ST. LAWRENCE CEMENT GROUP INC.
TSX : ST.A

ST. LAWRENCE CEMENT GROUP INC.

May 01, 2007 08:00 ET

St. Lawrence Cement Group First Quarter Results

MONTREAL, QUEBEC--(CCNMatthews - May 1, 2007) - St. Lawrence Cement Group Inc. (TSX:ST.A)

ANALYSIS OF FIRST QUARTER RESULTS

St. Lawrence Cement Group Inc. (the "Company") reported sales of $151.8 million for the first quarter ended March 31, 2007, compared to $178.1 million for the same period last year, a decrease of 14.8%. The lower sales reflect lower sales volumes of construction materials and lower construction services revenues as a result of unfavourable weather conditions in our markets compared to the first quarter of 2006. The lower sales volumes were partly offset by increased selling prices for construction materials in our Canadian markets and a positive foreign exchange impact of approximately $0.6 million on the translation of U.S. sales into Canadian currency for reporting purposes.

Sales volumes of cementitious materials decreased by approximately 20% compared to the first quarter of last year while volumes for aggregates and ready-mix concrete decreased by 9% and 11%, respectively, compared to the same 2006 period. It should be noted that the sales volumes in the first quarter of 2006 were higher than usual (based on historical first quarter averages), reflecting the exceptionally early start to the construction season as a result of the good weather conditions last year.

Gross profit for the first quarter decreased by $17.1 million to $7.9 million compared to the same period in 2006. This decrease is attributable to lower sales of construction materials, significantly higher costs of cement imported into the U.S., and increases in energy, distribution and maintenance costs which were partly offset by higher selling prices in the Canadian markets as well as research and development tax credits recorded in the period. Price increases for the U.S. markets, originally intended for January 1, 2007, were delayed to April 1, 2007 as a result of market conditions.

Selling and administrative expenses for the first quarter amounted to $22.4 million compared to $23.8 million for the same period last year. The decrease is mainly explained by severance payments included in the 2006 amount as well as lower pension expenses in the quarter compared to the same period last year. Depreciation expenses decreased slightly by $0.2 million compared to the same period last year.

Consequently, the operating loss increased to $27.6 million compared to $12.1 million for the first quarter of 2006.

Other expenses increased by $1.2 million compared to the first quarter of 2006. The 2006 amount included the reversal of certain provisions that were deemed no longer payable by the Company.

Financial expenses for the first quarter amounted to $3.9 million compared to $3.3 million for the same period last year. The increase is mainly due to higher interest rates, which were slightly offset by a $0.5 million reduction as a result of the adoption of new accounting standards relating to financial instruments in 2007, as well as the recognition of a small foreign exchange loss in the period compared to a foreign exchange gain for the same period last year.

Net loss for the quarter was $19.5 million ($0.46 basic loss per share) compared to a net loss of $9.3 million ($0.22 basic loss per share) for the first quarter of 2006. The Company has historically posted a net loss in the first quarter of each fiscal year as a result of the seasonal nature of the construction business in its markets.

OTHER SPECIFIED ITEMS ("OSI")

In the fourth quarter of 2006 the Company recorded an unusual expense of $13.8 million ($9.3 million after-tax or $0.22 basic earnings per share), the estimated amount awarded by the Quebec Court of Appeal to plaintiffs in a class action against the Company. The Company is seeking leave to appeal to the Supreme Court of Canada and had not paid the amount of the award as of May 1, 2007. In the first quarter of 2007, the Company recorded an additional unusual expense of $0.3 million ($0.2 million after-tax) representing accrued interest costs for the quarter relating to the judgement rendered in October 2006 as well as additional legal expenses incurred in relation to this litigation.

