<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 SEPTEMBER 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
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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 October 31, 1996
------------------------------------------ ---------------------
<S> <C>
Common Stock of Lafarge Corporation
($1 par value) 62,051,323
Exchangeable Preference Shares of
Lafarge Canada Inc.
(no par value) 8,075,538
----------
Total Common Equity Interests 70,126,861
===========
</TABLE>
Number of pages contained in this report 16
--
Total sequentially numbered pages 16
--
Exhibit index on page 14
--
1
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LAFARGE CORPORATION AND SUBSIDIARIES
FORM 10-Q - FOR THE QUARTER ENDED SEPTEMBER 30, 1996
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
a) Condensed Consolidated Statements 3
of Income - Three-Month and Nine-
Month Periods Ended September 30,
1996 and 1995
b) Condensed Consolidated Balance Sheets - 4
September 30, 1996, September 30, 1995,
and December 31, 1995
c) Condensed Consolidated Statements of 5
Cash Flows - Nine-Month Period Ended
September 30, 1996 and 1995
d) Condensed Consolidated Geographic Information - 6
Three-Month and Nine-Month Periods Ended
September 30, 1996 and 1995
e) Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial 9
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 5. Other Information 13
Item 6 (a). Exhibits 14
Item 6 (b). Reports on Form 8-K 14
SIGNATURE 15
</TABLE>
2
<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 ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------ ------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES $ 576,264 $ 510,459 $1,200,924 $1,103,268
---------- ---------- ---------- ----------
COST AND EXPENSES
Cost of goods sold 394,722 364,227 925,610 870,262
Selling and administrative 38,324 35,770 112,773 107,666
Interest expense 5,905 6,778 17,977 20,519
Interest income (1,831) (1,879) (7,097) (7,192)
Other expense (income), net 472 (275) 5,168 (2,848)
---------- ---------- ---------- ----------
Total costs and expenses 437,592 404,621 1,054,431 988,407
---------- ---------- ---------- ----------
Pre-tax income 138,672 105,838 146,493 114,861
Income tax expense (54,051) (19,963) (56,802) (21,321)
---------- ---------- ---------- ----------
NET INCOME $ 84,621 $ 85,875 $ 89,691 $ 93,540
========== ========== ========== ==========
NET INCOME PER COMMON
EQUITY SHARE-PRIMARY $ 1.21 $ 1.24 $ 1.28 $ 1.36
========== ========== ========== ==========
NET INCOME PER COMMON
EQUITY SHARE-ASSUMING
FULL DILUTION $ 1.15 $ 1.19 $ 1.25 $ 1.35
========== ========== ========== ==========
DIVIDENDS PER COMMON EQUITY SHARE $ .100 $ .100 $ .300 $ .275
========== ========== ========== ==========
Average number of common equity
shares outstanding 70,219 69,254 69,969 68,864
========== ========== ========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 4
LAFARGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30 SEPTEMBER 30 DECEMBER 31
1996 1995 1995
------------ ------------ -----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 111,186 $ 123,360 $ 136,435
Short-term investments 18,684 4,000 84,516
Receivables, net 408,645 368,737 256,262
Inventories 197,121 202,193 210,076
Other current assets 35,420 39,016 31,214
---------- ---------- ----------
Total current assets 771,056 737,306 718,503
Property, plant and equipment,
(less accumulated depreciation and
depletion of $1,015,488, $984,731 and
$983,518) 885,710 800,914 797,017
Excess of cost over net assets
of businesses acquired, net 32,996 20,123 21,302
Other assets 179,828 172,140 177,031
---------- ---------- ----------
TOTAL ASSETS $1,869,590 $1,730,483 $1,713,853
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 247,635 $ 248,385 $ 222,458
Income taxes payable 49,655 43,431 31,729
Current portion of long-term debt 44,063 8,632 15,741
---------- ---------- ----------
Total current liabilities 341,353 300,448 269,928
Long-term debt 263,106 278,832 268,636
Deferred income tax 43,891 44,102 43,314
Other postretirement benefits 124,811 123,829 123,260
Other long-term liabilities 29,351 24,402 27,737
---------- ---------- ----------
Total liabilities 802,512 771,613 732,875
---------- ---------- ----------
Common equity interests
Common shares 62,052 60,509 60,735
