<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
------------------------------------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the transition period from to
------------------- -------------------------
Commission file number 0-11936
--------------------------------------------------------
LAFARGE CORPORATION
- -------------------------------------------------------------------------------
(Exact name of company as specified in its charter)
MARYLAND 58-1290226
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11130 SUNRISE VALLEY DRIVE, SUITE 300, RESTON, VA 20191-4393
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
703-264-3600
- -------------------------------------------------------------------------------
(Company's telephone number, including area code)
Indicate by check mark whether the company (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding as of
Class July 31, 1996
----------------------------------------- ---------------------
<S> <C>
Common Stock of Lafarge Corporation
($1 par value) 61,806,082
Exchangeable Preference Shares of
Lafarge Canada Inc.
(no par value) 8,093,487
-----------------
Total Common Equity Interests 69,899,569
=================
</TABLE>
Number of pages contained in this report 16
--------------
Total sequentially numbered pages 16
--------------
Exhibit index on page 13
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<PAGE> 2
LAFARGE CORPORATION AND SUBSIDIARIES
FORM 10-Q - FOR THE QUARTER ENDED JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
a) Condensed Consolidated Statements
of Income - Three-Month, Six Month and
Twelve-Month Periods Ended
June 30, 1996 and 1995 3
b) Condensed Consolidated Balance Sheets -
June 30, 1996, June 30, 1995, and
December 31, 1995 4
c) Condensed Consolidated Statements of
Cash Flows - Six - Month and Twelve-Month
Periods Ended June 30, 1996 and 1995 5
d) Condensed Consolidated Geographic Information -
Three-Month, Six-Month and Twelve-Month Periods
Ended June 30, 1996 and 1995 6
e) Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6 (a). Exhibits 13
Item 6 (b). Reports on Form 8-K 13
SIGNATURE 14
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LAFARGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS TWELVE MONTHS
ENDED JUNE 30 ENDED JUNE 30 ENDED JUNE 30
----------------------------- ---------------------------- --------------------------------
1996 1995 1996 1995 1996 1995
----------- ------------ ------------ ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $ 420,948 $ 396,020 $ 624,660 $ 592,809 $ 1,504,010 $ 1,524,912
----------- ------------ ------------ ------------ ------------- ---------------
COSTS AND EXPENSES
Cost of goods sold 307,395 293,332 530,888 506,035 1,174,021 1,204,095
Selling and administrative 38,654 36,416 74,449 71,896 143,665 155,981
Interest expense, net 3,555 5,396 6,806 8,428 13,597 20,391
Other expense (income), net 1,839 2,007 4,696 (2,573) 3,762 (6,323)
----------- ------------ ------------ ------------ ------------- ---------------
Total costs and expenses 351,443 337,151 616,839 583,786 1,335,045 1,374,144
----------- ------------ ------------ ------------ ------------- ---------------
Pre-tax income 69,505 58,869 7,821 9,023 168,965 150,768
Income tax expense (26,240) (9,151) (2,751) (1,358) (41,947) (38,737)
----------- ------------ ------------ ------------ ------------- ---------------
NET INCOME $ 43,265 $ 49,718 $ 5,070 $ 7,665 $ 127,018 $ 112,031
=========== ============ ============ ============ ============= ===============
NET INCOME PER COMMON
EQUITY SHARE-PRIMARY $ .62 $ .72 $ .07 $ .11 $ 1.83 $ 1.64
=========== ============ ============ ============ ============= ===============
NET INCOME PER COMMON
EQUITY SHARE - ASSUMING
FULL DILUTION $ .59 $ .70 $ .07 $ .11 $ 1.77 $ 1.63
=========== ============ ============ ============ ============= ===============
DIVIDENDS PER COMMON
EQUITY SHARE $ .100 $ .100 $ .200 $ .175 $ .400 $ .325
=========== ============ ============ ============ ============= ===============
Average number of common equity
shares outstanding 70,090 68,878 69,848 68,667 69,576 68,483
=========== ============ ============ ============ ============= ===============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE> 4
LAFARGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30 JUNE 30 DECEMBER 31
1996 1995 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 67,501 $ 94,444 $ 136,435
Short-term investments 50,603 ---- 84,516
Receivables, net 321,672 297,196 256,262
Inventories 218,345 205,675 210,076
Other current assets 37,293 33,093 31,214