NON-GAAP MEASURES

The term "earnings before Other Specified Items or OSI" does not have any standardized meaning under Canadian Generally Accepted Accounting Principles and is therefore unlikely to be comparable to similar measures presented by other companies. The Company presents earnings before "OSI" as a measure of operating performance of the ongoing business without the effects of unusual items or the impact of tax changes. OSI are excluded because they affect the comparability of the financial results between periods and could potentially distort the analysis of trends in business performance.

RESULTS BY SEGMENT

The Ontario division reported sales of $83.5 million for the first quarter compared to $90.0 million for the same period last year. This decrease is explained mainly by lower volumes due to the poor weather conditions. Sales volumes for cementitious materials decreased by 10% compared to the first quarter of last year while aggregates and ready-mix concrete decreased by 4% and 3%, respectively. The unfavourable weather conditions also impacted construction services revenues for the quarter which decreased by 14% compared to the same period last year. As a result, operating loss for the first quarter was $14.1 million compared to an operating loss of $12.3 million for the same period last year.

Quebec and Atlantic division sales decreased by $6.5 million to $26.1 million for the first quarter due to lower sales volumes. Sales volumes for cementitious materials in the quarter decreased by 22% compared to the first quarter of last year while aggregates and ready-mix concrete decreased by 30% and 28%, respectively. The decrease is mainly attributable to seasonal weather conditions in the period compared to an exceptionally strong start to the construction season in 2006. Consequently, the operating loss was $6.6 million compared to an operating loss of $5.7 million for the same period last year.

The U.S. division reported sales of $42.2 million for the first quarter compared to $55.5 million for the same period last year. Sales volumes for cementitious materials decreased by 23% as a result of weather conditions and softer demand for construction materials compared to the first quarter of last year. Operating loss for the quarter amounted to $6.9 million compared to an operating profit of $5.9 million for the same period last year. The increase in the operating loss is due to significantly higher costs of imported cement as well as increased energy, distribution and maintenance costs compared to the same period last year. Price increases for our U.S. markets, originally intended for January 1, 2007, were delayed to April 1, 2007 as a result of market conditions.

LIQUIDITY AND CAPITAL RESOURCES

Operating cash flow (which the Company defines as net cash provided by operations before changes in non-cash balances relating to operations) decreased by $13.7 million compared to last year, in line with the higher net loss. Changes in non-cash balances relating to operations (which includes working capital requirements) increased by $53.7 million compared to an increase of $94.9 million for the same period last year. Net cash used for operations was $63.0 million compared to $90.5 million for the same period last year. The improvement is explained mainly by a reduction in accounts receivable and higher accounts payable balances offset by increases in inventory balances. As a result of the seasonal nature of our business, working capital requirements are variable throughout the year. Therefore, year-over-year comparisons of statements of cash flows and balance sheet items such as accounts receivable, inventories and accounts payable and accrued liabilities are generally more informative than with the previous quarter or year-end.

The Company ended the first quarter in a comfortable financial position with a ratio of long-term debt on total capitalization (which is defined as total long-term debt divided by the total of shareholders' equity and long-term future income taxes payable) of 24:76 compared to 27:73 at the end of the first quarter of 2006. Total long-term debt, including the current portion payable, as of March 31, 2007 amounted to $248.6 million compared to $270.3 million for the same 2006 period. The decrease is mainly related to lower working capital requirements compared to last year as well as the favourable currency translation of U.S. denominated debt on the balance sheet offset by increases in capital expenditures. As at March 31, 2007, the Company held cash and cash equivalents of $0.4 million compared to $1.2 million at March 31, 2006.

DIVIDENDS

A quarterly dividend of $0.14 per share ($0.14 last year) was paid on February 1, 2007 to shareholders of record on January 15, 2007. In addition, a quarterly dividend of $0.15 per share, reflecting the 7% increase announced earlier this year, has been declared for payment on May 1, 2007 to shareholders of record on April 15, 2007.