Exchangeable shares 55,754 58,159 58,311
Additional paid-in-capital 610,523 589,435 593,310
Retained earnings 397,343 299,506 328,623
Foreign currency translation adjustments (58,594) (48,739) (60,001)
---------- ---------- ----------
Total shareholders' equity 1,067,078 958,870 980,978
---------- ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,869,590 $1,730,483 $1,713,853
========== ========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 5
LAFARGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
---------------------
1996 1995
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net income $ 89,691 $ 93,540
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation, depletion and amortization 74,989 71,678
Provision for doubtful accounts 1,681 2,099
Gain on sale of assets (3,874) (12,753)
Other postretirement benefits 1,295 2,569
Other non-cash charges and credits, net (6,250) (35,205)
Changes in working capital (107,850) (132,918)
-------- --------
Net cash provided (consumed) by operations 49,682 (10,990)
-------- --------
CASH FLOWS FROM INVESTING
Capital expenditures (101,251) (94,363)
Acquisitions (80,726) (24,078)
Short-term investments 65,832 46,500
Proceeds from property, plant and
equipment dispositions 27,544 27,025
Other (3,226) 3,584
-------- --------
Net cash used for investing (91,827) (41,332)
-------- --------
CASH FLOWS FROM FINANCING
Net increase (decrease)in long-term
borrowings 21,329 (21,074)
Issuance of equity securities 4,070 2,995
Dividends, net of reinvestments (9,068) (7,387)
-------- --------
Net cash provided (consumed) by financing 16,331 (25,466)
-------- --------
Effect of exchange rate changes 565 8,091
-------- --------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (25,249) (69,697)
CASH AND CASH EQUIVALENTS AT
THE BEGINNING OF THE PERIOD 136,435 193,057
-------- --------
CASH AND CASH EQUIVALENTS AT
THE END OF THE PERIOD $ 111,186 $ 123,360
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE> 6
LAFARGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED GEOGRAPHIC INFORMATION
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------ ------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES
Canada $ 263,055 $ 244,574 $ 507,716 $ 497,933
United States 313,209 265,885 693,208 605,335
---------- ---------- ---------- ----------
TOTAL NET SALES $ 576,264 $ 510,459 $1,200,924 $1,103,268
========== ========== ========== ==========
INCOME FROM OPERATIONS (See Note 6)
Canada $ 71,354 $ 54,837 $ 64,099 $ 54,269
United States 71,392 55,900 93,274 73,919
---------- ---------- ---------- ----------
TOTAL INCOME FROM
OPERATIONS 142,746 110,737 157,373 128,188
Interest expense, net (4,074) (4,899) (10,880) (13,327)
---------- ---------- ---------- ----------
PRE-TAX INCOME $ 138,672 $ 105,838 $ 146,493 $ 114,861
========== ========== ========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
6
<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, gypsum 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
September 30, 1996 and 1995, and at December 31, 1995, inventories
consisted of the following (in thousands):
<TABLE>
<CAPTION>
September 30 September 30 December 31
1996 1995 1995
--------------- -------------- ---------------
<S> <C> <C> <C>
Finished products $ 89,665 $ 96,677 $ 97,950
Work in process 16,018 14,397 16,959
Raw materials and fuel 46,996 49,351 50,030
Maintenance and operating
supplies 44,442 41,768 45,137
-------- -------- --------
Total inventories $197,121 $202,193 $210,076
======== ======== ========
</TABLE>
7
<PAGE> 8
5. Cash paid during the period for interest and taxes is as follows (in
thousands):
<TABLE>
<CAPTION>
Nine Months
Ended September 30
------------------
1996 1995
------------ -------------
<S> <C> <C>
Interest $ 8,177 $ 8,253
Income taxes (net of refunds) 45,043 48,066
</TABLE>
6. 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. During the third quarter of 1996, the Company recorded a
U.S. $13.7 million adjustment for the year 1995 based on the above
aforementioned agreement with Revenue Canada Taxation. The impact of
these adjustments were immaterial to consolidated net income. The
1996 and 1995 amounts shown as income from operations for Canada and
the United States in the condensed consolidated geographic information
exclude the above adjustments.