--------------- --------------- ---------------
Total current assets 695,414 630,408 718,503
Property, plant and equipment, (less accumulated
depreciation and depletion of $1,007,658, $950,944 and
$983,518) 831,197 782,877 797,017
Excess of cost over net assets of businesses acquired, net 21,911 20,671 21,302
Other assets 170,262 183,705 177,031
--------------- --------------- ---------------
TOTAL ASSETS $ 1,718,784 $ 1,617,661 $ 1,713,853
=============== =============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 239,829 $ 231,150 $ 222,458
Income taxes payable 12,101 5,505 31,729
Current portion of long-term debt 20,711 8,709 15,741
--------------- --------------- ---------------
Total current liabilities 272,641 245,364 269,928
Long-term debt 263,282 293,040 268,636
Deferred income tax 45,950 72,619 43,314
Other postretirement benefits 124,724 122,634 123,260
Other long-term liabilities 29,211 24,563 27,737
--------------- --------------- ---------------
Total liabilities 735,808 758,220 732,875
--------------- --------------- ---------------
Common equity interests
Common shares 61,747 60,199 60,735
Exchangeable shares 55,737 58,100 58,311
Additional paid-in-capital 605,389 584,207 593,310
Retained earnings 319,744 220,553 328,623
Foreign currency translation adjustments (59,641) (63,618) (60,001)
--------------- --------------- ---------------
Total shareholders' equity 982,976 859,441 980,978
--------------- --------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,718,784 $ 1,617,661 $ 1,713,853
=============== =============== ===============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE> 5
LAFARGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
ENDED JUNE 30 ENDED JUNE 30
--------------------------------- --------------------------------
1996 1995 1996 1995
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATIONS
Net income $ 5,070 $ 7,665 $ 127,018 $ 112,031
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation, depletion and amortization 50,206 46,884 97,643 94,617
Provision for doubtful accounts 944 1,336 196 4,726
(Gain) loss on sale of assets 11 (9,876) (4,698) (23,836)
Other postretirement benefits 1,229 1,721 1,770 2,632
Other non-cash charges and credits, net (3,018) (6,960) (26,339) (25,385)
Changes in working capital (91,904) (119,821) (35,734) (25,356)
-------------- ------------- ------------- -------------
Net cash provided (consumed) by operations (37,462) (79,051) 159,856 139,429
-------------- ------------- ------------- -------------
CASH FLOWS FROM INVESTING
Capital expenditures (66,068) (61,104) (126,846) (111,108)
Acquisitions (8,593) (23,449) (14,463) (26,057)
Short-term investments 33,913 50,500 (50,603) --
Proceeds from property, plant and equipment
dispositions 13,009 24,458 23,179 170,088
Other 1,345 (3,519) 7,784 6,109
-------------- ------------- ------------- -------------
Net cash provided by (used for) investing (26,394) (13,114) (160,949) 39,032
-------------- ------------- ------------- -------------
CASH FLOWS FROM FINANCING
Net decrease in long-term borrowings (1,756) (6,760) (19,310) (131,889)
Issuance of equity securities 2,689 1,617 4,091 6,097
Dividends, net of reinvestments (6,122) (4,684) (11,552) (8,542)
-------------- ------------- ------------- -------------
Net cash consumed by financing (5,189) (9,827) (26,771) (134,334)
-------------- ------------- ------------- -------------
Effect of exchange rate changes 111 3,379 921 369
-------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (68,934) (98,613) (26,943) 44,496
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE PERIOD 136,435 193,057 94,444 49,948
-------------- ------------- ------------- -------------
CASH AND CASH EQUIVALENTS AT THE
END OF THE PERIOD $ 67,501 $ 94,444 $ 67,501 $ 94,444
============== ============= ============= =============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE> 6
LAFARGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED GEOGRAPHIC INFORMATION
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
-------------------------------------------------------------------------------------
1996 1995 1996 1995
----------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
NET SALES
Canada $ 164,924 $ 170,190 $ 244,661 $ 253,359
United States 256,024 225,830 379,999 339,450
----------------- ---------------- ---------------- ------------------
TOTAL NET SALES $ 420,948 $ 396,020 $ 624,660 $ 592,809
================= ================ ================ ==================
INCOME (LOSS) FROM OPERATIONS
Canada $ 24,518 $ 25,327 $ (7,255) $ (568)