HOLCIM PROPOSAL TO ACQUIRE MINORITY SHAREHOLDERS' INTERESTS IN THE COMPANY

On February 26, 2007, the Holcim Group ("Holcim") announced that it intends to make an offer for all outstanding class "A" subordinate voting shares of the Company that Holcim does not already own for $36.50 cash per share and for all of the outstanding class "1" special shares of the Company for $36.50 per share. The Company has not yet received Holcim's formal offer to shareholders.

Holcim currently owns 44% of the Company's class "A" subordinate voting shares and 100% of the Company's class "B" multiple voting shares, representing approximately 79% of the total votes attached to the Company's outstanding shares.

On February 28, 2007, the Company's board of directors approved the creation of a special committee (the "Special Committee") of independent directors to supervise the preparation of a formal independent valuation and to review and make a recommendation with respect to the proposed offer. The mailing of Holcim's offer will be dependent on the timing of the completion of the independent valuation, a summary of which will be included in the offer circular, and the recommendation of the Special Committee.

In its press release, Holcim stated that its formal offer, when made, will be conditional on more than 50% of the class "A" subordinate voting shares held by shareholders of the Company other than Holcim and 66 2/3% of the outstanding class "1" special shares being tendered as well as other customary conditions, including support of the Special Committee and the absence of any material adverse change, adverse litigation, proceeding or legal prohibition in respect of the offer.

OUTLOOK

Heading into the 2007 construction season, we expect cement demand to be approximately 2% lower in all of the Company's markets compared to 2006. Significant weakness in the residential construction sector is expected to be only partially offset by stronger conditions in the non-residential and public infrastructure sectors.

In Canada, the Company's construction services backlog remains strong in Ontario and there will be an improvement in Quebec thanks to a major concrete paving contract the Company has been awarded in the Greater Montreal Area. However, construction services typically generate lower margins than sales of construction materials. Lower sales volumes of construction materials are expected to be offset by price increases which took effect on January 1 and higher cement exports to the U.S.

The U.S. division is facing higher costs for energy, distribution and imported cement as well as softer demand. Price increases announced for the beginning of the year did not take effect until April 1 and imported cement costs are projected to increase further following the decision by the government of Venezuela to curtail exports. Although the Company expects to be in a position to meet the needs of its customers through cement purchases from alternative sources, margins will be negatively impacted.

Overall, based on current market conditions, the Company believes that net earnings in 2007 will be modestly below last year's results.

St. Lawrence Cement Group is a leading producer and supplier of products and services for the construction industry, namely cement, concrete, aggregates and construction. The company operates in Canada and on the eastern seaboard of the United States, and employs a total of 3,300 people.




Consolidated Statements of Earnings

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For the three-month
period ended
(millions of Canadian dollars March 31, March 31,
except per share data) 2007 2006
---------------------------------------------------------------------
(unaudited) (unaudited)

Sales 151.8 178.1
Cost of sales 143.9 153.1
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Gross profit 7.9 25.0
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Expenses
Selling and administrative 22.4 23.8
Depreciation and amortization of property,
plant and equipment, intangibles and other
assets 13.1 13.3
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35.5 37.1
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Operating loss (27.6) (12.1)

Other expenses 1.2 -
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Loss before interest, income taxes, unusual
expenses, and other items (28.8) (12.1)

Unusual expenses (Note 4) 0.3 -
Financial expenses 3.9 3.3
Gain on sale of assets (0.8) (0.1)
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Loss before income taxes (32.2) (15.3)

Recovery of income taxes
Current (9.4) (5.4)
Future (3.3) (0.6)
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(12.7) (6.0)
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Net loss (19.5) (9.3)
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Basic and diluted loss per share (0.46) (0.22)
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Weighted average number of outstanding shares
used in computing basic earnings per
share (millions) 42.0 41.9
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Weighted average number of outstanding shares
used in computing diluted earnings per
share (millions) 42.2 42.1
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The accompanying notes are an integral part of the interim
consolidated financial statements.



