SECURITIES AND EXCHANGE COMMISSION

-----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, VZFSHkkhj3mDfbzvs7aamYxPyCBt3LLbcd9475tGqm+bHCoSa0qkI9NtZYc7Q64E 6oxKfoKSGP20iC6HK52Yrw== 0000103973-05-000276.txt : 20051028 0000103973-05-000276.hdr.sgml : 20051028 20051028163245 ACCESSION NUMBER: 0000103973-05-000276 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051028 DATE AS OF CHANGE: 20051028 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VULCAN MATERIALS CO CENTRAL INDEX KEY: 0000103973 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 630366371 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04033 FILM NUMBER: 051163610 BUSINESS ADDRESS: STREET 1: 1200 URBAN CENTER DRIVE CITY: BIRMINGHAM STATE: AL ZIP: 35242 BUSINESS PHONE: 2052983000 MAIL ADDRESS: STREET 1: PO BOX 385014 CITY: BIRMINGHAM STATE: AL ZIP: 35238-5014 10-Q 1 q310q2005.htm VULCAN MATERIALS COMPANY 3Q 2005 10-Q SECURITIES AND EXCHANGE COMMISSION

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 Quarter ended September 30, 2005
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
VULCAN MATERIALS COMPANY (Exact name of registrant as specified in its charter)
New Jersey (State or other jurisdiction of incorporation)		1-4033 (Commission file number)	63-0366371 (I.R.S. Employer Identification No.)
1200 Urban Center Drive Birmingham, Alabama 35242 (Address of principal executive offices) (zip code)
(205) 298-3000 Registrant's telephone number including area code

Indicate by check mark whether the registrant (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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes X No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Class
Common Stock, $1 Par Value

Shares outstanding
at September 30, 2005
101,834,216

VULCAN MATERIALS COMPANY

FORM 10-Q
QUARTER ENDED September 30, 2005

Contents

			Page No.
PART I	FINANCIAL INFORMATION
	Item 1.	Financial Statements Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Earnings Condensed Consolidated Statements of Cash Flows Notes to Condensed Consolidated Financial Statements	3 4 5 6
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
	Item 4.	Controls and Procedures	33
PART II	OTHER INFORMATION
	Item 1.	Legal Proceedings	34
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
	Item 6.	Exhibits	36
SIGNATURES			37

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Vulcan Materials Company and Subsidiary Companies	(Amounts in Thousands)
Consolidated Balance Sheets (Condensed and unaudited)	September 30 2005	December 31 2004	September 30 2004
Assets Cash and cash equivalents Medium-term investments Accounts and notes receivable: Accounts and notes receivable, gross Less: Allowance for doubtful accounts Accounts and notes receivable, net Inventories: Finished products Raw materials Products in process Operating supplies and other Inventories Deferred income taxes Prepaid expenses Assets held for sale Total current assets Investments and long-term receivables Property, plant and equipment: Property, plant and equipment, cost Less: Reserve for depr., depl., & amort. Property, plant and equipment, net Goodwill Other assets Total assets Liabilities and Shareholders' Equity Current maturities of long-term debt Notes payable Trade payables and accruals Other current liabilities Liabilities of assets held for sale Total current liabilities Long-term debt Deferred income taxes Other noncurrent liabilities Minority interest in a consolidated subsidiary Other commitments and contingencies (Notes 13 & 19) Shareholders' equity Total liabilities and shareholders' equity	$ 253,594 192,720 540,709 (4,166) 536,543 158,853 8,727 1,525 16,774 185,879 42,446 20,643 -- 1,231,825 6,919 3,429,186 (1,838,360) 1,590,826 646,833 178,318 $ 3,654,721 $ 242,120 - -- 146,788 158,318 -- 547,226 355,308 300,432 287,870 - -- 2,163,885 $ 3,654,721	$ 271,450 179,210 286,809 (5,196) 281,613 158,350 6,512 937 11,385 177,184 34,433 15,846 458,223 1,417,959 7,226 3,264,193 (1,727,700) 1,536,493 600,181 103,274 $ 3,665,133 $ 3,226 - -- 95,312 139,716 188,435 426,689 604,522 348,613 271,334 - -- 2,013,975 $ 3,665,133	$ 159,578 187,105 466,378 (9,457) 456,921 162,357 7,579 781 35,550 206,267 35,100 24,771 -- 1,069,742 20,371 4,227,205 (2,356,348) 1,870,857 579,817 95,267 $ 3,636,054 $ 1,302 48,000 157,606 169,485 -- 376,393 607,158 341,949 268,341 95,277 1,946,936 $ 3,636,054

See accompanying Notes to Condensed Consolidated Financial Statements

Vulcan Materials Company and Subsidiary Companies
(Amounts in thousands, except per share data)

Consolidated Statements of Earnings	Three Months Ended September 30		Nine Months Ended September 30
(Condensed and unaudited)	2005	2004	2005	2004
Net sales Delivery revenues Total revenues Cost of goods sold Delivery costs Cost of revenues Gross profit Selling, administrative and general expenses Other operating expense (income), net Other income, net Earnings from continuing operations before interest and income taxes Interest income Interest expense Earnings from continuing operations before income taxes Provision for income taxes Earnings from continuing operations Discontinued operations (Note 3): Earnings (loss) from results of discontinued operations Minority interest in earnings of a consolidated subsidiary Gain on disposal of discontinued operations Income tax benefit (provision) Earnings (loss) on discontinued operations, net of tax	$ 749,367 80,649 830,016 522,111 80,649 602,760 227,256 62,387 (37) 10,673 175,579 6,484 9,150 172,913 44,592 128,321 (8,444) - -- -- 2,339 (6,105)	$ 649,309 74,066 723,375 452,096 74,066 526,162 197,213 52,378 (1,190) 1,670 147,695 1,106 8,982 139,819 47,828 91,991 13,805 (2,005) -- (4,829) 6,971	$ 1,934,116 206,590 2,140,706 1,404,252 206,590 1,610,842 529,864 169,511 4,173 12,907 369,087 12,118 28,023 353,182 101,475 251,707 85,484 (11,232) -- (27,845) 46,407	$ 1,665,906 179,775 1,845,681 1,221,415 179,775 1,401,190 444,491 146,977 (6,203) 6,017 309,734 3,654 31,116 282,272 86,016 196,256 11,990 (3,289) -- (3,204) 5,497
Net earnings	$ 122,216	$ 98,962	$ 298,114	$ 201,753
Basic earnings (loss) per share: Earnings from continuing operations Discontinued operations Net earnings per share Diluted earnings (loss) per share: Earnings from continuing operations Discontinued operations Net earnings per share	$ 1.25 (0.06) $ 1.19 $ 1.23 (0.06) $ 1.17	$ 0.90 0.07 $ 0.97 $ 0.89 0.07 $ 0.96	$ 2.46 0.45 $ 2.91 $ 2.41 0.45 $ 2.86	$ 1.92 0.05 $ 1.97 $ 1.90 0.05 $ 1.95
Weighted-average common shares outstanding: Basic Assuming dilution	102,320 104,397	102,502 103,659	102,503 104,376	102,361 103,513
Cash dividends per share of common stock	$ 0.290	$ 0.260	$ 0.870	$ 0.780
Depreciation, depletion, accretion and amortization from continuing operations	$ 55,759	$ 52,361	$ 162,944	$ 156,266
Effective tax rate	25.8%	34.2%	28.7%	30.5%

See accompanying Notes to Condensed Consolidated Financial Statements

Vulcan Materials Company and Subsidiary Companies	(Amounts in Thousands)
Consolidated Statements of Cash Flows	Nine Months Ended September 30
(Condensed and unaudited)	2005	2004
Operating Activities Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation, depletion, accretion and amortization Net gain on disposal of property, plant and equipment Contributions to pension plans Increase in assets before effects of business acquisitions and dispositions Increase in liabilities before effects of business acquisitions and dispositions Other, net Net cash provided by operating activities	$ 298,114 163,392 (4,219) (28,847) (199,154) 35,655 9,197 274,138	$ 201,753 191,047 (11,150) (712) (100,420) 77,856 5,257 363,631
Investing Activities Purchases of property, plant and equipment Proceeds from sale of property, plant and equipment Proceeds from sale of Chemicals business, net of cash transaction fees Payment for partner's interest in consolidated joint venture Payment for business acquisitions, net of acquired cash Purchases of medium-term investments Proceeds from sales and maturities of medium-term investments Change in investments and long-term receivables Net cash used for investing activities	(151,210) 5,069 209,327 (62,701) (93,314) (283,765) 270,255 620 (105,719)	(142,017) 26,665 - -- - -- (29,433) (293,598) 380,387 661 (57,335)
Financing Activities Net payments - commercial paper and bank lines of credit Payment of short-term debt and current maturities Payment of long-term debt Purchases of common stock Dividends paid Proceeds from exercise of stock options Other, net Net cash used for financing activities	- -- (1,291) (8,253) (123,125) (89,046) 35,394 46 (186,275)	19,000 (249,542) (195) - -- (79,684) 14,551 1,383 (294,487)
Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	(17,856) 271,450 $ 253,594	11,809 147,769 $ 159,578

See accompanying Notes to Condensed Consolidated Financial Statements

VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

Our accompanying condensed consolidated financial statements have been prepared in compliance with Form 10-Q instructions and thus do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of our management, the statements reflect all adjustments, including those of a normal recurring nature, necessary to present fairly the results of the reported interim periods. The statements should be read in conjunction with the summary of accounting policies and notes to financial statements included in our latest annual report on Form 10-K.

Due to the 2005 divestiture of our Chemicals business as presented in Note 3, the operating results of the Chemicals business have been presented as discontinued operations in the accompanying Condensed Consolidated Statements of Earnings.

The September 30, 2004 amount for medium-term investments has been reclassified from cash and cash equivalents to present them in accordance with their contractual maturities, which are in excess of three months. This reclassification resulted in the reduction of cash and cash equivalents and an offsetting increase in medium-term investments as of September 30, 2004 in the amount of $187,105,000. This reclassification had no impact on our Condensed Consolidated Statements of Earnings.

2. Stock-based Compensation

We account for our stock-based employee compensation plans (deferred stock units, stock options and performance share awards) under the intrinsic value recognition and measurement principles of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25), and related interpretations. For pro forma and actual reporting, we recognize compensation cost over the nominal (i.e., stated) vesting period. We will continue to follow this nominal vesting period approach for awards granted prior to our January 2006 adoption of Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), "Share-Based Payment" (FAS 123(R)). For awards granted subsequent to our adoption of FAS 123(R), compensation cost will be recognized over the shorter of:

1.
2.

the nominal vesting period, or
the period until the retirement eligible employee's award vests under the terms of
the award.

Under APB 25, we generally recognize no compensation expense in net earnings for stock options, as all options granted have an exercise price equal to the market value of our underlying common stock on the date of grant. However, in 2005 the terms of select stock options for certain employees terminated due to the sale of our Chemicals business were modified resulting in expense recognition in the second and third quarters of 2005 of $977,000 and $4,487,000, respectively. The pro forma effect on net earnings and earnings per share if we had applied the fair value recognition provisions to all stock-based employee compensation for the three and nine months ended September 30 is set forth below (amounts in thousands, except per share data):

Three Months Ended
   September 30

Nine Months Ended
   September 30

    2005

    2004

    2005

    2004

Net earnings, as reported
Add: Total stock-based employee compensation
  expense included in reported net earnings under
  intrinsic value based method for all awards,
  net of related tax effects
Deduct: Total stock-based employee compensation
  expense determined under fair value based
  method for all awards, net of related tax effects

$ 122,216

8,725

   (6,857)

$ 98,962

1,094

   (2,162)

$ 298,114

14,975

(14,308)

$ 201,753

3,286

   (6,491)

Pro forma net earnings

$ 124,084

$ 97,894

$ 298,781

$ 198,548

Earnings per share:
  Basic, as reported
  Basic, pro forma

  Diluted, as reported
  Diluted, pro forma

$1.19
$1.21

$1.17
$1.19

$0.97
$0.96

$0.96
$0.94

$2.91
$2.91

$2.86
$2.87

$1.97
$1.94

$1.95
$1.92

3. Discontinued Operations

On June 7, 2005, we sold substantially all the assets of our Chemicals business, known as Vulcan Chemicals, to Occidental Chemical Corporation through its subsidiary Basic Chemicals Company, LLC (Basic Chemicals). These assets consisted primarily of chloralkali plants in Wichita, Kansas, Geismar, Louisiana and Port Edwards, Wisconsin; and the facilities of our Chloralkali joint venture located in Geismar. The decision to sell the Chemicals business was based on our desire to focus our resources on the Construction Materials business.

In consideration for the sale of the Chemicals business, Basic Chemicals made an initial cash payment of $214 million and assumed certain liabilities relating to the business as described below. Concurrent with the sale transaction, we acquired the 49% interest in the joint venture not owned by us for $62.7 million, and conveyed such interest to Basic Chemicals. The net initial cash proceeds of approximately $151.3 million are subject to adjustments for actual working capital balances at the closing date, transaction costs and income taxes. In addition, Basic Chemicals may be required to make contingent future payments under two separate earn-out agreements. The first earn-out agreement is based on ECU (electrochemical unit) and natural gas prices during the five-year period following the closing and is capped at $150.0 million (ECU earn-out or ECU derivative). This ECU earn-out is accounted for as a derivative instrument; accordingly, it is reported at fair value and changes, if any, to the fair value of the ECU derivative are recorded within continuing operations pursuant to the Securities and Exchange Commission (SEC) Staff Accounting Bulletin Topic 5:Z:5, "Classification and Disclosure of Contingencies Relating to Discontinued Operations." Future estimates of this derivative's fair value could vary materially from period to period. Proceeds under the second earn-out agreement will be determined based primarily on the performance of the hydrochlorocarbon product HCC-240fa (commonly referred to as 5CP) from the closing of the transaction through December 31, 2012. Under this earn-out agreement, cash plant margin for 5CP, as defined in the Asset Purchase Agreement, in excess of an annual threshold amount will be shared equally with the purchaser. The primary determinant of the value for this earn-out will be growth in 5CP sales volume. There can be no assurance as to the future amount received from the earn-outs, if any. The purchaser also assumed certain liabilities relating to the Chemica ls business, including the obligation to monitor and remediate historical and future releases of hazardous materials at or from the three plant facilities. We retained certain other liabilities of the Chemicals business.

The fair value of the consideration received in connection with the sale of the Chemicals business, including anticipated cash flows from the two earn-out agreements, is expected to exceed the net carrying value of the assets and liabilities sold. Since SFAS No. 5, "Accounting for Contingencies," precludes the recognition of a contingent gain until realization is assured beyond a reasonable doubt, no gain was recognized on the Chemicals sale. Accordingly, the value recorded at the June 7, 2005 closing date referable to these two earn-outs was limited to $128.2 million. The combined carrying amount of these earn-outs reflected in accounts and notes receivable and other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets as of September 30, 2005 was $137.5 million. The increase from the June 7, 2005 closing is due to the $9.6 million gain on the ECU earn-out, which is reflected as a component of other income, net in our Condensed Consolidated Statement of Earnings fo r the nine months ended September 30, 2005.

As a result of this transaction, we expect to incur approximately $23.5 million of pretax exit and disposal charges and transaction fees consisting of $7.8 million of SFAS No. 88, "Employers' Accounting for Settlements & Curtailments of Defined Benefit Pension Plans and for Termination Benefits" (FAS 88), expense, $10.2 million for employee severance expenses, primarily referable to outstanding stock-based incentive awards, and $5.5 million for various transaction fees. Approximately $10.8 million of the charges are cash expenditures and the remaining $12.7 million are for non-cash charges. Approximately $11.4 million and $6.1 million of the pretax exit and disposal charges were recognized in results of discontinued operations in the second and third quarters, respectively. Additionally, $4.7 million of transaction fees were applied against the proceeds in calculating the gain/loss on disposal.

We are potentially liable for a cash transaction bonus payable in the future to certain key Chemicals' employees. This transaction bonus will be payable only if cash receipts realized from the two earn-out agreements described above exceed an established minimum threshold. As of September 30, 2005, the calculated transaction bonus would be $0 and, as such, no liability for these contingent payments has been recorded. Based on our evaluation of cash receipts from the earn-outs, the likely range for the contingent payment to certain key Chemicals employees is between $0 and $5 million.

Under the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets" (FAS 144), the financial results of the Chemicals business are classified as discontinued operations in the accompanying Condensed Consolidated Statements of Earnings for all periods presented.

In addition to $6.1 million of pretax exit and disposal charges recognized during the third quarter of 2005, we recognized $2.3 million of other transitional costs in the results of discontinued operations. Net sales, total revenues and pretax earnings (loss) from discontinued operations, excluding minority interest, were as follows (in millions of dollars):

	Three Months Ended September 30		Nine Months Ended September 30
	2005	2004	2005	2004
Net sales Total revenues Pretax earnings (loss)	$ -- $ -- $(8.4)	$154.6 $167.9 $13.8	$339.7 $364.4 $85.5	$438.7 $480.1 $12.0

As of December 31, 2004, assets and liabilities of our discontinued operations were classified as held for sale in the accompanying Condensed Consolidated Balance Sheets under two captions: assets held for sale and liabilities of assets held for sale. In accordance with FAS 144, depreciation expense and amortization expense were suspended on assets held for sale upon the October 2004 board approval of the disposal plan. The major classes of assets and liabilities of our discontinued operations at December 31, 2004 were as follows (in millions of dollars):

  Dec. 31
    2004

Accounts and notes receivable
Inventories
Prepaid expenses
Investments and long-term receivables
Property, plant and equipment, net
Goodwill
Other assets
  Total assets

$   88.5
37.5
0.9
9.4
321.4
0.4
       0.1
$ 458.2

Current liabilities
Asset retirement obligations
All other noncurrent liabilities
Minority interest in a consolidated subsidiary
  Total liabilities

$   61.5
17.5
8.4
   101.0
$ 188.4

4. Earnings Per Share (EPS)

We report two earnings per share numbers, basic and diluted. These are computed by dividing net earnings by the weighted-average common shares outstanding (basic EPS) or weighted-average common shares outstanding assuming dilution (diluted EPS) as set forth below (in thousands of shares):

	Three Months Ended September 30		Nine Months Ended September 30
	2005	2004	2005	2004
Weighted-average common shares outstanding Dilutive effect of: Stock options Other Weighted-average common shares outstanding, assuming dilution	102,320 1,600 477 104,397	102,502 853 304 103,659	102,503 1,420 453 104,376	102,361 859 293 103,513

All dilutive common stock equivalents are reflected in our earnings per share calculations. Antidilutive common stock equivalents are not included in our earnings per share calculations. The number of antidilutive common stock equivalents were as follows (in thousands of shares):

	Three Months Ended September 30		Nine Months Ended September 30
	2005	2004	2005	2004
Antidilutive common stock equivalents	--	7	--	6

5. Income Taxes

Our effective tax rate is based on expected income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate. For interim financial reporting, we estimate the annual tax rate based on projected taxable income for the full year and record a quarterly income tax provision in accordance with the anticipated annual rate. As the year progresses, we refine the estimates of the year's taxable income as new information becomes available, including year-to-date financial results. This continual estimation process often results in a change to our expected effective tax rate for the year. When this occurs, we adjust the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected annual tax rate. Significant judgment is required in determining our effective tax rate and in evaluating our tax positions.

We establish accruals for certain tax contingencies when, despite the belief that our tax return positions are fully supported, we believe that certain positions are likely to be challenged and that our positions may not be fully sustained. The methodology utilized in establishing our tax contingency accrual involves estimating the risk to each exposure item and accruing at the appropriate amount. The tax contingency accruals are adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. Our effective tax rate includes the net impact of tax contingency accruals and subsequent adjustments as considered appropriate by management.

The 2005 third quarter effective tax rate of 25.8% was affected by a favorable settlement of federal refund claims in the third quarter of 2005 of approximately $3.2 million and a reduction in estimated income tax liabilities for prior years of approximately $6.9 million. The third quarter 2005 adjustments resulted in an effective tax rate of 28.7% for the nine months ended September 30, 2005.

The 2004 third quarter tax rate of 34.2% was affected by an increase in the provision for uncertain tax positions during the quarter. The third quarter 2004 adjustment, along with adjustments recorded in prior 2004 quarters, resulted in an effective tax rate of 30.5% for the nine months ended September 30, 2004.

6. Medium-term Investments

Our medium-term investments consist of highly liquid securities with a contractual maturity in excess of three months at the time of purchase. The fair value of these available-for-sale investments by major security type are summarized below (amounts in thousands):

Sept. 30
  2005

Dec. 31
  2004

Sept. 30
  2004

Bonds, notes and other securities:
  Variable rate demand obligations
  Other debt securities
    Total medium-term investments

$ 182,720
   10,000
$ 192,720

$ 179,210
          --
$ 179,210

$ 187,105
          --
$ 187,105

While the contractual maturities for the variable rate demand obligations noted above are generally long term (longer than one year), these securities have certain economic characteristics of current (less than one year) investments because of their rate-setting mechanisms. Therefore, all our medium-term investments are classified as current assets based on our investing practices and intent. The contractual maturities of the available-for-sale securities as of September 30, 2005 are summarized below (amounts in thousands):

  Sept. 30
    2005

Less than one year
Due in 1-2 years
Due in 2-5 years
Due after 5 years
  Total available-for-sale securities

$   10,100
- --
- --
  182,620
$ 192,720

Proceeds, gross realized gains and gross realized losses from sales and maturities of medium-term investments are summarized below (amounts in thousands):

	Three Months Ended September 30		Nine Months Ended September 30
	2005	2004	2005	2004
Proceeds Gross realized gains Gross realized losses	$ 136,665 insignificant insignificant	$ 58,560 insignificant insignificant	$ 270,255 insignificant insignificant	$ 380,387 insignificant insignificant

There were no transfers from the available-for-sale category to the trading category for the nine months ended September 30, 2005 and 2004. There were no gross unrealized holding gains or losses related to medium-term investments for the nine months ended September 30, 2005 and 2004.

7. Derivative Instruments

In connection with the sale of our Chemicals business, we entered into an earn-out agreement that may require the purchaser, Basic Chemicals, to make contingent future payments based on ECU (electrochemical unit) and natural gas prices during the five-year period following the sale, not to exceed $150 million. We have not designated the ECU earn-out as a hedging instrument and accordingly, gains and losses resulting from changes in the fair value, if any, are recognized in current period operating results. Pursuant to Staff Accounting Bulletin Topic 5:Z:5, changes in fair value are recognized in continuing operations. During the three and nine month periods ended September 30, 2005, we recorded gains of $9,620,000 and $9,350,000, respectively, which are reflected in other income, net of other charges, in our Condensed Consolidated Statements of Earnings.

In November 2003, we entered into an interest rate swap agreement for a stated (notional) amount of $50,000,000 under which we pay the six-month London Interbank Offered Rate (LIBOR) plus a fixed spread and receive a fixed rate of interest of 6.40% from the counterparty to the agreement. We have designated this instrument as an effective fair value hedge in accordance with FAS 133. Accordingly, the mark-to-market value of the hedge, which will terminate February 1, 2006, has been reflected in our Condensed Consolidated Balance Sheets with an adjustment to record the underlying hedged debt at its fair value. As of September 30, 2005, the estimated fair value of our interest rate swap agreement reflected projected payments by us of $409,000.

Natural gas used in our discontinued operations - Chemicals business - was subject to price volatility caused by supply conditions, political and economic variables, and other unpredictable factors. We used over-the-counter commodity swap and option contracts to manage the volatility related to future natural gas purchases. We designated these instruments as effective cash flow hedges in accordance with SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (FAS 133). There were no open contracts as of September 30, 2005. As of September 30, 2004, our consolidated financial statements reflected the fair value of the open contracts as a favorable component of accumulated other comprehensive income of $2,307,000 less income tax expense of $867,000. As of December 31, 2004, our consolidated financial statements reflected the fair value of the open contracts as an unfavorable component of accumulated other comprehensive income of $99,000, offset by an income tax benefit of $37,000.

There was no impact to earnings due to hedge ineffectiveness during the periods ended September 30, 2005 and 2004.

8. Comprehensive Income

Comprehensive income includes charges and credits to equity from nonowner sources.

Comprehensive income comprises two subsets: net earnings and other comprehensive income (loss). Historically, other comprehensive income (loss) includes fair value adjustments to cash flow hedges pertaining to our commodity swap and option contracts to purchase natural gas and minimum pension liability adjustments. Total comprehensive income is comprised of the following (in thousands of dollars):

Three Months Ended
     September 30

Nine Months Ended
     September 30

    2005

    2004

    2005

    2004

Net earnings
Other comprehensive income:
  Fair value adjustments to cash
    flow hedges
Total comprehensive income

$ 122,216

          --
$ 122,216

$ 98,962

     (124)
$ 98,838

$ 298,114

         62
$ 298,176

$ 201,753

   (1,209)
$ 200,544

9. Shareholders' Equity

Through September 30, 2005, we had purchased a total of 44,520,419 shares of our common stock at a cost of $731,548,000 pursuant to a common stock purchase plan initially authorized by the Board of Directors in July 1985 and increased in subsequent years, and pursuant to a tender offer during the period November 5, 1986 through December 4, 1986. As of September 30, 2005, 6,465,550 shares remained under the current purchase authorization.

The number and cost of shares purchased during the periods presented and shares held in treasury at period end are shown below:

Three Months Ended
     September 30

Nine Months Ended
     September 30

    2005

    2004

    2005

    2004

Shares purchased:
  Number
  Total cost (thousands)
  Average cost

795,800
$54,120
$68.01

- --
$ --
$ --

2,008,438
$123,125
$61.30

- --
$ --
$ --

    Sept. 30
       2005

    Dec. 31
       2004

    Sept. 30
       2004

Shares in treasury at period end:
  Number
  Average cost

37,870,756
$ 17.96

37,045,535
$ 15.32

37,297,079
$ 15.28

10. Benefit Plans

The following tables set forth the components of net periodic benefit cost (in thousands of dollars):

PENSION BENEFITS	Three Months Ended September 30		Nine Months Ended September 30
	2005	2004	2005	2004
Components of Net Periodic Benefit Cost: Service cost Interest cost Expected return on plan assets Amortization of prior service cost Recognized actuarial loss (gain) Net periodic benefit cost	$ 4,888 7,384 (10,782) 521 351 $ 2,362	$ 4,727 7,311 (10,201) 626 (42) $ 2,421	$ 15,482 22,964 (31,421) 1,690 969 $ 9,684	$ 14,183 21,932 (30,604) 1,878 (124) $ 7,265

OTHER POSTRETIREMENT BENEFITS	Three Months Ended September 30		Nine Months Ended September 30
	2005	2004	2005	2004
Components of Net Periodic Benefit Cost: Service cost Interest cost Amortization of prior service cost Recognized actuarial loss Net periodic benefit cost	$ 973 1,167 (37) 202 $ 2,305	$ 1,055 1,367 (45) 245 $ 2,622	$ 3,216 3,994 (130) 1,012 $ 8,092	$ 3,315 4,309 (148) 834 $ 8,310

As a result of the June 7, 2005 sale of our Chemicals business, as presented in Note 3, in the second quarter, we recognized an acceleration of a portion of the current unrecognized prior service cost of $1,533,000 (curtailment loss) for the pension plans and a benefit of $176,000 (curtailment gain) for the postretirement medical and life insurance plans in accordance with FAS 88. In addition, we granted special termination benefits in relation to the divestiture, including immediate vesting of pension benefits and an extension of eligibility for enhanced early retirement pension benefits and postretirement medical benefits. These benefits have been treated as special termination benefits under FAS 88 and result in one-time, second quarter, non-cash charges of $5,633,000 for the pension plans and $788,000 for the postretirement medical plans.