United States 48,542 38,938 21,882 18,019
----------------- ---------------- ---------------- ------------------
TOTAL INCOME FROM OPERATIONS 73,060 64,265 14,627 17,451
Interest expense, net (3,555) (5,396) (6,806) (8,428)
----------------- ---------------- ---------------- ------------------
PRE-TAX INCOME $ 69,505 $ 58,869 $ 7,821 $ 9,023
================= ================ ================ ==================
</TABLE>
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED JUNE 30
-------------------------------------------
1996 1995
------------------ -------------------
<S> <C> <C>
NET SALES
Canada $ 652,036 $ 677,600
United States 851,974 847,312
------------------ -------------------
TOTAL NET SALES $ 1,504,010 $ 1,524,912
================== ===================
INCOME (LOSS) FROM OPERATIONS
Canada $ 68,791 $ 70,120
United States 113,771 101,039
------------------ -------------------
TOTAL INCOME FROM OPERATIONS 182,562 171,159
Interest expense, net (13,597) (20,391)
------------------ -------------------
PRE-TAX INCOME $ 168,965 $ 150,768
================== ===================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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<PAGE> 7
LAFARGE CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. The Company is engaged in the production and sale of cement,
ready-mixed concrete, other concrete products, asphalt and aggregates.
The Company operates in the U.S. and, through its major operating
subsidiary, Lafarge Canada Inc. ("LCI"), in Canada. The Company's
wholly-owned subsidiary, Systech Environmental Corporation, supplies
cement plants with substitute fuels and raw materials. Lafarge S.A.,
a French corporation, and certain of its affiliates own a majority of
the Company's outstanding voting securities.
2. The condensed consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. As a result, certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. The Company believes that the disclosures made are adequate
to make the information presented not misleading. These condensed
consolidated financial statements should be read in conjunction with
the consolidated financial statements and related notes included in
the Company's 1995 Annual Report on Form 10-K.
3. Because of seasonal, weather-related conditions in most of the
Company's marketing areas, earnings of any one quarter should not be
considered as indicative of results to be expected for a full fiscal
year or any other interim period.
4. Substantially all U.S. inventories other than maintenance and
operating supplies are costed using the last-in, first-out ("LIFO")
method and all other inventories are valued at average cost. At June
30, 1996 and 1995, and at December 31, 1995, inventories consisted of
the following (in thousands):
<TABLE>
<CAPTION>
JUNE 30 JUNE 30 DECEMBER 31
1996 1995 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Finished products $ 101,980 $ 96,182 $ 97,950
Work in process 27,137 22,032 16,959
Raw materials and fuel 47,891 49,097 50,030
Maintenance and operating
supplies 41,337 38,364 45,137
--------------- --------------- ---------------
Total inventories $ 218,345 $ 205,675 $ 210,076
=============== =============== ===============
</TABLE>
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<PAGE> 8
5. Cash paid during the period for interest and taxes is as follows (in
thousands):
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
ENDED JUNE 30 ENDED JUNE 30
-------------------------- -------------------------------
1996 1995 1996 1995
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Interest, net $ 6,884 $ 6,859 $ 15,962 $ 19,774
Income taxes
(net of refunds) 26,376 31,638 69,803 58,849
</TABLE>
6. The 1995 amounts shown as income from operations for Canada and the
United States in the condensed consolidated geographic information
exclude $30.1 million of cumulative adjustments resulting from an
agreement reached with Revenue Canada Taxation during the second
quarter of 1995 related to the pricing of certain cement sales between
the Company's operations in Canada and the U.S. for the years 1984
through 1994. If these adjustments were reflected, net sales and
income from operations from Canada would be increased with
corresponding adjustments in the U.S. There would be no impact on
consolidated income from operations.
7. See Part II Item 1 on page 13 for a discussion of the material
developments in legal proceedings. It is the opinion of management
that all legal and environmental matters will be resolved without
material effect on the Company's consolidated financial statements.
