property, plant and equipment (17.7) (13.0)
Proceeds from asset sales 0.9 4.0
Acquisitions, net of cash acquired - (12.6)
Other (0.4) (0.5)
Net cash used in discontinued operations - (1.5)
------------- --------------
Net cash used in investing activities (17.2) (23.6)
------------- --------------
Financing activities:
Additions to long-term debt 130.7 41.4
Reductions in long-term debt (120.4) (0.2)
Premium on early extinguishment of debt (11.6) -
Dividends (8.4) (6.6)
Securities issuance costs (4.5) -
Distributions to minority interest (1.5) -
------------- --------------
Net cash provided by (used in) financing activities (15.7) 34.6
------------- --------------
Net increase in cash and cash equivalents 0.7 1.2
Cash and cash equivalents at beginning of period 7.7 7.4
------------- --------------
Cash and cash equivalents at end of period $ 8.4 $ 8.6
============= ==============
</TABLE>
Cash payments for income taxes totaled $1.2 million and $7.9 million in the
first six months of 1996 and 1995, respectively. Further, in order not to incur
additional interest charges, in early January 1995 the Company also paid a $7.6
million tax assessment, including interest, proposed by the Internal Revenue
Service in a preliminary audit report issued in late 1994. Interest paid, net of
amounts capitalized, was $9.5 million and $12.4 million in the first six months
of 1996 and 1995, respectively.
-3-
<PAGE>
<TABLE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED REVENUES AND OPERATING EARNINGS
BY BUSINESS SEGMENT
(UNAUDITED)
<CAPTION>
(IN MILLIONS)
--------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Contributions to revenues:
Cement $ 127.9 $ 108.8 $ 210.5 $ 188.9
Concrete products 63.1 56.5 118.9 106.2
Intersegment sales (12.8) (10.3) (23.8) (21.0)
------------ ------------ ------------ ------------
$ 178.2 $ 155.0 $ 305.6 $ 274.1
============ ============ ============ ============
Contributions to operating earnings (loss) before interest
expense
expense and income taxes:
Cement $ 36.4 $ 27.7 $ 53.5 $ 44.1
Concrete products 4.4 2.7 6.3 3.9
Corporate
General and administrative (5.9) (5.9) (11.1) (12.3)
Depreciation, depletion and amortization (0.9) (1.1) (1.8) (2.1)
Miscellaneous income 0.1 1.3 0.1 1.4
------------ ------------ ------------ ------------
$ 34.1 $ 24.7 $ 47.0 $ 35.0
============ ============ ============ ============
</TABLE>
<TABLE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<CAPTION>
(IN MILLIONS)
-----------------------------------------------------------------------------
CAPITAL
PREFERRED STOCK COMMON STOCK IN EXCESS OF REINVESTED
----------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT PAR VALUE EARNINGS
--------- ----------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 4.6 $ 151.9 17.3 $ 21.6 $ 127.0 $ 74.5
NET EARNINGS - - - - - 12.3
DIVIDENDS ON PREFERRED STOCK
(NOTE 4) - - - - - (4.9)
DIVIDENDS PAID ON COMMON STOCK - - - - - (3.4)
OTHER - - - - 0.1 -
--------- ----------- ---------- --------- ----------- -----------
BALANCE AT JUNE 30, 1996 4.6 $ 151.9 17.3 $ 21.6 $ 127.1 $ 78.5
========= =========== ========== ========= =========== ===========
</TABLE>
-4-
<PAGE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Balance Sheet of Southdown, Inc. and subsidiary
companies (the Company) at June 30, 1996 and the Statements of Consolidated
Earnings, Consolidated Cash Flows, Consolidated Revenues and Operating Earnings
by Business Segment and Shareholders' Equity for the periods indicated herein
have been prepared by the Company without audit. The Consolidated Balance Sheet
at December 31, 1995 is derived from the December 31, 1995 audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles. It is assumed that these financial statements will be
read in conjunction with the audited financial statements and notes thereto
included in the Company's 1995 Annual Report on Form 10-K.
In the opinion of management, the statements reflect all adjustments
necessary for a fair presentation of the financial position, results of
operations and cash flows of the Company on a consolidated basis and all such
adjustments are of a normal recurring nature. The interim statements for the
period ended June 30, 1996 are not necessarily indicative of results to be
expected for the full year. Certain data from the prior year have been
reclassified for purposes of comparison.
NOTE 2 - CHANGES IN LONG-TERM DEBT:
On March 19, 1996, the Company issued $125 million of 10% Senior
Subordinated Notes due 2006 (the 10% Notes) in a private placement. Interest on
the 10% Notes will be payable semi-annually, commencing September 1, 1996. The
10% Notes will be redeemable at the option of the Company, in whole or in part,
at any time on or after March 1, 2001 at 105% of the principal amount, declining
ratably in annual increments to par on or after March 1, 2004, plus accrued
interest. The 10% Notes are subordinate in right of payment to the Company's
existing and future senior debt, as defined in the indenture under which the 10%
Notes were issued, rank on a parity with the Company's existing and future
senior subordinated debt, as defined in the indenture, and rank senior to other
existing and future subordinated debt of the Company. The indenture includes
affirmative and negative covenants which in certain instances restrict, among
other things, incurrence of additional indebtedness, certain sales of assets,
certain mergers and consolidations and dividends and distributions. In
accordance with a Registration Rights Agreement entered at the time of the
private placement, the Company exchanged all of the 10% Notes in a registered
exchange offer that expired on July 5, 1996 for 10% Senior Subordinated Notes
due 2006, Series B, which are substantially similar to the 10% Notes and were
issued under the same indenture.
The net proceeds of the 10% Notes and other funds were used to
repurchase $120.2 million in principal amount of the Company's 14% Senior
Subordinated Notes due 2001, Series B (the 14% Notes) for $131.8 million plus
accrued interest of $7.2 million and to pay related costs and expenses. The
Company recorded a $11.4 million net of tax charge in the first quarter of 1996
to reflect the prepayment premium and other costs incurred on the early
retirement of the 14% Notes.
-5-
<PAGE>
NOTE 3 - INVENTORIES:
<TABLE>
<CAPTION>
(UNAUDITED, IN MILLIONS)
---------------------------------
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
Finished goods $ 19.4 $ 18.6
Work in progress 17.6 14.6
Raw materials 6.6 6.5
Supplies 29.8 29.9
----------- -----------
$ 73.4 $ 69.6
=========== ===========
</TABLE>
Inventories stated on the LIFO method were $35.6 million of total
inventories at June 30, 1996 and $30.4 million of total inventories at December
31, 1995 compared with current costs of $44.3 million and $39.1 million,
respectively.
NOTE 4 - CAPITAL STOCK:
COMMON STOCK
At June 30, 1996, a total of 17,307,000 shares of common stock were
issued and outstanding. A quarterly dividend of $0.10 per share of common stock
was paid on March 1, 1996 and June 3, 1996.
PREFERRED STOCK REDEEMABLE AT ISSUER'S OPTION
SERIES A PREFERRED STOCK - The Company had 1,994,000 shares of Preferred
Stock, $0.70 Cumulative Convertible Series A (Series A Preferred Stock)
outstanding at June 30, 1996, December 31, 1995 and June 30, 1995. The Series A
Preferred Stock (a) has a stated value and liquidation preference of $10 per
share, plus accrued and unpaid dividends, (b) carries a cumulative dividend of
$.70 per year, payable quarterly, and entitles the holders of a majority thereof
to elect two directors if dividends are in arrears for at least 540 days, (c) is
initially convertible into one-half of a share of Common Stock for each share of
Series A Preferred Stock, subject to adjustment and (d) is redeemable with at
least 10 days notice at the option of the Company at 105% of the $10 stated
value thereof through April 30, 1997 (declining to 100% of the stated value
thereafter) plus accrued and unpaid dividends. Dividends paid on the Series A
Preferred Stock were approximately $350,000 and $700,000, respectively, during
the three and six-month periods ended June 30, 1996 and 1995.
SERIES B PREFERRED STOCK - The Company had 914,360 shares of Preferred
Stock, $3.75 Convertible Exchangeable Series B (Series B Preferred Stock)
outstanding at June 30, 1996, December 31, 1995, and June 30, 1995. The Series B
Preferred Stock (a) has a stated value and liquidation preference of $50 per
share, plus accrued and unpaid dividends, (b) carries a cumulative dividend of
$3.75 per year, payable semi-annually, and entitles the holders of a majority
thereof to elect two directors if dividends are in arrears for at least 180
days, (c) is initially convertible into two and one-half shares of Common Stock
for each share of Series B Preferred Stock, subject to adjustment and (d) is
redeemable with at least 30 days notice at the option of the Company at 100% of
the $50 stated value thereof plus accrued and unpaid dividends. Dividends
accrued on the Series B Preferred Stock were approximately $860,000 and $1.7
million, respectively, during the three and six-month periods ended June 30,
1996 and 1995.
SERIES D PREFERRED STOCK - The Company had 1,725,000 shares of Preferred
Stock, $2.875 Cumulative Convertible Series D (Series D Preferred Stock)
outstanding at June 30, 1996, December 31, 1995, and June
-6-
<PAGE>
30, 1995. The Series D Preferred Stock (a) has a stated value and liquidation
preference of $50 per share, plus accrued and unpaid dividends, (b) carries a
cumulative annual dividend of $2.875 per share, payable quarterly, (c) is
initially convertible into 1.511 shares of Common Stock for each share of Series
D Preferred Stock, subject to adjustment, (d) may be converted at the option of
the Company, in whole but not in part, at any time on and after January 27, 1997
and until January 27, 2001, if for at least 20 trading days within a period of
30 consecutive trading days, including the last trading day of such 30 trading
day period, the closing price of the Common Stock equals or exceeds 130% of the
conversion price, into 1.511 shares of Common Stock, subject to adjustment and
(e) is redeemable at the option of the Company at 100% of the stated value
thereof plus accrued and unpaid dividends on and after January 27, 2001.
Dividends paid on the Series D Preferred Stock were approximately $1.3 million
and $2.5 million, respectively, during the three and six-month periods ended
June 30, 1996 and 1995.
NOTE 5 - CONTINGENCIES:
On a voluntary basis, the Company is investigating two inactive Ohio
cement kiln dust (CKD) disposal sites. When CKD is infused with water, it may
produce leachate with an alkalinity high enough to be classified as hazardous
and may also leach certain hazardous trace metals present therein. The two sites
in question were part of a cement manufacturing facility that was owned and
operated by a now dissolved cement company from 1924 to 1945 and by a division
of USX Corporation (USX) from 1945 to 1975. The Company believes that USX is a
responsible party because it owned and operated the larger of the two sites (USX
Site) at the time of disposal of the CKD, and also arranged for the disposal and
transported the CKD to the USX Site. Therefore, based on the advice of counsel,
the Company believes there is a reasonable basis for the apportionment of
cleanup costs relating to the USX Site between the Company and USX with USX
shouldering substantially all of the cleanup costs because, based on the facts
known at this time, the Company itself disposed of no CKD at the USX Site and is
potentially liable only because of its current ownership of the USX Site. In
September 1993, the Company filed a complaint against USX, alleging that USX is
a potentially responsible party under both Federal and applicable Ohio law, and
therefore, jointly and severally liable for costs associated with cleanup of the
USX Site. The Company and USX have held settlement discussions with respect to
this matter and are currently jointly funding a phased approach to investigating
and remediating the problems at the USX Site.
Based on the information obtained from this investigation project, the
Company has received revised estimates of the potential magnitude of the
remediation costs for the USX Site which are substantially below previous
estimates. Current estimates of the total cost are between $300,000 and $8
million, depending on the assumptions used. No regulatory agency has directly
asserted a claim against the Company as the owner of the USX Site requiring it
to remediate the property, and no cleanup of the USX Site has yet been
initiated. Under Federal and applicable Ohio law, a court generally applies
equitable principles in determining the amount of contribution which a
potentially responsible party must provide with respect to a cleanup of
hazardous substances and such determination is within the sole discretion of the
court.
See also Item 2. "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources - Known
Events, Trends and Uncertainties" for discussion of certain contingencies.
NOTE 6 - REVIEW BY INDEPENDENT ACCOUNTANTS:
The unaudited financial information presented in this report has been
reviewed by the Company's independent public accountants. The review was limited
in scope and did not constitute an audit of the financial information in
accordance with generally accepted auditing standards such as is performed in
the year-end audit of financial statements. The report of Deloitte & Touche LLP
relating to its limited review of the financial information as of June 30, 1996
and for the three and six-month periods ended June 30, 1996 and 1995 follows.
-7-
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
TO THE SHAREHOLDERS AND
BOARD OF DIRECTORS OF
SOUTHDOWN, INC.
HOUSTON, TEXAS
We have reviewed the accompanying consolidated balance sheet of
Southdown, Inc. and subsidiary companies as of June 30, 1996, and the related
statements of consolidated earnings for the three and six-month periods ended
June 30, 1996 and 1995, consolidated cash flows for the six months ended June
30, 1996 and 1995 and the statement of shareholders' equity for the six months
ended June 30, 1996. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of the interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such financial statements for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Southdown, Inc. and
subsidiary companies as of December 31, 1995 and the related statements of
consolidated earnings, shareholders' equity and cash flows for the year then
ended (not presented herein); and in our report dated February 14, 1996, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1995 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
Deloitte & Touche LLP
Houston, Texas
July 26, 1996
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management's Discussion and Analysis of Financial Condition and Results
of Operations included on pages 21 through 35 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1995 should be read in conjunction
with the discussion contained herein.
RESULTS OF OPERATIONS
CONSOLIDATED SECOND QUARTER EARNINGS
Operating earnings for the second quarter of 1996 were $34.1 million
compared with $24.7 million in the prior year quarter. Net earnings for the
second quarter of 1996 were $18.9 million, $0.79 per share, fully diluted,
compared with $12 million, $0.51 per share, fully diluted, for the prior year
quarter.
Consolidated revenues in the second quarter of 1996 increased 15% over
the same period of the prior year primarily because of improved sales volumes
and sales prices from cement and ready-mixed concrete. Second quarter 1996
operating earnings improved $9.4 million over the same quarter of the prior year
reflecting improvements in both operating segments.
Second quarter interest expense in 1996 declined compared with the prior
year quarter, reflecting the refinancing of the 14% Notes with the 10% Notes in
March 1996 and lower borrowings on the Company's Revolving Credit Facility.