The sale of the Chemicals business reduces our future pension and postretirement obligations approximately $18.2 million and $19.6 million, respectively. For the full year 2005, the sale reduces pension and other postretirement benefits expense approximately $2.1 million and $1.6 million, respectively.

In August 2005, we contributed $28,082,000, the estimated maximum deductible contribution pursuant to the Internal Revenue Code, to the funded, noncontributory defined benefit pension plans. We expect to make no additional contributions to these qualified pension plans in 2005. We expect to contribute approximately $1.0 million to the unfunded, nonqualified pension plans in 2005. Additionally, we expect to pay approximately $5.0 million to cover our other postretirement benefit plan obligations in 2005. Contributions to the pension plans for the nine months ended September 30 were as follows: 2005 - $28,847,000 and 2004 - $711,917.

11. Long-term Debt

Long-term debt is set forth below (in thousands of dollars):

    Sept. 30
      2005

    Dec. 31
      2004

    Sept. 30
      2004

6.40% 5-year notes issued 2001*
6.00% 10-year notes issued 1999
Private placement notes
Medium-term notes
Tax-exempt bonds
Other notes

$ 239,591
250,000
82,441
23,000
- --
     2,396

$ 239,744
250,000
83,139
23,000
8,200
     3,665

$ 239,975
250,000
83,385
23,000
8,200
     3,900

  Total debt excluding notes payable
Less current maturities of long-term debt

$ 597,428
242,120

$ 607,748
     3,226

$ 608,460
     1,302

Total long-term debt

$ 355,308

$ 604,522

$ 607,158

Estimated fair value of long-term debt

$ 376,011

$ 645,502

$ 655,543

*Includes a (decrease) in valuation for the fair value of interest rate swaps, as follows: September 30, 2005 - ($409,000); December 31, 2004 - ($256,000) and September 30, 2004 - ($25,000).

In May 2005, we called and redeemed $8,200,000 of variable-rate, tax-exempt bond issues maturing in 2009.

The increase in current maturities from December 31, 2004 to September 30, 2005 resulted primarily from the February 2006 scheduled maturity of the $240,000,000, 6.40% five-year notes issued in 2001.

12. Asset Retirement Obligations

SFAS No. 143, "Accounting for Asset Retirement Obligations" (FAS 143) applies to legal obligations associated with the retirement of long-lived assets resulting from the acquisition, construction, development and/or normal use of the underlying assets. A liability is recognized for an asset retirement obligation in the period in which it is incurred at its estimated fair value. The associated asset retirement costs are capitalized as part of the carrying amount of the underlying asset and depreciated over the estimated useful life of the asset. The liability is accreted through charges to operating expenses. If the asset retirement obligation is settled for other than the carrying amount of the liability, we recognize a gain or loss on settlement. FAS 143 operating costs for our continuing operations are reported in cost of goods sold.

A reconciliation of the carrying amount of our asset retirement obligations is as follows (in thousands of dollars):

	Three Months Ended September 30		Nine Months Ended September 30
	2005	2004	2005	2004
Balance at beginning of period Liabilities incurred Liabilities (settled) Accretion expense Revisions up (down) Asset retirement obligations	$ 102,853 998 (3,614) 1,257 5,262 $ 106,756	$ 113,144 7 (3,292) 1,229 409 $ 111,497	$ 90,906 3,456 (8,705) 3,549 17,550 $ 106,756	$ 107,683 40 (5,306) 4,019 5,061 $ 111,497

The information reported above for the three and nine months ended September 30, 2005 excludes discontinued operations (Chemicals business) as its asset retirement obligations were settled with the sale of the business as presented in Note 3. As of December 31, 2004 and prior to the sale, the asset retirement obligations referable to the Chemicals business were classified as liabilities of assets held for sale.

13. Standby Letters of Credit

We provide certain third parties with irrevocable standby letters of credit in the normal course of business operations. Our commercial banks issue standby letters of credit to secure our obligations to pay or perform when required to do so pursuant to the requirements of an underlying agreement or the provision of goods and services. The standby letters of credit listed below are cancelable only at the option of the beneficiaries who are authorized to draw drafts on the issuing bank up to the face amount of the standby letter of credit in accordance with its terms. Since banks consider letters of credit as contingent extensions of credit, we are required to pay a fee until they expire or are cancelled. Substantially all of our standby letters of credit are renewable annually at the option of the beneficiary.

Our standby letters of credit as of September 30, 2005 are summarized in the table below (in thousands of dollars):

   Amount

  Term

   Maturity

Risk management requirement for insurance claims
Payment surety required by utilities
Contractual reclamation/restoration requirements
    Total standby letters of credit

$ 15,652
5,100
  33,979
$ 54,731

One year
One year
One year

Renewable annually
Renewable annually
Renewable annually

14. Business Acquisitions

Year-to-date September 30, 2005, we acquired the assets of the following businesses for cash payments of approximately $93,314,000, including acquisition costs and net of acquired cash:

--

New West Materials Co., LLC - five aggregates facilities and five asphalt plants in Arizona.

--

Long Branch Quarry, LLC - an aggregates facility in Georgia.

--

Critser Companies, Inc. and Northern Indiana Materials Corporation - five aggregates facilities in Indiana.

--

Polk County Stone, LLC - an aggregates facility in Tennessee.

The acquisition costs reported above exclude escrowed funds of $5,800,000 of contingent consideration related to the New West acquisition and $100,000 of contingent consideration related to the Polk County acquisition. Upon resolution of such contingencies, distributions to the seller, if any, will be considered additional acquisition cost.

15. Goodwill

The changes in the carrying amount of goodwill for each reportable segment for the periods presented below are as follows (in thousands of dollars):

		Construction Materials	Chemicals*	Total
Goodwill as of September 30, 2004		$ 579,442	$ 375	$ 579,817
Goodwill of acquired businesses Less goodwill as of December 31, 2004 classified as assets held for sale		20,739 --	-- 375	20,739 375
Goodwill as of December 31, 2004		$ 600,181	$ --	$ 600,181
Goodwill of acquired business ** Purchase price allocation adjustments		48,587 (1,935)	-- --	48,587 (1,935)
Goodwill as of September 30, 2005		$ 646,833	$ --	$ 646,833
* **	Goodwill for the former Chemicals segment is classified as assets held for sale as of December 31, 2004 and all periods thereafter up to the disposition on June 7, 2005, as presented in Note 3. The goodwill of acquired business for 2005 relates to the acquisitions listed in Note 14 above. We are in the preliminary stage of purchase price allocation; therefore, the goodwill amount is subject to change. When finalized, the goodwill from the 2005 acquisitions is expected to be fully deductible for income tax purposes.

16. New Accounting Standards

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an amendment of ARB No. 43, Chapter 4" (FAS 151). FAS 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) and also requires that the allocation of fixed production overhead be based on the normal capacity of the production facilities. FAS 151 is effective for fiscal years beginning after June 15, 2005, and we are required to adopt it effective January 1, 2006. We are currently evaluating the impact of adopting FAS 151; however, we do not expect the adoption of this statement to have a material impact on our results of operations, financial position or liquidity.

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123 (revised 2004), "Share-Based Payment" (FAS 123(R)), which is a revision of SFAS No. 123, "Accounting for Stock-Based Compensation" (FAS 123). FAS 123(R) supersedes Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25), and amends SFAS No. 95, "Statement of Cash Flows." The approach in FAS 123(R) is generally similar to the approach described in FAS 123. However, FAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the earnings statements based on their fair values. Pro forma disclosure will no longer be an alternative. FAS 123(R) is effective as of the first fiscal year beginning after June 15, 2005 for registrants that are not small business issuers; accordingly, we expect to adopt FAS 123(R) on January 1, 2006. FAS 123(R) permits public companies to adopt its requirements using one of two m ethods, as follows:

--

A modified-prospective method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of FAS 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of FAS 123 for all awards granted to employees prior to the effective date of FAS 123(R) that remain unvested on the effective date.

--

A modified-retrospective method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under FAS 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim periods of the year of adoption.

We are currently evaluating the implementation methods. As permitted by FAS 123, we currently account for share-based payments to employees using APB 25's intrinsic value method and, as such, generally recognize no compensation cost for employee stock options. Accordingly, the adoption of FAS 123(R)'s fair value method will have an impact on our Consolidated Statements of Earnings, although it will have no impact on our overall financial position. The impact of adoption of FAS 123(R) cannot be estimated at this time because it will depend on levels of share-based payments granted in the future. However, had we adopted FAS 123(R) in prior periods, the impact would have approximated the impact of FAS 123 as described in the disclosure of pro forma net earnings and earnings per share in Note 2. FAS 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under ex isting rules. This requirement will reduce net operating cash flows and increase net financing cash flows. While we cannot estimate what those amounts will be in the future (because they depend on, among other things, when employees exercise stock options), the amounts of operating cash flows recognized for such excess tax deductions were $13,805,000 and $4,903,000 for the nine months ended September 30, 2005 and September 30, 2004, respectively.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets - an amendment of APB Opinion No. 29" (FAS 153). APB Opinion No. 29, "Accounting for Nonmonetary Transactions" (APB 29) applies the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. FAS 153 amends APB 29, eliminating the exception to fair value accounting for nonmonetary exchanges of similar productive assets, and replaces it with a general exception to fair value accounting for nonmonetary exchanges that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. FAS 153 is effective for nonmonetary asset exchanges occurring after December 31, 2005. We do not expect the adoption of FAS 153 to have a material effect on our results of operations, financial position or liquidity.

In March 2005, the FASB ratified the Emerging Issues Task Force's Issue No. 04-6, "Accounting for Stripping Costs Incurred during Production in the Mining Industry" (EITF 04-6). In the mining industry, the costs of removing overburden and waste materials to access mineral deposits are referred to as "stripping costs." Per EITF 04-6, stripping costs incurred during the production phase should be considered costs of the extracted minerals under a full absorption costing system, inventoried, and recognized in costs of sales in the same period as the revenue from the sale of the inventory. Additionally, capitalization of such costs would be appropriate only to the extent inventory exists at the end of a reporting period. Currently, with only limited exceptions when specific criteria are met, we expense stripping costs as incurred. The guidance in EITF 04-6 is effective for financial statements issued for fiscal years beginning after December 15, 2005, with early adoption permitted. Upon adoption, recognition of the cumulative effect of adopting this guidance will be required. The impact of implementation is not determinable prior to adoption, as it is dependent upon the stripping costs to be incurred during 2005 and the finished product inventory levels as of December 31, 2005. Upon adoption, the cumulative effect of applying this guidance will be recorded in beginning retained earnings. We plan to adopt EITF 04-6 on January 1, 2006 and are presently evaluating the impact of adoption.

In March 2005, the FASB issued Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143" (FIN 47). FIN 47 clarifies that the term "conditional asset retirement obligations" as used in FASB Statement No. 143, "Accounting for Asset Retirement Obligations," refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. An entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated, even if there is uncertainty with regards to the timing and (or) method of settlement. Uncertainty about the conditional outcome of the obligation is incorporated into the measurement of the fair value of the liability, not the recognition decision. FIN 47 is effective for fiscal years ending after December 15, 20 05. We do not expect the adoption of FIN 47 to have a material effect on our results of operations, financial position or liquidity.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3" (FAS 154). FAS 154 changes the method for reporting an accounting change. Under FAS 154, accounting changes must be retrospectively applied to all prior periods for which financial statements are presented, unless the change in accounting principle is due to a new pronouncement that provides other transition guidance or unless application of the retrospective method is impracticable. Under the retrospective method, we will no longer present the cumulative effect of a change in accounting principle in our earnings statements. FAS 154 carries forward APB Opinion No. 20's guidance for reporting corrections of errors in previously issued financial statements and for reporting changes in accounting estimates. FAS 154 is effective for any accounting changes and corrections of errors occurring after December 31, 2005. We do not expect the adoption of FAS 154 to have a material effect on our results of operations, financial position or liquidity.

17. Enterprise Data - Continuing Operations

Our reportable segments are organized around products and services. Due to the sale of our Chemicals business as described in Note 3, we have one reportable segment, Construction Materials, which constitutes continuing operations.

We produce and sell aggregates and related products and services in seven regional divisions. These divisions have been aggregated for financial statement purposes. Customers use aggregates

primarily in the construction and maintenance of highways, streets and other public works and in the construction of housing and commercial, industrial and other nonresidential facilities. The majority of our activities are domestic; thus, assets outside the United States are not material. We sell a relatively small amount of construction aggregates outside the United States. Net sales by product are summarized below (in millions of dollars):

	Three Months Ended September 30		Nine Months Ended September 30
	2005	2004	2005	2004
NET SALES BY PRODUCT Aggregates Asphaltic products and placement Ready-mixed concrete Other Total	$ 536.1 114.2 68.7 30.4 $ 749.4	$ 471.5 95.8 59.2 22.8 $ 649.3	$ 1,404.5 265.3 185.5 78.8 $ 1,934.1	$ 1,209.2 222.7 173.4 60.6 $ 1,665.9

18. Supplemental Cash Flow Information

Supplemental information referable to our Condensed Consolidated Statements of Cash Flows for the nine months ended September 30 is summarized below (in thousands of dollars):

  2005

  2004

Cash payments:
  Interest (exclusive of amount capitalized)
  Income taxes

$ 26,170
173,053

$ 33,045
58,635

Noncash investing and financing activities:
  Amounts referable to business acquisitions:
    Liabilities assumed
  Noncash proceeds from the sale of the Chemicals business:
        Earn-outs (Note 3)
        Working capital adjustments

4,709

128,167
14,213

- --

- --
- --

19. Other Commitments and Contingencies

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2004, we are involved in cases stemming from our perchloroethylene product and involving claims of IBM employees who allege personal injury as a result of workplace exposure at IBM semiconductor manufacturing plants. These cases have been settled and the settlement was approved by the court on October 7, 2005. The amount paid by us in excess of our insurance coverage will not have a material adverse effect on our consolidated financial position, results of operations and cash flows.