Consolidated Statements of Retained Earnings

---------------------------------------------------------------------
For the three-month period ended
March 31, March 31,
(millions of Canadian dollars) 2007 2006
---------------------------------------------------------------------
(unaudited) (unaudited)

Retained earnings at beginning of period 564.5 505.2

Adoption of new accounting standard for
Financial Instruments (Note 3) (0.7) -

Net loss for the period (19.5) (9.3)

Dividends (6.3) (5.9)
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Retained earnings at end of period 538.0 490.0
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Consolidated Statements of Comprehensive loss

---------------------------------------------------------------------
For the three-month period ended
March 31, March 31,
(millions of Canadian dollars) 2007 2006
---------------------------------------------------------------------
(unaudited) (unaudited)

Net loss for the period (19.5) (9.3)

Other comprehensive income
Unrealized losses on translating financial
statements of self-sustaining
foreign operations (0.6) (0.8)

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Comprehensive loss for the period (20.1) (10.1)
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The accompanying notes are an integral part of the interim
consolidated financial statements.



Consolidated Balance Sheets

---------------------------------------------------------------------
As at As at As at
March 31, December 31, March 31,
(millions of Canadian dollars) 2007 2006 2006
---------------------------------------------------------------------
(unaudited) (audited)(unaudited)

ASSETS

Current assets
Cash and cash equivalents 0.4 7.7 1.2
Accounts receivable 62.9 141.7 125.7
Inventories 156.3 149.2 141.5
Prepaid expenses and other 22.2 6.9 22.9
Income taxes recoverable 37.7 16.1 32.8
Future income taxes 7.5 7.5 7.5
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287.0 329.1 331.6

Property, plant and equipment 846.2 836.4 735.4
Intangible assets 10.2 10.5 5.4
Goodwill 81.1 81.7 75.2
Investments and other assets 21.6 28.5 27.9
Employee future benefits 5.8 6.0 5.3
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1,251.9 1,292.2 1,180.8
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LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Accounts payable and accrued
liabilities 143.1 233.8 120.7
Dividends payable 6.3 5.9 5.9
Construction advances, net 17.3 16.6 10.3
Current portion of long-term debt 109.4 114.1 7.9
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276.1 370.4 144.8

Employee future benefits 5.3 5.1 3.9
Long-term provision (Note 5) 36.9 36.9 27.3
Long-term debt 139.2 53.9 262.4
Future income taxes 142.6 146.4 150.5
Other long-term liabilities 5.3 7.2 0.1

Shareholders' equity
Share capital 139.9 138.9 137.3
Contributed surplus 3.1 2.8 1.2
Retained earnings 538.0 564.5 490.0
Accumulated other comprehensive
loss (Note 3) (34.5) (33.9) (36.7)
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646.5 672.3 591.8

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1,251.9 1,292.2 1,180.8
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Disclosure of guarantees (Note 7)

The accompanying notes are an integral part of the interim
consolidated financial statements.



Consolidated Statements of Cash Flows

---------------------------------------------------------------------
For the three-month period ended
(millions of Canadian dollars) March 31, 2007 March 31, 2006
---------------------------------------------------------------------
(unaudited) (unaudited)

OPERATIONS
Net loss (19.5) (9.3)
Depreciation and amortization 13.1 13.3
Future income taxes (3.3) (0.6)
Unusual expenses (Note 4) 0.3 -
Gain on sale of assets (0.8) (0.1)
Other 0.9 1.1
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(9.3) 4.4

Net changes in non-cash balances relating
to operations (53.7) (94.9)
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Net cash used for operations (63.0) (90.5)
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INVESTMENTS
Additions to property, plant and
equipment (23.7) (16.7)
Proceeds from sale of assets 1.6 0.1
Decrease in long-term receivables 1.1 0.3
Other 0.4 -
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Net cash used for investments (20.6) (16.3)
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FINANCING
Share capital issued 0.5 0.3
Redemption of shares - (0.4)
Repayment of loans to officers included
in share capital 0.5 0.7
Increase in long-term debt 81.2 102.5
Dividends paid (5.9) (5.9)
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Net cash provided by financing 76.3 97.2
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Net decrease in cash and cash equivalents (7.3) (9.6)
Cash and cash equivalents, beginning of
period 7.7 10.8
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Cash and cash equivalents, end of period 0.4 1.2
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The accompanying notes are an integral part of the interim
consolidated financial statements.