8. In the third quarter of 1995, the U.S. tax provision was decreased by
$23.3 million due to the reduction of a valuation allowance on
deferred tax assets which had been recorded in 1992. The reduction
resulted from the favorable long-term outlook of the U.S. cement
market, three consecutive years of taxable income in the U.S. and
management's projections of future taxable income in the U.S. which is
expected to be in excess of amounts needed to realize these deferred
tax assets. Therefore, management believes it is more likely than not
the related deferred tax assets will be realized.
9. On August 6, 1996, the Company announced it had reached an agreement
to acquire G-P Gypsum Corporation's (a subsidiary of Georgia Pacific
Corporation) gypsum wallboard manufacturing plants in Buchanan, New
York and Wilmington, Delaware. The acquisition of the two facilities,
which combined had gross sales of $75 million last year, is scheduled
for completion in early September.
10. In the opinion of management, the accompanying condensed consolidated
financial statements reflect all adjustments (which included only
normal recurring adjustments) necessary to present fairly the
Company's financial position as of the applicable dates and the
results of its operations and its cash flows for the interim periods
presented.
-8-
<PAGE> 9
LAFARGE CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
During the second quarter of 1995, the Company reached an agreement with
Revenue Canada Taxation related to the pricing of certain cement sales between
its operations in Canada and the U.S. for the years 1984 through 1994. The
result was an increase in net sales and pre-tax income in Canada of U.S. $30.1
million with corresponding adjustments in the U.S. The impact of this
agreement was immaterial to consolidated net income. Management's Discussion
and Analysis that follows excludes the impact of this agreement (except for the
discussion on income taxes).
THREE MONTHS ENDED JUNE 30, 1996
The Company reported net income of $43.3 million in 1996 compared with net
income of $49.7 million for the same period in 1995. Net income per common
equity share was $0.62 compared with $0.72. The decline in earnings was due to
an increase in income tax expense in the U.S. The 1996 second quarter earnings
in the U.S. reflect a full tax provision against quarterly income whereas the
U.S. earnings in the second quarter of 1995 include a reduced tax provision as
a result of the utilization of net operating loss carryforwards and the fact
that tax benefits arising from seasonal losses in the first quarter were not
recognized prior to 1996. The higher income tax expense was partially offset
by higher prices and volumes in the Company's cement, ready-mixed concrete and
aggregate operations.
The Company's net sales increased 6 percent to $420.9 million from $396.0
million in 1995. Canadian net sales declined 3 percent mainly due to the
continuing weaknesses in the Ontario and Alberta construction markets. Net
sales in the U.S. increased 13 percent primarily because of higher cement
prices and the effect of acquisitions (in late 1995 and early 1996) in the
construction materials operations. Cement shipments increased 2 percent while
ready-mixed concrete and aggregate volumes rose 12 percent and 5 percent,
respectively.
Second quarter earnings from the Company's cement operations were $71.4
million, $9.6 million better than last year. Higher prices and a slight
increase in sales volumes were partially offset by lower clinker production in
Canada due to high inventories. Net sales increased 6 percent reflecting the
rise in shipments and prices. Earnings from Canadian cement operations were
$22.9 million, $0.2 million worse than 1995. A 2 percent increase in the
average net sales price (before exchange rate fluctuation) was offset by a 4
percent decline in sales volumes (reflecting lower demand in Ontario and
Alberta). Net sales declined 2 percent. The U.S. contribution was $48.5
million, $9.8 million better than 1995. Higher cement prices (3 percent) and
increased shipments (4 percent) were the driving forces behind the improved
U.S. results. Net sales rose 9 percent.
-9-
<PAGE> 10
Earnings from the Company's construction materials and waste management
operations were $14.1 million, $1.7 million better than 1995. The improvement
was due to higher earnings in the U.S. and lower expenses related to the
implementation of a new financial system. Net sales were 8 percent higher
mainly due to acquisitions in the U.S. In Canada, earnings were $5.5 million,
$0.3 million lower than 1995 due to lower earnings in the Ontario and Alberta
markets. Ready-mixed concrete and aggregate volumes increased 6 percent and 15
percent, respectively; however, net sales were 2 percent lower reflecting an
unfavorable product and geographical mix. The U.S. operations earned $8.6
million, $2.0 million higher than a year ago. Strong ready-mixed concrete
volumes (up 25 percent) due to acquisitions and the absence of 1995 flooding
conditions in the Midwest were the primary factors. Net sales increased 34
percent mostly due to acquisitions and higher ready-mixed concrete prices.