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2004, we are involved in an action filed in November 1998 by the City of Modesto in state court in California. This claim arose from allegations of perchloroethylene contamination of municipal water wells in the City of Modesto. The trial in this matter was stayed pending appeal by the plaintiff of a pretrial ruling. The appeal has been exhausted and trial is now scheduled to begin in the first quarter of 2006.

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2004, we have been named as a defendant in multiple lawsuits filed in 2001 and 2002 in state court and federal district court in Louisiana. These lawsuits claim damages for various personal injuries allegedly resulting from releases of chemicals at our former Geismar, Louisiana plant in 2001. Although we have reached a tentative settlement with the plaintiffs in the matter, some of the plaintiffs' attorneys have objected to the proposed settlement. A court-appointed special master is overseeing the settlement process. It is uncertain at this time if the proposed settlement will in fact be consummated.

As of the 10-Q filing date, an estimate of the potential range of losses for these claims, if any, cannot be made. Although the ultimate outcome is uncertain, it is our opinion, based in part on consultation with legal counsel, that the disposition of these described lawsuits, as well as certain other lawsuits, will not have a material adverse affect on our consolidated financial position, results of operations and cash flows.

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations

GENERAL COMMENTS

Seasonality of our Business

Results of any individual quarter are not necessarily indicative of results to be expected for the year due principally to the effect that weather can have on the sales and production volumes of our continuing operations - Construction Materials business. Normally, the highest sales and earnings of our continuing operations are attained in the third quarter and the lowest are realized in the first quarter when sales and earnings are substantially below the levels realized in all subsequent quarters of the year.

Forward-Looking Statements

Certain matters discussed in this report, including expectations regarding future performance, contain forward-looking statements that are subject to assumptions, risks and uncertainties that could cause our actual results to differ materially from those projected. These assumptions, risks and uncertainties include, but are not limited to, those associated with general business conditions; the timing and amount of federal, state and local funding for infrastructure; the highly competitive nature of the construction materials industry; pricing; weather and other natural phenomena; energy costs; costs of hydrocarbon-based raw materials; increasing healthcare costs; the timing and amount, if any, of the payments to be received under two earn-outs contained in the agreement for the divestiture of our Chemicals business unit; and other assumptions, risks and uncertainties detailed from time to time in our periodic reports. Forward-looking statements speak only as of the date hereof, and we ass ume no obligation to update such statements.

Reclassification

The amount for medium-term investments as of September 30, 2004 has been reclassified from cash and cash equivalents to present them in accordance with their contractual maturities, which are in excess of three months. This reclassification resulted in the reduction of cash and cash equivalents and an offsetting increase in medium-term investments in the amount of $187,105,000 as of September 30, 2004. This reclassification had no impact on our Condensed Consolidated Statements of Earnings.

RESULTS OF OPERATIONS

The following comparative analysis is based on net sales and cost of goods sold, which exclude delivery revenues and costs, and is consistent with the basis on which management reviews results of operations.

Third Quarter 2005 as Compared with Third Quarter 2004

We attained record net sales of $749.4 million and record net earnings of $122.2 million, or $1.17 per diluted share in the third quarter. These amounts represent a 15% increase in net sales and a 23% increase in net earnings from the prior year's level. Earnings from continuing operations increased 39% to $128.3 million, or $1.23 per diluted share. Discontinued operations, comprised of our former Chemicals business, reported a loss of $6.1 million, or $0.06 per diluted share in the quarter.

During the third quarter, we repurchased 795,800 shares of our common stock at a total cost of approximately $54.1 million, representing an average cost of $68.01 per share. The number of shares remaining under our repurchase authorization is approximately 6.5 million shares.

Continuing Operations:

Construction Materials reported record net sales of $749.4 million, an increase of $100.1 million, or 15%, from the record level reported last year. The strong increase in sales resulted from sharply higher prices for all products and a 3% increase in aggregates shipments. Prices for aggregates in the quarter increased 9% as compared to the same period in the prior year. Sales volume growth was limited somewhat by wet weather and the related disruptions in construction activity from the five hurricanes experienced in the quarter. Sales for both asphalt and ready-mixed concrete were up sharply in the third quarter from the prior year due mostly to significantly higher prices. Price increases for both products offset higher costs for raw materials, including liquid asphalt and cement. Sales volumes for both products increased versus the prior year, driven by strong demand in California and Arizona and the addition of an asphalt business acquired in Arizona during the first quarter of the ye ar.

Earnings from continuing operations were $128.3 million, an increase of $36.3 million over the prior year resulting from the aforementioned sharply higher prices for all products and growth in sales volume. These favorable factors were partially offset by sharp increases in the cost of diesel fuel higher spending for repairs; maintenance; parts and supplies necessary to improve recently acquired plants and to operate at record production levels; and higher selling, administrative and general expenses. Diesel fuel price per gallon increased over 50% from the prior year, reducing pretax earnings by approximately $10.6 million.

Selling, administrative and general expenses of $62.4 million increased $10.0 million from the prior year's quarter. This increase was due mostly to the effect of our performance share incentive plan. Compensation expense under the plan is influenced by the degree to which business targets are achieved and is affected by stock price, which increased sharply in the third quarter. Other operating income, net, decreased $1.2 million compared to the third quarter of 2004 resulting primarily from lower gains on asset sales. Other income, net, increased $9.0 million from the prior year's third quarter due to an increase in the carrying value of a contingent ECU earn-out agreement included as part of the consideration paid by the buyer of our Chemicals business. This earn-out is accounted for as a derivative instrument with future adjustments to the carrying value, if any, recorded as other income or charges in continuing operations.

Net interest expense declined $5.2 million from the prior year's third quarter due to interest recorded from the settlement of federal tax refunds, higher returns on and higher average balances of short and medium-term investments. Interest expense remained relatively flat quarter-over-quarter.

The effective tax rate for earnings from continuing operations was 25.8% for the third quarter of 2005, compared to 34.2% for the third quarter of 2004. Variability in our quarterly effective tax rates results from the requirement to report in the current quarter any changes in estimated prior year tax liabilities, uncertain tax positions, refund claims, and tax assessments. The 2005 third quarter effective tax rate of 25.8% was affected by a favorable settlement of federal refund claims in the third quarter of 2005 of approximately $3.2 million and a reduction in estimated income tax liabilities for prior years of approximately $6.9 million. The 2004 third quarter tax rate of 34.2% was affected by an increase of approximately $3.4 million in the provision for uncertain tax positions during the quarter.

Discontinued Operations:

On June 7, 2005, we closed the sale of our Chemicals business. The third quarter 2005 reported loss of $6.1 million, net of income tax benefit, was due to exit and disposal costs and other transitional costs. In the prior year's quarter, earnings were $7.0 million, net of tax and minority interest.

Year-to-Date Comparisons as of September 30, 2005 and September 30, 2004

Net earnings were $298.1 million, or $2.86 per diluted share, for the first nine months of 2005 compared to $201.8 million, or $1.95 per diluted share, in the prior year. Net sales of $1.9 billion for the first nine months of 2005 increased 16% from the comparable 2004 total of $1.7 billion. Earnings from continuing operations were $251.7 million, or $2.41 per diluted share, for the first nine months of 2005. Comparable 2004 earnings were $196.3 million, or $1.90 per diluted share. Earnings from discontinued operations were $0.45 per diluted share for the first nine months of 2005 compared with $0.05 per diluted share in 2004.

Year-to-date September 30, 2005, we repurchased 2,008,438 shares of our common stock at a total cost of approximately $123.1 million, representing an average cost of $61.30 per share.

Continuing Operations:

Construction Materials' net sales of $1.9 billion were up $268.2 million, or 16% from the first nine months of 2004. This increase resulted primarily from higher pricing for aggregates and increased shipments. Pricing for aggregates increased over 7% and aggregates shipments increased 7% of which 1% was attributable to acquisitions. Asphalt volumes were up 8%, with legacy operations, which excludes current year acquisitions and prior & current year dispositions, increasing nearly 12%. Ready-mixed concrete volumes were down 6% with legacy operations increasing 5%.

Earnings from continuing operations were $251.7 million, up $55.5 million from the prior year. This increase resulted primarily from higher pricing for aggregates and growth in sales volume. Gross profit, as a percent of net sales was 27.4% as compared with 26.7% in the prior year. Higher diesel fuel price per gallon resulted in a 130 basis point reduction in the gross profit as a percent of net sales and lowered pretax earnings approximately $24.4 million.

Selling, administrative and general expenses increased $22.5 million, up 15% from the prior year, due mostly to the impact of our higher stock price on our performance share incentive plan. Selling, administrative and general expenses were 8.8% of net sales, consistent with the prior year. Other operating expenses increased $10.4 million due to lower gains on the sale of real estate and higher environmental accruals. The $6.9 million increase in other income, net, resulted primarily from the gain related to the increase in the fair value of the ECU derivative.

Net interest expense decreased $11.6 million as a result of the retirement of $243.0 million of debt in April 2004, interest income recorded upon the settlement of federal tax refunds, higher returns on and higher average balances of short and medium-term investments.

The effective tax rate for earnings from continuing operations was 28.7% for the nine months ended September 30, 2005, down from 30.5% during the same period of 2004. This decrease principally reflects a reduction in estimated income tax liabilities for prior years and a favorable settlement of federal refund claims in the third quarter of 2005.

Discontinued Operations:

Earnings from discontinued operations, net of tax, were $46.4 million compared with $5.5 million for the first nine months of 2004. Operating earnings from discontinued operations were $85.5 million for the five months of operation in 2005 and the remaining four months of exiting and disposal. Comparatively, operating earnings from discontinued operations for the first nine months of 2004 were $12.0 million. The 2005 operating earnings include the impact of approximately $16.6 million of pretax exit and disposal charges. During the five months of operation in 2005, discontinued operations experienced improved results from the prior year due primarily to sharply higher pricing for most products and higher volumes.

LIQUIDITY AND CAPITAL RESOURCES

We believe that we have sufficient financial resources, including cash provided by operating activities, unused bank lines of credit and ready access to the capital markets, to fund business requirements in the future including capital expenditures, dividend payments, stock repurchases, potential future acquisitions, debt service obligations and cash contractual obligations.

Cash Flows

Net cash provided by operating activities totaled $274.1 million in the first nine months of 2005, down 25% from the $363.6 million generated in the same period last year. The $89.5 million decrease in cash provided by operating activities resulted primarily from an increase in accounts and notes receivable of $72.2 million due to higher sales; income tax payments of $53.7 million referable to the taxable gain on the sale of our Chemicals business; a decrease in depreciation, depletion and amortization expense of $34.3 million referable to the sale of our Chemicals business; and an increase in pension contributions of $28.1 million. These uses of cash were partially offset by a $96.4 million increase in net earnings. Net cash used for investing activities was $105.7 million in the first nine months of 2005, compared to net cash used for investing activities of $57.3 million from the first nine months of 2004. This $48.4 million increase was due primarily to a $110.1 million reduction in s ales and maturities of medium-term investments, a $63.9 million increase in cash paid for business acquisitions, net of acquired cash, offset by net cash proceeds from the sale of the Chemicals business of $209.3 million. Net cash used for financing activities decreased $108.2 million from the first nine months of 2004 to total $186.3 million for the nine months ended September 30, 2005. This decrease in cash used for financing activities resulted primarily from the April 1, 2004 debt payment in the principal amount of $240.0 million related to 5.75% five-year notes issued in 1999, partially offset by $123.1 million of share repurchases in 2005.

Working Capital

Working capital, the excess of current assets over current liabilities, totaled $684.6 million at September 30, 2005. This represented a $306.7 million decrease from our December 31, 2004 level and an $8.7 million decrease from our September 30, 2004 level. The decrease from the year-end 2004 level resulted from a $238.9 million increase in current maturities of long-term debt attributable to the reclassification to current liabilities of debt maturing February 2006 and an increase in contributions to our pension plans of $28.1 million. The decrease in working capital from September 30, 2004 resulted primarily from an increase in current maturities of long-term debt of $240.8 million, offset in part by an increase in cash and cash equivalents of $94.0 million, an increase in accounts and notes receivable, net, of $79.6 million, and a decrease in notes payable of $48.0 million

Short-term Borrowings

Short-term borrowings consisted of the following (in thousands of dollars):

Sept. 30
    2005

Dec. 31
    2004

Sept. 30
    2004

Bank borrowings
Commercial paper
  Total notes payable

$   --
    --
$   --

$   --
    --
$   --

$   8,000
  40,000
$ 48,000

In the third quarter of 2004, we issued $40.0 million of commercial paper to fund current working capital needs in lieu of liquidating short-term investments with favorable terms. We plan to continue this practice from time to time as circumstances warrant. As of September 30, 2004, our previously owned Chloralkali joint venture had an uncommitted bank credit facility in the amount of $30.0 million available at September 30, 2004, of which $8.0 million was drawn, as noted above in the bank borrowing.

Unsecured bank lines of credit totaling $350.0 million were available at September 30, 2005, none of which was in use.

