Mail Stop 7010
June 8, 2005
via U.S. mail and facsimile
Bernard Kasriel
Chief Executive Officer
Lafarge
61, rue des Belles Feuilles
75116 Paris
France
RE: Lafarge
Form 20-F for the fiscal year ended December 31, 2004
Filed March 25, 2005
File No. 1-15218
Dear Mr. Kasriel:
We have reviewed your filing and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and do not intend to expand our review to
other
portions of your documents. Where indicated, we think you should
revise your document in future filings in response to these
comments.
If you disagree, we will consider your explanation as to why our
comment is inapplicable or a revision is unnecessary. Please be
as
detailed as necessary in your explanation. In some of our
comments,
we may ask you to provide us with information so we may better
understand your disclosure. After reviewing this information, we
may
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Item 5. Operating and Financial Review and Prospects, page 59
1. Your disclosure of fair value assumptions and sensitivity
analyses
in your critical accounting policies on page 61 covers euro1.9
billion
of your euro8.8 billion of goodwill and intangible assets. Please
disclose this information for the remainder of your goodwill and
market share assets.
2. Please revise your table of contractual obligations as follows:
* To increase transparency of cash flow, please include scheduled
interest payments in your table. To the extent that the interest
rates are variable and unknown, you may use your judgment to
determine whether or not to include estimates of future variable
rate
interest payments in the table or in a footnote to the table.
Regardless of whether you decide to include variable rate
estimated
interest payments in the table or in a footnote, you should
provide
appropriate disclosure with respect to your assumptions.
* To the extent that you are in the position of paying cash rather
than receiving cash under your interest rate swaps, please
disclose
estimates of the amounts you will be obligated to pay.
* To the extent you are required or planning to fund your pension
plans in the future, present in this table funding contributions
to
your pension plans for at least the following year and, if known,
for
subsequent years. Include a footnote to the table that (1)
discusses
the basis for inclusion or exclusion of these obligations and (2)
explicitly states the periods for which no amounts have been
included
in the table.
Note 2 - Summary of Significant Accounting Policies, (b)
Principles
of consolidation, page F-8
3. You state on page 11 that "the presence of minority interests
may,
among other things, impede [your] ability to implement
organizational
efficiencies and transfer cash and assets from one subsidiary to
another in order to allocate assets most effectively." You also
state on page 20 that the "presence of minority shareholders often
leads to the implementation of shareholder agreements that contain
board membership or other similar provisions, shareholders`
information rights and control provisions." Please specify for us
the nature of the rights held by these minority interests. In
addition, please explain, in detail, your evaluation of whether
such
rights represent substantive participating veto or approval rights
under US GAAP pursuant to EITF 96-16.
Note 2 - Summary of Significant Accounting Policies, (d)
Translation
of financial statements denominated in foreign currencies, page F-
9
4. If material, please explain how you apply SFAS No. 52 in
accounting for your operations in highly inflationary economies
under
US GAAP. In this regard, please tell us:
* Why you do not consider your subsidiaries in Serbia and
Montenegro
and Zimbabwe as operating in highly inflation economies.
* Whether you remeasure the financial statements of these
operations
to the euro, your reporting currency, as required by paragraph 11
of
SFAS No. 52. If, instead, you remeasure these financial
statements
into the U.S. dollar under U.S. GAAP, as you do under French GAAP,
please tell us your consideration of paragraphs 5 - 8 and the
factors
in Appendix A of SFAS No. 52 in determining that the U.S. dollar
is
the functional currency for these operations.
* Whether, under US GAAP, you remeasure goodwill, intangible
assets,
inventory, and expenses related to intangible assets, inventory,
fixed assets, investments, and operating supplies using historical
rates.
If you do not believe your operations in highly inflation
economies
are material, please explain your quantitative and qualitative
basis
for this conclusion.
Note 2 - Summary of Significant Accounting Policies, (k)
Impairment
of long-lived assets, page F-11
5. Please explain your consideration of SFAS No. 142 in testing
goodwill for impairment under US GAAP. Specifically, please
explain:
* The level at which you test for goodwill impairment. Your
disclosures in note 2(k) suggest that you test at the division
level
or one level below, which includes several activities in several
countries. We assume that your divisions represent your
reportable
segments, and that consequently, under French GAAP, you test for
goodwill impairment at the reportable segment or operating segment
level. However, these levels appear different from the reporting
unit level, as defined by paragraph 30 of SFAS No. 142.