CONSOLIDATED YEAR-TO-DATE EARNINGS
Earnings before extraordinary charge for the six months ended June 30,
1996 were $23.7 million, $1.05 per share, fully diluted, compared with $14.5
million, $0.55 per share, fully diluted, in the prior year period. The
extraordinary charge of $11.4 million, $0.63 per share, reflects prepayment
premium and other costs incurred on the early retirement of $120.2 million of
the 14% Notes. The year-over-year improvement in operating results includes a
21% increase in Cement segment earnings, a $2.4 million improvement in the
results reported by Concrete Products and a 10% reduction in Corporate expenses.
The Cement segment benefited from a 10% increase in sales volumes and a 3%
improvement in average sales prices. Operating earnings from the Concrete
Products segment were also significantly improved primarily because of higher
ready-mixed concrete sales volumes and sales prices. Interest expense in the
1996 period was 16% below that of the comparable prior year period because of
lower debt levels and borrowing costs.
SEGMENT OPERATING EARNINGS
CEMENT
SECOND QUARTER - The record quarterly operating earnings of the Cement
segment for the three-month period ended June 30, 1996 were $36.4 million
compared with $27.7 million in the prior year quarter. The improvement reflects
a 17% increase in sales volumes and a weighted average $1.09 per ton improvement
in cement sales prices. Higher sales volumes were reflected at all but one of
the Company's cement plants. Sales volumes were favorably impacted by strong
market conditions and favorable weather in most of the Company's market areas.
The improvement in sales prices reflected price increases implemented during the
previous twelve months in most of the Company's market areas. Per unit Cement
segment operating costs declined primarily
-9-
<PAGE>
because of higher clinker production, despite a six week outage related to the
modernization project at the Fairborn, Ohio plant.
YEAR-TO-DATE - Operating earnings for the six months ended June 30, 1996
were $53.5 million compared with $44.1 million in the prior year period. The
Cement segment benefited from a 264,000 ton increase in cement sales volumes and
a 3% improvement in the weighted average sales price. The higher sales volumes
and sales prices reflected strong demand in most market areas. Per unit
operating costs, excluding a 1995 litigation settlement charge, were essentially
unchanged for the comparable year-to-date periods.
Sales volumes, average unit price and cost data and unit operating
profit margins relating to the Company's cement plant operations appear in the
following table:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- -------------------------
1996 1995 1996 1995
--------- --------- --------- -------
<S> <C> <C> <C> <C>
Tons of cement sold (thousands) 1,813 1,552 3,032 2,768
========= ========= ========= ==========
Weighted average per ton data:
Sales price (net of freight) $ 62.80 $ 61.71 $ 61.83 $ 60.13
Cost of sales (1) 42.72 43.38 (2) 44.10 43.80 (2)
--------- --------- --------- ---------
Margin $ 20.08 $ 18.33 $ 17.73 $ 16.33
========= ========= ========= =========
--------------
(1) Includes fixed and variable manufacturing costs, cost of purchased
cement, selling expenses, plant general and administrative costs,
other plant overhead and miscellaneous costs.
(2) Excludes a $750,000 charge for the three months ended June 30,1995
and a total charge of $1 million for the six months then ended
related to a litigation settlement.
</TABLE>
CONCRETE PRODUCTS
SECOND QUARTER - Operating earnings for the Concrete Products segment
increased $1.7 million or 63% over the prior year quarter. A $2.23 per yard
improvement in ready-mixed concrete sales prices combined with a 10% increase in
ready-mixed sales volumes. The increase in sales volumes was based almost
entirely on an improved Florida market. Favorable weather and an improved
construction market contributed to higher Florida concrete operations sales
volumes and sales prices and resulted in a 72% increase in earnings from the
Florida division. Operating results in California were approximately flat
between the two quarters as a $3.44 per yard improvement in average ready-mixed
concrete sales prices were offset by a 52% decrease in earnings from the
California aggregate operation. Operating results at the California aggregate
operations have been adversely impacted by a further slide in construction
activity in the Company's market area.
YEAR-TO-DATE - Concrete Products operating earnings increased 62% to
$6.3 million for the six months ended June 30, 1996. The Concrete Products
segment achieved a significant improvement because of higher earnings from the
Florida concrete operation. Fair weather and a strong construction market
resulted in higher Florida ready-mixed concrete sales volumes and sales prices.
Operating results from the California operation declined $811,000 because a 63%
decrease in California aggregate earnings more than offset slightly improved
results from the ready-mixed concrete operation. The California aggregate
operations were adversely impacted by a further slide in construction activity
in the Company's market area.
-10-
<PAGE>
The segment's operating results also include the block, resale and fly
ash operations in Florida and aggregate operations in southern California which
combined totalled $3.3 million of operating earnings in the 1996 period compared
with $4 million in the 1995 period.
Sales volumes, unit price and cost data and unit operating margins
relating to the Company's sales of ready-mixed concrete appear in the following
table:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- -------------------------
1996 1995 1996 1995
--------- --------- --------- -------
<S> <C> <C> <C> <C>
Yards of ready-mixed concrete
sold (thousands) 974 889 1,832 1,680
========= ========= ========= ========
Weighted average per cubic yard data:
Sales price $ 53.33 $ 51.10 $ 53.04 $ 50.60
Operating costs (1) 51.05 50.65 51.41 50.62
--------- --------- --------- --------
Margin(2) $ 2.28 $ 0.45 $ 1.63 $ (0.02)
========= ========= ========= =========
--------------
(1) Includes variable and fixed plant costs, delivery, selling, general
and administrative and miscellaneous operating costs.
(2) Does not include aggregate, concrete block and other related
products.
</TABLE>
CORPORATE
SECOND QUARTER - Corporate general and administrative expenses were flat
in the second quarter of 1996 compared with the prior year quarter.
YEAR-TO-DATE - Corporate general and administrative expenses for the
first six months of 1996 were $1.2 million below the prior year period primarily
because of lower accruals required for postretirement benefits.
LIQUIDITY AND CAPITAL RESOURCES
The net proceeds from the Company's March 1996 issuance of $125 million
of 10% Notes, combined with borrowings under the Company's Revolving Credit
Facility, were utilized to repurchase $120.2 million of 14% Notes and to pay the
related prepayment premium and other costs. The Company currently anticipates
that the 14% Notes remaining outstanding will be redeemed or otherwise retired
after they become redeemable in October 1996.
Internally generated cash flow during the first six months of 1996 was
utilized to invest approximately $17.7 million in property, plant and equipment,
reduce borrowings outstanding under the Revolving Credit Facility and pay
dividends on capital stock. In the first six months of 1995, borrowings under
the Company's Revolving Credit Facility were utilized to (i) fund working
capital requirements, (ii) invest approximately $13 million in property, plant
and equipment, (iii) acquire additional ready-mix concrete operations in Florida
and in southern California for a total of $12.6 million and (iv) pay dividends
on preferred stock.
-11-
<PAGE>
The Company's Revolving Credit Facility totals $200 million and matures
in October 2000. The terms of the facility also permit the issuance of standby
letters of credit up to a maximum of $95 million in lieu of borrowings. The
Company's ownership interest in five cement manufacturing facilities and the
Company's joint venture interest in Kosmos Cement Company are pledged to secure
this facility. At June 30, 1996, $17 million of borrowings and $51.3 million of
letters of credit were outstanding under the Revolving Credit Facility, leaving
$131.7 million of unused and unrestricted capacity.
CHANGES IN FINANCIAL CONDITION
The change in the financial condition of the Company between December
31, 1995 and June 30, 1996 reflects the March 1996 issuance of $125 million of
10% Notes, borrowings under the Company's Revolving Credit Facility and
internally generated cash flow to complete the repurchase of $120.2 million of
the 14% Notes and fund capital expenditures and capital stock dividends.
Accounts and notes receivables increased because of the additional sales
activity occurring in the summer construction season relative to the winter
months. The increase in inventories reflects the seasonal build-up in cement
inventories in preparation for the peak selling months in the second and third
quarters. Accounts payable and accrued liabilities increased because of the
timing of payments on normal trade and other obligations. Other liabilities and
deferred credits decreased because of payments made in conjunction with the
shipping operations formerly owned by a predecessor company and other
obligations.
KNOWN EVENTS, TRENDS AND UNCERTAINTIES
ENVIRONMENTAL MATTERS
The Company is subject to Federal, state and local laws, regulations
and ordinances pertaining to the protection of the environment. These laws
regulate water discharges and air emissions, as well as the handling, use and
disposal of hazardous and non-hazardous waste materials and may require the
Company to remove or mitigate the environmental effects of the disposal or
release of certain substances at the Company's various operating facilities or
elsewhere.
Industrial operations have been conducted at the Company's cement
manufacturing facilities for many years. In the past, the Company disposed of
various materials used in its cement manufacturing and concrete products
operations in onsite and offsite facilities. Some of these materials, if
discarded today, might be classified as hazardous wastes. Several of the
Company's previously and currently owned facilities at several locations have
become the subject of various local, state and Federal environmental proceedings
and inquiries, including being named a potentially responsible party with regard
to Superfund sites, primarily at several locations to which they are alleged to
have shipped materials for disposal. While some of these matters have been
settled for de minimis amounts, others are in their preliminary stages and final
results may not be determined for years. Based on the information the Company
has developed to date, the Company has no reason to believe it will be required
to spend significant sums with regard to these locations either individually or
in the aggregate. However, until it is determined what, if any, contribution the
Company or its predecessors made to these locations and until all environmental
studies, investigations, remediation work and negotiations with or litigation
against potential sources of recovery have been completed, it is impossible to
determine the ultimate cost of resolving these environmental matters.
Cement kiln dust (CKD) is a by-product of the cement manufacturing
process. Most manufacturing plants in the industry have typically disposed of
CKD in and around the plant site since the inception of cement
-12-
<PAGE>
manufacturing operations. When CKD is infused with water, it may produce a
leachate with an alkalinity high enough to be classified as hazardous and may
also leach certain hazardous trace metals present therein. The Company has
recorded charges totaling approximately $13.3 million as the estimated
remediation cost for one inactive CKD disposal site in Ohio. Approximately $12
million of the reserved amount had been expended through June 30, 1996.
On a voluntary basis, the Company is also investigating two other
inactive Ohio CKD disposal sites. The two additional sites in question were part
of a cement manufacturing facility that was owned and operated by a now
dissolved cement company from 1924 to 1945 and by a division of USX Corporation
(USX) from 1945 to 1975. The Company believes that USX is a responsible party
because it owned and operated the larger of the two sites (USX Site) at the time
of disposal of the CKD, and also arranged for the disposal and transported the
CKD to the USX Site. Therefore, based on the advice of counsel, the Company
believes there is a reasonable basis for the apportionment of cleanup costs
relating to the USX Site between the Company and USX with USX shouldering
substantially all of the cleanup costs because, based on the facts known at this
time, the Company itself disposed of no CKD at the USX Site and is potentially
liable only because of its current ownership of the USX Site. In September 1993,
the Company filed a complaint against USX, alleging that USX is a potentially
responsible party under both Federal and applicable Ohio law, and therefore,
jointly and severally liable for costs associated with cleanup of the USX Site.
The Company and USX have held settlement discussions with respect to this matter
and are currently jointly funding a phased approach to investigating and
remediating the problems at the USX Site.
Based on the information obtained from this investigation project, the
Company has received revised estimates of the potential magnitude of the
remediation costs for the USX Site which are substantially below previous
estimates. Current estimates of the total cost are between $300,000 and $8
million, depending on the assumptions used. No regulatory agency has directly
asserted a claim against the Company as the owner of the USX Site requiring it
to remediate the property, and no cleanup of the USX Site has yet been
initiated. Under Federal and applicable Ohio law, a court generally applies
equitable principles in determining the amount of contribution which a
potentially responsible party must provide with respect to a cleanup of
hazardous substances and such determination is within the sole discretion of the
court.
No substantial investigative work has been undertaken at the Company's
other CKD sites in Ohio. Several of the Company's other inactive CKD disposal
sites around the country are under study to determine if remedial action is
required.
CLAIMS FOR INDEMNIFICATION
Prior to the sale of the Company's then oil and gas subsidiary, Pelto
Oil Company (Pelto) in 1989 to Energy Development Corporation (EDC), Pelto
entered into certain gas settlement agreements, including one with Tennessee Gas
Pipeline Company (Tennessee Gas). The Minerals Management Service (MMS) of the
Department of the Interior has reviewed the 1988 agreement Pelto entered into
with Tennessee Gas to determine whether a payment to Pelto thereunder is
associated with Federal or Indian leases and whether, in its view, any
additional royalties may be due as a result of that payment. In October 1995,
the MMS's Houston Compliance Division advised EDC that it had determined that a
lump sum payment made by Tennessee Gas to Pelto was, for several alleged
reasons, royalty bearing. The MMS advised EDC of a preliminary determination of
underpayment of royalties in the amount of $1.35 million attributable to these
proceeds. In 1994, the Company timely filed its notice of appeal and its
statement of reasons supporting its appeal regarding an earlier similar MMS
determination of royalty underpayment, in an amount unspecified, with respect to
a separate $5.9 million
-13-
<PAGE>
gas settlement payment from Transcontinental Gas Pipe Line Corporation (Transco)
to Pelto. The Company has been notified by EDC that EDC was exercising its
indemnification rights under the 1989 stock purchase for Pelto with respect to
both of these matters. The Company disagrees with MMS' preliminary
determinations, however, if the determinations as to the payments to Pelto are
ultimately upheld, the Company could have liability for royalties on those sums,
plus late payment charges. Such expenditures would result in a charge to
discontinued operations.
DISCONTINUED ENVIRONMENTAL SERVICES SEGMENT
The Company has both given environmental and other indemnifications to
and received environmental and other indemnifications from others for properties
previously owned although some courts have held that indemnification for such
environmental liabilities is unenforceable. No estimate of the extent of
contamination, remediation cost or recoverability of cost from prior owners, if
any, is presently available regarding these discontinued operations.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
Part I, Item 2 and Part II, Item 1 of this document include forward
looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Although the Company believes that the expectations reflected in such
forward looking statements are based upon reasonable assumptions, it can give no
assurance that its expectations will be achieved. Important factors that could
cause actual results to differ materially from the Company's expectations are
disclosed in conjunction with the forward looking statements included herein
(Cautionary Disclosures). Subsequent written and oral forward looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the Cautionary Disclosures.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
(a) The information appearing under "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources
- - Known Events, Trends and Uncertainties Environmental Matters" is incorporated
hereunder by reference, pursuant to Rule 12b-23.