Current Maturities

Current maturities of long-term debt are summarized below (in thousands of dollars):

	Sept. 30 2005	Dec. 31 2004	Sept. 30 2004
6.40% 5-year notes issued 2001* Medium-term notes Other notes Total	$ 239,591 2,000 529 $ 242,120	$ (80) 2,000 1,306 $ 3,226	$ -- -- 1,302 $ 1,302
*Includes a decrease in valuation for the fair value of the short-term interest rate swaps, as follows: September 30, 2005 - $409 thousand and December 31, 2004 - $80 thousand.

The principal balance of $240.0 million (listed above, net of the $409 thousand decrease for the interest rate swap) on the 6.40% 5-year notes issued 2001 is due February 1, 2006. We expect to retire this debt using available cash and medium-term investments. Scheduled debt payments during 2005 include $2.0 million due in November to retire a medium-term note issued in 1999 at 8.07%. Scheduled debt payments during 2004 included $243.0 million in April to retire the 5.75% five-year notes issued in 1991 and $5.0 million in September to retire an 8.55% medium-term note issued in 1991.

Long-term Obligations

Long-term obligations and measures are summarized below (amounts in thousands, except percentages):

	Sept. 30 2005	Dec. 31 2004	Sept. 30 2004
Long-term obligations: Long-term debt Total long-term obligations	$ 355,308 $ 355,308	$ 604,522 $ 604,522	$ 607,158 $ 607,158
Long-term capital: Long-term debt Deferred income taxes All other noncurrent liabilities Shareholders' equity Total long-term capital	$ 355,308 300,432 287,870 2,163,885 $ 3,107,495	$ 604,522 348,613 271,334 2,013,975 $ 3,238,444	$ 607,158 341,949 268,341 1,946,936 $ 3,164,384
Long-term obligations as a percent of: Long-term capital Shareholders' equity	11.4% 16.4%	18.7% 30.0%	19.2% 31.2%

The reduction in long-term obligations and long-term capital from December 31, 2004 to September 30, 2005 is due primarily to the reclassification to current maturities of the $240.0 million 6.40% 5-year notes issued 2001.

The calculations of the ratio of total debt to total capital are summarized below (amounts in thousands, except percentages):

	Sept 30 2005	Dec. 31 2004	Sept 30 2004
Debt: Current maturities of long-term debt Notes payable Long-term debt Total debt	$ 242,120 - -- 355,308 $ 597,428	$ 3,226 - -- 604,522 $ 607,748	$ 1,302 48,000 607,158 $ 656,460
Capital: Total debt Shareholders' equity Total capital	$ 597,428 2,163,885 $ 2,761,313	$ 607,748 2,013,975 $ 2,621,723	$ 656,460 1,946,936 $ 2,603,396
Ratio of total debt to total capital	21.6%	23.2%	25.2%

In the future, the ratio of total debt to total capital will depend upon specific investment and financing decisions. Nonetheless, management believes our cash-generating capability, combined with our financial strength and geographic diversification, can comfortably support a ratio of 30% to 35%. We have made acquisitions from time to time and will continue to pursue attractive investment opportunities. Such acquisitions could be funded by using internally generated cash flow or issuing debt or equity securities.

Standby Letters of Credit

We provide certain third parties with irrevocable standby letters of credit in the normal course of business operations. Our commercial banks issue standby letters of credit to secure our obligations to pay or perform when required to do so pursuant to the requirements of an underlying agreement or the provision of goods and services. The standby letters of credit listed below are cancelable only at the option of the beneficiaries who are authorized to draw drafts on the issuing bank up to the face amount of the standby letter of credit in accordance with its terms. Since banks consider letters of credit as contingent extensions of credit, we are required to pay a fee until they expire or are cancelled. Substantially all of our standby letters of credit are renewable annually at the option of the beneficiary.

Our standby letters of credit as of September 30, 2005 are summarized in the table below (in thousands of dollars):

	Amount	Term	Maturity
Risk management requirement for insurance claims Payment surety required by utilities Contractual reclamation/restoration requirements Total standby letters of credit	$ 15,652 5,100 33,979 $ 54,731	One year One year One year	Renewable annually Renewable annually Renewable annually

CRITICAL ACCOUNTING POLICIES

We follow certain significant accounting policies when preparing our consolidated financial statements. A summary of these policies is included in our latest Annual Report on Form 10-K. The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities at the date of the financial statements. We evaluate these estimates and judgments on an ongoing basis and base our estimates on historical experience, current conditions and various other assumptions that are believed to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencie s. Our actual results may differ from these estimates.

We believe that the estimates, assumptions and judgments involved in the accounting policies described in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our most recent Annual Report on Form 10-K have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies.

Additionally, we consider that the following policy related to the ECU earn-out to be a critical accounting policy due to the significant level of estimates, assumptions and judgments and its potential impact on our consolidated financial statements.

ECU Earn-out
In connection with our June 2005 sale of our Chemicals business, as described in Note 3 to the condensed consolidated financial statements, we entered into two separate earn-out agreements that may require the purchaser (Basic Chemicals) to make contingent future payments. One of these earn-out agreements (the ECU earn-out) is based on ECU (electrochemical unit) and natural gas prices during the five-year period following the sale, and qualifies as a derivative financial instrument under SFAS 133, "Accounting for Derivative Instruments and Hedging Activities" (FAS 133). The ECU earn-out is payable annually and is capped at $150 million.

FAS 133 requires all derivatives to be recognized on the balance sheet and measured at fair value. The fair value of the ECU earn-out is adjusted quarterly based on expected future cash flows. We have not designated the ECU earn-out as a hedging instrument, and accordingly, gains and losses resulting from changes in the fair value, if any, are recognized in current period operating results. Further, pursuant to the Securities and Exchange Commission (SEC) Staff Accounting Bulletin Topic 5:Z:5, "Classification and Disclosure of Contingencies Relating to Discontinued Operation," changes in fair value are recorded within continuing operations. The carrying amount (fair value) of the ECU earn-out is classified in the accompanying Condensed Consolidated Balance Sheets as current (less than one year) or long-term (longer than one year) based on our expectation of the timing of the future cash flows.

The discounted cash flow model utilized to determine the fair value of the ECU earn-out requires significant estimates and judgments described hereafter. An ECU is defined as the price of one short ton of chlorine plus the price of 1.1 short tons of caustic soda. The expected future developments of ECU and natural gas prices are critical variables in the discounted cash flow model. Our estimates of these variables are derived from historical price behavior as well as prevailing market data, including the Chemical Market Associates, Inc.'s quarterly ECU price forecast and current natural gas futures contracts. Differences between our expected future price developments and actual results could materially affect the fair value of the ECU earn-out. In addition, significant judgment is required to assess the likelihood of the amounts and timing of each possible outcome. Future estimates of the ECU

earn-out's fair value could vary materially from period to period and have a material affect on our financial position, results of operations and cash flows. Further, there can be no assurance as to the future amount received under this earn-out, if any. Additional disclosures regarding the ECU earn-out are presented in Notes 3 and 7 to the condensed consolidated financial statements.

INVESTOR ACCESS TO COMPANY FILINGS

We make available free of charge on our website, vulcanmaterials.com, copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as well as all Forms 4 and 5 filed by our executive officers and directors, as soon as the filings are made publicly available by the Securities and Exchange Commission on its EDGAR database, at sec.gov. In addition to accessing copies of our reports online, you may request a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2004, at no charge, by writing to:

William F. Denson, III
Secretary
Vulcan Materials Company
1200 Urban Center Drive
Birmingham, Alabama 35242

Item 3. Quantitative and Qualitative Disclosures
About Market Risk

We are exposed to certain market risks arising from transactions that are entered into in the normal course of business. In order to manage or reduce this market risk, we may utilize derivative financial instruments. To date, we have used commodity swap and option contracts to reduce our exposure to fluctuations in prices for natural gas in our discontinued operations - Chemicals business. We had no such contracts outstanding as of September 30, 2005. For the prior periods presented, the fair values of these contracts were as follows: December 31, 2004 - $99,000 unfavorable and September 30, 2004 - $2,307,000 favorable.

We are exposed to interest rate risk due to our various long-term debt instruments. Substantially all of this debt is at fixed rates; therefore, a decline in interest rates would result in an increase in the fair market value of the liability. At times, we use interest rate swap agreements to manage this risk. In November 2003, we entered into an interest rate swap agreement with a counterparty in the stated (notional) amount of $50,000,000. Under this agreement, we pay a variable London Interbank Offered Rate (LIBOR) plus a fixed spread and receive a fixed rate of interest of 6.40% from the counterparty. The six-month LIBOR approximated 4.23% at September 30, 2005. The interest rate swap agreement is scheduled to terminate February 1, 2006, coinciding with the maturity of our 6.40% five-year notes issued in 2001 in the amount of $240,000,000. The realized gains and losses upon settlement related to the swap agreement are reflected in interest expense concurrent with the hedged interest p ayments on the debt. The estimated fair values of this agreement were as follows: September 30, 2005 - $409,000 unfavorable, December 31, 2004 - $256,000 unfavorable and September 30, 2004 - $25,000 unfavorable.

We do not enter into derivative financial instruments for speculative or trading purposes.

At September 30, 2005, the estimated fair market value of our debt instruments was $618,131,000 as compared to our book value of $597,428,000. The effect of a hypothetical decline in interest rates of 1% would increase our fair market value of the liability by approximately $12,573,000.

We are exposed to risk related to the ultimate proceeds to be received from the sale of the Chemicals business. As described in Note 3 to the condensed consolidated financial statements, in addition to the initial proceeds, we are entitled to receive annual cash receipts under two separate earn-outs, subject to certain conditions. The first earn-out is based on ECU (electrochemical unit) and natural gas prices during the five-year period following the June 7, 2005 sale. This earn-out is capped at $150,000,000 and is accounted for as a derivative instrument. Accordingly, it is reported at fair value and changes, if any, to the fair value of the ECU derivative are recorded in current period operating results. Future estimates of this derivative's fair value could vary materially from period to period. Proceeds under the second earn-out will be determined based primarily on the performance of the hydrochlorocarbon product HCC-240fa (commonly referred to as 5CP) from the June 7, 2005 sale thr ough 2012. Since SFAS No. 4, "Accounting for Contingencies," precludes the recognition of a contingent gain until realization is assured beyond a reasonable doubt, no gain was recognized on the Chemicals sale. Accordingly, the value recorded at the June 7, 2005 closing date referable to these two earn-outs was limited to $128.2 million. The combined carrying amount of these earn-outs reflected in accounts and notes receivable and other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets as of September 30, 2005 was $137.5 million. The increase from the June 7, 2005 closing is due to the $9.6 million gain on the ECU earn-out which is reflected as a component of other income, net in our Condensed Consolidated Statements of Earnings for the nine months ended September 30, 2005.

We are exposed to certain economic risks related to the costs of our pension and other postretirement benefit plans. These economic risks include changes in the discount rate for high-quality bonds, the expected return on plan assets, the rate of compensation increase for salaried employees and the rate of increase in the per capita cost of covered healthcare benefits. The impact of a change in these assumptions on our annual pension and other postretirement benefits costs is discussed in our latest Annual Report on Form 10-K.

Item 4. Controls and Procedures

We maintain a system of controls and procedures designed to ensure that information required to be disclosed in reports we file with the Securities and Exchange Commission (SEC) is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer, with the participation of other management officials, evaluated the effectiveness of the design and operation of the disclosure controls and procedures as of September 30, 2005. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective. There have been no c hanges to our internal controls over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2004, and our Quarterly Reports on Forms 10-Q for the quarters ended March 31, 2005 and June 30, 2005, we have been named as one of numerous defendants in 111 lawsuits in Mississippi by 3,716 plaintiffs, 67 lawsuits in Texas by 1,002 plaintiffs, 64 cases in Florida with 64 plaintiffs, 11 cases in California with 11 plaintiffs, 3 cases in Ohio with 81 plaintiffs, and 1 case in West Virginia with 1 plaintiff. The first of these lawsuits was filed in July 1993, and the most recent case was filed in September 2005. Most of the actions are in state court in the state in which it was filed. The plaintiffs in the cases in Mississippi and Texas allege personal injuries arising from silicosis and failure to adequately warn, related to exposure to and use of industrial sand used for abrasive blasting. We produced and marketed industrial sand from 1988 to 1994, in Texas. In the cases in California, West Virginia , Ohio and Florida, the plaintiffs allege personal injuries relating to exposure to silica. We are seeking dismissal from the cases in Mississippi, California, West Virginia, Ohio and Florida because there was no exposure by the plaintiffs to our product in those states.

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2004, we are involved in cases stemming from our perchloroethylene product and involving claims of IBM employees who allege personal injury as a result of workplace exposure at IBM semiconductor manufacturing plants. These cases have been settled and the settlement was approved by the court on October 7, 2005. The amount paid by us in excess of our insurance coverage will not have a material adverse effect on our consolidated financial position, results of operations and cash flows.

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2004, we are involved in an action filed in November 1998 by the City of Modesto in state court in California. This claim arose from allegations of perchloroethylene contamination of municipal water wells in the City of Modesto. The trial in this matter was stayed pending appeal by the plaintiff of a pretrial ruling. The appeal has been exhausted and trial is now scheduled to begin in the first quarter of 2006.

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2004, we have been named as a defendant in multiple lawsuits filed in 2001 and 2002 in state court and federal district court in Louisiana. These lawsuits claim damages for various personal injuries allegedly resulting from releases of chemicals at our former Geismar, Louisiana plant in 2001. Although we have reached a tentative settlement with the plaintiffs in the matter, some of the plaintiffs' attorneys have objected to the proposed settlement. A court-appointed special master is overseeing the settlement process. It is uncertain at this time if the proposed settlement will in fact be consummated.

As of the 10-Q filing date, an estimate of the potential range of losses for these claims, if any, cannot be made. Although the ultimate outcome is uncertain, it is our opinion, based in part on consultation with legal counsel, that the disposition of these described lawsuits, as well as certain other lawsuits, will not have a material adverse affect on our consolidated financial position, results of operations and cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) Issuer Purchases of Equity Securities

The following table presents a summary of share repurchases we made during the quarter ended September 30, 2005:

     Period

Total Number of
Shares Purchased

Average Price
Paid per Share (1)

Total Number of Shares
Purchased as Part of
Publicly Announced
  Plans or Programs

Maximum Number of
Shares that May Yet be
Purchased Under the
  Plans or Programs (2)

July 1 - 31, 2005

--

$   --

--

7,261,350

Aug. 1 - 31, 2005

643,000

$67.57

643,000

6,618,350

Sept. 1 - 30, 2005

152,800

$69.86

152,800

6,465,550

     Total

795,800

$68.01

795,800

(1)

The average price paid per share includes commission costs.

(2)

The share repurchase program was authorized June 28, 1985 with an initial authorization of 6,000,000 shares, as adjusted for stock splits. On February 14, 1997, the Board of Directors raised the authorization to repurchase stock to 12,000,000 shares, as adjusted for stock splits. As of September 30, 2005, there were 6,465,550 shares remaining under the authorization. We may make share repurchases from time to time in the open market or through privately negotiated transactions, depending upon market, business, legal and other conditions.

Item 6. Exhibits

Exhibit 3(a) - By-laws, as restated February 2, 1990, and as last amended October 14, 2005.

Exhibit 31(a) - Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31(b) - Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32(a) - Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32(b) - Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VULCAN MATERIALS COMPANY

Date October 28, 2005

/s/ Ejaz A. Khan
Ejaz A. Khan
Vice President, Controller and Chief Information Officer

/s/ Daniel F. Sansone
Daniel F. Sansone
Senior Vice President, Chief Financial Officer and
Treasurer

EX-3 2 bylaws101405.htm EXHIBIT 3(A) BY-LAWS Exhibit 3(a)


BY-LAWS VULCAN MATERIALS COMPANY (Incorporated under the laws of the State of New Jersey)
Restated: Amended:	February 2, 1990 June 27, 1990 March 27, 1991 February 5, 1992 (eff. 5/11/92) May 11, 1992 December 8, 1992 February 12, 1993 March 5, 1995 February 17, 1996 May 17, 1996 February 14, 1997 February 12, 1999 July 14, 2000 May 11, 2001 July 13, 2001 February 8, 2002 February 14, 2003 October 10, 2003 March 30, 2004 May 14, 2004 October 14, 2005

INDEX
ARTICLE I	Shareholders' Meetings		Page
	Section 1.1 Section 1.2 Section 1.3 Section 1.4 Section 1.5 Section 1.6 Section 1.7 Section 1.8	Annual Meetings Special Meetings Notice and Purpose of Meetings Quorum and Adjournments Organization Voting Selection of Inspectors Duties of Inspectors	1 1 1 1 2 2 2 3
ARTICLE II	Directors
	Section 2.1 Section 2.2 Section 2.3 Section 2.4 Section 2.5 Section 2.6 Section 2.7	Number, Qualification, Tenure, Term, Quorum, Vacancies, Removal (a) Number, Qualification and Tenure (b) Term (c) Quorum Meetings of the Board of Directors Committees of the Board of Directors Participation in Meetings by Means of Conference Telephone or Similar Instrument Action of Board of Directors and Committees Without a Meeting Dividends Conflict of Interest	3 4 4 4 5 6 6 6 7
ARTICLE III	Officers
	Section 3.1 Section 3.2 Section 3.3 Section 3.4 Section 3.5 Section 3.6 Section 3.7 Section 3.8 Section 3.9 Section 3.10 Section 3.11 Section 3.12 Section 3.13 Section 3.14 Section 3.15	(a) Corporate Officers (b) Group Officers (c) Division Officers (a) Term and Removal of Officers of the Corporation (b) Term and Removal of Group and Division Officers (a) Chairman of the Board (b) Vice Chairman Chief Executive Officer Chief Operating Officer President Chief Administrative Officer Vice Presidents General Counsel Associate General Counsel Secretary Treasurer Controller Other Officers Voting Corporation's Securities	7 7 7 8 8 8 8 8 9 9 9 9 9 10 10 10 10 10 11
ARTICLE IV	Indemnification of Directors, Officers and Employees		11
ARTICLE V	Certificates of Stock
	Section 5.1 Section 5.2 Section 5.3 Section 5.4	Transfer of Shares Transfer of Agent and Registrar Fixing Record Date Lost, Stolen or Destroyed Certificates	13 13 13 13
ARTICLE VI	Miscellaneous
	Section 6.1 Section 6.2 Section 6.3 Section 6.4	Fiscal Year Corporate Seal Delegation of Authority Notices	14 14 14 14
ARTICLE VII	By-Laws and Their Amendments		15
ARTICLE VIII	National Emergency		15
ARTICLE I Shareholders' Meetings

           SECTION 1.1.    Annual Meetings

           (a)    The annual meeting of the shareholders of the corporation may be held at such place within or without the State of New Jersey as may be fixed by the Board of Directors, at 10 a.m., local time, or at such other hour as may be fixed by the Board of Directors, on such day in April or May of each year as may be fixed by the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting.

           (b)    If the annual meeting for the election of directors is not held in one of the months set forth in Section 1.1(a), the Board of Directors shall cause the meeting to be held as soon thereafter as convenient.

           SECTION 1.2.    Special Meetings

           (a)    Special meetings of the shareholders may be called by the Board of Directors, the chairman of the Board of Directors or the chief executive officer.

           (b)    Special meetings shall be held at such time and date and at such place as shall have been fixed by the Board of Directors, the chairman of the Board of Directors or by the chief executive officer.

           SECTION 1.3.    Notice and Purpose of Meetings

           Written notice of the time, place and purpose or purposes of every meeting of shareholders shall be given, not less than ten nor more than 60 days before the meeting, either personally or by mail, to each shareholder of record entitled to vote at the meeting.

           SECTION 1.4.    Quorum and Adjournments

           (a)    A quorum at all meetings of shareholders shall consist of the holders of record of a majority of the shares of the issued and outstanding capital stock of the corporation, entitled to vote thereat, present in person or by proxy, except as otherwise provided by law or the Certificate of Incorporation.

           (b)    A shareholders' meeting may be adjourned to another time or place, and, if no new record date is fixed, it shall not be necessary to give notice of the adjourned meeting if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken, and at the adjourned meeting only such business is transacted as might have been transacted at the original meeting. If after the adjournment a new record date is fixed by the Board of Directors, notice of the adjourned meeting shall be given to shareholders of record on the new record date entitled to vote. Less than a quorum may adjourn the meeting as herein provided.

<PAGE 1>

           SECTION 1.5.    Organization

           Meetings of the shareholders shall be presided over by the chief executive officer, or, if he is not present, by a chairman to be chosen by a majority of the shareholders entitled to vote who are present in person or by proxy at the meeting. The Secretary of the corporation, or, in his or her absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present, the meeting shall choose any person present to act as secretary of the meeting.

           SECTION 1.6.    Voting

           (a)    At all meetings of the shareholders the voting need not be by ballot, except that all elections for directors shall be by ballot, and except that the voting shall be by ballot on all other matters upon which voting by ballot is expressly required by the Certificate of Incorporation or by the laws of the State of New Jersey.

           (b)    The poll at all elections of directors shall be open in accordance with the laws of the State of New Jersey.

           (c)    Subject to the foregoing provisions, the right of any shareholder to vote at a meeting of shareholders shall be determined on the basis of the number of shares registered in his or her name on the date fixed as the record date for said meeting.

           (d)    Except as otherwise provided by statute or these By-laws, any matter submitted to a vote of shareholders shall be viva voce unless the person presiding at the meeting determines that the voting shall be by ballot or unless the circumstances are such that the will of the holders of a majority of shares entitled to vote cannot be determined with certainty and the holder of a share entitled to vote or his or her proxy shall demand a vote by ballot. In either of such events a vote by ballot shall be taken.

           SECTION 1.7.    Selection of Inspectors

           (a)    The Board of Directors may in advance of any shareholders' meeting or any proposed shareholder action without a meeting appoint one or more inspectors to act at the meeting or any adjournment thereof or to receive consents of shareholders. If inspectors are not so appointed for a shareholders' meeting or shall fail to qualify, the person presiding at the shareholders' meeting may, and upon the request of any shareholder entitled to vote thereat shall, make such appointment.

           (b)    In case any person appointed as inspector fails to appear or act, the vacancy may be filled by appointment made by the Board of Directors in advance of the meeting or at the meeting by the person presiding.

<PAGE 2>

           (c)    Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting or in tabulating consents with strict impartiality and according to the best of his or her ability.

           (d)    No person shall be elected a director in an election for which he has served as an inspector.

           SECTION 1.8.    Duties of Inspectors

           The inspectors shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting or the shares entitled to consent, the existence of a quorum, the validity and effect of proxies, and shall receive votes or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes or consents, determine the result, and do such acts as are proper to conduct the election or vote or consents with fairness to all shareholders. If there are three or more inspectors, the act of a majority shall govern. On request of the person presiding at the meeting or any shareholder entitled to vote thereat or of any officer, the inspectors shall make a report in writing of any challenge, question or matter determined by them. Any report made by them shall be prima facie evidence of the facts therein stated, and such report shall be filed with the m inutes of the meeting.

ARTICLE II
Directors

           SECTION 2.1.    Number, Qualification, Tenure, Term, Quorum, Vacancies, Removal

           (a)    Number, Qualification and Tenure. The business and affairs of the corporation shall be managed by or under the direction of its Board of Directors. The number of directors constituting the Board of Directors shall not be less than nine nor more than twelve, with the actual number of directors to be fixed, from time to time, by resolution adopted by a majority of the entire Board of Directors. Any directorship to be filled by reason of an increase in the number of directors may be filled by the affirmative vote of two-thirds of the directors in office at the time. Directors shall be at least 25 years of age and need not be United States citizens or residents of New Jersey or shareholders of the corporation.

           Any outside director shall retire from the Board of Directors at the annual meeting next following their 72nd birthday, regardless of the term for which they might have been elected. Any outside director who ceases to hold the position with the business or professional organization with which such person was associated when most recently elected a director shall automatically be deemed to have offered his or her resignation as a director of the corporation, and the Director and Management Succession Committee shall make a recommendation to the Board of Directors with respect to such resignation; and, if the deemed offer to resign is

<PAGE 3>

accepted by the Board of Directors, such resignation shall be effective as of the next annual meeting of shareholders.

           Any inside director shall retire from the Board of Directors at the annual meeting next following his or her 65th birthday; provided, however, that any inside director who has served as chief executive officer of the corporation and who has been requested by the Board of Directors to do so shall serve until the next annual meeting following his or her 69th birthday, but not thereafter.

           An inside director is one who is or has been in the full-time employment of the corporation, and an outside director is any other director.

           (b)    Term. Directors shall be divided into three classes, with the term of office of one class expiring each year. Except as otherwise provided in the Certificate of Incorporation or these By-laws, directors shall be chosen at annual meetings of the shareholders, and each director shall be chosen to serve until the third succeeding annual meeting of shareholders following his or her election and until his or her successor shall have been elected and qualified.

           (c)    Quorum. A majority of the members of the Board of Directors then acting, but, in no event less than one-third of the entire Board of Directors, acting at a meeting duly assembled, shall constitute a quorum for the transaction of business. Directors having a personal or conflicting interest in any matter to be acted upon may be counted in determining the presence of a quorum. If at any meeting of the Board of Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting, without further notice, from time to time until a quorum shall have been obtained.

           SECTION 2.2.    Meetings of the Board of Directors

           (a)    Meetings of the Board of Directors shall be held at such place within or without the State of New Jersey and at such time and date as may from time to time be fixed by the Board of Directors, or, if not so fixed, as may be specified in the notice of the meeting. A meeting of the Board of Directors shall be held without notice immediately after the annual meeting of the shareholders.

           (b)    Regular meetings of the Board of Directors shall be held on such day of such months as may be fixed by the Board of Directors. At any regular meeting of the Board of Directors any business that comes before such meeting may be transacted except where special notice is required by these By-laws.

           (c)    Special meetings of the Board of Directors may be held on the call of the chairman of the Board of Directors, the presiding director, the chief executive officer or any three directors.

           (d)    Notice of each regular meeting of the Board of Directors, other than the meeting following the annual meeting of shareholders, shall be given not less than

<PAGE 4>

seven days before the date on which such regular meeting is to be held. Notice of each special meeting of the Board of Directors shall be given to each member of the Board of Directors not less than two days before the date upon which such meeting is held. Notice of any such meeting may be given by mail, telegraph, telephone, telex, facsimile transmission, personal service or by personally advising the director orally. Notice of a meeting of the Board of Directors may be waived in writing before or after the meeting. Meetings may be held at any time without notice if all the directors are present. Notice of special meetings of the Board of Directors shall specify the purpose or purposes of the meeting. Neither the business to be transacted nor the purpose or purposes of any meeting of the Board of Directors need be specified in the notice of regular meetings or in the waiver of notice of any regular or special meeting of the Board of Directors.

           (e)    Notice of an adjourned meeting of the Board of Directors need not be given if the time and place are fixed at the meeting adjourning and if the period of adjournment does not exceed ten days in any one adjournment.