Summary of Quarterly Net (Losses) Earnings
(unaudited)

---------------------------------------------------------------------
(millions of Canadian dollars) 2007 2006 2005
---------------------------------------------------------------------

First quarter (19.5) (9.3) (23.6)
Second quarter 35.0 (15.5)
Third quarter 42.3 42.5
Fourth quarter 15.2 17.2
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Net (losses) earnings to date (19.5) 83.2 20.6
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Segmented Information
(unaudited)

For the three-month period ended March 31
---------------------------------------------------------------------
Quebec & United
(millions of Ontario Atlantic States Total
Canadian dollars) 2007 2006 2007 2006 2007 2006 2007 2006
---------------------------------------------------------------------
Sales to
external
customers 83.5 90.0 26.1 32.6 42.2 55.5 151.8 178.1
Inter-segment
sales 2.4 2.5 0.7 0.4 - - 3.1 2.9
Operating (loss)
profit (14.1) (12.3) (6.6) (5.7) (6.9) 5.9 (27.6) (12.1)



Financial Summary
(unaudited)

---------------------------------------------------------------------
For the three-month For the year
(millions of period ended March 31 ended December 31
Canadian dollars) 2007 2006 2006 2005 2004
---------------------------------------------------------------------

Sales 151.8 178.1 1,383.4 1,317.8 1,278.0

Net (loss) earnings (19.5) (9.3) 83.2 20.6 67.1

Operating cash flow (1) (9.3) 4.4 154.8 128.4 136.8

Per share values
Basic earnings (0.46) (0.22) 1.98 0.49 1.61
Operating cash flow (0.22) 0.11 3.69 3.07 3.29
Dividends 0.15 0.14 0.56 0.56 0.52

Total assets 1,251.9 1,180.8 1,292.2 1,189.8 1,213.3

Total long-term debt 248.6 270.3 168.0 168.2 193.8

Future income taxes
liabilities 142.6 150.5 146.4 151.1 173.4

Shareholders' equity 646.5 591.8 672.3 607.0 610.5

Total long-term debt
on total
capitalization 24:76 27:73 17:83 18:82 20:80

Return on average
equity (%) (3.1) (1.6) 13.0 3.4 11.2

(1) Defined as net cash provided by operations before changes in non-
cash balances relating to operations.



General Information

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As at March 31, 2007
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Stock listings
Toronto Stock Exchange

Trading symbol ST.A

Stock price (last 3 months)
Closing $40.00
High $40.90
Low $28.51

Book value per share $15.38

Outstanding shares
Class A (1 vote) 26,790,654
Class B (3 votes) 15,252,848
Special 568,974

Approximate "Float" (Class A) 15,654,454

Corporate Office
1945 Graham Boulevard
Mount Royal, Quebec H3R 1H1
Telephone : (514) 340-1881
Fax : (514) 342-8154



NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As at March 31, 2007
(tabular amounts are expressed in millions of Canadian dollars except
per share data) (unaudited)


1. Governing statute and nature of operations

St. Lawrence Cement Group Inc., incorporated under the Canadian Business Corporations Act, is a leading cement producer and supplier of products and services for the construction industry. St. Lawrence Cement Group Inc., together with its subsidiaries, is hereinafter referred to as the "Company". The Company operates in Canada, on the eastern seaboard of the United States, and is a member of the Holcim Group.