(b) The Company owns two inactive CKD disposal sites in Ohio that were formerly
owned by a division of USX Corporation (USX). In late July 1993, a citizens
environmental group brought suit in U.S. District Court for the Southern
District of Ohio, Western Division (Greene Environmental Coalition, Inc. (GEC)
v. Southdown, Inc., Case No. C-3-93-270) alleging the Company is in violation of
the Clean Water Act by virtue of the discharge of pollutants in connection with
the runoff of stormwater and groundwater from the larger of these two sites (USX
Site) and is seeking injunctive relief, unspecified civil penalties and
attorney's fees, including expert witness fees (GEC case). In December 1994, GEC
agreed to a separate out-of-court settlement which included a cash payment by
the Company to GEC and a covenant by the Company not to store, burn or dispose
of hazardous wastes at the Ohio cement plant. As a result of the settlement, the
GEC case has been stayed until January 3, 1997 pending possible resolution.
In September 1993, the Company filed a complaint against USX alleging that with
respect to the USX Site, USX is a potentially responsible party under CERCLA
and, therefore, jointly and severally liable
-14-
<PAGE>
for costs associated with cleanup of the USX Site. (Southdown, Inc. vs. USX
Corporation, Case No. C-3- 93-354, U.S. District Court, Southern District of
Ohio Western Division) (USX Case). In late September 1995, the Company and USX
entered into a partial settlement agreement wherein the Company dismissed its
claim for response costs incurred prior to September 29, 1995 and USX agreed to
pay the Company a specified amount representing half of certain costs already
incurred by the Company at the USX Site. The Company and USX jointly funded the
initial project of a phased approach to investigating and remediating the
problems at the USX Site and have since agreed to undertake a Phase II
investigation of remedial options. The Phase II investigation is estimated to
take approximately six months to complete. As a result, during a pretrial status
conference in early July 1996, the Court indicated its intention to stay this
litigation but has not yet formally entered such a stay of these proceedings.
(c) On November 17, 1992, Region IV of the U.S. EPA advised the Company of
certain alleged violations of the National Pollution Discharge Elimination
System (NPDES) permit issued to a ready-mixed concrete facility operated by the
Company in Tallahassee, Florida. Although the Company no longer owns the
property involved in the alleged violation, on September 13, 1994, the United
States Department of Justice (DOJ), acting on behalf of U.S. EPA, brought an
action against the Company in the United States District Court for the Northern
District of Florida alleging NPDES Clean Water Act violations and seeking the
statutory maximum penalty of $25,000 per day of violation. After several months
of preparation for discovery and negotiations to settle this matter, the Company
and DOJ recently reached an agreement in principle with respect to it. That
agreement in principle calls for the Company to pay the United States the sum of
$350,000 and to carry out a Supplemental Environmental Project. The Supplemental
Environmental Project involves a commitment by the Company to conduct a series
of educational seminars for the ready-mix concrete association addressing the
general environmental obligations of the industry, with specific emphasis on the
regulatory programs governing water and wastewater. The agreement in principle
calls for the Company to invest a minimum of $200,000 to complete these
seminars. The total cost of the seminars is not expected to be significantly
higher than that amount. Although the paperwork for this agreement has not been
finalized, the Company does not believe that the remaining tasks for finalizing
the agreement in principle will alter the terms of the agreement in any
significant way.
(d) In the matter of Jack Blair, et al. vs. Ideal Basic Industries, Inc., United
Cement, Lime, Gypsum and Allied Workers International Union, and Dixie Cement
Company (Chancery Court of Knox County, Tennessee, No. 03A1-CH-00029), which is
described in the Company's 1995 Annual Report on Form 10-K and Quarterly Report
on Form 10-Q for the period ended March 31, 1996, the plaintiffs are fifteen
former employees of Ideal Basic Industries, Inc. (Ideal), and the defendants are
Ideal, Dixie Cement Company (Dixie) (a subsidiary of Moore McCormack Resources
Inc. which was acquired by the Company in 1988), and the United Cement, Lime,
Gypsum and Allied Workers International Union (Union). The Union and Plaintiffs
reached a separate settlement agreement in early 1996 and Plaintiff's claim
against the Union has been dismissed. The Company has subpoenaed information
concerning this agreement. Discovery has recommenced and depositions of the
Plaintiffs were taken in June 1996. The case has now been set for trial during
February 1997.
-15-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
11 Statement of Computation of Per Share Earnings
27 Financial Data Schedule
99.1 Bylaws of the Company amended as of March 21, 1996.
99.2 Agreement dated May 1, 1996 by and between Kosmos Cement
Company and the International Brotherhood of Boilermakers,
Cement, Lime, Gypsum and Allied Workers Division Lodge D- 595.
(b) Reports on Form 8-K
On May 21, 1996, the Company filed a Current Report on Form 8-K
reporting the results of matters submitted to a vote of the
Shareholders of the Company at its Annual Meeting on May 16, 1996,
namely the election of three directors to the Company's Board of
Directors, the ratification and approval of the Board of Directors'
amendment of the 1991 Nonqualified Stock Option Plan for Non-Employee
Directors of the Company and the ratification of the appointment of
Deloitte & Touche LLP as the independent auditors for the fiscal year
ending December 31, 1996.
No other reports on Form 8-K were filed during the quarter ended June
30, 1996.
-16-
<PAGE>
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.
SOUTHDOWN, INC.
(Registrant)
Date: August 6, 1996 By: JAMES L. PERSKY
-------------------------------
James L. Persky
Executive Vice President-Finance & Administration
(Principal Financial Officer)
Date: August 6, 1996 By: ALLAN KORSAKOV
--------------------------------
Allan Korsakov
Corporate Controller
(Principal Accounting Officer)
-17-
<PAGE>
Exhibit 11
- ------------
<TABLE>
SOUTHDOWN, INC. AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS - UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- ---------------------------
1996 1995 1996 1995
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Earnings (loss) for primary earnings per share:
Earnings before extraordinary charge and
preferred stock dividends $ 18.9 $ 12.0 $ 23.7 $ 14.5
Preferred stock dividends (2.5) (2.5) (4.9) (4.9)
------------ ----------- ----------- -----------
Earnings before extraordinary charge 16.4 9.5 18.8 9.6
Extraordinary charge, net of income taxes - - (11.4) -
------------ ----------- ----------- -----------
Net earnings for primary earnings per share $ 16.4 $ 9.5 $ 7.4 $ 9.6
============ =========== =========== ===========
Earnings (loss) for fully diluted earnings per share:
Earnings before extraordinary charge and
preferred stock dividends $ 18.9 $ 12.0 $ 23.7 $ 14.5
Antidilutive preferred stock dividends - - (4.9) (4.9)
------------ ----------- ----------- -----------
Earnings before extraordinary charge 18.9 12.0 18.8 9.6
Extraordinary charge, net of income taxes - - (11.4) -
------------ ----------- ----------- -----------
Net earnings for fully diluted earnings per share $ 18.9 $ 12.0 $ 7.4 $ 9.6
============ =========== =========== ===========
Average shares outstanding:
Common stock 17.3 17.3 17.3 17.3
Common stock equivalents from assumed exercise of
stock options and warrants (treasury stock method) 0.6 0.3 0.5 0.2
------------ ----------- ----------- -----------
Total for primary earnings per share 17.9 17.6 17.8 17.5
Other potentially dilutive securities:
- additional common stock equivalent from assumed
conversion of stock options and warrants at ending
market price 0.1 - 0.1 0.1
- assumed conversion of Series A convertible
preferred stock at one-half share of common stock 1.0 1.0 1.0 1.0
- assumed conversion of Series B convertible
preferred stock at 2.5 shares of common stock 2.3 2.3 2.3 2.3
- assumed conversion of the Series D convertible
preferred stock at 1.51 shares of common stock 2.6 2.6 2.6 2.6
------------ ----------- ----------- -----------
Total for fully diluted earnings per share 23.9 23.5 23.8 23.5
Less: Antidilutive securities
Series A preferred stock - - (1.0) (1.0)
Series B preferred stock - - (2.3) (2.3)
Series D preferred stock - - (2.6) (2.6)
------------ ----------- ----------- -----------
23.9 23.5 17.9 17.6
============ =========== =========== ===========
Earnings (loss) per share:
Primary
Earnings before extraordinary charge $ 0.92 $ 0.54 $ 1.05 $ 0.55
Extraordinary charge, net of income taxes - - (0.63) -
------------ ----------- ----------- -----------
$ 0.92 $ 0.54 $ 0.42 $ 0.55
============ =========== =========== ===========
Fully diluted
Earnings before extraordinary charge $ 0.79 $ 0.51 $ 1.05 $ 0.55
Extraordinary charge, net of income taxes - - (0.63) -
------------ ----------- ----------- -----------
$ 0.79 $ 0.51 $ 0.42 $ 0.55
============ =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's consolidated balance sheet as of June 30, 1996 and the related
statement of consolidated earnings and is qualified in its entirety by reference
to such statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 8
<SECURITIES> 0
<RECEIVABLES> 99
<ALLOWANCES> 10
<INVENTORY> 73
<CURRENT-ASSETS> 183
<PP&E> 901
<DEPRECIATION> 339
<TOTAL-ASSETS> 893
<CURRENT-LIABILITIES> 84
<BONDS> 187
<COMMON> 22
0
152
<OTHER-SE> 206
<TOTAL-LIABILITY-AND-EQUITY> 893
<SALES> 306
<TOTAL-REVENUES> 306
<CGS> 229
<TOTAL-COSTS> 259
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11
<INCOME-PRETAX> 36
<INCOME-TAX> 12
<INCOME-CONTINUING> 24
<DISCONTINUED> 0
<EXTRAORDINARY> (11)
<CHANGES> 0
<NET-INCOME> 12
<EPS-PRIMARY> 0.42
<EPS-DILUTED> 0.42
</TABLE>
Exhibit 99.1
- AS AMENDED MARCH 21, 1996 -
BYLAWS
OF
SOUTHDOWN, INC.
ARTICLE I
Shareholders
SECTION 1 - PLACE OF HOLDING MEETINGS
All meetings of the shareholders shall be held at the principal business office
of the corporation in New Orleans, Louisiana, or at such other place as may be
specified in the notice of the meeting.
SECTION 2 - ANNUAL ELECTION OF DIRECTORS
An annual meeting of shareholders for the election of directors shall be held in
each calendar year on such date as the board of directors may determine but not
later than 18 months after the date of the annual meeting held the preceding
year, at such time as may be specified in the notice of the meeting.
SECTION 3 - VOTING
(a) On demand of any shareholder, the vote for directors, or on any
questions before a meeting, shall be by ballot. All elections shall be
had by plurality, and all questions decided by majority, of the votes
cast, except as otherwise provided by the articles or by law.
(b) At each meeting of shareholders, a list of the shareholders entitled to
vote, arranged alphabetically and certified by the transfer agent,
showing the number and class of shares held by each such shareholder on
the record date for the meeting, shall be produced on the request of
any shareholder.
(c) The date and time of the opening and the closing of the polls for each
matter on which the shareholders will vote at any meeting of the
shareholders shall be announced at the meeting by the chairman of the
meeting. The Board of Directors of the corporation (or any committee
designated by it for that purpose) may, to the extent not prohibited by
law, adopt by resolution such rules, regulations and procedures for the
conduct of any meeting
<PAGE>
of shareholders as it may deem appropriate or convenient. Except to the
extent inconsistent with such rules, regulations and procedures as
adopted by the Board of Directors or any such committee, the chairman
of any meeting has the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment
of the chairman, are appropriate or convenient for the conduct of any
meeting. Such rules, regulations or procedures, whether adopted by the
Board of Directors or any such committee or prescribed by the chairman
of any meeting, may, to the extent not prohibited by law, include,
without limitation, establishment of the following: (1) an agenda or
order of business for the meeting; (2) rules, regulations and
procedures for maintaining order at the meeting and the safety of those
present; (3) limitations on attendance at or participation in the
meeting to shareholders of record of the corporation, their duly
authorized and constituted proxies or such other persons as the
chairman of the meeting shall determine; (4) restrictions on entry to
the meeting after the time fixed for the commencement thereof; and (5)
limitations on the time allotted to questions or comments by
participants at the meeting. Unless, and to the extent, determined by
the Board of Directors, by a duly appointed committee or by the
chairman of the meeting, meetings of shareholders are not required to
be held in accordance with the rules of parliamentary procedure.
SECTION 4 - QUORUM
Except as provided herein, any number of shareholders, together holding at least
a majority of the outstanding shares entitled to vote thereat, who are present
in person or represented by proxy at the meeting, constitute a quorum for the
transaction of business despite the subsequent withdrawal or refusal to vote of
any shareholder. If notice of any meeting is mailed to the shareholders entitled
to vote at the meeting, stating the purpose or purposes of the meeting and that
the previous meeting failed for lack of a quorum, then any number shareholders,
present in person or represented by proxy and together holding at least
one-fourth of the outstanding shares entitled to vote thereat, constitute a
quorum at such meeting.
SECTION 5 - ADJOURNMENT OF MEETING
If less than a quorum is in attendance at any time for which a meeting is
called, the meeting may be adjourned by a majority in interest of the
shareholders present or represented and entitled to vote thereat.
SECTION 6 - SPECIAL MEETING: HOW CALLED
Special Meetings of the shareholders for any purpose or purposes may be called
in the manner set forth in the Restated Articles of Incorporation.
SECTION 7 - NOTICE OF SHAREHOLDERS' MEETINGS
Written or printed notice, stating the place and time of any meeting, and, if a
special meeting, the general nature of the business to be considered, shall be
given to each shareholder entitled to vote thereat, at his last known address,
at least ten days before the meeting.
<PAGE>
SECTION 8 - FORM OF PROXIES
Without limiting the manner in which a shareholder may authorize another person
or persons to act for him as proxy, the following shall constitute a valid means
by which a shareholder may grant such authority:
(a) A shareholder may execute a writing authorizing another person or
persons to act for him or her as proxy. Execution may be accomplished
by the shareholder or his or her authorized officer, director, employee
or agent signing such writing or causing his or her signature to be
affixed to such writing by any reasonable means including, but not
limited to, by facsimile signature.
(b) Any copy, facsimile telecommunication or other reliable reproduction of
the writing created under subsection (a) of this section 8 may be
substituted or used in place of the original writing for any and all
purposes for which the original writing could be used, including filing
with the secretary of the corporation at or before the meeting,
provided that such copy, facsimile telecommunication or other
reproduction shall be a complete reproduction of the entire original
writing.
ARTICLE II
Directors
SECTION 1 - NUMBER OF DIRECTORS
The number of directors is ten (10); provided, that the number of directors
shall be increased automaticially in the manner and upon the events specified in
Article III of the Restated Articles of Incorporation, as amended.