* How you measure your goodwill impairment loss under US GAAP.
Under
French GAAP, you measure your goodwill impairment loss as the
difference between the carrying value of the reporting unit and
its
fair value. This method differs from paragraphs 19 - 21 of SFAS
No.
142, which require that your goodwill impairment loss be measured
as
the difference between the carrying value of goodwill and its
implied
fair value.
Note 26 - Commitments and Contingencies, page F-46
6. In future filings, please disclose the information required by
paragraph 13 of FIN 45 with respect to your guarantees given of
euro208
million as of December 31, 2004. In your operating and financial
review and prospects, please also disclose the information
discussed
in Item 5.E of Form 20-F. If these guarantees are not within the
scope of FIN 45, please disclose, at a minimum, the nature, terms,
and amounts of the guarantees in your financial statements.
Note 27 - Litigation, page F-48
7. Please tell us with a view toward future disclosure the amount
of
reserve for the Tollens Coatings B.V. litigation, if any. In
addition, please tell us the amount or range of reasonably
possible
loss in excess of accrual. SFAS 5 and SAB Topic 5:Y requires
additional disclosure if there is at least a reasonable
possibility
that a loss exceeding amounts already recognized may have been
incurred and the amount of that additional loss would be material
to
a decision to buy or sell your securities. In that case, you must
either (a) disclose the estimated additional loss, or range of
loss,
or (b) state that such an estimate cannot be made.
Note 31 - Reconciliation of French GAAP to U.S. GAAP and
Presentation
of Condensed Financial Statements, page F-78
8. We note from your disclosures within MD&A and Note 5 to your
consolidated financial statements that you have disposed of
certain
consolidated subsidiaries and equity method investees. Please
tell
us the following information regarding these disposals:
* Please provide us with a list of all consolidated
subsidiaries/entities and entities accounted for under the equity
method for US GAAP purposes that were disposed of in each period
presented along with the corresponding gain or loss on disposal
recognized.
* For each consolidated subsidiary disposed of during one of the
periods presented, please tell us whether those consolidated
subsidiaries would be considered a component of Lafarge in
accordance
with SFAS 144.
* Please tell us which line item the gains/losses are captured on
the
consolidated financial statements of income prepared in accordance
with US GAAP.
* Please confirm to us that in future filings, you will provide
the
disclosures required by paragraph 47 of SFAS 144, as applicable,
for
US GAAP purposes.
9. Please tell us whether you have retroactively restated your
earnings per share in prior periods for common stock issued
pursuant
to your dividend reinvestment plan, as disclosed in consolidated
financial statements of changes in shareholders` equity, and your
2003 stock rights issue, as disclosed in note 19(b). See
paragraphs
54 - 56 of SFAS No. 128.
Exhibits
10. In future filings, please disclose as an exhibit or note to
your
financial statements your schedule of valuation and qualifying
accounts for each income statement period, as required by Rule 5-
04
of Regulation S-X. At a minimum, we would expect this schedule to
include your valuation allowances related to accounts receivable
and
deferred tax assets. Your filing should include an opinion from
your
independent accountants covering this schedule.
Exhibits 11.1 and 11.2
11. In future filings, ensure that your certifications required
under
section 302 of the Sarbanes-Oxley Act conform exactly to the
language
per Instruction 12 to the Form 20-F exhibits.
* * * *
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a letter that keys your responses to our comments
and
provides any requested supplemental information. Detailed
response
letters greatly facilitate our review. Please file your response
letter on EDGAR. Please understand that we may have additional
comments after reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
? the company is responsible for the adequacy and accuracy
of
the disclosure in the filing;
? staff comments or changes to disclosure in response to
staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
? the company may not assert staff comments as a defense in
any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Tracey Houser, Staff Accountant, at (202)
551-
3736, or me at (202) 551-3255, if you have questions regarding
comments on the financial statements and related matters.
Sincerely,
Nili Shah
Accounting Branch Chief
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Bernard Kasriel
Lafarge
June 8, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE