-----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, SflBpAkhHH9O/73KR0NJpGpIVm6GmIJNEbU9My5QM5ZOKIRNhOBVZP8gOWFPDH4a GHZfQ1W38C0nSXB0v5oaTA== 0000103973-97-000002.txt : 19970327 0000103973-97-000002.hdr.sgml : 19970327 ACCESSION NUMBER: 0000103973-97-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 18 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970326 SROS: NYSE 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04033 FILM NUMBER: 97563767 BUSINESS ADDRESS: STREET 1: ONE METROPLEX DR CITY: BIRMINGHAM STATE: AL ZIP: 35209 BUSINESS PHONE: 2058773000 MAIL ADDRESS: STREET 1: PO BOX 530187 CITY: BIRMINGHAM STATE: AL ZIP: 35253-0187 10-K 1 10K96 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 1-4033 VULCAN MATERIALS COMPANY (Exact name of registrant as specified in its charter) New Jersey 63-0366371 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Metroplex Drive, Birmingham, Alabama 35209 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (205) 877-3000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered Common Stock, $1 Par Value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant as of February 28, 1997: Common Stock, $1 Par Value $2,199,958,756 The number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: Shares outstanding at February 28, 1997 Common Stock, $1 Par Value 33,976,197 Documents Incorporated by Reference: Portions of the registrant's Annual Report to Shareholders for the year ended December 31, 1996, are incorporated by reference into Parts I, II and IV of this Annual Report on Form 10-K. Portions of the registrant's annual proxy statement for the annual meeting of its shareholders to be held on May 16, 1997, are incorporated by reference into Part III of this Annual Report on Form 10-K. VULCAN MATERIALS COMPANY CROSS REFERENCE SHEET FOR DOCUMENTS INCORPORATED BY REFERENCE HEADING IN ANNUAL REPORT PAGE IN FORM 10-K TO SHAREHOLDERS FOR ANNUAL ITEM NO. YEAR ENDED DECEMBER 31, 1996 REPORT 1. Business (Financial Results Segment Financial Data 42-43 by Business Segments) Note 12, Segment Data 65 Note 14 Acquisitions 66 3. Legal Proceedings Note 10, Other Commitments and Contingent Liabilities 64 5. Market for the Registrant's Common Stock Market Prices Common Equity and Related and Dividends 44 Stockholder Matters 6. Selected Financial Data Selected Financial Data 41 7. Management's Discussion and Management's Discussion 45-51 Analysis of Financial and Analysis Condition and Results Financial Terminology 40 of Operations 8. Financial Statements and Consolidated Statements of Earnings 54 Supplementary Data Consolidated Balance Sheets 55 Consolidated Statements of Cash Flows 56 Consolidated Statements of Shareholders' Equity 57 Notes to Financial Statements 58-66 Management's Responsibility for Financial Reporting and Internal Control 67 Independent Auditors' Report 67 Supplementary Information- Quarterly Financial Data (Unaudited) 53 14. Exhibits, Financial Statement Management's Discussion Schedules and Reports on and Analysis 45-51 Form 8-K HEADING IN PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 16, 1997 10. Directors and Executive Election of Directors; Nominees for Officers of the Registrant Election to the Board of Directors; Directors Continuing in Office; Compliance with the Securities Exchange Act 11. Executive Compensation Compensation of Directors; Executive Compensation; Option Grants in 1996; Shareholder Return Performance Presentation; Retirement Income Plan; Employee Special Severance Plan 12. Security Ownership of Security Ownership of Certain Beneficial Certain Beneficial Owners Owners; Security Holdings of Management and Management VULCAN MATERIALS COMPANY ANNUAL REPORT ON FORM 10-K FISCAL YEAR ENDED DECEMBER 31, 1996 CONTENTS PART ITEM PAGE I 1 Business 1 2 Properties 5 3 Legal Proceedings 8 4 Submission of Matters to a Vote of Security Holders 11 4 a. Executive Officers of the Registrant 11 II 5 Market for the Registrant's Common Equity and Related Stockholder Matters 13 6 Selected Financial Data 13 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 13 8 Financial Statements and Supplementary Data 13 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 14 III 10 Directors and Executive Officers of the Registrant 14 11 Executive Compensation 14 12 Security Ownership of Certain Beneficial Owners and Management 14 13 Certain Relationships and Related Transactions 14 IV 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K 15 -- Signatures 21 PART I ITEM 1. BUSINESS Vulcan Materials Company, a New Jersey corporation incorporated in 1956, and its subsidiaries (together called the "Company") are principally engaged in the production, distribution and sale of construction materials ("Construction Materials") and industrial and specialty chemicals ("Chemicals"). Construction Materials and Chemicals may each be considered both a segment (or a line of business) and a class of similar products. The Company is the nation's leading producer of construction aggregates. All of the Company's products are marketed under highly competitive conditions, including competition in price, service and product