SECTION 2 - PLACE OF HOLDING MEETINGS
Meetings of the directors, regular or special, may be held at any place, within
or outside Louisiana, as the board may determine.
SECTION 3 - MEETING AFTER ANNUAL MEETING
A meeting of the Board of Directors shall be held immediately following the
annual meeting of shareholders, and no notice of such meeting shall be necessary
to the directors, whether or not newly elected, in order legally to constitute
the meeting, provided a quorum is present; or they may meet at such time and
place as fixed by the consent in writing of all of the directors, or by notice
given by the majority of the remaining directors. At such meeting, or at any
subsequent meeting called for the purpose, the directors shall elect the
officers of the corporation.
3
<PAGE>
SECTION 4 - REGULAR DIRECTORS' MEETING
Any regular meeting of the directors may be held without notice, if a calendar
of regular meeting dates including the date of such meeting has been established
by the directors at least two weeks prior to such meeting, at the principal
business office of the corporation or at any other location specified in such
calendar of regular meeting dates. Any regular meeting of the directors may be
held in the absence of establishment of such calendar of regular meeting dates,
or at a location other than the principal business office of the corporation or
location specified in such calendar, by the given notice as required for special
directors' meetings. Any proposed agenda for such regular meetings shall not be
exclusive of other matters properly brought before the meeting.
SECTION 5 - SPECIAL DIRECTORS' MEETING: HOW CALLED
Special meetings of the directors may be called at any time by the board of
directors or by the executive committee, if one be constituted, by the chairman
of the board of directors, or by the president, or in writing, with or without a
meeting, by a majority of the directors or of the members of the executive
committee. Special meetings may be held at such place or places within or
outside Louisiana as may be designated by the person or persons calling the
meeting.
SECTION 6 - NOTICE OF SPECIAL DIRECTORS' MEETINGS
Notice of the place and time of every special meeting of the board of directors
(and of the first meeting of the newly-elected board, if held on notice) (i) if
given by telephone or telegraph shall be delivered to each director at his
residence or usual place of business at least 3 days before the date of the
meeting, and (ii) if given by a means other than telephone or telegraph shall be
sent to each director at his residence or usual place of business at least 5
days before the date of the meeting. Any proposed agenda or statement of purpose
or purposes for a special meeting of directors shall not be exclusive of other
matters properly brought before the meeting.
SECTION 7 - QUORUM
At all meetings of the board, a majority of the directors in office constitute a
quorum for the transaction of business, and the act of a majority of the
directors present at any meeting at which a quorum is present shall be the act
of the Board of Directors, unless the concurrence of a greater proportion is
required for such action by law, the articles of the bylaws. If a quorum is not
present at any meeting of directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present. If a quorum be present, the directors
present may continue to act by vote of a majority of a quorum until adjournment,
notwithstanding the subsequent withdrawal of enough directors to leave less than
a quorum or the refusal of any directors present to vote.
SECTION 8 - REMUNERATION TO DIRECTORS
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Directors, as such, shall not receive any stated salary for their services, but
by resolution of the Board, expenses of attendance, if any, and except as to
salaried officers or employees of the corporation or an affiliated company, a
fixed fee for the performance of their duties as directors, as may be determined
from time to time by resolution of the Board, may be allowed to directors, but
this Section does not preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
SECTION 9 - POWERS OF DIRECTORS
The board of directors has the management of the business of the corporation,
and subject to any restrictions imposed by law, the articles or these bylaws,
may exercise all the powers of the corporation. Without prejudice to such
general powers, the directors have the following specific powers:
(a) From time to time, to devolve the powers and duties of any officer upon any
other person for the time being.
(b) To confer upon any officer the power to appoint, remove and suspend, and fix
and change the compensation of, subordinated officers, agents and factors.
(c) To determine who shall be entitled to vote, or to assign and transfer any
shares of stock, bonds, debentures or other securities of other corporations
held by this corporation.
(d) To delegate any of the powers of the board to any standing or special
committee or to any officer or agent (with power to sub-delegate) upon such
terms as they deem fit.
SECTION 10 - RESIGNATIONS
The resignation of a director shall take effect on receipt thereof by the
president or secretary, or on any later, date, not more than thirty days after
such receipt, specified therein.
SECTION 11 - TERM OF OFFICE
Each director of the corporation shall hold office for the full term of office
to whom he shall have been elected and until his successor shall have been
elected and shall qualify, or until his death, resignation or removal.
SECTION 12 - PARTICIPATION IN MEETINGS
Directors may participate in and be present at any meeting of the board by means
of conference telephone or similar communications equipment if all persons
participating in such meeting can hear and communicate with each other.
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SECTION 13 - CHAIRMAN OF THE BOARD
The board of directors shall elect one of its members to be chairman of the
board, to serve in such capacity at the pleasure of the board. In his capacity
as chairman of the board, he shall not be an officer of the corporation. The
chairman of the board shall preside at meetings of the board of directors and
shareholders and perform such other duties as from time to time may be assigned
to him by the board.
SECTION 14 - VICE CHAIRMAN OF THE BOARD
The board of directors may elect one of its members to be vice chairman of the
board to serve in such capacity at the pleasure of the board. In his capacity as
vice chairman of the board, he shall not be an officer of the corporation. In
the absence of the chairman of the board, the vice chairman of the board shall
preside at meetings of the board of directors and shareholders and perform such
other duties as from time to time may be assigned to him by the board.
SECTION 15 - ELIGIBILITY
No person shall be eligible for election or reelection as a director after
having attained the age of seventy prior to or on the day of election or
reelection. Effective January 1, 1996, a director who attains the age of seventy
during his or her term of office shall be eligible to serve only until the
annual meeting of shareholders of the corporation next following such director
seventieth birthday, at which meeting the shareholders of the corporation shall
elect such director's successor in accordance with Article I of these bylaws.
ARTICLE III
Committees
SECTION 1 - EXECUTIVE COMMITTEE
The board may appoint an executive committee, which, when the board is not in
session, to the full extent of the powers of the board shall have and may
exercise the powers of the board in the management of the business and affairs
of the corporation and may have power to authorize the seal of the corporation
to be affixed to documents, provided that the executive committee shall not have
the power to make or alter bylaws, fill vacancies on the board or the executive
committee, or change the membership of the executive committee.
SECTION 2 - MINUTES OF MEETING OF COMMITTEES
Any committees designated by the board shall keep regular minutes of their
proceedings, and shall report the same to the board when required, but no
approval by the board of any action properly taken by a committee shall be
required.
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SECTION 3 - PROCEDURE
If the Board fails to designate the chairman of a committee, the Chairman of the
Board, if a member, shall be Chairman. Each committee shall meet at such times
as it shall determine, and at any time on call of the chairman. A majority of a
committee constitutes a quorum, and the committee may take action by vote of a
majority of the members present at any meeting at which there is a quorum. The
Board has power to change the members of any committee at any time, to fill
vacancies, and to discharge any committee at any time.
SECTION 4 - PARTICIPATION IN MEETINGS
Members of a committee may participate in and be present at any meeting of the
committee by means of conference telephone or similar communications equipment
if all person participating in such meeting can hear and communicate with each
other.
ARTICLE IV
Officers
SECTION 1 - TITLES
The officers of the corporation shall be a president, one or more
vice-presidents, a treasurer, a secretary and such other officers, including a
chief executive officer and chief operating officer, as may, from time to time,
be elected or appointed by the board or appointed by the president. Any two
offices may be combined in the same person, provided that no person holding more
than one office may sign, in more than one capacity, any certificate or other
instrument required by law to be signed by two officers. No officer need be a
director.
SECTION 2 - PRESIDENT
The president shall be the chief executive officer of the corporation.
Subject to the direction of the board of directors, he shall have the
responsibility for the management and control of the business and affairs of the
corporation; he shall see that all orders and resolutions of the board are
carried into effect and direct the other officers in the performance of their
duties; and he shall perform all duties and have all powers that are commonly
incident to the office of chief executive or that are assigned to him by the
board of directors. In the absence of the chairman of the board and the vice
chairman of the board, he shall preside at shareholders' meetings and at
directors' meetings.
<PAGE>
SECTION 3 - VICE PRESIDENTS
Each vice president shall have such powers, and shall perform such duties, as
shall be assigned to him by the directors, by the chairman of the board, or by
the president, and, in the order determined by the board, shall, in the absence
or disability of the chairman and president, perform their duties and exercise
their powers.
SECTION 4 - TREASURER
The treasurer has custody of all funds, securities, evidences of indebtedness
and other valuable documents of the corporation. He shall receive and give, or
cause to be given, receipts and acquittances of moneys paid in on account of the
corporation, and shall pay out of the funds on hand all just debts of the
corporation of whatever nature, when due. He shall enter, or cause to be
entered, in books of the corporation to be kept for that purpose, full and
accurate accounts of all moneys received and paid out on account of the
corporation, and, whenever required by the president or the directors, he shall
render a statement of his accounts. He shall keep or cause to be kept such books
as will show a true record of the expenses, gains, losses, assets and
liabilities of the corporation; and he shall perform all of the other duties
incident to the office of treasurer. If required by the board, he shall give the
corporation a bond for the faithful discharge of his duties and for restoration
to the corporation, upon termination of his tenure, of all property of the
corporation under his control.
SECTION 5 - SECRETARY
The secretary shall give, or cause to be given, notice of all meetings of
shareholders, directors and committees, and all other notices required by law or
by these bylaws, and in case of his absence or refusal or neglect so to do, any
such notice may be given by the shareholders or directors upon whose request the
meeting is called as provided in these bylaws. He shall record all of the
proceedings of the meetings of the shareholders, of the directors, and of
committees in a book to be kept for that purpose. Except as otherwise determined
by the directors, he has charge of the original stock books, transfer books and
stock ledgers, and shall act as transfer agent in respect of the stock and other
securities issued by the corporation. He has custody of the seal of the
corporation, and shall affix it to all instruments requiring it; and he shall
perform such other duties as may be assigned to him by the directors, the
chairman of the board of directors, or the president.
SECTION 6 - ASSISTANTS
Assistant secretaries or treasurers shall have such duties as may be assigned to
them by the directors, by the chairman of the board, or by the president, and as
may be delegated to them by the secretary and treasurer respectively.
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ARTICLE V
Capital Stock
SECTION 1 - CERTIFICATES OF STOCK
Certificates of Stock, numbered and with the seal of the corporation affixed or
imprinted, signed by the Chairman of the Board of Directors, or the President or
Vice President, and the Treasurer or Secretary, shall be issued to each
shareholder, certifying the number of shares owned by him in the corporation.
Where such certificate is countersigned (1) by a transfer agent other than the
corporation or its employee, or (2) by a registrar other than the corporation or
its employee, any other signature on the certificate may be a facsimile.
SECTION 2 - LOST CERTIFICATES
A new certificate of stock may be issued in place of any certificate theretofore
issued by the corporation, alleged to have been lost, stolen, mutilated or
destroyed or mailed and not received, and the directors may in their discretion
require the owner of the replaced certificate to give the corporation a bond,
unlimited as to stated amount, to indemnify the corporation against any claim
which may be made against it on account of the replacement of the certificate or
any payment made or other action taken in respect thereof.
SECTION 3 - TRANSFER OF SHARES
Shares of stock of the corporation are transferrable only on its books, by the
holders thereof in person or by their duly authorized attorneys or legal
representatives, and upon such transfer, the old certificate shall be
surrendered to the person in charge of the stock transfer records, by whom they
shall be cancelled, and new certificates shall thereupon be issued. A record
shall be made of each transfer, and whenever a transfer is made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer. The board may make regulations concerning the transfer of shares, and
may in their discretion authorize the transfer of shares from the names of
deceased persons whose estates are not administered, upon receipt of such
indemnity as they may require.
SECTION 4 - RECORD DATES
The board may fix a record date for determining shareholders of record for any
purpose, such date to be not more than sixty days and, if fixed for the purpose
of determining shareholders entitled to notice of and to vote at a meeting, not
less than ten days, prior to the date of the action for which the date is fixed.
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SECTION 5 - TRANSFER AGENTS, REGISTRARS
The board may appoint and remove one or more transfer agents and registrars for
any stock. If such appointments are made, the transfer agents shall effect
original issuances of stock certificate and transfers of shares, record and
advise the corporation and one another of such issuances and transfers,
countersign and deliver stock certificates, and keep the stock, transfer and
other pertinent records; and the registrars shall prevent over-issues by
registering and countersigning all stock certificates issued. A transfer agent
and registrar may be identical.
ARTICLE VI
Miscellaneous Provisions
SECTION 1 - CORPORATION SEAL
The Corporate seal is circular in form, and contains the name of the corporation
and the words "SEAL, LOUISIANA". The seal may be used by causing it, or a
facsimile thereof, to be impressed or affixed or otherwise reproduced.
SECTION 2 - CHECKS, DRAFTS, NOTES
All checks, drafts, other orders for the payment of money, and notes or other
evidences of indebtedness, issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall, from time to time, be determined by the board.
SECTION 3 - FISCAL YEAR
The fiscal year of the corporation begins on January 1.
SECTION 4 - NOTICE
Whenever any notice is required by these bylaws to be given, personal notice is
not meant unless expressly so stated; any notice is sufficient if given by
depositing the same in a mail receptacle in a sealed post-paid envelope
addressed to the person entitled thereto at his last known address as it appears
on the records of the corporation; and such notice is deemed to have been given
on the day of such mailing.
SECTION 5 - WAIVER OF NOTICE
Whenever any notice of the time, place or purpose of any meeting of
shareholders, directors or committee is required by law, the articles or these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
such notice and filed with the records of the meeting before or
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after the holding thereof, or actual attendance at the meeting of shareholders
in person or by proxy or at the meeting of directors or committee in person, is
equivalent to the giving of such notice except as otherwise provided by law.
SECTION 6 - INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS
(a) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including any action by or in the
right of the corporation by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
business, foreign or nonprofit corporation, partnership, joint venture or other
enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interest of the
corporation, and with respect to any criminal action or proceeding, has no
reasonable cause to believe his conduct was unlawful. However, in case of
actions by or in the right of the corporation, the indemnity shall be limited to
expenses, including attorneys' fees and amounts paid in settlement not
exceeding, in the judgment of the board of directors, the estimated expense of
litigating the action to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such action and no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged by a court of competent jurisdiction, after exhaustion
of all appeals therefrom, to be liable for willful or intentional misconduct in
the performance of his duty to the corporation unless and only to the extent
that the court shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, he is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper. The termination of any action, suit or proceeding by judgement, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, or itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) In any event, a director, officer, employee or agent of the corporation
who has been successful on the merits or otherwise in defense of any such
action, suit or proceeding, or in defense of any claim, issue or matter therein,
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(c) Any indemnification under subsection (a) of this Section, unless
ordered by the Court shall be made by the corporation only as authorized in a
specific case upon a determination that the applicable standard of conduct has
been met. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of
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directors who were not parties to such action, suit or proceeding, or (2)
if such a quorum is not obtainable and the board of directors so directs, by
independent legal counsel or (3) by the shareholders.
(d) Expenses incurred in defending such an action, suit or proceeding may
be paid by the corporation in advance of the final disposition thereof if
authorized by the board of directors, without regard to whether participating
members thereof are parties to such action, suit, or proceeding, upon receipt of
an undertaking by or on behalf of the director, officer, employee or agent to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation as authorized in this Section.
(e) The indemnification and advancement of expenses provided by or granted
pursuant to the other subsections of this Section shall not be deemed exclusive
of any other rights to which the person indemnified or obtaining advancement of
expenses is entitled under any agreement, authorization of shareholders or
directors, regardless of whether directors authorizing such indemnification are
beneficiaries thereof, or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs and legal representative;
however, no such other indemnification measure shall permit indemnification of
any person for the results of such person's willful or intentional misconduct.
(f) The corporation shall have power to procure or maintain insurance or
other similar arrangement on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
business, nonprofit or foreign corporation, partnership, joint venture or other
enterprise against any liability asserted against or incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of this Section. Without limiting the power of the corporation to
procure or maintain any other kind of insurance or similar arrangement, the
corporation may create a trust fund or other form of self-insurance arrangement
for the benefit of persons indemnified by the corporation and may procure or
maintain such insurance with any insurer deemed appropriate by the board of
directors regardless of whether all or part of the stock or other securities
thereof are owned in whole or part by the corporation. In the absence of actual
fraud, the judgment of the board of directors as to the terms and conditions of
such insurance or self-insurance arrangement and the identity of the insurer or
other person participating in a self-insurance arrangement shall be conclusive,
and such arrangements for insurance shall not be subject to voidability and
shall not subject the directors approving such arrangement to liability, on any
ground, regardless of whether directors participating in approving such
insurance arrangements shall be beneficiaries thereof. The provisions of the
Insurance Code (Title 22 of the Revised Statutes) will not apply to any
wholly-owned subsidiary of this corporation if it issues contracts of insurance
only as permitted by this subsection for coverage of a person who is or was a
director,
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officer, employee, or agent of this corporation, or who is or was serving
at the request of this corporation as a director, officer, employee, or agent of
another business, nonprofit or foreign corporation, partnership, joint venture,
or other enterprise, which contracts of insurance for such directors, officers,
employees, or agents may be issued by such wholly-owned subsidiary without
compliance with the provisions of the Insurance Code.
SECTION 7 - REDEMPTION OF CONTROL SHARES
In accordance with Section 140.1 of the Louisiana Business Corporation Law, the
Company may redeem any or all control shares acquired in a control share
acquisition with respect to which either:
(a) no acquiring person statement has been filed with the Company in
accordance with Section 137 of the Louisiana Business Corporation Law;
or
(b) the control shares are not accorded full voting rights by the
shareholders of the Company as provided in Section 140 of the Louisiana
Business Corporation Law.
A redemption pursuant to subparagraph (a) hereof may be made at any time during
the period ending sixty (60) days after the last acquisition of control shares
by an acquiring person. A redemption pursuant to subparagraph (b) hereof may be
made at any time during the period ending two (2) years after the shareholder
vote with respect to the voting rights of such control shares. Any redemption
pursuant to this Paragraph shall be made at the fair value of the control shares
and pursuant to such procedures as may be adopted by resolution of the Board of
Directors of the Company.
ARTICLE VII
Amendments
Except as otherwise provided in the Restated Articles of Incorporation, the
shareholders or the directors, by affirmative vote of a majority of those
present or represented, may at any meeting, amend or alter any of the bylaws;
subject, however, to the right of the shareholders to change or repeal any
bylaws made or amended by the directors.
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Exhibit 99.2
TABLE OF CONTENTS
ARTICLE I - RECOGNITION.......................................................1
ARTICLE II - UNION AND COMPANY COOPERATION....................................1
ARTICLE III - THE BASE CREW...................................................2
ARTICLE IV - UNION SECURITY...................................................2
ARTICLE V - MANAGEMENT RIGHTS.................................................5
ARTICLE VI - WAGES............................................................5
ARTICLE VII - VACATIONS.......................................................6
ARTICLE VIII - JURY DUTY - WITNESS PAY .......................................7
ARTICLE IX - COPIES...........................................................8
ARTICLE X - GRIEVANCE PROCEDURE...............................................8
ARTICLE XI - NON-BARGAINING UNIT EMPLOYEES....................................9
ARTICLE XII - STRIKES AND LOCKOUTS...........................................10
ARTICLE XIII - HOLIDAYS......................................................10
ARTICLE XIV - SENIORITY......................................................11
ARTICLE XV - LAYOFF/RECALL...................................................12
ARTICLE XVI - JOB BIDDING....................................................13
ARTICLE XVII - INCAPACITATED EMPLOYEE........................................14
ARTICLE XVIII - WORKWEEK AND OVERTIME........................................15
ARTICLE XIX - BEREAVEMENT LEAVE..............................................16
ARTICLE XX - ANNUAL RESERVE TRAINING LEAVE...................................16
ARTICLE XXI - SAFETY AND HEALTH..............................................17
<PAGE>
ARTICLE XXII - BULLETIN BOARD................................................17
ARTICLE XXIII - FURNISHING OF TOOLS..........................................17
ARTICLE XXIV - TRAINING COMMITTEE............................................17
ARTICLE XXV - OVERTIME LUNCH ALLOWANCE.......................................18
ARTICLE XXVI - BENEFIT PLANS.................................................18
ARTICLE XXVII - TERMS OF AGREEMENT...........................................20
SCHEDULE A - PAY PROCEDURES..................................................21
A1 - GAINSHARING....................................................21
A2 - LEADPERSONS....................................................21
A3 - JOB GROUPINGS..................................................21
A4 - PROGRESSION SCHEDULES..........................................23
LETTERS OF AGREEMENT.........................................................25
<PAGE>
AGREEMENT
KOSMOS CEMENT COMPANY
KOSMOSDALE - BATTLETOWN, KENTUCKY
AGREEMENT
BETWEEN
KOSMOS CEMENT COMPANY
OPERATED BY SOUTHDOWN, INC.
AND
INTERNATIONAL BROTHERHOOD OF BOILERMAKERS,
CEMENT, LIME, GYPSUM & ALLIED WORKERS DIVISION
LODGE D-595
1996-1999
<PAGE>
This Agreement, dated May 1, 1996 is made by and between the KOSMOS
CEMENT COMPANY, Louisville, Kentucky, and the INTERNATIONAL BROTHERHOOD OF
BOILERMAKERS, CEMENT, LIME, GYPSUM, AND ALLIED WORKERS DIVISION LOCAL LODGE NO.
D595, referred to respectively as the "Company" and the "Union."
ARTICLE I - RECOGNITION
1.1 The Company recognizes the Union as the sole bargaining agent for its
employees as is defined in paragraph 1.2 who work at the Company's operations at
Louisville and Battletown, Kentucky, for the purpose of collective bargaining
with respect to rates of pay, hours, and other conditions of employment.
1.2 The term "employee" as used in this Agreement shall include all permanent
production and maintenance employees including lead men, but excluding all
clerical employees, guards and supervisors as defined in the Act and all other
employees.
1.3 Union officers and members shall refrain from any union solicitation on
company time.
1.4 All provisions of this Agreement shall be applied to all employees without
regard to race, color, sex, religious creed, age, national origin, or veteran
status. The Company and the Union will comply with all Federal and State laws
concerning the rights of employees, including the Americans with Disability Act
and the Family and Medical Leave Act.
ARTICLE II - UNION AND COMPANY COOPERATION
2.1 The Union agrees that it will cooperate with the Company in all matters of
industrial relations including carrying out Equal Employment Opportunity
obligations and will support the Company's efforts to assure a fair day's work
on the part of its members and that it will actively strive to eliminate
absenteeism and other practices which restrict production. It further agrees
that its members will abide by the rules of the Company in its effort to prevent
accidents, to eliminate waste in production, conserve materials and supplies,
improve the quality of workmanship, and strengthen goodwill between the Company
and its employees.
2.2 The Union agrees that it will use its best efforts to assist the Company in
enhancing the competitiveness of the Company, and augmenting or increasing
revenue generation. For example, the Union will support, through community
involvement and pro-active measures, the efforts of the Company to obtain
permits and/or other necessary certifications to utilize alternative fuels.
2.3 The parties hereto intend by this Agreement to provide a stabilized and
mutually beneficial relationship between them and to insure the production of
quality products on schedule and at competitive costs during the life of this
Agreement. The Company and the Union will also
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establish an active Employee Participation Program to facilitate ideas and
develop and implement programs to improve the overall operations and enhance
employee involvement.
ARTICLE III - THE BASE CREW
3.1 The parties agree that due to business conditions and the need for effective
plant operations, it is necessary to utilize outside contract labor to perform
work in the operation. Base Crew employees will perform most of the work to be
done at the plant with the remainder to be performed by various numbers and
types of outside contractors. The parties recognize that the Company is in the
primary business of manufacturing cement and other products requiring similar
process (utilizing hazardous waste as fuel). The parties further recognize that
the business is limited in scope and that the Company should avoid, to the
extent possible, getting into other businesses such as special projects, special
maintenance other than routine preventive maintenance, laborer work, janitorial
work, trucking and the like, where other business concerns may have more
expertise, competence, economies of scale or other advantages. Therefore, the
Union agrees that the Company has the right to subcontract these and other types
of work when in the Company's judgement it is in the economic best interest of
the Company and its employees to do so. The base crew concept is intended to
enhance the job security of our permanent employees.
3.2 In an effort to provide the employees of Kosmos Cement Company with positive
labor relations and maximum job security, it is not the intention of the Company
to permanently displace members of the bargaining unit through the use of
contract employees without substantial economic justification.
ARTICLE IV - UNION SECURITY
4.1 All employees covered by this Agreement, who as of May 1, 1991, are members
of the Union in good standing, and all employees who thereafter become members,
shall, as a condition of continued employment, remain members of the Union in
good standing for the duration of the Agreement. All new employees covered by
the Agreement shall, as a condition of employment, become members of the Union
on or immediately after successful completion of their probationary period. The
Company will notify the Union of all permanent new hires' addresses, telephone
numbers, and Social Security numbers.
4.2 The Company agrees that during all reasonable times when the plant is
operating a duly accredited representative of the Union shall be entitled access
to the premises during the regular working hours for the purpose of assisting in
the adjustment of pending grievances, provided that the designated
representative of the Company is properly notified in advance and the Union
representative establishes proper identification. If it is necessary to go into
the work area of the plant (for example, to view a particular operation relative
to a pending grievance), then the appropriate Company official shall accompany
the Union representative so that both parties see
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the same thing so as to aid in resolving the grievance.
4.3 The Union Grievance Committee representing the employees in matters other
than negotiations shall consist of not more than three (3) employees.
4.4 Any employee elected or appointed to a full time position with the
International Brotherhood of Boilermakers, Cement, Lime, Gypsum and Allied
Workers Division may be granted a leave of absence up to one (1) year provided
thirty (30) days written notice is given to the Company prior to the beginning
of such leave. During such leave, seniority shall accumulate. Insurance benefits
shall be suspended upon the commencement of such leave and will be in effect the
first day of returning to work with the Company. Upon returning to work such
employee shall be reinstated to his or her former job within the bargaining unit
by means of the then-existing bidding procedure. The Company agrees to consent
to the absence of no more than one (1) employee at any time under this
paragraph.
4.5 Up to two (2) employees may be excused from work for up to two (2) weeks in
a calendar year for the purpose of attending an International Union meeting or
convention. The leave shall be granted provided the Company receives fifteen
(15) days advance written notice.
4.6 Check-off: During the term of this Agreement, the Company will continue to
check off monthly dues, and initiation fees, each as designated by the Treasurer
of the Local Union, as membership dues in the Union on the basis of and for the
term of individually signed check-off authorization cards, a copy of which is
reproduced below, or hereafter submitted to the Company. The Company shall
promptly remit any and all amounts so deducted to the Treasurer of the Local
Union with a list of the employees from whom the deduction was checked off. On
or before the last Friday of each calendar month the Union shall submit to the
Company a summary list of cards transmitted in each month. Dues for a given
month shall be deducted weekly; deductions on the basis of authorization cards
submitted to the Company shall commence with respect to dues for the month in
which the Company receives such authorization cards. Unless the Company is
otherwise notified, the only Union membership dues to be deducted for payment to
the Union from the pay of the employee who has furnished an authorization shall
be the monthly Union dues. The Company will deduct initiation fees when notified
as designated by the Treasurer of the Local Union. The Union shall indemnify the
Company and hold it harmless against any and all suits, claims, demands and
liabilities that shall arise out of or by reason of any action that shall be
taken or not taken by the Company for the purpose of complying with the
foregoing provisions of this Article, or in reliance on any list or certificate
which shall have been furnished to the Company by the Union under any such
provisions.
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CHECK-OFF AUTHORIZATION
FOR INTERNATIONAL BROTHERHOOD OF
BOILERMAKERS, CEMENT DIVISION
I hereby authorize (Name of Employer) to deduct from any wages earned or to be
earned by me, as your employee, and assign to Local Lodge No. , of the
International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths,
Forgers and Helpers, the sum of money determined by the Union in succeeding
calendar weeks, beginning with the week next following thereof, until such
weekly deductions shall total the sum of my Initiation or Reinstatement Fees,
and thereafter the sum of money set by the Union per month in payment of my
Membership Dues, in accordance with its Constitution and Bylaws, and became due
to it as my Membership Dues in said Union.
This assignment, authorization and description shall be irrevocable for the
period of one (1) year, or until the termination of the current Agreement
between the Employer and the Union, whichever occurs sooner; and I agree and
direct that this assignment, authorization and direction shall be automatically
renewed and shall be irrevocable for successive periods of one (1) year each, or
for the period each succeeding applicable Agreement between the Employer and the
Union, whichever is shorter, unless written notice is given by me to the
Employer and the Union not more than twenty (20) days and not less than ten (10)
days prior to the expiration of each period of one (1) year, or of each
applicable collective agreement between the Employer and the Union, whichever
occurs sooner.
Executed as ________________________ this _________ day of ___________ , 1991.