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 November 12, 1996, the Company called for redemption of its
outstanding 7% Convertible Subordinated Debentures dated July 1, 1988.
All of the $100 million debentures issued are currently outstanding.
The redemption price will be 101.4 percent of the principal amount of
each $1,000 debenture. The redemption is expected to occur on
December 12, 1996 and will result in an after-tax charge to fourth
quarter income of approximately $1.3 million.
10. In the opinion of management, the accompanying condensed consolidated
financial statements reflect all adjustments (which included only
normal recurring adjustments except as discussed above) 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. During the third quarter of
1996, the Company recorded a U.S. $13.7 million adjustment for the year 1995
based on the above aforementioned agreement with Revenue Canada Taxation. The
impact of these adjustments on consolidated net income was immaterial.
Management's Discussion and Analysis that follows excludes the impact of this
agreement (except for the discussion on income taxes).
THREE MONTHS ENDED SEPTEMBER 30, 1996
The Company reported net income of $84.6 million in 1996 compared with net
income of $85.9 million for the same period in 1995. Net income per common
equity share was $1.21 compared with $1.24. During the third quarter of 1995,
the Company's U.S. tax provision was reduced by $23.3 million, the result of
reversing a valuation allowance that was recorded in 1992 against deferred tax
assets. If the one-time adjustment were excluded, the Company's net income in
the third quarter of 1996 would have been $22.0 million, or $0.31 per share,
better than last year. Operating income increased 29 percent in both Canada
and the U.S. totaling $142.7 million compared with $110.7 million last year.
The improvement was due to higher product shipments and cement prices.
The Company's net sales increased 13 percent to $576.3 million from $510.5
million in 1995. Canadian net sales were $263.1 million, an 8 percent
increase. U.S. net sales increased 18 percent to $313.2 million. The
improvement in both Canada and the U.S. was primarily due to improved product
shipments and cement prices as well as the effect of acquisitions (in late 1995
and early 1996) in the construction materials operations. Cement shipments
increased 9 percent while ready-mixed concrete and aggregate volumes rose 33
percent and 8 percent, respectively. However, ready-mixed concrete and
aggregate volumes from continuing operations increased 20 and 5 percent,
respectively.
Third quarter earnings from the Company's cement operations were $108.2
million, $20.3 million higher than last year. The improvement was due to an
increase in shipments and prices, and lower plant costs in the U.S. Net sales
increased 13 percent reflecting the rise in shipments and prices. Earnings
from the Canadian cement operations were $40.1 million, $14.0 million better
than 1995. Construction activity in eastern and western Canada rebounded,
resulting in a sales volume increase of 13 percent. The average net sales
price in Canada (before exchange rate fluctuation) was up 2
9
<PAGE> 10
percent over a year ago while net sales increased 15 percent. Canadian results
were also favorably impacted by higher prices for exports to the U.S. In the
U.S., operating income was $68.1 million, $6.3 million better than 1995. The
improvement was due to higher shipments and prices and lower plant costs.
Cement shipments in the U.S were up 8 percent despite weak activity in the
Northeast and work disruption on vessels that distribute the Company's products
on the Great Lakes. Net sales increased 12 percent. Plant costs were lower
primarily because of fewer clinker purchases at clinker producing plants.
