-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qy0tgTetTdIHCVOxlmG3cCcRBiCMiAQfBCueUVkel5zXqYHdgohYJI6Fie9+bNos ZERJSxp32JMqTdss2wS2Rg== 0000950133-96-002539.txt : 19961118 0000950133-96-002539.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950133-96-002539 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LAFARGE CORP CENTRAL INDEX KEY: 0000716783 STANDARD INDUSTRIAL CLASSIFICATION: CEMENT, HYDRAULIC [3241] IRS NUMBER: 581290226 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08584 FILM NUMBER: 96663732 BUSINESS ADDRESS: STREET 1: 11130 SUNRISE VALLEY DR STE 300 CITY: RESTON STATE: VA ZIP: 22091-4329 BUSINESS PHONE: 7032643600 10-Q 1 LAFARGE CORPORATION FORM 10-Q 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 -------------------------------------------------------- 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.
Outstanding as of Class October 31, 1996 ------------------------------------------ --------------------- 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 ===========
Number of pages contained in this report 16 -- Total sequentially numbered pages 16 -- Exhibit index on page 14 -- 1 2 LAFARGE CORPORATION AND SUBSIDIARIES FORM 10-Q - FOR THE QUARTER ENDED SEPTEMBER 30, 1996 INDEX
Page ---- 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
2 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)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------------ ------------------------ 1996 1995 1996 1995 ---------- ---------- ---------- ---------- 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 ========== ========== ========== ==========
See Notes to Condensed Consolidated Financial Statements. 3 4 LAFARGE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED AND IN THOUSANDS)
SEPTEMBER 30 SEPTEMBER 30 DECEMBER 31 1996 1995 1995 ------------ ------------ ----------- 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 ========== ========== ==========
See Notes to Condensed Consolidated Financial Statements. 4 5 LAFARGE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED AND IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30 --------------------- 1996 1995 -------- --------- 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 ========= =========
See Notes to Condensed Consolidated Financial Statements. 5 6 LAFARGE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED GEOGRAPHIC INFORMATION (UNAUDITED AND IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------------ ------------------------ 1996 1995 1996 1995 ---------- ---------- ---------- ---------- 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 ========== ========== ========== ==========
See Notes to Condensed Consolidated Financial Statements. 6 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):
September 30 September 30 December 31 1996 1995 1995 --------------- -------------- --------------- 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 ======== ======== ========
7 8 5. Cash paid during the period for interest and taxes is as follows (in thousands):
Nine Months Ended September 30 ------------------ 1996 1995 ------------ ------------- Interest $ 8,177 $ 8,253 Income taxes (net of refunds) 45,043 48,066
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 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 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 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 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 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 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 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 EX-11 2 COMPUTATION OF NET INCOME PER COMMON EQUITY SHARE 1 LAFARGE CORPORATION AND SUBSIDIARIES EXHIBIT 11 COMPUTATION OF NET INCOME PER COMMON EQUITY SHARE (UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------------ ----------------------- 1996 1995 1996 1995 -------- -------- -------- -------- 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 ========= ========= ========= =========
16 EX-27.1 3 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 111,186 18,684 408,645 0 197,121 771,056 1,901,198 (1,015,488) 1,869,590 341,353 263,106 0 0 728,329 338,749 1,869,590 1,200,924 1,200,924 925,610 925,610 5,168 0 10,880 146,493 (56,802) 89,691 0 0 0 89,691 1.28 1.25
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