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ARTICLE V - MANAGEMENT RIGHTS
5.1 The Union recognizes that the management of the plant, river, and quarry
operations, the direction of the working forces, including the right to hire,
discipline for just cause, the right to make and change and enforce (after
posting) rules for the maintenance of discipline and safety; the exclusive
rights to determine partial or permanent discontinuance or shutdown of
operations (the Company's only obligation when exercising this right is to
bargain with the Union over the effects of that decision); the right to promote,
or transfer employees; the right to transfer and relieve employees from duty
because of lack of work or other legitimate reason, and the right to establish
and change the working schedules and duties of employees are vested in the
Company, except as otherwise provided in the Agreement. The listing of specific
rights in this Agreement is not intended to be nor shall be considered
restrictive of or a waiver of any of the rights of management not listed and not
specifically surrendered herein, whether or not such rights have been exercised
by the Company in the past.
ARTICLE VI - WAGES
6.1 It is agreed that for the duration of this Agreement, the wage groups and
the rates of pay shall be those set in Schedule "A".
6.2 (1) All scheduled work beginning between 5:00 A.M. and 12:59 P.M. inclusive,
shall be considered 1st shift work.
(2) All scheduled work beginning between 1:00 P.M. and 8:59 P.M. inclusive,
shall be considered 2nd shift work.
(3) All scheduled work beginning between 9:00 P.M. and 4:59 A.M. inclusive,
shall be considered 3rd shift work.
6.3 Each employee regularly scheduled to work on the 2nd shift shall be paid a
premium of fifty cents ($.50) for all hours worked by him or her on that shift.
Each employee regularly scheduled to work on the 3rd shift shall be paid
sixty-five ($.65) for all hours worked by him or her on that shift. These
premium rates do not apply to day workers even though they may work over into a
premium pay shift. If, however, the day worker is scheduled to take the place of
a regular scheduled shift worker, then the premium rate applies. Employees
called out will receive the appropriate shift premium for hours worked prior to
their normal shift.
6.4 All consecutive hours (exclusive of meal periods) worked by an employee who
normally begins work at a time specified in the preceding paragraphs, shall be
deemed to be worked by him or her on the shift on which he or she begins work.
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ARTICLE VII - VACATIONS
7.1 Each employee meeting all the requirements of paragraph 7.2 of this Article
shall be eligible for vacation in accordance with the following schedule:
CONTINUOUS SERVICE VACATION WEEKS
1 Year of Service 2 Weeks
5 Years of Service 3 Weeks
10 or more Years of Service 4 Weeks
7.2 An employee must have been actively employed at some time during the
calendar year to be eligible for vacation with pay during that calendar year. An
employee shall receive a full vacation provided that such employee has actually
worked at least one thousand two hundred (1,200) hours during the year preceding
his or her most recent anniversary date. Employees who work less than one
thousand two hundred (1,200) hours in the preceding year will receive their
vacation pay prorata with one/twelfth of their vacation entitlement paid for
every one hundred of hours of actual work performed. An employee shall be
considered as having worked for the purpose of vacation eligibility on the basis
of an eight (8) hour day and forty (40) hour week during absence from work
because of a work related illness or injury for a period not to exceed four
hundred (400) hours.
7.3 Vacations will not be cumulative, and the final right to allotment of
vacation period is exclusively reserved to the Company in order to ensure the
orderly operation of the plant. When requested vacation periods conflict,
preference shall be given to the employee with the most plant seniority. In the
event a paid holiday falls during an employee's vacation period, the employee
shall receive holiday pay in addition to vacation pay.
7.4 The Company determines the number of employees by classification allowed on
vacation on any given week. Management will schedule vacation in a fair and
equitable manner. Vacation scheduling will begin on November 15th of the
previous year and be concluded by December 15th. The final schedule will be
posted by the Company no later than January 1st.
7.5 Vacation must be scheduled by week or weeks (a week is seven (7) calendar
days). Employees may request vacation pay in lieu of the time off provided they
produce a good and sufficient reason to the Company and it is mutually agreed by
the Company and the Union.
7.6 Vacation pay will based on forty (40) hours for each week of entitlement at
the employee's highest rate held for at least thirty (30) weeks in the previous
calendar year.
7.7 Prime Months Vacation Scheduling.
(1) Prime months for vacation scheduling are June, July, and August.
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(2) Employees may request a vacation of up to two (2) consecutive
weeks during prime months in their classification based on
plant seniority. The Company will approve a vacation request
provided there are openings in the schedule and it does not
adversely affect the efficient operations of the plant or
quarry.
(3) Once all employees in a job classification have had an
opportunity to request a prime month vacation provided there
are openings and it does not adversely impact operations, the
Company will consider second requests.
7.8 One (1) week of vacation can be taken one day at a time provided:
(1) The employee makes a request at least seventy-two (72) hours in
advance, and,
(2) The request is granted by the Company.
(3) Employee may use the above to cover a day of sickness provided
the Company is notified as soon as possible but no later than
30 minutes before the start of the shift.
It is the intent to arrange absences so that the Company will not incur
penalties, and, as such, the Company reserves the right to disallow any
request for a one day vacation.
ARTICLE VIII - JURY DUTY - WITNESS PAY
8.1 It is agreed that the Company shall make up the wage loss incurred by a
regular employee (as distinguished from a probationary employee) because of jury
service by payment of the difference between the amount received for such jury
service on the day such employee would have been regularly scheduled to work and
his or her regular rate of pay computed on the same basis as vacation pay. Any
employee reporting for jury duty will not be required to work his or her regular
shift that calendar day. The employee will be excused for the entire day without
loss of pay. Hours spent on jury duty service and paid for hereunder shall be
considered as time actually worked for the 40 hour overtime requirements.
Further as outlined above, the Company shall make up the wage loss incurred by
an employee when subpoenaed as a witness in an action when the employee or the
Union or the Company are neither the plaintiff nor the defendant.
8.2 To receive pay from the Company under this provision, the employee must
provide the Company with a statement signed by an official of the court
certifying as to the employee's service as a juror or court witness or
appearance in court for such purposes, the date or dates of attendance, and the
compensation paid him or her exclusive of any transportation and/or subsistence
allowance.
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ARTICLE IX - COPIES
9.1 The Labor Agreement and Summary Plan Descriptions for the Pension Plan,
401K, and Insurance Plan will be printed at Company expense. The Company will
provide each member with a copy of the booklet.
ARTICLE X - GRIEVANCE PROCEDURE
10.1 Should differences arise during the term of this Agreement between the
Company and the Union, or an individual employed by the Company, as to the
meaning and application of the provisions of this Agreement, an earnest effort
shall be made by the parties to settle such differences promptly and in the
following manner:
(1) STEP I. The complaint, within three (3) days of its occurrence, or
the occurrence of the matter out of which the complaint arises, may be taken up
by the employee involved, with or without Union representation, with his or her
supervisor. The employee shall state the specific article(s) and paragraph(s) of
the Contract that is alleged to have been violated in order for the grievance to
be considered and processed.
(2) STEP II. If no satisfactory settlement is reached in Step I, the
matter shall be reduced to writing and presented to the Plant Manager within
five (5) days from the date of the meeting with the supervisor. The employee
shall state the specific article(s) and paragraph(s) of the Contract that is
alleged to have been violated in order for the grievance to be considered and
processed. At the time of presentation, or within five (5) days, the Plant
Manager or his designee will meet with the grievance committee to hear and
discuss the grievance. The Company shall answer the grievance in writing within
five (5) days after said meeting.
(3) STEP III. If no agreement is reached in Step II, the Committee may,
within five (5) days of the receipt of the above answer, refer the matter to
higher officials of the Company and the Union, who may attend a meeting to be
held at a time mutually agreed to by the parties.
(4) STEP IV. Any grievance not settled in Step III above may be
referred to the Dispute Resolution Panel. This panel will consist of one (1)
official of the International Union, one (1) official of the Corporate Human
Resources Department, and one (1) individual mutually agreed upon by these two
(2) officials. Notice to refer a grievance to the Dispute Resolution Panel shall
be given in writing within fifteen (15) days after being notified of the
decision rendered in Step III or the matter will be considered closed. Only one
(1) grievance may be submitted to or be under review by the Dispute Resolution
Panel at any one (1) time unless by prior mutual written consent of the parties.
The Dispute Resolution Panel shall have no power to add to or subtract from or
change, modify or amend any of the provisions of this Agreement. The decision
rendered by the Dispute Resolution Panel will be final and binding upon the
Union,
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the Company, the grievant, and all the employees covered by this Agreement. The
Dispute Resolution Panel shall interpret and apply the terms of this Agreement;
they shall not substitute their discretion and judgement for that of the
Company. Disputes shall be settled by majority vote. The actual vote cast by
each party shall not be revealed. It is expressly agreed that the Dispute
Resolution Panel shall not have the authority to decide any matter involving the
exercise of a right reserved to management under this Agreement. The expenses
incident to the services of the third party, including the cost of the meeting
room, etc. shall be shared equally by the Company and the Union.
10.2 Any grievance growing out of a discharge or suspension must be submitted in
writing by the aggrieved employee directly to the Union and from the Union to
the Director of Human Resources or Plant Manager within forty-eight (48) hours
from the time the Union is notified in writing of the discharge or suspension or
it will not be recognized and action taken shall be final.
10.3 The time limits referred to in the foregoing paragraphs exclude Saturdays,
Sundays and holidays.
10.4 Any grievance not presented or appealed within the time limits provided,
unless mutually agreed in writing to extend the time, shall be considered
settled on the basis of the decision which was not appealed and shall be final
and binding on the parties involved.
10.5 Grievances presented in any of the regular steps set forth and not answered
within the specified time shall be considered as having been appealed to the
next step of the grievance procedure.
10.6 The Company will schedule grievance meetings at mutually convenient times
and the Union Grievance Committee as defined in Article 4.3 will not lose
regularly scheduled pay for time spent in grievance meetings.
ARTICLE XI - NON-BARGAINING UNIT EMPLOYEES
11.1 It is understood and agreed that during the normal course of operations it
may be necessary for non-bargaining unit employees to perform some bargaining
unit work from time to time. Such work will be incidental to the normal duties
of said non-bargaining unit employees, as long as such work does not permanently
displace or replace a bargaining unit employee. Such work shall include work
involving corrective action which must be performed expeditiously; instruction
or training of employees; demonstration; inspection or testing of equipment;
work of an emergency nature; and development work for new processes and/or
procedures.
11.2 Temporary employees will be used to perform work that is incidental to the
manufacturing of cement. This will include but not be limited to clean-up,
janitorial duties, lawn and ground maintenance and short-term projects, etc. In
addition, the parties recognize that temporary
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employees may be used for other assignments such as to address temporary surges
in business, to facilitate the scheduling of permanent employees for training
and development opportunities, to enhance the job security of permanent
employees, etc. Temporary employees will not be permitted to work for the plant
or the quarry more than 180 consecutive calendar days.
11.3 The Company will not expand beyond three (3) temporary employees without
first notifying the Union committee in writing. Any new temporary employees
added cannot be utilized for longer than 180 calendar days without mutual
agreement between the parties.
ARTICLE XII - STRIKES AND LOCKOUTS
12.1 The Union agrees that there shall be no picketing or strikes by the Union
or by its members, of any kind or degree whatsoever, or walkout, suspension of
work, slowdowns, limiting of production, or any other interference or stoppage,
total or partial, of the Company's operations for any reason whatsoever, such
reasons including, but not limited to, unfair labor practices by the Company or
any other Employer. It is further agreed that neither the Union or its members
shall engage in the above prohibited conduct in support of picketing, strikes or
any labor dispute actions engaged in by any other organization or person. In
addition to any other recourse or remedy available to the Company for violation
of the terms of this Article by the Union and/or any Union member, the Company
may discharge or otherwise discipline any employee who authorizes, causes,
engages in, sanctions, recognizes, or assists in any violation of this Article.
The Company will not engage in any lockouts during the term of this Agreement.
ARTICLE XIII - HOLIDAYS
13.1 The Company recognizes the following nine (9) paid holidays per year: New
Year's Day, Good Friday, Memorial Day, 4th of July, Labor Day, Thanksgiving, Day
after Thanksgiving, Christmas Eve, and Christmas Day.
13.2 Holiday pay will be equal to eight (8) hours pay at the employee's straight
time hourly rate. Such holiday pay will not be paid if the employee is absent
from work on the holiday if scheduled to work on the holiday or if the employee
is absent on the scheduled day preceding or following the holiday unless such
absences are excused by Management. In no event shall a holiday be paid for
unless an employee has also actually worked at least one (1) day during the
fifteen (15) day period immediately preceding or immediately following the
holiday. If a ten (10) hour shift employee is scheduled off for a holiday
falling during his or her regular four (4) days of work, he or she will receive
ten (10) hours of holiday pay.
13.3 If an employee is required to work on a holiday, he or she will receive
eight (8) hours pay for the holiday (holiday pay) plus one and one-half (1-1/2)
times the employee's regular hourly rate for the first eight (8) hours actually
worked on the holiday. The employee will receive two
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(2) times the employee's regular hourly rate for hours worked in excess of eight
(8) on the holiday.
13.4 The eight (8) hours holiday pay shall be counted toward the calculation of
overtime pay paid for working in excess of forty (40) hours per week.
13.5 Since the employee is receiving one and one-half (1-1/2) times the
employee's regular hourly rate for hours actually worked on the holiday, such
hours actually worked on the holiday shall not be counted toward the calculation
of overtime pay received for working in excess of forty (40) hours per week.
13.6 When a holiday falls on Sunday, it will normally be observed on the
following Monday.
ARTICLE XIV - SENIORITY
14.1 Seniority shall consist of an employee's length of continuous service with
the Company since the employee's last day of hire at its facility located at
Louisville and/or Battletown, Kentucky.
14.2 Each new employee shall be considered as a probationary employee for the
first ninety (90) calendar days of full time employment after which the
employee's seniority shall date back to his or her date of hire. There shall be
no seniority among probationary employees. Such employees shall not have
recourse to the grievance procedure of this Agreement and may be laid off or
discharged as exclusively determined by the Company.
14.3 Seniority and the employment relationship shall be automatically terminated
when an employee:
1. is discharged;
2. is terminated upon permanent shutdown of the Company's facilities;
3. is laid off for a period of twenty-four (24) months or the length
of his or her seniority as of his or her last day of work, whichever period
is shorter;
4. voluntarily quits which shall be deemed to include:
a) failure to notify the Company of the employee's intention to return
to work after layoff within three (3) working days, and to actually report
to work within seven (7) working days (unless this latter period is
extended in writing by the Company) after he or she has been notified by
certified mail (either by delivery or attempted delivery) at his or her
last address
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appearing on the Company's records to report to work;
b) an absence for two (2) consecutive scheduled work days without
notifying the Company or reporting to work unless excused by Management in
advance;
c) the employee fails to return to work on the first regularly
scheduled work day following the termination of any leave of absence or any
other leave approved by the Company unless excused by Management.