performance. There are a substantial number of competitors in both the Construction Materials segment and Chemicals segment. No material part of the business of either segment of the Company is dependent upon a single customer or upon a few customers, the loss of any one of which would have a materially adverse effect on the segment. The Company's products are sold principally to private industry. Although large amounts of construction materials are used in public works, relatively insignificant sales are made directly to federal, state, county or municipal governments, or agencies thereof. The Company conducts research and development activities for both of its business segments. The Construction Materials research and development laboratory is located near Birmingham, Alabama. The Chemicals research and development laboratories are located in Wichita, Kansas and Columbus, Georgia. In general, the Company's research and development effort is directed to applied technological development for the use of its Construction Materials and Chemicals products as well as for the manufacturing or processing of its Chemicals products. The Company spent approximately $1,080,000 in 1994, $1,142,000 in 1995 and $1,091,000 in 1996 on research and development activities for its Construction Materials segment. The Company spent approximately $7,215,000 in 1994, $9,159,000 in 1995 and $7,939,000 in 1996 on research and development activities for its Chemicals segment. The Company estimates that capital expenditures for environmental control facilities in the current fiscal year (1997) and the succeeding fiscal year (1998) will be approximately $2,367,000 and $1,130,000, respectively, for the Construction Materials segment, and $3,849,000 and $3,000,000, respectively, for the Chemicals segment. The Company's principal sources of energy are electricity, natural gas and diesel fuel. The Company does not anticipate any material difficulty in obtaining the required sources of energy required for its operations. In 1996, the Construction Materials segment employed an average of approximately 5,074 people. The Chemicals segment employed an average of approximately 1,704 people. The Company's corporate office employed an average of approximately 148 people. The Company considers its relationship with its employees to be good. Financial results of the Company for any individual quarter are not necessarily indicative of results to be expected for the year, due primarily to the effect that weather can have on the sales and production volume of the Construction Materials segment. Normally, the highest sales and earnings of the Construction Materials segment are attained in the third quarter and the lowest are realized in the first quarter. CONSTRUCTION MATERIALS The Company's construction materials business consists of the production and sale of crushed stone, sand, gravel, rock asphalt and crushed slag (a by-product of steel production). Crushed stone constituted approximately 79% of the dollar volume of the Construction Materials segment's 1996 sales, as compared to 77% in 1995 and 75% in 1994. Construction aggregates of suitable characteristics are employed in virtually all types of construction, including highway construction and maintenance, and in the production of asphaltic and portland cement concrete mixes. They also are widely used as railroad track ballast. Each type of aggregate is sold in competition with other types of aggregates and in competition with other producers of the same type of aggregate. Because of the relatively high transportation costs inherent in the business, competition generally is limited to the areas in relatively close proximity to production facilities. Noteworthy exceptions are the areas along the Mississippi and Tennessee-Tombigbee river systems and the Gulf Coast which are served by the Company's Reed quarry, areas served by rail-connected quarries, and the areas along the U.S. coast served by ocean-going vessels that transport stone from the Company's joint venture operation in Mexico. The Company's construction aggregates are sold in 17 states primarily in the Southeast, Midwest and Southwest regions of the United States. During 1996, the Company completed several acquisitions, including stone quarries in Alabama, Arkansas and Texas, an aggregates distribution facility in northern Illinois and an aggregates distribution business in Louisiana. Shipments to customers of all construction aggregates from the Company's domestic operations in 1996 totaled approximately 147 million tons, with crushed stone shipments to customers accounting for approximately 138 million tons. In 1996, the Company, directly or through joint ventures, operated 127 permanent crushed stone plants in 14 states and Mexico for the production of crushed limestone and granite with estimated reserves totaling approximately 8.1 billion tons. In 1996, the Company, directly or through joint ventures, operated 12 sand and gravel plants, 4 slag plants and various other types of plants which produce rock asphalt and other aggregates. Estimates of sand and gravel reserves, calculated in a manner