Earnings from the Company's construction materials and waste management
operations were $44.8 million, $12.3 million better than 1995. Higher
ready-mixed concrete and aggregate volumes, increased ready-mixed concrete
prices in the U.S. and lower operating costs were the primary reasons for the
earnings improvement. Net sales were 14 percent higher reflecting the
increased ready-mixed concrete and aggregate sales volumes including the impact
of acquisitions. In Canada, earnings were $33.9 million, $7.9 million better
than 1995. Due to increased construction activity coupled with the impact of
late 1995 acquisitions in western Canada, ready-mixed concrete and aggregate
sales volumes rose 26 percent and 5 percent, respectively. Net sales were 6
percent higher. Operating costs declined because of specific cost reduction
actions implemented at each region. The U.S. operations earned $10.9 million,
$4.4 million higher than a year ago mainly due to higher earnings in the
Company's Northern Division and the full impact of earnings from the
acquisition of the remaining interest in a ready-mixed concrete and building
materials supplier. Earnings in the Northern Division were enhanced by the
1996 divestment of an unprofitable sand and gravel operation. Net sales
increased 41 percent mostly due to acquisitions and higher ready-mixed concrete
prices. Ready-mixed concrete shipments increased 6 percent as higher shipments
in the New Orleans market due to acquisitions were partially offset by a
decline in St. Louis. Aggregate shipments climbed 4 percent; however, volumes
were negatively impacted by the 1996 divestment of a sand and gravel operation.
Income tax expense was $54.1 million, $34.1 million higher than 1995. In the
U.S., taxes were $22.4 million higher. During the third quarter of 1995, the
Company reduced the valuation allowance previously provided against the
Company's U.S. deferred tax assets by $23.3 million. The decrease in the
valuation allowance was reflected as a reduction in the 1995 third quarter
income tax provision. In Canada, taxes increased $11.7 million mostly due to
higher earnings and the agreement with Revenue Canada Taxation that increased
taxable income in Canada. The latter increase was offset by a corresponding
tax reduction in the U.S. The Company's effective income tax rate was 39.0
percent in 1996 and 18.9 percent in 1995.
NINE MONTHS ENDED SEPTEMBER 30, 1996
The Company reported net income of $89.7 million or $1.28 per common equity
share. This compares with net income of $93.5 million or $1.36 for the first
nine months of 1995. The earnings
10
<PAGE> 11
decrease resulted from the non-recurring tax credit recorded in the third
quarter of last year and lower divestment gains largely offset by higher
product shipments and increased prices.
Net sales were $1,200.9 million, up 9 percent from 1995. Cement shipments were
3.5 percent higher and ready-mixed concrete and aggregate volumes increased 25
and 4 percent, respectively. From continuing operations, ready-mixed concrete
volumes rose 14 percent while aggregate volumes increased slightly (1 percent).
Canadian net sales were $507.7 million, an increase of 2 percent. U.S. net
sales climbed 15 percent to $693.2 million mainly because of higher cement
shipments and prices and 1995 and 1996 acquisitions in construction materials
operations.
Earnings from the Company's cement operations were $152.6 million, $24.9
million better than last year. Results were better due to higher sales volumes
and prices, and lower clinker purchases at clinker producing plants in the U.S.
Net sales and cement shipments were 7 percent and 3.5 percent higher,
respectively. Earnings from Canadian operations were $52.6 million, an
increase of $8.9 million over 1995. The improvement was due to slightly higher
cement shipments (1 percent), a 2 percent increase in the average net selling
price (excluding exchange rate fluctuation) and higher prices for exports to
the U.S. Net sales increased 4 percent. Canadian results were also affected by
lower clinker production in both regions due to high inventory levels. In the
U.S., earnings were $100.0 million, $16.0 million higher than 1995. The
improvement was due to an increase in shipments (4 percent), a 2.5 percent
price increase and lower clinker purchases. Net sales increased 9 percent.