5. retires.
14.4 When a vacancy occurs for which a laid off employee is qualified, he or she
will be given notice of recall at his or her last address as shown on Company
records. The employee must notify the Company of the employee's intention to
return to work after layoff within three (3) working days and must actually
report to work within seven (7) working days after he or she has been notified.
This may be extended for an additional seven (7) days if the employee has
another job which requires a two (2) week resignation notice.
14.5 An employee on continuous absence due to disability shall accrue seniority
and retain recall rights for a period not to exceed twenty-four (24) months. An
employee absent because of disability shall only be returned to work after he or
she is physically able to perform the job. However, should such an employee be
declared totally and permanently disabled prior to twenty-four (24) months, such
employee's name shall be removed from the payroll and a notice to this effect
will be sent to his or her last address as shown on Company records.
14.6 Seniority lists agreed to by and between the Company and the Union shall be
posted on the bulletin board as of May 1 and November 1 of each year.
Corrections shall be made in the seniority lists when it is proved an employee
is placed in the wrong position on said list, but all requests for corrections
must be made within thirty (30) days from date of posting or the list shall be
valid as posted. The Union will be given a copy of the seniority list.
14.7 All employees have the obligation to notify the Company of their current
address and telephone number and immediately advise the Company of any changes.
ARTICLE XV - LAYOFF/RECALL
15.1 The Company recognizes that all employees shall retain the right to
seniority preference in cases of layoffs and recall. The last employee hired
shall be the first laid off and the last laid off the first rehired. Such
preferences in the cases of layoffs and recall shall take into consideration the
employee's ability to perform the available work and the efficient operations of
the operation. It is recognized that, in periods where business conditions
necessitate that the level of production be reduced to a point where only a
minimum of employees is required, it shall be
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necessary, in some cases, to deviate from strict plant seniority in order that
some positions be available to service and adjust the equipment when production
requirements increase. In the event of a layoff which is scheduled to last
ninety (90) or more days, the Company will layoff employees in Job Groups one
(1) through four (4) by plant seniority. Any such employee who displaces the
least senior person in a position must be qualified to perform in that position
within a reasonable period of time not to exceed thirty (30) days of being
placed on the job. If the Company does not layoff in accordance with seniority,
the Company will meet with the Union to explain the reasons prior to the layoff.
15.2 In the event that an employee is displaced by the installation of
mechanical equipment, change in production methods, the installation of new or
larger equipment, the combining of jobs, the elimination of jobs, or by a more
senior person, the employee may elect to exercise his or her plant seniority to
displace the least senior person in a position the employee is qualified to
perform within a reasonable period of time not to exceed thirty (30) days of
being placed on the job.
15.3 In the event the Company determines it is necessary to permanently change
the shift schedule or off days of an employee, the affected employee may
exercise seniority to displace a less senior employee within the same
classification.
ARTICLE XVI - JOB BIDDING
16.1 When the Company determines a permanent vacancy exists, other than a
minimum pay job and it cannot be filled from senior employees within the same
job classification, the Company will post a notice of such fact, such notice to
remain posted for a period of five (5) days, not including Saturdays, Sundays,
or holidays. Any employee on vacation during the posting period (not to exceed
two (2) weeks) will have forty-eight (48) hours from the time the employee was
scheduled to return from vacation to determine if any bids were posted during
the vacation and to submit a job bid for consideration. This notice shall state
rates of pay, hours, current shifts and off days, and job requirements.
Employees who wish the job shall be considered in the manner provided herein in
paragraph 16.2 and the successful applicant's name should the job be awarded,
will be posted within fourteen (14) days after the bid is removed from the
bulletin board, no more than thirty (30) days where testing is required. The
successful bidder will be placed on the job as needed. If a successful bidder is
not assigned to the job within ninety (90) days following the awarding of the
bid, and the Company still intends to fill the job, the employee shall receive
the applicable rate of the new job. If there are no qualified bidders, the
Company may assign the least senior qualified employee who does not hold a bid
job to the vacancy.
16.2 The following factors shall apply in the awarding of all jobs:
(1) Qualifications of the Applicant (which shall include: ability to
perform the work, aptitude, skills, experience, training for the job, score
on the mechanical aptitude examination published by The Psychological
Corporation, and attendance);
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(2) Physical ability to perform the essential functions of the job;
(3) Experience gained through holding jobs under the bid system,
outside schooling, as well as skills, knowledge, training and
ability acquired by an employee prior to employment with the
Company, will be given consideration in awarding jobs.
Experience gained through temporary reassignments will not be
given consideration in awarding jobs.
(4) In the event that the three previous criterion are equal the
position will be filled by the most senior applicant.
If the employee selected shall fail to qualify after a fair trial
period, in the exclusive judgement of the Company he or she shall be returned to
his or her former position and the next bidder shall be given consideration. No
employee with a formal disciplinary action in the record within the last 12
months may be considered for promotion. Employees may only bid for promotional
job opportunities except by mutual agreement between the parties an employee may
bid on a job which would not result in a promotion when there is a good and
sufficient reason.
16.3 Temporary Reassignment. An employee who is temporarily assigned by his or
her supervisor to perform work of a higher paid job classification will be paid
the rate of such higher job classification for time actually worked. An employee
temporarily assigned by his or her supervisor to perform work in an equal or
lower paid classification will be paid the base hourly wage rate of his or her
permanent classification.
16.4 In no event shall the Company be requested or required to post any job
temporarily vacated by reason of vacations, illness, or injury. The Company, at
its discretion, may create temporary jobs not to exceed one hundred twenty (120)
work days, which may be extended by mutual agreement between the Company and the
Union. Should the Company determine that any temporary job become permanent, the
Company shall post the job as provided in this Article.
16.5 In the event that two (2) or more existing positions are combined, the
affected employees in the classification will be assigned, if needed, in the new
combined job by seniority and ability to perform the work. Any vacancies created
by this action will be bid in accordance with Article 16.1.
ARTICLE XVII - INCAPACITATED EMPLOYEE
17.1 Any employee who becomes incapacitated and, on the basis of competent
medical opinion, cannot perform the duties of his or her regular job may be
placed in a vacant or other job by mutual agreement between the Local Management
and the Local Union Committee providing the employee can perform the job within
a reasonable training program. In placing an incapacitated employee under this
provision, the Parties will take into consideration the fair placement of any
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employee who may be displaced by such assignment.
ARTICLE XVIII - WORKWEEK AND OVERTIME
18.1 During the life of this Agreement it is understood that the work day shall
be twenty-four (24) hours commencing with the beginning of the employee's
morning shift and the work week shall be seven (7) days beginning with the
beginning of the morning shift on Monday. One and one-half (1-1/2) times the
employee's regular hourly rate shall be paid for all hours worked in excess of
forty (40) hours per week.
18.2 One and one-half (1-1/2) times the employee's regular hourly rate shall be
paid for all hours worked in excess of eight (8) in a day and two (2) times the
employees regular hourly rate shall be paid for all hours worked in excess of
twelve (12) in a work day for employees scheduled to work a normal eight (8)
hour day. One and one-half (1-1/2) times the employee's regular hourly rate
shall be paid for all hours worked in excess of ten (10) in a day and two (2)
times the employee's regular hourly rate shall be paid for all hours worked in
excess of fourteen (14) in a work day for employees scheduled to work a normal
ten (10) hour day. Daily overtime shall not be counted toward the calculation of
overtime pay received for working in excess of forty (40) hours per week.
18.3 Callouts.
(1) If an employee is called out after his or her regular shift and
after leaving the plant, or on off days, he or she shall be paid a minimum of
four (4) hours pay at one and one-half (1- 1/2) times the employee's regular
rate. However, such hours shall not be counted toward the calculation of
overtime pay paid for working in excess of forty (40) hours per week.
(2) If such employee is notified twelve (12) hours or more in advance
of his or her shift, the four (4) hour minimum will not apply.
(3) If an employee is called out within four (4) hours of his or her
scheduled shift start, he or she shall receive the applicable call out rate for
the first four (4) hours worked.
18.4 Weekly manning schedule shall be posted no later than 10:00 A.M. on Fridays
barring unforeseen circumstances outside the Company's control.
18.5 Employees who have not been notified of a schedule change after the Friday
posting and who report to work shall be guaranteed a minimum of four (4) hours
pay if no work is available. If an employee is assigned to work, he or she shall
be scheduled a minimum of eight (8) hours of work during the work day. This
provision shall not apply if failure to provide work is due to circumstances
outside the Company's control such as but not limited to fire, flood, storm,
major equipment failure, or utility failure. Every reasonable effort shall be
made to notify employees
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in advance of their reporting to work.
18.6 Report Pay.
If an employee shows up for work at his or her scheduled time and is not put to
work (sent home for lack of available work) he or she shall receive four (4)
hours pay. An employee who works will be paid for hours worked but not less than
four (4) hours pay if sent home by the Company. This provision shall not apply
if failure to provide work is due to circumstances outside the Company's control
such as, but not limited to, fire, flood, storm, major equipment failure or
utility failure.
18.7 The current Overtime Distribution Policy will be posted by the Company.
This policy may be amended by a mutual agreement between the parties.
ARTICLE XIX - BEREAVEMENT LEAVE
19.1 When an employee who has completed the probationary period is absent from
work to arrange for and/or attend the funeral of his or her parent, stepfather,
stepmother, wife or husband, son or daughter, or stepchildren, brother, sister,
grandfather, grandmother, grandchildren, father-in-law, mother-in-law, spouse's
grandparents, spouse's brother, spouse's sister, the Company will pay up to the
next three (3) scheduled work days (up to the next four (4) scheduled days off
with pay if the employee is required to travel beyond a radius of five hundred
(500) miles), for eight (8) hours at the employee's regular hourly rate for each
scheduled workday the employee is absent.
19.2 Funeral leave will be granted within seven (7) days of the death or service
only for absences occurring on the employee's regularly scheduled workdays and
will not apply to employees on layoff or other non-working status. Hours paid
under this Article will be counted as hours worked for the purpose of computing
overtime. To be eligible for benefit under the Article, the employee must supply
reasonable documentary evidence of covered death, family relationship, and
attendance at the funeral or service.
19.3 Employees who normally work a ten (10) hour, four (4) day work week will be
compensated in accordance with paragraph 19.1 for up to ten (10) hours at the
employee's regular hourly rate for each scheduled workday absent provided the
employee would have worked ten (10) hours on those days of absence. The maximum
funeral leave allowance for ten (10) hour shift employees will be thirty (30)
hours of pay per bereavement.
ARTICLE XX - ANNUAL RESERVE TRAINING LEAVE
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20.1 Employees who are members of organized reserve components of the Armed
Forces, including the National Guard, will be allowed leave of absence annually
for the purpose of attending required military training encampments or cruises.
The Company will pay any employee who goes on such leave of absence the
difference between the employee's straight time pay for up to (2) two weeks and
the employee's military pay including longevity pay but excluding all allowances
such as rent, subsistence, uniform and travel. Payment will be made when the
employee returns from reserve training on presentation of satisfactory proof of
the amount of pay received.
ARTICLE XXI - SAFETY AND HEALTH
21.1 A joint Safety and Health Committee shall be established consisting of
members, appointed by the Company and the Union. The committee will consist of
not more than four (4) members from the Union and four (4) members from the
Company plus the Plant Manager or his representative. Meetings will be held
regularly to address safety and health concerns and make recommendations to the
Plant Manager.
ARTICLE XXII - BULLETIN BOARD
22.1 The Union agrees to post only notices concerning elections, meetings,
reports and other official Union business and notices of social and recreational
activities on the Company bulletin board. A copy of each notice will be supplied
to the Plant Manager at the time of its posting. The Union agrees further that
it will post no matter which is in the disinterest of the Company. However,
notwithstanding the above, it is understood that the Company's decision
concerning the use of the bulletin board shall be final.
ARTICLE XXIII - FURNISHING OF TOOLS
23.1 The Company shall furnish all special tools and equipment. Maintenance
employees shall furnish their own tools; in case of breakage, loss, or worn out
tools, the Company will replace or repair such tools. All breakage or loss shall
be reported immediately to the Company.
ARTICLE XXIV - TRAINING COMMITTEE
24.1 A joint Union Management Training Committee will be established consisting
of an equal number of representatives from the Union and the Management. Other
representatives may be invited to participate in the meetings from time to time
by mutual agreement as needed.
24.2 The purpose of the Committee will be to assist management by making
recommendations
17
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as to the selections, evaluations and progression of employees in training and
the overall successful administration of the plant training program. The
Committee shall meet quarterly or otherwise as necessary to accomplish this
objective.
24.3 A trainee will not be disqualified from the program without first being
advised of and placed in a probationary status unless the trainee's conduct
requires immediate removal. The Parties recognize it may be necessary to rotate
shift assignments to enable employees to obtain the necessary work experience.
Employees placed on probationary status shall not advance in pay.
ARTICLE XXV - OVERTIME LUNCH ALLOWANCE
25.1 Any employee who works more than ten (10) consecutive hours or twelve (12)
consecutive hours for employees on ten (10) hour shifts where such overtime
hours are unscheduled, shall be given a lunch allowance. Any employee called out
who works more than four (4) consecutive hours outside his or her normal shift
will receive a lunch allowance. No lunch allowance will be provided if such
overtime hours are scheduled with twelve (12) hours advance notice. The lunch
allowance will not exceed $6.
ARTICLE XXVI - BENEFIT PLANS
26.1 During the term of this Agreement the Company will provide employees with
participation in the Southdown, Inc. Medical Plan, the Southdown, Inc. Group
Dental Benefit Plan, the Southdown, Inc. Life Insurance and Accidental Death and
Dismemberment Plan, the Southdown, Inc. Long Term Disability Plan, the
Southdown, Inc. Pension Plan, the Southdown, Inc. Retirement Savings Plan, and
the Southdown, Inc. Voluntary Life Insurance Plan, and continue said plans for
the life of this Agreement unless the parties agree mutually to modify the
provisions of these plans.
26.2 During the life of and for the term of this Agreement dated May 1, 1996,
the Company will provide post retirement medical insurance coverage to all
eligible employees covered under this bargaining unit who retire after having
achieved age 62 with at least 15 years of company service. The provisions of
this coverage will be the same as the benefits and eligibility requirements
provided for in the Southdown Inc. Retiree Medical Insurance Plan which are
subject to modification.