comparable to the estimates of stone reserves set forth above, total approximately 43 million tons. Other Construction Materials products and services include asphaltic concrete, ready-mixed concrete, trucking services, barge transportation, coal handling services, a Mack Truck distributorship, paving construction, dolomitic lime, emulsified asphalt and several other businesses. Environmental and zoning regulations have made it increasingly difficult for the construction aggregates industry either to expand existing quarries or to develop new quarries. Although it cannot be predicted what policies will be adopted in the future by governmental bodies regarding environmental controls which affect the Construction Materials industry, the Company anticipates that future environmental control costs will not have a materially adverse effect upon its business. CHEMICALS The Chemicals Group is organized into two business units: the Chloralkali Business Unit which manages the Company's chloralkali and related businesses, and the Performance Systems Business Unit which manages the Company's specialty chemicals and services business. The principal chemicals produced by the Chloralkali Business Unit at the Company's three chloralkali plants described in Item 2 below, are chlorine, caustic soda (sodium hydroxide), muriatic acid, caustic potash (potassium hydroxide), potassium carbonate, chlorinated hydrocarbons and calcium chloride. Chlorine and various hydrocarbons (primarily ethylene and methanol) are used to produce the Unit's line of chlorinated hydrocarbons, including methylene chloride, perchloroethylene, chloroform, methyl chloride, ethylene dichloride, carbon tetrachloride, methyl chloroform and pentachlorophenol. Principal markets for the Chloralkali Business Unit's chemical products include pulp and paper, energy, food, pharmaceutical, cleaning, chemical processing, fluorocarbons, water management and textiles. In the paper-making industry, chlorine is used in pulp and paper bleaching, while caustic soda is used primarily in the kraft and sulfite pulping process. The Company supplies hydrochloric acid to the energy industry for use in oil well stimulation and gas extraction. Caustic soda also is used to demineralize water for steam production at electrical energy facilities and to remove sulfur from gas and coal. Hydrochloric acid, caustic soda, methylene chloride and caustic potash are used by the food and pharmaceutical industries. Perchloroethylene, methylene chloride and methyl chloroform are used in industrial cleaning applications. Perchloroethylene is also used in the drycleaning industry. The Chloralkali Business Unit's sales to the chemical processing industry serve companies that produce organic and inorganic chemical intermediates and finished products ranging from clay-based catalysts to agricultural herbicides. Products sold to this market include hydrochloric acid, chlorine, caustic soda, caustic potash and potassium carbonate. Potassium carbonate is used in the manufacture of screen glass, rubber antioxidants and other chemicals. The Company sells chloroform, methyl chloroform and perchloroethylene to the fluorocarbons market. Chlorine is used in water and sewage management, and caustic soda and caustic potash are used in the production of soaps and detergents. Chlorine also is used as an industrial bleaching agent, in cleaning applications for the electronics industry, as a biocide in the fruit processing industry and in various applications in the oil industry. Calcium chloride, produced at the Company's Wichita complex, has a multitude of uses including de-icing of roads, dust control, road stabilization and oil well completion. The principal chemicals produced for the Performance Systems Business Unit by the Company's Callaway Chemical Company subsidiaries include process aids for the pulp and paper and textile industries and various water management chemicals. Through its Vulcan Chemical Technologies, Inc. (VCT) subsidiary, the Performance Systems Business Unit assembles and markets small-scale chlorine dioxide generators, and sells related chemicals (primarily sodium chlorite manufactured by the Company) and services to the water management, food and beverage processing and pulp and paper industries. This subsidiary also assembles and markets equipment, and sells related chemicals (primarily hydrogen peroxide purchased from others) and services, to the municipal and industrial water management markets. Additionally, the Performance Systems Business Unit markets sodium chlorite produced at the Chloralkali Business Unit's Wichita plant. Sodium chlorite is used in the water management, food and beverage processing, pulp and paper, textile and electronics industries. The Performance Systems Business Unit also markets sodium hydrosulfite which is used primarily in the pulp and paper industry and produced at the Chloralkali Business Unit's Port Edwards plant. In June 1996, the Company's Callaway Chemical Company subsidiary acquired substantially all of the assets of Mayo Chemical Company, Inc. Mayo produces and markets specialty chemicals for the water