The Company's construction materials and waste management operations earned
$37.7 million, $15.7 million better than 1995. The improvement was achieved by
higher ready-mixed concrete and aggregate sales volumes, an increase in
ready-mixed concrete prices in the U.S., lower operating costs and lower
expenses related to the implementation of a new financial system. Canadian
operations earned $22.3 million, $8.1 million better than 1995. Ready-mixed
concrete and aggregate volumes were 14 percent and 4 percent higher,
respectively. Net sales increased 2 percent and operating costs were lower due
to specific cost reduction actions implemented at each region. U.S.
operations earned $15.4 million compared to $7.8 million in 1995. Net sales
increased 37 percent mostly due to acquisitions and higher ready-mixed
concrete prices. Earnings improved in all markets, particularly the midwest
which was hampered in 1995 by adverse weather conditions (flooding). U.S.
results also were boosted from the acquisition of the remaining interest in a
ready-mixed concrete and building materials supplier. Ready-mixed concrete
shipments were 15 percent higher while aggregate shipments declined 4 percent,
mainly due to the 1996 divestment of a sand and gravel operation.
Other expense, net was $5.2 million compared to income of $2.8 million in 1995.
The change resulted mostly from lower divestment gains.
Income tax expense for the nine months ended September 30, 1996 was $56.8
million which was $35.5 million higher than 1995. Income tax expense was
impacted by the non-recurring adjustment as discussed under "Three Months Ended
September 30, 1996."
11
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided from operating activities for the first nine months of 1996
was $49.7 million compared to net cash consumed of $11.0 million in 1995. The
primary reasons for the change were higher after-tax income from operations
($24.8 million) and a lower seasonal increase in working capital ($25.1
million). Inventories were lower and income taxes payable increased, both
somewhat offset by higher accounts receivable. Net cash used for investing
activities in 1996 was $50.5 million higher than 1995. The increase in
acquisitions was partially offset by higher proceeds from short-term investment
maturities. The increase in acquisitions resulted from the Company's purchase
of two gypsum wallboard manufacturing facilities (See below). Net cash
provided by financing activities was $16.3 million in 1996 compared to net cash
consumed of $25.5 million in 1995. The change resulted from long-term
borrowings in 1996. The increase in long-term borrowings was primarily due to
the issuance of an Industrial Revenue Bond. The debt reduction in 1995
resulted mostly from the proceeds of divested non-strategic assets.
On November 12, 1996, the Company called for redemption of its outstanding 7%
Convertible Subordinated Debentures dated July 1, 1988. All of the $100
million debentures issued are currently outstanding. The redemption price will
be 101.4 percent of the principal amount of each $1,000 debenture. The
redemption is expected to occur on December 12, 1996 and will result in an
after-tax charge to fourth quarter income of approximately $1.3 million.
Capital investments are not expected to exceed $300 million in 1996. In
September 1996, the Company acquired G-P Gypsum Corp.'s (a subsidiary of
Georgia Pacific Corporation) gypsum wallboard manufacturing plants in Buchanan,
New York and Wilmington, Delaware. At September 30, 1996, the Company had no
material capital commitments. Committed bank lines of credit totaled $150
million under which no amounts were outstanding.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In September, 1995, the Company and LCI commenced suit in the U.S. District
Court for the District of Maryland against National Union Fire Insurance
Company of Pittsburgh, PA ("NUF") as a result of its failure to contribute to
the settlement of the Lone Star case. This action seeks declaratory relief
regarding NUF's obligation to pay $4.865 million in indemnity under its
insurance policies, and damages for NUF's breach of contract, violations of the
Texas Insurance Code and common law bad faith. This case was severed from the
Coverage suit. See the Company's annual report on Form 10-K for the year ended
December 31, 1995 for a description of the Coverage suit. The Company, LCI and
NUF filed motions for summary judgment in this action in late May, 1996. On
August 20, 1996, the Court entered its amended final judgment order, granting
the Lafarge motion and granting in part and denying in part NUF's motion and
awarding the Company and LCI a judgment of approximately $2.1 million. All
parties in this litigation have appealed this matter to the U.S. Court of
Appeals for the Fourth Circuit.