           SECTION 2.3.    Committees of the Board of Directors

           (a)    The Board of Directors, by resolution adopted by a majority of the entire Board of Directors, may appoint from among its members an Executive Committee and one or more other committees, each of which shall have at least three members. To the extent provided in such resolution each such committee shall have and may exercise all the authority of the Board of Directors, except as expressly limited by the New Jersey Business Corporation Act.

           (b)    The Board of Directors, by resolution adopted by a majority of the entire Board of Directors, may: (1) fill any vacancy in any such committee; (2) appoint one or more directors to serve as additional members of any such committee; (3) appoint one or more directors to serve as alternate members of any such committee, to act in the absence or disability of members of any such committee with all the powers of such absent or disabled members; (4) abolish any such committee at its pleasure; and (5) remove any director from membership on such committee at any time, with or without cause.

           (c)    The Executive Committee shall meet at such time or times, and at such place within or outside the State of New Jersey, as it shall designate or, in the absence of such designation, as shall be designated by the person or persons calling the meeting; and it shall make its own rules of procedure. Meetings may be held at any time without notice if all members of the Executive Committee are present, or if at any time before or after the meeting those not present waive notice of the meeting in writing. A majority of the members of the Executive Committee shall constitute a quorum thereof, but at any meeting of the Committee at which all the members are not present no action shall be taken except by the unanimous vote of those present.

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           (d)    Meetings of any committee may be called by the chairman of the Board of Directors, the chief executive officer, the chairman of the committee, by any two members of the committee or as provided in the resolution appointing the committee. Notice of such meeting shall be given to each member of the committee by mail, telegraph, telephone, telex, facsimile transmission, personal service or by personally advising the member orally. Said notice shall state the time and place of any meeting of any such committee and shall be fixed by the person or persons calling the meeting.

           (e)    Actions taken at a meeting of any committee shall be reported to the Board of Directors at its next meeting following such committee meeting; except that, when the meeting of the Board of Directors is held within two days after the committee meeting, such report shall, if not made at the first meeting, be made to the Board of Directors at its second meeting following such committee meeting.

           SECTION 2.4.    Participation in Meetings by Means of Conference Telephone or Similar Instrument

           Where appropriate communication facilities are available, any or all directors may participate in all or any part of a meeting of the Board of Directors or in a meeting of any committee of the Board of Directors by means of a conference telephone or any means of communication by which the persons participating in the meeting are able to hear each other as though he was or they were present in person at such meeting. Such participation without protesting prior to the conclusion of such participation the lack of notice of such meeting shall constitute a waiver of notice by such participating director or directors with respect to business transacted during such participation.

           SECTION 2.5.    Action of Board of Directors and Committees Without a Meeting

           Any action required or permitted to be taken pursuant to authorization voted at a meeting of the Board of Directors or any committee of the Board of Directors may be taken without a meeting if, prior or subsequent to such action, all members of the Board of Directors or of such committee, as the case may be, consent thereto in writing and such written consents are filed with the minutes of the proceedings of the Board of Directors or committee.

           SECTION 2.6.    Dividends

           Subject to the provisions of the laws of the State of New Jersey and the Certificate of Incorporation, the Board of Directors shall have full power to determine whether any and, if any, what part of any funds of the corporation shall be declared in dividends and paid to shareholders; the division of the whole or any part of such funds of the corporation shall rest wholly within the lawful discretion of the Board of Directors, and it shall not be required at any time, against such discretion, to divide or pay any part of such funds among or to the shareholders as dividends or otherwise, and the Board of Directors may fix a sum which may be set aside or reserved over and above the capital paid in of the corporation as working capital for the corporation or as a reserve for any proper purpose, and from time to time may increase, diminish and vary the same in its absolute judgment and discretion.

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           SECTION 2.7.    Conflict of Interest

           No contract or other transaction between the corporation and one or more of its directors, or between the corporation and any domestic or foreign corporation, firm or association of any type or kind in which one or more of its directors are directors or are otherwise interested, shall be void or voidable solely by reason of such common directorship or interest, or solely because such director or directors are present at the meeting of the Board of Directors or a committee thereof which authorizes or approves the contract or transaction, or solely because his or their votes are counted for such purpose, if any of the following is true: (1) the contract or other transaction is fair and reasonable as to the corporation at the time it is authorized, approved or ratified; or (2) the fact of the common directorship or interest is disclosed or known to the Board of Directors or committee and the Board of Directors or committee authorizes, approves, or ratifies the contract by unanimous written consent, provided at least one director so consenting is disinterested, or by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (3) the fact of the common directorship or interest is disclosed or known to the shareholders, and they authorize, approve or ratify the contract or transaction.

           The Board of Directors, by the affirmative vote of a majority of directors in office and irrespective of any personal interest of any of them, shall have authority to establish reasonable compensation of directors for services to the corporation as directors, officers or otherwise.

ARTICLE III
Officers

           SECTION 3.1

           (a)    Corporate Officers. Each year promptly after the annual meeting of the shareholders, the Board of Directors shall elect officers of the corporation, including a Chairman of the Board, a President, one or more Vice Presidents, with such designations, if any, as it may determine, a General Counsel, a Secretary, a Treasurer, and a Controller. From time to time, the Board or the Chief Executive Officer may appoint one or more Assistants to any of such officers, and such one or more Assistant Secretaries, Assistant Treasurers, and Assistant Controllers as may be deemed appropriate. Any two or more offices may be concurrently held by the same person at the same time. The Chairman of the Board shall be chosen from among the directors.

           (b)    Group Officers. The Chief Executive Officer of the corporation may appoint such officers of any group of the corporation as he may deem proper, except that group senior vice presidents may be appointed only by the Board of Directors. A group officer shall not be an officer of the corporation, and shall serve as an officer only of the group to which he is appointed, but a person who holds a group office may also hold a corporate office or a division office, or both.

           (c)    Division Officers. The Chief Executive Officer of the corporation may appoint such officers of any division of the corporation as he may deem proper,

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except that division chairmen and presidents may be appointed only by the Board of Directors. A division officer shall not be an officer of the corporation, and shall serve as an officer only of the division to which appointed, but a person who holds a division office may also hold a corporate office or a group office, or both.

           SECTION 3.2

           (a)    Term and Removal of Officers of the Corporation. The term of office of all officers shall be one year and until their respective successors are elected and qualify, but any officer may be removed from office, either with or without cause, at any time, by the affirmative vote of a majority of the members of the Board of Directors then in office; provided, however, that any officer appointed by the Chief Executive Officer may be removed from office by the Chief Executive Officer.

           (b)    Term and Removal of Group and Division Officers. Group senior vice presidents and division chairmen and presidents shall serve at the pleasure of the Board of Directors. Group senior vice presidents and division chairmen and presidents may be removed from office, either with or without cause, at any time, by the Board of Directors. Other group and division officers shall serve at the pleasure of the Chief Executive Officer of the corporation. Any other group or division officer may be removed from office as a group or division officer, either with or without cause, at any time, by the Chief Executive Officer of the corporation.

           SECTION 3.3.

           (a)    Chairman of the Board. The Chairman of the Board may execute bonds, mortgages, and bills of sale, assignments, conveyances, and all other contracts, except those required by law to be otherwise signed and executed, or except when the signing and execution thereof when permitted by law shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. The Chairman of the Board shall preside at all meetings of the Board of Directors. The Chairman of the Board shall perform such other duties as may be assigned to him by the Board of Directors.

           (b)    Vice Chairman. The Vice Chairman shall advise and counsel with the Chairman of the Board, and with other officers of the corporation on any or all activities in which the corporation may engage, and shall perform such other duties as may be assigned to him by the Chairman of the Board or the Board of Directors.

           SECTION 3.4.    Chief Executive Officer

           The Chief Executive Officer may execute bonds, mortgages, and bills of sale, assignments, conveyances, and all other contracts, except those required by law to be otherwise signed and executed, or except when the signing and execution thereof when permitted by law shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. The Chief Executive Officer shall be responsible to the Board of Directors for planning and directing the business of the corporation and for initiating and directing those actions essential to its

<PAGE 8>

profitable growth and development and shall perform such other duties as may be assigned to him by the Board of Directors.

           SECTION 3.5.    Chief Operating Officer

           The Chief Operating Officer may execute bonds, mortgages, and bills of sale, assignments, conveyances, and all other contracts, except those required by law to be otherwise signed and executed, or except when the signing and execution thereof when permitted by law shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. The Chief Operating Officer shall, subject to the authority and direction of the Chief Executive Officer, have general and active management of the operating affairs of the corporation and shall carry into effect the resolutions of the Board of Directors and the orders of the Chief Executive Officer with respect to the operating affairs of the corporation.

           SECTION 3.6.    President

           The President may execute bonds, mortgages, and bills of sale, assignments, conveyances, and all other contracts, except those required by law to be otherwise signed and executed, or except when the signing and execution thereof when permitted by law shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. The President shall perform such other duties as may be delegated to him by the Board of Directors or the Chief Executive Officer.

           SECTION 3.7.    Chief Administrative Officer

           The Chief Administrative Officer shall be the chief administrative officer of the corporation and shall supervise and manage the administrative affairs of the corporation. He shall supervise and direct those officers and agents of the corporation who are engaged in the administrative affairs of the corporation. He shall perform such functions for the corporation as may be designated by the chief executive officer or the chief operating officer, and shall carry into effect the resolutions of the Board of Directors and the orders of the chief executive officer or the chief operating officer with respect to such functions.

           SECTION 3.8.    Vice Presidents

           Each Vice President of the corporation may execute bonds, mortgages, bills of sale, assignments, conveyances, and all other contracts, except where required by law to be otherwise signed and executed. Each Vice President of the corporation shall perform such functions for the corporation as may be designated by the chief executive officer of the corporation, and shall carry into effect the resolutions of the Board of Directors and the orders of the chief executive officer of the corporation with respect to such functions.

           SECTION 3.9.    General Counsel

           The General Counsel shall be the chief legal officer of the corporation and shall have overall responsibility for all legal affairs of the corporation. The General Counsel shall have management responsibility for the corporation's legal department and its relationships with outside

<PAGE 9>

counsel. The General Counsel's duties shall include providing legal advice to corporate and division officers, confirming compliance with applicable laws, overseeing litigation, reviewing significant agreements, participating in important negotiations, and selecting all outside counsel. He shall perform such other functions for the corporation as may be designated by the Board of Directors or the chief executive officer.

           SECTION 3.10.    Associate General Counsel

           The Associate General Counsel shall be the deputy chief legal officer who shares legal department management responsibilities with and reports to the general counsel and who acts for him under certain circumstances. The Associate General Counsel supervises all other attorneys in the department, including other managing attorneys. He shall perform such other functions for the corporation as may be designated by the Board of Directors, the chief executive officer or the general counsel.

           SECTION 3.11.    Secretary

           The Secretary shall keep or cause to be kept the minutes of all meetings of the shareholders, of the Board of Directors, of the Executive Committee, and unless otherwise directed by the Board of Directors, the minutes of meetings of other committees of the Board of Directors. He shall attend to the giving or serving of all notices required to be given by law or by the By-laws or as directed by the Board of Directors or the chief executive officer of the corporation. He shall have custody of the seal of the corporation and shall have authority to affix or cause the same or a facsimile thereof to be affixed to any instrument requiring the seal and to attest the same. He shall perform such other functions for the corporation as may be designated by the Board of Directors or the chief executive officer of the corporation.

           SECTION 3.12.    Treasurer

           The Treasurer shall be responsible for safeguarding the cash and securities of the corporation and shall keep or cause to be kept a full and accurate account of the receipts and disbursements of the corporation. He shall perform such other functions for the corporation as may be designated by the Board of Directors or the chief executive officer of the corporation.

           SECTION 3.13.    Controller

           The Controller shall be the principal accounting officer of the corporation, shall have supervision over the accounting records of the corporation and shall be responsible for the preparation of financial statements. He shall perform such other functions for the corporation as may be designated by the Board of Directors or by the chief executive officer of the corporation.

           SECTION 3.14.    Other Officers

           The other officers of the corporation shall have such powers and duties as generally pertain to their respective offices as well as such powers and duties as from time to time may be designated by the Board of Directors or by the chief executive officer of the corporation.

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           SECTION 3.15.    Voting Corporation's Securities

           Unless otherwise ordered by the Board of Directors, the chief executive officer or his or her delegate, or, in the event of his or her inability to act, such other officer as may be designated by the Board of Directors to act in the absence of the chief executive officer shall have full power and authority on behalf of the corporation to attend and to act and to vote, and to execute a proxy or proxies empowering others to attend and to act and to vote, at any meetings of security holders of the corporations in which the corporation may hold securities, and at such meetings the chief executive officer or such other officer of the corporation, or such proxy, shall possess and may exercise any and all rights and powers incident to the ownership of such securities, and which as the owner thereof the corporation might have possessed and exercised, if present. The Secretary or any Assistant Secretary may affix the corporate seal to any such proxy o r proxies so executed by the chief executive officer or such other officer and attest the same. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons.

ARTICLE IV
Indemnification of Directors, Officers and Employees

           (a)    Subject to the provisions of this Article IV, the corporation shall indemnify the following persons to the fullest extent permitted and in the manner provided by and the circumstances described in the laws of the State of New Jersey, including Section 14A:3-5 of the New Jersey Business Corporation Act and any amendments thereof or supplements thereto: (i) any person who is or was a director, officer, employee or agent of the corporation; (ii) any person who is or was a director, officer, employee or agent of any constituent corporation absorbed by the corporation in a consolidation or merger, but only to the extent that (a) the constituent corporation was obligated to indemnify such person at the effective date of the merger or consolidation or (b) the claim or potential claim of such person for indemnification was disclosed to the corporation and the operative merger or consolidation documents contain an express agreement by the corporation to pay the same; (iii) any person who is or was serving at the request of the corporation as a director, officer, trustee, fiduciary, employee or agent of any other domestic or foreign corporation, or any partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise, whether or not for profit; and (iv) the legal representative of any of the foregoing persons (collectively, a "Corporate Agent").