Aggregate volumes declined 12 percent mainly due to the shutdown and 1996
divestment of a sand and gravel operation.
Income tax expense was $26.2 million, $17.1 million higher than 1995. The 1996
second quarter earnings in the U.S. reflect a full tax provision against
quarterly income whereas the U.S. earnings in the second quarter of 1995
include a reduced tax provision as a result of the utilization of net operating
loss carryforwards and the fact that tax benefits arising from seasonal losses
in the first quarter were not recognized prior to 1996. In Canada, taxes
decreased $10.3 million due to lower earnings as the result of the agreement
with Revenue Canada Taxation, concluded in the second quarter of 1995, that
resulted in a cumulative adjustment to increase taxable income in Canada. This
adjustment was offset by a corresponding tax benefit in the U.S. The Company's
effective income tax rate was 37.8 percent in 1996 and 15.5 percent in 1995.
SIX MONTHS ENDED JUNE 30, 1996
The Company reported net income of $5.1 million or $0.07 per common equity
share. This compares with net income of $7.7 million, or $0.11 for the first
six months of 1995. Historically, the Company's first quarter sales and
operating results are negatively impacted by seasonal weather conditions which
reduce construction activity. In addition, a substantial portion of the year's
major maintenance projects are performed during this period of low plant
utilization with the associated costs being charged to expense as incurred.
The decrease in earnings resulted from lower cement volumes and lower
divestment gains largely offset by higher prices.
Net sales were $624.7 million compared with $592.8 million in 1995, a 5 percent
increase. Cement shipments were 1 percent lower while ready-mixed concrete and
aggregate volumes were 10 percent and 1 percent higher, respectively. Canadian
net sales declined 3 percent to $244.7 million primarily due to 7 percent lower
cement shipments. U.S. sales increased 12 percent to $380.0 million because of
a 3 percent increase in cement prices and 1995 and 1996 acquisitions in the
construction materials operations.
Earnings from the Company's cement operations were $44.4 million, $4.6 million
better than last year. Net sales rose 3 percent. Earnings from Canadian
operations were $12.0 million, $5.6 million worse than 1995. Net sales and
cement shipments were 4 percent and 7 percent lower, respectively, reflecting
inclement weather and the slowdown of construction activity in Ontario, Quebec,
Alberta and British Columbia. Canadian results were also affected by lower
clinker
-10-
<PAGE> 11
production in both regions due to high inventory levels. The average net
selling price (excluding exchange rate fluctuation) improved modestly (1.5
percent). In the U.S., earnings were $32.4 million, $10.2 million higher than
1995. The improvement was due to a slight increase in shipments and a 3
percent increase in prices. Net sales increased 6 percent.
The Company's construction materials and waste management operations lost $7.1
million, $3.4 million better than last year. The improvement was due to an 8
percent increase in net sales primarily due to acquisitions in the U.S. and
lower expenses related to the implementation of a new financial system.
Canadian operations lost $11.7 million, $0.1 million better than 1995.
Ready-mixed concrete and aggregate volumes were 4 percent and 9 percent higher,
respectively; however, net sales were 3 percent lower reflecting an unfavorable
product and geographical mix. U.S. operations earned $4.6 million compared to
$1.3 million in 1995. Net sales increased 34 percent mostly due to ready-mixed
concrete acquisitions and higher ready-mixed concrete prices. Earnings
improved in the Company's midwestern markets which were hampered in 1995 by
adverse weather conditions (flooding). Ready-mixed concrete shipments were 22
percent higher while aggregate shipments declined 11 percent, mainly due to the
shutdown and 1996 divestment of a sand and gravel operation.
Other expense, net was $4.7 million compared to income of $2.6 million in 1995.
The change resulted mostly from lower divestment gains.
TWELVE MONTHS ENDED JUNE 30, 1996
The Company reported net income of $127.0 million compared to $112.0 million
for the same period ended June 30, 1995. Net sales declined 1 percent.
Canadian net sales were 4 percent lower mostly due to a slowdown of
construction activity in Ontario, Quebec and British Columbia. Net sales in
the U.S. increased 1 percent. The average cement net selling price increased 5
percent in both the U.S. and Canada (excluding exchange rate fluctuations).