ITEM 5. OTHER INFORMATION
The Company called for redemption of all of the outstanding 7% Convertible
Subordinated Debentures dated July 1, 1988. The redemption date is December
12, 1996. Currently, all of the $100,000,000 debentures issued are
outstanding.
The redemption price will be 101.4 percent of the principal amount of each
$1,000 debenture plus interest accrued to the redemption date. To receive
payment, the Debentures must be surrendered to the Company's paying agent, the
Bank of New York, in New York, NY. Interest on the Debentures shall cease to
accrue on December 12, 1996. Until December 12, 1996, debenture holders have
the right to receive Lafarge Corporation Common Shares at a conversion price of
$22.125 per share.
As a result of the redemption, the Company will incur a pre-tax charge of $2.2
million in the fourth quarter ($1.3 million after tax) or $.02 per
fully-diluted share. Approximately $0.8 million of the pre-tax charge is
unamortized debt issuance cost.
13
<PAGE> 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Page
Exhibit 11 - Statement regarding computation of net income
per common equity share. 16
(b) Reports on Form 8-K
The Company filed a report on 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.
14
<PAGE> 15
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: November 14, 1996 By:
------------------------- -----------------------------
LARRY J. WAISANEN
Senior Vice President
and Chief Financial Officer
15
<PAGE> 1
LAFARGE CORPORATION AND SUBSIDIARIES EXHIBIT 11
COMPUTATION OF NET INCOME PER COMMON EQUITY SHARE
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------ -----------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
PRIMARY CALCULATION
- -------------------
Net income $ 84,621 $ 85,875 $ 89,691 $ 93,540
========= ========= ========= =========
Weighted average number
of common equity
shares outstanding 69,954 68,828 69,644 68,527
Net effect of dilutive
stock options based on
the treasury method 265 426 325 337
-------- -------- -------- --------
Weighted average number
of common equity shares
and share equivalents
outstanding 70,219 69,254 69,969 68,864
======== ======== ======== ========
Primary net income
per common equity share $ 1.21 $ 1.24 $ 1.28 $ 1.36
========= ========= ========= =========
FULLY DILUTED CALCULATION
- -------------------------
Net income $ 84,621 $ 85,875 $ 89,691 $ 93,540
Add after tax interest expense
applicable to 7% Convertible
Subordinated Debentures 1,081 1,750 3,243 5,250
-------- -------- -------- --------
Net income assuming
full dilution $ 85,702 $ 87,625 $ 92,934 $ 98,790
========= ========= ========= =========
Weighted average number
of common equity
shares outstanding 69,954 68,828 69,644 68,527
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 265 426 325 337
-------- -------- -------- --------
Weighted average number of
common equity shares
assuming full conversion
of all potentially
dilutive securities 74,739 73,774 74,489 73,384
======== ======== ======== ========
Fully diluted net income
per common equity share $ 1.15 $ 1.19 $ 1.25 $ 1.35
========= ========= ========= =========
</TABLE>
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 111,186
<SECURITIES> 18,684
<RECEIVABLES> 408,645
<ALLOWANCES> 0
<INVENTORY> 197,121
<CURRENT-ASSETS> 771,056
<PP&E> 1,901,198
<DEPRECIATION> (1,015,488)
<TOTAL-ASSETS> 1,869,590
<CURRENT-LIABILITIES> 341,353
<BONDS> 263,106
0
0
<COMMON> 728,329
<OTHER-SE> 338,749
<TOTAL-LIABILITY-AND-EQUITY> 1,869,590
<SALES> 1,200,924
<TOTAL-REVENUES> 1,200,924
<CGS> 925,610
<TOTAL-COSTS> 925,610
<OTHER-EXPENSES> 5,168
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,880
<INCOME-PRETAX> 146,493
<INCOME-TAX> (56,802)
<INCOME-CONTINUING> 89,691
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 89,691
<EPS-PRIMARY> 1.28
<EPS-DILUTED> 1.25
</TABLE>