           (b)    Anything herein to the contrary notwithstanding, the corporation shall not be obligated under this Article IV to provide indemnification (i) to any bank, trust company, insurance company, partnership or other entity, or any director, officer, employee or agent thereof or (ii) to any other person who is not a director, officer or employee of the corporation, in respect of any service by such person or entity, whether at the request of the corporation or by agreement therewith, as investment advisor, actuary, custodian, trustee, fiduciary or consultant to any employee benefit plan.

<PAGE 11>

           (c)    To the extent that any right of indemnification granted hereunder requires any determination that a Corporate Agent shall have been successful on the merits or otherwise in any Proceeding (as hereinafter defined) or in defense of any claim, issue or matter therein, the Corporate Agent shall be deemed to have been "successful" if, without any settlement having been made by the Corporate Agent, (i) such Proceeding shall have been dismissed or otherwise terminated or abandoned without any judgment or order having been entered against the Corporate Agent, (ii) such claim, issue or other matter therein shall have been dismissed or otherwise eliminated or abandoned as against the Corporate Agent, or (iii) with respect to any threatened Proceeding, the Proceeding shall have been abandoned or there shall have been a failure for any reason to institute the Proceeding within a reasonable time after the same shal l have been threatened or after any inquiry or investigation that could have led to any such Proceeding shall have been commenced. The Board of Directors or any authorized committee thereof shall have the right to determine what constitutes a "reasonable time" or an "abandonment" for purposes of this paragraph (c), and any such determination shall be conclusive and final.

           (d)    To the extent that any right of indemnification granted hereunder shall require any determination that the Corporate Agent has been involved in a Proceeding by reason of his or her being or having been a Corporate Agent, the Corporate Agent shall be deemed to have been so involved if the Proceeding involves action allegedly taken by the Corporate Agent for the benefit of the corporation or in the performance of his or her duties or the course of his or her employment for the corporation.

           (e)    If a Corporate Agent shall be a party defendant in a Proceeding, other than a Proceeding by or in the right of the corporation, and the Board of Directors or a duly authorized committee of disinterested directors shall determine that it is in the best interests of the corporation for the corporation to assume the defense of any such Proceeding, the Board of Directors or such committee may authorize and direct that the corporation assume the defense of the Proceeding and pay all expenses in connection therewith without requiring such Corporate Agent to undertake to pay or repay any part thereof. Such assumption shall not affect the right of any such Corporate Agent to employ his or her own counsel or to recover indemnification under this By-law to the extent that he may be entitled thereto.

           (f)    As used herein, the term "Proceeding" shall mean and include any pending, threatened or completed civil, criminal, administrative or arbitrative action, suit or proceeding, and any appeal therein and any inquiry or investigation which could lead to such action, suit or proceeding.

           (g)    The right to indemnification granted under this Article IV shall not be exclusive of any other rights to which any Corporate Agent seeking indemnification hereunder may be entitled.

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ARTICLE V
Certificates of Stock

           SECTION 5.1.    Transfer of Shares

           Stock of the corporation shall be transferable in accordance with the provisions of Chapter 8 of the Uniform Commercial Code as adopted in New Jersey (N.J.S. 12A:8-101, et seq.) as amended from time to time, except as otherwise provided in the New Jersey Business Corporation Act.

           SECTION 5.2.    Transfer Agent and Registrar

           The Board of Directors may appoint one or more transfer agents and one or more registrars of transfers and may require all stock certificates to bear the signatures of such transfer agent and registrar, one of which signatures may be a facsimile.

           SECTION 5.3.    Fixing Record Date

           For the purpose of determining the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to or dissent from any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividend or allotment of any right, or for the purpose of any other action, the Board of Directors may fix, in advance, a date as the record date for any such determination of shareholders. Such date shall not be more than 60 nor less than ten days before the date of such meeting, nor more than 60 days prior to any other action.

           SECTION 5.4.    Lost, Stolen or Destroyed Certificates

           (a) Where a certificate for shares has been lost, apparently destroyed, or wrongfully taken and the owner thereof fails to so notify the corporation or the transfer agent of that fact within a reasonable time after he has notice of it and the transfer agent or the corporation registers a transfer of the shares before receiving such a notification, the owner shall be precluded from asserting against the corporation any claim for registering the transfer of such shares or any claim to a new certificate.

           (b) Subject to the foregoing, where the owner of shares claims that the certificate representing shares has been lost, destroyed or wrongfully taken, the corporation shall issue a new certificate in place of the original certificate if the owner thereof requests the issue of a new certificate before the corporation has notice that the certificate has been acquired by a bona fide purchaser, makes proof in affidavit form, satisfactory to the Secretary or Assistant Secretary of the corporation and to its transfer agent, of his or her ownership of the shares represented by the certificate and that the certificate has been lost, destroyed or wrongfully taken; files an indemnity bond for an open or unspecified amount or if authorized in a specific case by the corporation, for such fixed amount as the chief executive officer, or a Vice President, or the Secretary of the corporation may

<PAGE 13>

specify, in such form and with such surety as may be approved by the transfer agent and the Secretary or Assistant Secretary of the corporation, indemnifying the corporation and the transfer agent and registrar of the corporation against all loss, cost and damage which may arise from issuance of a new certificate in place of the original certificate; and satisfies any other reasonable requirements imposed by the corporation or transfer agent. In case of the surrender of the original certificate, in lieu of which a new certificate has been issued, or the surrender of such new certificate, for cancellation, the bond of indemnity given as a condition of the issuance of such new certificate may be surrendered.

ARTICLE VI
Miscellaneous

           SECTION 6.l.    Fiscal Year

           The fiscal year of the corporation shall begin on the first day of January in each year and shall end on the 31st day of December next following, unless otherwise determined by the Board of Directors.

           SECTION 6.2.    Corporate Seal

           The corporate seal of the corporation shall have inscribed thereon the name of the corporation, the year 1956 and the words "Corporate Seal, New Jersey."

           SECTION 6.3.    Delegation of Authority

           Any provision of these By-laws granting authority to the Board of Directors shall not be construed as indicating that such authority may not be delegated by the Board of Directors to a committee to the extent authorized by the New Jersey Business Corporation Act and these By-laws.

           SECTION 6.4    Notices

           In computing the period of time for the giving of any notice required or permitted for any purpose, the day on which the notice is given shall be excluded and the day on which the matter noticed is to occur shall be included. If notice is given by mail, telegraph, telex or facsimile transmission, the notice shall be deemed to be given when deposited in the mail, delivered to the telegraph or telex office or transmitted via facsimile transmitter, addressed to the person to whom it is directed at his or her last address as it appears on the records of the corporation, with postage or charges prepaid thereon; provided, however, that notice must be given by telegraph, telephone, telex, facsimile transmission, personal service or by personally advising the person orally when, as authorized in these By-laws, less than three days' notice is given. Notice to a shareholder shall be addressed to the address of such shareholder as it appears on the sto ck transfer records of the corporation.

<PAGE 14>

ARTICLE VII
By-Laws and Their Amendments

Subject to the rights, if any, of the holders of any series of Preference Stock then outstanding, the By-laws of the corporation shall be subject to alteration, amendment or repeal, and new By-laws not inconsistent with any provisions of the Certificate of Incorporation and not inconsistent with the laws of the State of New Jersey may be made, either by the affirmative vote of a majority of the votes cast at any annual or special meeting of shareholders by the holders of shares entitled to vote thereon, or, except with respect to By-laws adopted by the shareholders of the corporation which by their terms may not be altered, amended or repealed by the Board of Directors, by the affirmative vote of a majority of the whole Board of Directors at any regular or special meeting of the Board of Directors.

ARTICLE VIII
National Emergency

           For the purpose of this Article VIII a national emergency is hereby defined as any period following an enemy attack on the continental United States of America or any nuclear or atomic disaster as a result of which and during the period that communication or the means of travel among states in which the corporation's plants or offices are disrupted or made uncertain or unsafe. Persons not directors of the corporation may conclusively rely upon a determination by the Board of Directors of the corporation, at a meeting held or purporting to be held pursuant to this Article VIII that a national emergency as hereinabove defined exists regardless of the correctness of such determination. During the existence of a national emergency under the foregoing provisions of this Article VIII the following provisions shall become operative but no other provisions of these By-laws shall become inoperative in such event unless directly in conflict with this Article VIII or action taken pursuant hereto:

           (a)    When it is determined in good faith by any director that a national emergency exists, special meetings of the Board of Directors may be called by such director and at any such special meeting two directors shall constitute a quorum for the transaction of business including without limiting the generality hereof the filling of vacancies among directors and officers of the corporation and the election of additional officers. The act of a majority of the directors present thereat shall be the act of the Board of Directors. If at any such special meeting of the Board of Directors there shall be only one director present such director present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given of any such adjournment. The director calling any such special meeting shall make a reasonable effort to notify all other directors of the time and place of such speci al meeting, and such effort shall be deemed to constitute the giving of reasonable notice of such special meeting and every director shall be deemed to have waived any requirement, of law or otherwise, that any other notice of such special meeting be given. The directors present at any such special meeting shall make reasonable effort to notify all absent directors of any action taken thereat, but failure to give such notice shall not affect the validity of the action taken at any such meeting. Any action taken at any such special meeting may be conclusively

<PAGE 15>

relied upon by all directors, officers, employees, and agents of, and all persons dealing with, the corporation.

           (b)    The Board of Directors shall have the power to alter, amend, or repeal any Articles of these By-laws by the affirmative vote of at least two-thirds of the directors present at any special meeting attended by two or more directors and held in the manner prescribed in paragraph (a) of this Article, if it is determined in good faith by said two-thirds that such alteration, amendment or repeal would be conducive to the proper direction of the corporation's affairs.

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EX-31 3 exhibit31-sec302.htm EXHIBIT 31 SEC 302 CERTIFICATIONS OF CEO AND CFO Exhibit 31

EXHIBIT 31(a)
Certification of Chief Executive Officer
I, Donald M. James, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Vulcan Materials Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)		Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)		Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)		Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date October 28, 2005
			/s/ Donald M. James Donald M. James Chairman and Chief Executive Officer

EXHIBIT 31(b)
Certification of Chief Financial Officer
I, Daniel F. Sansone, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Vulcan Materials Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)		Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)		Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)		Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date October 28, 2005
			/s/ Daniel F. Sansone Daniel F. Sansone Senior Vice President, Chief Financial Officer and Treasurer

EX-32 4 exhibit32-sec906.htm EXHIBIT 32 SEC 906 CERTIFICATIONS OF CEO AND CFO Exhibit 32

EXHIBIT 32(a)

Certificate of Chief Executive Officer of Vulcan Materials Company Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
I, Donald M. James, Chairman and Chief Executive Officer of Vulcan Materials Company, certify that the Quarterly Report on Form 10-Q (the "Report") for the quarter ended September 30, 2005, filed with the Securities and Exchange Commission on the date hereof:
(i)	fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Vulcan Materials Company.
		/s/Donald M. James Donald M. James Chairman and Chief Executive Officer October 28, 2005
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Vulcan Materials Company and will be retained by Vulcan Materials Company and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32(b)

Certificate of Chief Financial Officer of Vulcan Materials Company Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
I, Daniel F. Sansone, Senior Vice President and Chief Financial Officer of Vulcan Materials Company, certify that the Quarterly Report on Form 10-Q (the "Report") for the quarter ended September 30, 2005, filed with the Securities and Exchange Commission on the date hereof:
(i)	fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Vulcan Materials Company.
		/s/Daniel F. Sansone Daniel F. Sansone Senior Vice President and Chief Financial Officer October 28, 2005
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Vulcan Materials Company and will be retained by Vulcan Materials Company and furnished to the Securities and Exchange Commission or its staff upon request.

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	Dec. 31 2004
Accounts and notes receivable Inventories Prepaid expenses Investments and long-term receivables Property, plant and equipment, net Goodwill Other assets Total assets	$ 88.5 37.5 0.9 9.4 321.4 0.4 0.1 $ 458.2
Current liabilities Asset retirement obligations All other noncurrent liabilities Minority interest in a consolidated subsidiary Total liabilities	$ 61.5 17.5 8.4 101.0 $ 188.4

	Sept. 30 2005
Less than one year Due in 1-2 years Due in 2-5 years Due after 5 years Total available-for-sale securities	$ 10,100 - -- - -- 182,620 $ 192,720

--	New West Materials Co., LLC - five aggregates facilities and five asphalt plants in Arizona.
--	Long Branch Quarry, LLC - an aggregates facility in Georgia.
--	Critser Companies, Inc. and Northern Indiana Materials Corporation - five aggregates facilities in Indiana.
--	Polk County Stone, LLC - an aggregates facility in Tennessee.

--	A modified-prospective method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of FAS 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of FAS 123 for all awards granted to employees prior to the effective date of FAS 123(R) that remain unvested on the effective date.
--	A modified-retrospective method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under FAS 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim periods of the year of adoption.

	2005	2004
Cash payments: Interest (exclusive of amount capitalized) Income taxes	$ 26,170 173,053	$ 33,045 58,635
Noncash investing and financing activities: Amounts referable to business acquisitions: Liabilities assumed Noncash proceeds from the sale of the Chemicals business: Earn-outs (Note 3) Working capital adjustments	4,709 128,167 14,213	- -- - -- - --

Period	Total Number of Shares Purchased	Average Price Paid per Share (1)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (2)
July 1 - 31, 2005	--	$ --	--	7,261,350
Aug. 1 - 31, 2005	643,000	$67.57	643,000	6,618,350
Sept. 1 - 30, 2005	152,800	$69.86	152,800	6,465,550
Total	795,800	$68.01	795,800