26.3 SICKNESS AND ACCIDENT BENEFITS
If an employee with at least one (1) year of service is absent from work due to
disability, sickness and accident benefits are payable. The disability must
prevent the employee from performing the duties of the job because of a
non-occupational sickness or injury. This benefit is payable if confined to a
hospital or home.
18
<PAGE>
After a waiting period of three (3) work days, disability benefits are payable
at a rate of twenty five dollars ($25) per day for the fourth and fifth work day
of absence, then at a rate of fifty dollars ($50) per day for a maximum of five
days per week. The waiting period will be waived if the employee is hospitalized
as an in-patient and the daily benefits will be paid immediately at the fifty
dollar ($50) rate. A disabled employee may receive weekly sickness and accident
benefits during the period of disability not to exceed five (5) months. It is
the employee's responsibility to make application for this benefit and the
attending physician must document the nature of the disability and expected date
of return to work.
No benefits shall be payable for the following:
1. disability which you are not under the direct care of a licensed
physician.
2. sickness or injury which is purposefully self-inflicted while sane
or insane.
3. disability due to an injury arising out of the course of
employment.
4. disability due to disease which benefits are payable under Worker's
Compensation, Occupational Disease or similar law.
This benefit terminates upon retirement or upon termination of employment.
Any employee currently not participating in the long term disability (LTD) plan
and who applies for LTD coverage no later than July 1, 1996 and is rejected or
shows evidence of prior rejection, will be eligible for up to fifty two (52)
weeks of sickness and accident benefits.
19
<PAGE>
ARTICLE XXVII - TERMS OF AGREEMENT
27.1 After ratification by the members of the Local Union, this Agreement shall
become effective and remain in force and effect and be binding upon the parties
hereto from May 1, 1996, to and including April 30, 1999, and it shall continue
to be in full force and effect thereafter from year to year until either party
on or before February 28 of any year, beginning February 28,1999, gives written
notice to the other party of its desire or intention either to alter and modify
or terminate the same. If such notice is given, the parties hereto shall begin
negotiations not later than April 1 in such year.
IN WITNESS WHEREOF, the Union has caused this Agreement to be executed
in its name, after due authorization by a vote of a majority of its members, and
the Company has caused it to be executed in its name, by its duly authorized
representatives.
INTERNATIONAL BROTHERHOOD OF KOSMOS CEMENT COMPANY
BOILERMAKERS, CEMENT, LIME,
GYPSUM AND ALLIED WORKERS,
DIVISION LOCAL LODGE NO. D595
________________________________ ___________________________
By: J. C. Todd By: Bernard M. Reuland
________________________________ ___________________________
By: Timothy E. McCoy By: Wayne W. Emmer
________________________________ ___________________________
By: David L. Swarens By: David E. Tiller
________________________________ ___________________________
By: Gary W. Killen By: Steven K. Martin
________________________________ ___________________________
By: Patrick M. Granzow By: Paul J. Anderson
________________________________
By: William G. Bennett
________________________________
By: Robert B. Allen
Signed this 1st day of May, 1996. Signed this 1st day of May, 1996.
20
<PAGE>
SCHEDULE A - PAY PROCEDURES
A1 - GAINSHARING: The employees will participate in a gainsharing program
developed by the Company.
A2 - LEADPERSONS: Leadpersons may only be appointed at the sole discretion of
management. They shall be paid $1.25 per hour in addition to their normal rate
of pay while they are designated as leadpersons to perform certain
quasi-supervisory tasks incidental to their normal hands-on work.
A3 - JOB GROUPINGS: The following positions shall be grouped together for pay
purposes:
JOB GROUP ONE - GENERAL PLANT WORKER
Town Pick-Up Truck Driver
Sweeper
Bobcat Operator
Quarry Pick-up Truck Driver
Laborer
JOB GROUP TWO - UTILITY WORKER
River Watchman
Storeroom Attendant
Maintenance Lift Truck Driver
Shipping Lift Truck Driver
Shipper/Packer*/Loader
Root Catcher
Utility Person
*The Company will continue the current practice of providing an incentive to
packhouse employees of $3/1,000 bags of product packed per day.
JOB GROUP THREE - MATERIAL HANDLERS
Quarry Lube Serviceman
Crusher Operator
Clay Feeder
Clay Dryer Operator
Drill Operator
Quarry Driver
Quarry Barge Loader
Quarry Front-end Loader
21
<PAGE>
Material Handler
JOB GROUP FOUR - PROCESS/HEAVY EQUIPMENT
Process Attendant
Quarry Mobile Equipment Operator
Derrick Operator
Resource Recovery Specialist
JOB GROUP FIVE - LABORATORY
Laboratory Technicians
JOB GROUP SIX - SKILLED REPAIRMAN
Mechanical Repairman*
Electrical Repairman*
Garage Mechanic
Machinist
*Requires Department of Labor Journeyman's Certificate to achieve Journeyman's
rate.
JOB GROUP SEVEN - INSTRUMENTS & CONTROL
Instrument Technician**
Control Room Operator
**Must be Journeyman Electrical Repairman.
22
<PAGE>
A4 - PROGRESSION SCHEDULES: The following wage schedules reflect a forty-five
cent ($.45) increase effective 5/1/96, a forty-five cent ($.45) increase
effective 5/1/97, and a forty-five cent ($.45) increase effective 5/1/98.
<TABLE>
<CAPTION>
5/1/96 5/1/97 5/1/98
------ ------- ------
<S> <C> <C> <C>
JOB GROUP ONE
Starting Rate $ 9.80 $10.25 $10.70
End of 6 Months Worked $10.45 $10.90 $11.35
JOB GROUP TWO
Starting Rate $10.45 $10.90 $11.35
End of 6 Months Worked $11.35 $11.80 $12.25
End of 12 Months Worked $12.30 $12.75 $13.20
End of 18 Months Worked $12.60 $13.05 $13.50
JOB GROUP THREE
Starting Rate $12.15 $12.60 $13.05
End of 6 Months Worked $13.00 $13.45 $13.90
End of 12 Months Worked $13.50 $13.95 $14.40
End of 18 Months Worked $14.00 $14.45 $14.90
JOB GROUP FOUR
Starting Rate $12.70 $13.15 $13.60
End of 6 Months Worked $13.05 $13.50 $13.95
End of 12 Months Worked $13.45 $13.90 $14.35
End of 18 Months Worked $13.85 $14.30 $14.75
End of 24 Months Worked $14.25 $14.70 $15.15
End of 30 Months Worked $14.65 $15.10 $15.55
End of 36 Months Worked $15.15 $15.60 $16.05
JOB GROUP FIVE
Starting Rate $12.95 $13.40 $13.85
End of 6 Months Worked $13.35 $13.80 $14.25
End of 12 Months Worked $13.85 $14.30 $14.75
End of 18 Months Worked $14.35 $14.80 $15.25
End of 24 Months Worked $14.80 $15.25 $15.70
End of 30 Months Worked $15.10 $15.55 $16.00
End of 36 Months Worked $15.45 $15.90 $16.35
End of 42 Months Worked $15.80 $16.25 $16.70
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
5/1/96 5/1/97 5/1/98
------- ------- -------
<S> <C> <C> <C>
JOB GROUP SIX
Starting Rate $13.25 $13.70 $14.15
End of 6 Months Worked $13.55 $14.00 $14.45
End of 12 Months Worked $13.85 $14.30 $14.75
End of 18 Months Worked $14.15 $14.60 $15.05
End of 24 Months Worked $14.45 $14.90 $15.35
End of 30 Months Worked $14.75 $15.20 $15.65
End of 36 Months Worked $15.05 $15.50 $15.95
End of 42 Months Worked $15.35 $15.80 $16.25
End of 48 Months Worked $16.00 $16.45 $16.90
JOB GROUP SEVEN
Starting Rate $16.00 $16.45 $16.90
End of 6 Months Worked $16.20 $16.65 $17.10
End of 12 Months Worked $16.35 $16.80 $17.25
End of 18 Months Worked $16.50 $16.95 $17.40
End of 24 Months Worked $16.70 $17.15 $17.60
End of 30 Months Worked $16.85 $17.30 $17.75
End of 36 Months Worked $17.05 $17.50 $17.95
End of 42 Months Worked $17.20 $17.65 $18.10
End of 48 Months Worked $17.40 $17.85 $18.30
</TABLE>
Requires satisfactory progress in each 6 month period worked in above designated
classifications.
24
<PAGE>
LETTERS OF AGREEMENT
May 1, 1996
Mr. J. C. Todd
International Representative
International Brotherhood of Boilermakers
Cement, Lime, Gypsum and Allied Workers Division
80 Sweetbriar Trail
Fayetteville, GA 30215
Dear J.C.:
When bargaining unit employees are working side-by-side with outside
contractors and there is a need to work overtime to continue or complete the
job, the bargaining unit employees will be offered the overtime to work with the
outside contractors provided they are qualified to perform the work.
Sincerely,
Bernard M. Reuland
Director, Employee Relations
BMR:mjb
cc: W. W. Emmer
D. E. Tiller
T. E. McCoy
25
<PAGE>
May 1, 1996
Mr. J. C. Todd
International Representative
International Brotherhood of Boilermakers
Cement, Lime, Gypsum and Allied Workers Division
80 Sweetbriar Trail
Fayetteville, GA 30215
Subject: Letter of Understanding
Current Practices
Dear J. C.:
This will confirm our discussions during 1996 contract negotiations.
The Company will continue our current policies regarding safety procedures,
uniforms, and employee travel expenses at our Louisville and Quarry operations
during the life of this Agreement for the following:
o Supply to employees personal protective safety equipment required by the
Company such as hard hats, safety shoes not to exceed two (2) pairs per
year up to $110 per pair, hearing protection, safety glasses, and
respirators.
o License fee reimbursement for blasting and welding certification as
required by the Company.
o Current uniform arrangements.
o Reasonable reimbursement for meals and other expenses while traveling on
Company business. Sincerely,
Bernard M. Reuland
Director, Employee Relations
BMR:mjb
cc: W. W. Emmer
D. E. Tiller
T. E. McCoy
26
<PAGE>
May 1, 1996
Mr. J. C. Todd
International Representative
International Brotherhood of Boilermakers
Cement, Lime, Gypsum and Allied Workers Division
80 Sweetbriar Trail
Fayetteville, GA 30215
Subject: Seniority Provisions for Same Date
Hire and Prospective Employees
Dear J.C.:
Confirming our Agreement reached during the KOSMOS negotiations in
Louisville, Kentucky, the initial plant seniority roster as referenced in
Article 14.6 of the Labor Agreement will be ranked in seniority order by the
lottery system for current employees hired on the same date. This seniority
roster will be used for prospective application of provisions in the Labor
Agreement.
Prospective same date hires will be placed on the seniority list
according to the date and time of their initial employment application.
Sincerely,
Bernard M. Reuland
Director, Employee Relations
BMR:mjb
cc: W. W. Emmer
D. E. Tiller
T. E. McCoy
27
<PAGE>
May 1, 1996
Mr. J. C. Todd
International Representative
International Brotherhood of Boilermakers
Cement, Lime, Gypsum and Allied Workers Division
80 Sweetbriar Trail
Fayetteville, GA 30215
Subject: Letter of Understanding - Dispute Resolution Panel
Dear J.C.:
This will confirm our discussion during 1996 negotiations covering
Louisville Operations regarding the Dispute Resolution Panel.
The Parties agree to select by mutual agreement three (3) impartial
representatives who will be available to serve for the term of this Agreement
for a reasonable fee when called upon to serve on the Panel. When necessary for
the Panel to meet to resolve a grievance in accordance with Article 10.1(4), the
Parties will mutually select one of these impartial representatives to serve on
the Panel.
It is understood that following the discussions and hearing of the
grievance, the Panel will determine the outcome of the grievance. The outcome of
the grievance will be determined by majority vote of the Panel and communicated
by a brief written description of the disposition of the grievance by the
impartial representative. The individual vote of the Panel will not be
disclosed, only the fact that a majority was reached. If additional information
is needed prior to making a determination on the result of the grievance, it
must be gathered and the decision will be made within three (3) working days.
The Company or Union representatives may call upon various witnesses to be
present at the hearing and the cost incurred or lost-time pay involved for the
witness will be the responsibility of the Party calling the witness.
The Company or Union Representative may cancel the use of any third
party representative with thirty (30) days notice to the other Party and another
impartial representative will be selected in accordance with the above.
Sincerely,
Bernard M. Reuland
Director, Employee Relations
BMR:mjb
cc: W. W. Emmer
D. E. Tiller
T. E. McCoy
28
<PAGE>
May 1, 1996
Mr. J. C. Todd
International Representative
Cement, Lime, Gypsum, and Allied Workers Division
International Brotherhood of Boilermakers
80 Sweetbriar Trail
Fayetteville, GA 30215
Re: Letter of Understanding
Dear J. C.:
Pursuant to our discussions during the 1996 Kosmosdale labor contract
negotiations, the Company agrees to establish a joint committee for the purpose
of developing an incentive plan for employees assigned to the
Shipper/Packer/Loader position. This incentive plan would be subject to mutual
agreement. If mutual agreement is not reached, the current packhouse incentive
will remain as in the Agreement.
Sincerely,
Bernard M. Reuland
Director, Employee Relations
BMR:mjb
cc: W. W. Emmer
D. E. Tiller
T. E. McCoy
29
<PAGE>
May 1, 1996
Mr. J. C. Todd
International Representative
Cement, Lime, Gypsum, and Allied Workers Division
International Brotherhood of Boilermakers
80 Sweetbriar Trail
Fayetteville, GA 30215
Re: Letter of Understanding - Working Spouse
Dear J. C.:
Pursuant to our discussions during the 1996 Kosmosdale Labor Contract
negotiations, if an employee's spouse is eligible for health care coverage under
another employer's group health plan, that spouse will not be eligible to
participate in the Southdown Medical Plan. If the premium which the spouse is
required to pay exceeds $30.00 per month for individual coverage under that
plan, the Company will offset the cost in excess of $30.00 per month by reducing
the employee's monthly contribution to the Southdown Plan. The offset will not
be greater than the total monthly premium the employee is required to pay for
the Southdown Plan. Affected employees will provide reasonable documentation to
substantiate the cost of spousal coverage.
Sincerely,
Bernard M. Reuland
Director, Employee Relations
BMR:mjb
cc: W. W. Emmer
D. E. Tiller
T. E. McCoy
30
<PAGE>