management, textile, industrial and institutional cleaning, mining and pulp and paper industries. Callaway also acquired the textile chemicals business of Laun-Dry Supply Co., Inc., in December 1996. The Company's VCT subsidiary made three small acquisitions in 1996. It acquired the stock of Miller-Aldridge Chemicals, Inc., which supplies sanitation and other products to the food processing industry in the midwest United States, in June 1996. In September 1996, VCT acquired the municipal drinking water management business of the Drew Industrial Division of Ashland Chemical Company. Finally, in December 1996, VCT purchased the food processing business of Savolite, Inc., which supplies sanitation and other products to customers primarily in the Pacific Northwest region of the United States. The Company competes throughout the United States with numerous companies, including some of the largest chemical companies, in the production and sale of its lines of chemicals. The Company also competes for sales to customers located outside the United States, with sales to such customers currently accounting for approximately 6% of the sales of the Company's Chemicals segment. The Company's underground reserves of salt, which is a basic raw material in the production of chlorine and caustic soda, are located near its Wichita, Kansas and Geismar, Louisiana plants. The Company purchases salt for its Port Edwards, Wisconsin plant. Ethylene, methanol, and vinyl chloride monomer, the other major raw materials used in the Chloralkali Business Unit and various chemicals used by the Performance Systems Business Unit are purchased from several different suppliers. Sources of salt, ethylene, methanol, vinyl chloride monomer and other various chemicals are believed to be adequate for the Company's operations and the Company does not anticipate any material difficulty in obtaining the raw materials which it uses. The Company's chemical operations are subject to the Resource Conservation and Recovery Act ("RCRA"). Under the corrective action requirements of RCRA, the Environmental Protection Agency ("EPA") must identify facilities subject to RCRA's hazardous waste permitting provisions where practices in the past have caused releases of hazardous waste or constituents thereof. The owner of any such facility is then required to conduct a Remedial Facility Investigation ("RFI") defining the nature and extent of any such releases described by the EPA. If the results of the RFI determine that constituent concentrations from any such release exceed action levels specified by the EPA, the facility owner is further required to perform a Corrective Measures Study ("CMS") identifying feasible technological alternatives for addressing these releases. Depending upon the results reported to the EPA in the RFI and CMS, the EPA subsequently may require Corrective Measures Implementation ("CMI") by the facility owner - essentially, implementation of a cleanup plan developed by the EPA based on the RFI and CMS. The Company expects to incur RFI and CMS costs over the next several years at its Geismar, Port Edwards and Wichita manufacturing facilities. For each of these three facilities, the RFI and CMS results will determine whether the EPA subsequently requires a CMI to address releases at the facility, and the scope and cost of any such CMI. With respect to those RFI and CMS costs that currently can be reasonably estimated, the Company has determined that its accrued reserves are adequate to cover such costs. However, the total costs which ultimately may be incurred by the Company in connection with discharging its obligations under RCRA's corrective action requirements cannot reasonably be estimated at this time. Various other environmental regulations also have a restrictive effect upon the chemicals industry, both as to production and sales, particularly the production and sale of certain chemicals which are subject to regulation as ozone depleting chemicals. The production and marketing of carbon tetrachloride ended effective January 1, 1996, for most end uses except for exports to Article 5 countries as defined by the Montreal Protocol on Ozone Depleting Chemicals. The production of methyl chloroform for emissive applications also ended effective January 1, 1996. Existing inventory of methyl chloroform may continue to be marketed for emissive uses. In addition, methyl chloroform will continue to be produced and marketed for non-emissive uses while carbon tetrachloride will continue to be produced and marketed for export to Article 5 countries. However, sales volume of both products will be lower than in prior years. FINANCIAL RESULTS BY BUSINESS SEGMENTS Net sales, earnings, identifiable assets and related financial data for each of the Company's business segments for the three years ended December 31, 1996, are reported on page 65 (Note 12 of the Notes to Financial Statements) and on pages 42 and 43 (under the caption "Segment Financial Data") in the Company's 1996 Annual Report to Shareholders, which pages are incorporated herein by reference. ITEM 2. PROPERTIES CONSTRUCTION MATERIALS The Company's current