2. Basis of presentation

The interim consolidated financial statements included in this interim report are unaudited and reflect normal and recurring adjustments which are, in the opinion of the Company, considered necessary for fair presentation. These financial statements have been prepared in conformity with Canadian generally accepted accounting principles. The same accounting policies as described in the Company's latest annual report have been used except for changes disclosed in note 3. These consolidated financial statements, however, do not include all disclosures required under Canadian generally accepted accounting principles and accordingly should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest annual report. The Company's business is seasonal, with slow construction activity generally resulting in net losses during the first quarter of each year. As a result, earnings of any one interim period should not be considered as indicative of results for an entire year.

3. Changes in accounting policies

i) Financial Instruments

The Canadian Institute of Chartered Accountants ("CICA") issued Handbook section 3855, "Financial Instruments - Recognition and Measurement", effective for interim periods of fiscal years beginning on or after October 1, 2006. This section describes the standards for recognizing and measuring financial assets, financial liabilities and non-financial derivatives. All financial assets, except for those classified as held-to-maturity, loans and receivables, and derivative financial instruments must be measured at their fair value. All financial liabilities must be measured at their fair value if they are classified as held for trading purposes, and if not, they are measured at their amortized value. As a result of the adoption of this standard, the Company has classified its cash and cash equivalents as available for sale. The Company has also classified its accounts receivable as loans and receivables, and its accounts payable and long-term debt as other financial liabilities, all of which are measured at amortized cost.

In the normal course of operations the Company records long-term accounts receivable and long-term accounts payable holdbacks on its balance sheet relating to its construction services operations. According to section 3855 these long-term receivables and long-term payables need to be measured at fair value and the adoption of this new standard resulted in the following changes as of January 1, 2007: a $0.7 million decrease in retained earnings, a $1.7 million decrease in investments and other assets, a $0.7 million decrease in other long-term liabilities, and a $0.3 million decrease in future income tax liabilities.

For the three-month period ended March 31, 2007 the adoption of this standard resulted in the following changes: a $0.8 million increase in investments and other assets, a $0.3 million increase in other long-term liabilities, a $0.2 million increase in future income tax liabilities, a $0.5 million decrease in financial expenses, and a $0.2 million increase in future income tax expense. The adoption of this standard had no impact on the Company's cash flows.

ii) Comprehensive Income

The CICA issued Handbook section 1530, "Comprehensive Income", and section 3251, "Equity", effective for interim periods of fiscal years beginning on or after October 1, 2006. Comprehensive income is the change in equity of an enterprise during a period arising from transactions and other events and circumstances from non-owner sources. It includes items that would normally not be included in net earnings such as changes in the foreign currency translation adjustment relating to self-sustaining foreign operations and unrealized gains or losses on available-for-sale financial instruments. These sections describe how to report and disclose comprehensive income and its components. Section 3251, "Equity", replaces section 3250, "Surplus", and describes the changes in how to report and disclose equity and changes in equity as a result of the new requirements of section 1530, "Comprehensive Income". The adoption of this standard resulted in the reclassification of an amount of $33.9 million previously recorded in "Cumulative translation adjustments" to "Accumulated other comprehensive loss". Additionally, any variation in the unrealized gains or losses upon the translation of the financial statements of self-sustaining foreign operations are now included in the consolidated statement of comprehensive loss.

iii) Hedges

The CICA issued Handbook section 3865, "Hedges", effective for interim periods of fiscal years beginning on or after October 1, 2006. This section describes when hedge accounting is appropriate. Hedge accounting ensures that all gains, losses, revenue and expenses from the derivative, and the item it hedges, are recorded in the statement of earnings in the same period. The impact of the adoption of this new section did not have an impact on the consolidated financial statements.