Cement sales volumes were flat in the U.S. but declined 9 percent in Canada.
Ready-mixed concrete and aggregate volumes declined 6 percent and 1 percent,
respectively, in Canada. In the U.S., ready-mixed concrete volumes were
unchanged but aggregate volumes dropped 26 percent due to divestments. Selling
and administrative expenses were $12.3 million lower as the result of the
Company's staff reductions related to restructuring and from divestments. Net
interest expense declined $6.8 million due to lower average debt and higher
average cash invested at higher interest rates. Other expense, net was $3.8
million as compared to income of $6.3 million in 1995. The change resulted
primarily from lower gains on the sale of non-strategic assets.
LIQUIDITY AND CAPITAL RESOURCES
Net cash consumed from operating activities was lower during the first six
months of 1996 compared with the same period in 1995 mainly due to a decrease
in working capital requirements. The higher increase in accounts receivable
coupled with lower increases in current liabilities were offset by smaller
increases in inventories which compared to 1995. Net cash used for investing
activities in the first six months of 1996 was $13.3 million higher than 1995.
The decrease in acquisitions was more than offset by lower proceeds from
divestments and short-term
-11-
<PAGE> 12
investment maturities. The 1995 divestment proceeds resulted mainly from the
sale of the Company's interest in a Texas aggregate operation. Net cash
consumed by financing activities in 1996 decreased by $4.6 million from 1995
due primarily to less debt reduction in 1996. The equity issuances during both
periods were primarily attributable to the exercise of stock options.
For the twelve month period ended June 30, 1996, net cash provided from
operating activities increased over the same period in 1995 primarily as a
result of higher net income partially offset by an increase in working capital
requirements. Net cash of $160.9 million was used for investing activities
during the twelve-month period ended June 30, 1996 compared to net cash of
$39.0 million provided during the same period in 1995. The change resulted
mainly from proceeds received upon the 1995 divestment of non-strategic assets
and short-term investments in 1996. Net cash consumed by financing activities
for the twelve-month period ended June 30, 1996 was $107.6 million lower than
the same period in 1995 due to lower debt reduction. The debt reduction in
1995 resulted mostly from the proceeds of divested non-strategic assets.
Capital investments are not expected to exceed $300 million in 1996. On August
6, 1996, the Company announced it had reached an agreement to acquire G-P
Gypsum Corp.'s ( a subsidiary of Georgia Pacific Corporation) gypsum wallboard
manufacturing plants in Buchanan, New York and Wilmington, Delaware. The
acquisition of the two facilities is scheduled for completion in early
September. At June 30, 1996, the Company had no material capital commitments
and had $150.0 million of committed bank lines of credit of which none had been
drawn.
-12-
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and LCI have settled all of their claims with all of the insurance
companies in the Coverage Suit except for Hartford Casualty Insurance Company
("Hartford"). For a description of the Coverage Suit, see the Company's annual
report on Form 10-K for the year ended December 31, 1995. On March 20, 1996,
the Company and LCI filed an appeal of certain issues to the Court of Appeals
for the Fourth Circuit. On April 15, 1996, Hartford also filed an appeal.
Attorneys and principals of both Hartford and the Company met with conference
attorneys for the Fourth Circuit Court of Appeals pursuant to a Pre-Argument
Conference Notice in an attempt to settle this litigation. Settlement efforts
were unsuccessful. It is expected that the Fourth Circuit will hear the appeal
sometime during the fourth quarter of 1996 and render a decision in the first
half of 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Page
Exhibit 11 - Statement regarding computation of net income per
common equity share. 15
(b) Reports on Form 8-K
The Company filed a form 8-K dated August 6, 1996 to report the
appointment of a new President and Chief Executive Officer effective
October 1, 1996 and an agreement to acquire G-P Gypsum Corp.'s (a
subsidiary of Georgia Pacific Corporation) wallboard manufacturing
plants in Buchanan, New York and Wilmington, Delaware.