estimate of approximately 8.1 billion tons of stone reserves is approximately 600 million tons more than the estimate reported at the end of 1995. These reserves include stone reserves in Mexico owned or controlled by the Company's Mexican joint venture. Increases in the Company's reserves have resulted from 1996 acquisitions in Alabama, Arkansas and Texas, and significant reserve acquisitions in Mexico by the Company's Mexican joint venture. Management believes that the quantities of reserves at the Company's stone quarries are sufficient to result in an average quarry life of approximately 56 years at present operating levels. The foregoing estimates of reserves are of recoverable stone of suitable quality for economic extraction, based on drilling and studies by the Company's geologists and engineers, recognizing reasonable economic and operating restraints as to maximum depth of overburden and stone excavation. Of the 127 stone quarries which the Company operates directly or through joint ventures, 34 are located on owned land, 22 are on land owned in part and leased in part, and 71 are on leased land. While some of the Company's leases run until reserves at the leased sites are exhausted, generally the Company's leases have definite expiration dates which range from 1997 to 2085. Most of the Company's leases have options to extend them well beyond their current terms. Due to transportation costs, the marketing areas for most quarries in the construction aggregates industry are limited, often consisting of a single metropolitan area or one or more counties or portions thereof. The following table itemizes the Company's 10 largest active stone quarries in terms of the quantity of stone reserves, with nearby major metropolitan areas (if applicable) shown in parentheses:
ESTIMATED YEARS OF LIFE LEASE AT AVERAGE EXPIRATION RATE OF NATURE OF DATE, IF LOCATION PRODUCT PRODUCTION(1) INTEREST APPLICABLE(2) McCook (Chicago), Illinois Limestone 91.5(3) Owned Paducah, Kentucky Limestone 42.7 Leased (4) Grayson (Atlanta), Georgia Granite Over 100 Owned Playa Del Carmen, Mexico Limestone 87.4 Owned(5) Gray Court (Greenville), South Carolina Granite Over 100 Owned Warrenton, Virginia (Washington, D.C.) Diabase Over 100 Leased (4) Kennesaw (Atlanta), Georgia Granite 46.7 75% Owned 25% Leased 2013 Manteno, Illinois Limestone Over 100 Leased 2005 Skippers, Virginia Granite Over 100 Leased 2016 Lawrenceville (Norfolk/Virginia Beach), Virginia Granite 81.6 25% Owned 75% Leased 2024 (1) Estimated years of life of stone reserves are based on the average annual rate of production of the quarry for the most recent three-year period, except that if reserves are acquired or if production has been reactivated during that period, the estimated years of life are based on the annual rate of production from the date of such acquisition or reactivation. Revisions may be necessitated by such occurrences as changes in zoning laws governing quarry properties, changes in stone specifications required by major customers and passage of government regulations applicable to quarry operations. Estimates also are revised when and if additional geological evidence indicates that a revision is necessary. (2) Renewable by the Company through date shown. (3) For some time, the Metropolitan Water Reclamation District of Greater Chicago (MWRD) has had under consideration the condemnation of a portion of this quarry in order to use it as a reservoir. The Company believes that this action, if it occurs, could significantly reduce the life of this quarry, but will not have a material effect on the financial condition of the Company as a whole. In 1996, the MWRD announced that it plans to have reservoirs created on real property it owns near the McCook quarry and that its current plan does not include using the McCook quarry as a reservoir. (4) Lease does not expire until reserves are exhausted. Surface rights at the Paducah, Kentucky, quarry are owned. (5) Owned by the Company's joint venture in Mexico.
The estimated average life of the Company's sand and gravel operations, calculated in the same manner as described in the footnote to the table set out above, is approximately 8 years. Approximately 39% of the Company's estimated 43 million tons of sand and gravel reserves are located on owned land, with the remaining 61% located on leased land. CHEMICALS Manufacturing facilities for the chemicals produced by the Chloralkali Business Unit are owned and operated by the Company at Wichita, Kansas, Geismar, Louisiana, and Port Edwards, Wisconsin. With a few exceptions, the Geismar and Wichita facilities produce the full line of products manufactured by the Company's Chloralkali Business Unit. The Port Edwards plant produces chlorine, caustic soda, muriatic acid, caustic potash, potassium carbonate and sodium hydrosulfite. All of the facilities at Wichita are located on a 1,396-acre tract of land owned by the Company. Mineral rights for salt are held by the Company under two leases that are automatically renewable from year to year unless terminated by the Company and under several other leases which may be kept in