4. Unusual expense

On October 31, 2006, a judgment by the Quebec Court of Appeal on the class action suit initiated by a group of Beauport, Quebec residents was rendered in favour of the plaintiffs, whereby an estimated amount of $13.8 million could be paid. This judgment follows legal proceedings initiated in 1993 with respect to the operations of a former cement plant. Based on an analysis of the initial judgment, the Company launched an appeal and the case was heard in Montreal by the Quebec Court of Appeal in December 2005. As a result of the judgment of the Quebec Court of Appeal, the Company recorded a provision of $13.8 million ($9.3 million after-tax), representing the estimated amount payable, as an unusual expense in the fourth quarter of 2006. In the current period the Company recorded an additional unusual expense of $0.3 million ($0.2 million after-tax) representing accrued interest costs for the quarter relating to the judgement rendered in October 2006 as well as additional legal expenses incurred in relation to this claim. This provision is included in accounts payable and accrued liabilities. The Company is seeking leave to appeal the judgment before the Supreme Court of Canada.

5. Long-term provision

The asset retirement obligation is included in the long-term provision balance in the consolidated balance sheet.

The analysis of the asset retirement obligation for the three months ended March 31, 2007 is as follows:



Balance as at December 31, 2006 $36.9
Accretion expense 0.3
Payment of obligation (0.3)
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Balance as at March 31, 2007 $36.9
--------------------------------------------------
--------------------------------------------------

Included in depreciation and amortization of property, plant and
equipment and other long-term assets, is a charge of $0.1 million for
the amortization of the asset retirement cost.

The following assumptions were used to estimate the fair value of the
obligation as at March 31, 2007:

Total undiscounted amount of the estimated cash flows $ 131.1
Expected timing of payment of the cash flows 2007 to 2114
Risk-free interest rate 3.98 % to 4.13 %

The estimate of the total liability for future asset retirement
obligation is subject to change, based on amendments to laws and
regulations and as new information concerning the Company's
operations becomes available. Future changes, if any, to the
estimated total liability as a result of amended requirements, laws,
regulations and operating assumptions may be significant and would be
recognized prospectively as a change in estimate, when applicable.

6. Stock-based compensation and other stock-based payments

The Company applies the fair value based method to all employee stock
options granted on or after January 1, 2003. Under the fair value
based method, the compensation cost is measured at fair value at the
date of grant and is expensed over the award's vesting period.

Had compensation expense been determined based upon fair values at
the date of grant for awards issued in 2002 under all plans, the
Company's pro forma net earnings and earnings per share for the
three-month period ended March 31 would have been as follows:

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2007 2006
---------------------------------------------------------------------
Reported net loss $(19.5) $(9.3)
---------------------------------------------------------------------
Adjustment using the fair market value method:
Special shares purchase plan (0.1) -
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Adjusted pro forma net loss $(19.6) $(9.3)
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Basic and diluted loss per share $(0.46) $(0.22)
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Adjusted pro forma basic and diluted loss per
share $(0.47) $(0.22)
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The pro forma disclosure omits the effect of awards granted prior
to January 1, 2002.

7. Disclosure of guarantees

The Company has entered into various guarantee agreements that arose
out of transactions related to goods purchased from suppliers and to
borrowings of the Company's customers.

The following table provides the undiscounted maximum amount of
potential future payments for each major group of guarantees:

Standby letters of credit $ 11.3
Guarantees on customer debts 0.6
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Total $ 11.9
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8. Employee future benefits

The Company's total net benefit cost for the three-month period ended March 31, 2007 was $2.7 million ($3.2 million for the three-month period ended March 31, 2006).

9. Comparative figures

Certain 2006 comparative figures have been reclassified to conform with the basis of presentation adopted in the current year.

Contact Information

  • St. Lawrence Cement Group Inc.
    Dean Bergmame
    Senior Vice President and Chief Financial Officer
    514-340-1555 ext. 223
    or
    St. Lawrence Cement Group Inc.
    Aurelie Sabatie
    Corporate Communications
    514-340-1555, ext. 210
    514-342-8154 (FAX)
    stlawrencecement.com