-13-
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LAFARGE CORPORATION
Date: August 14, 1996 By:
------------------------- ----------------------------------
LARRY J. WAISANEN
Senior Vice President
and Chief Financial Officer
-14-
<PAGE> 1
Exhibit 11
Page 1 of 2
LAFARGE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON EQUITY SHARE
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
-----------------------------------------------------------------------------------
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
PRIMARY CALCULATION
-------------------
Net income $ 43,265 $ 49,718 $ 5,070 $ 7,665
=============== =============== =============== ===============
Weighted average number of common equity
shares outstanding 69,650 68,498 69,488 68,375
Net effect of dilutive stock options based on
the treasury method 440 380 360 292
--------------- --------------- --------------- ---------------
Weighted average number of common equity
shares and share equivalents outstanding 70,090 68,878 69,848 68,667
=============== =============== =============== ===============
Primary net income per common equity
share $ .62 $ .72 $ .07 $ .11
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED JUNE 30
------------------------------------------
1996 1995
------------------ -------------------
<S> <C> <C>
PRIMARY CALCULATION
-------------------
Net income $ 127,018 $ 112,031
================== ===================
Weighted average number of common equity
shares outstanding 69,221 68,169
Net effect of dilutive stock options based on
the treasury method 355 314
------------------ -------------------
Weighted average number of common equity
shares and share equivalents outstanding 69,576 68,483
================== ===================
Primary net income per common equity
share $ 1.83 $ 1.64
================== ===================
</TABLE>
-15-
<PAGE> 2
Exhibit 11
Page 2 of 2
LAFARGE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON EQUITY SHARE
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
----------------------------------------------------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FULLY DILUTED CALCULATION
-------------------------
Net income $ 43,265 $ 49,718 $ 5,070 $ 7,665
Add after tax interest expense applicable to 7%
Convertible Subordinated Debentures 1,110 1,750 2,219 3,500
------------- ------------- ------------- -------------
Net income assuming full dilution $ 44,375 $ 51,468 $ 7,289 $ 11,165
============= ============= ============= =============
Weighted average number of common equity
shares outstanding 69,650 68,498 69,488 68,375
Add additional shares assuming conversion of 7%
Convertible Subordinated Debentures 4,520 4,520 4,520 4,520
Net effect of dilutive stock options based on
the treasury stock method 440 380 401 316
Weighted average number of common equity
shares assuming full conversion of all potentially
dilutive securities 74,610 73,398 74,409 73,211
============= ============= ============= =============
Fully diluted net income per common equity share $ .59 $ .70 $ .10 (a) $ .15 (a)
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED JUNE 30
-------------------------------------------
1996 1995
----------------- -------------------
<S> <C> <C>
FULLY DILUTED CALCULATION
-------------------------
Net income $ 127,018 $ 112,031
Add after tax interest expense applicable to 7%
Convertible Subordinated Debentures 4,439 7,000
----------------- -------------------
Net income assuming full dilution $ 131,457 $ 119,031
================= ===================
Weighted average number of common equity
shares outstanding 69,221 68,169
Add additional shares assuming conversion of 7%
Convertible Subordinated Debentures 4,520 4,520
Net effect of dilutive stock options based on
the treasury stock method 409 314
----------------- -------------------
Weighted average number of common equity
shares assuming full conversion of all potentially
dilutive securities 74,150 73,003
================= ===================
Fully diluted net income per common equity share $ 1.77 $ 1.63
================= ===================
</TABLE>
(a) This calculation is submitted in accordance with Regulation S-K item
601(b) (11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an anti-dilutive result.
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 67,501
<SECURITIES> 50,603
<RECEIVABLES> 321,672
<ALLOWANCES> 0
<INVENTORY> 218,345
<CURRENT-ASSETS> 695,414
<PP&E> 1,838,855
<DEPRECIATION> (1,007,658)
<TOTAL-ASSETS> 1,718,784
<CURRENT-LIABILITIES> 272,641
<BONDS> 263,282
0
0
<COMMON> 722,873
<OTHER-SE> 260,103
<TOTAL-LIABILITY-AND-EQUITY> 1,718,784
<SALES> 624,660
<TOTAL-REVENUES> 624,660
<CGS> 530,888
<TOTAL-COSTS> 530,888
<OTHER-EXPENSES> 4,696
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,806
<INCOME-PRETAX> 7,821
<INCOME-TAX> (2,751)
<INCOME-CONTINUING> 5,070
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,070
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