effect so long as production from the underlying properties is continued. In addition, the Company owns 320 acres of salt reserves and 160 acres of water reserves. The Company maintains an electric power cogeneration facility at the Wichita plant site which is capable of generating approximately one-third of the plant's electricity and two-thirds of its process steam requirements. Effective July 1995, pursuant to a long-term agreement, the Company has placed this facility in reserve and is purchasing all of its requirements for electric power from a local utility at favorable rates. The facilities at Geismar, Louisiana are located on a 1,266-acre tract of land owned by the Company. Included in the facilities at the Geismar plant is an electric power cogeneration facility owned by the Company which supplies substantially all of the electricity and process steam required by the plant. Mineral rights for salt are held under a lease expiring in 2007. The plant facilities at Port Edwards, Wisconsin are located on a 34-acre tract of land, the surface rights to which are owned by the Company. Currently, the Company purchases its salt and electrical power requirements for the Port Edwards facility from regional sources of supply. Manufacturing facilities for chemicals produced by the Performance Systems Business Unit (other than sodium chlorite produced at Wichita and sodium hydrosulfite produced at Port Edwards) are operated by subsidiaries of the Company. Callaway Chemical Company owns a headquarters office building and two production facilities in Columbus, Georgia and additional facilities in Smyrna, Georgia, Dalton, Georgia and Shreveport, Louisiana. Callaway Chemical Limited has an office and small production facility on leased property in Vancouver, British Columbia. Vulcan Chemical Technologies, Inc., leases its office and production facilities in West Sacramento, California and owns a small production facility and warehouse space near Kansas City, Missouri. The Company's Chemicals manufacturing facilities are designed to permit a high degree of flexibility as to feedstocks, product mix and by-product ratios; therefore, actual plant production capacities vary according to these factors. Management does not believe, however, that there is material excess production capacity at the Company's Chemicals facilities. OTHER PROPERTIES The Company's corporate offices are located in an office complex near Birmingham, Alabama. Headquarters staffs of the Construction Materials and Chemicals segments, the Southern Division of the Construction Materials segment, and Vulcan Gulf Coast Materials, Inc., also are located in this complex. The space is occupied pursuant to several leases. The lease pursuant to which the majority of the space is leased runs through December 31, 1998. The Company has the option of extending this lease for two five-year periods. The Company's space in this complex is leased at an approximate annual rental, as of December 31, 1996, of $1,470,000, which is subject to limited escalation. ITEM 3. LEGAL PROCEEDINGS The Company is a defendant in various lawsuits in the ordinary course of business. It is not possible to determine with precision the probable outcome of or the amount of liability, if any, under these lawsuits; however, in the opinion of the Company and its counsel, the disposition of these lawsuits will not adversely affect the consolidated financial position of the Company to a material extent. In the course of its Construction Materials and Chemicals operations, the Company is subject to occasional governmental proceedings and orders pertaining to occupational health and safety or to protection of the environment, such as proceedings or orders relating to noise abatement, air emissions or water discharges. As part of its continuing program of environmental stewardship, however, the Company has been able to resolve such proceedings and to comply with such orders without any materially adverse effects on its business. 1. The Company has been designated by the United States Environmental Protection Agency ("EPA") as a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") with respect to a Louisiana chemical waste disposal site, referred to as the Cleve Reber site. Records indicate that the Company generated a portion of the waste placed at the site. In 1996, the Company, together with certain other participating PRPs, completed all site remediation activities required under a CERCLA unilateral administrative order issued by the EPA, except the ongoing operation and maintenance ("O&M") of the completed remedy. Mid- year 1998, EPA anticipates conducting its five-year review of site conditions. If, based on that review, site conditions are satisfactory, the Cleve Reber site will thereafter be removed from the national list of Superfund sites. The Company is continuing to make payments from its accrued reserve to fund, under an agreement among the participating PRPs, the Company's allocated share of the O&M costs. An understanding in principle has also been reached among the Company, the other participating PRPs and EPA regarding settlement of EPA's as yet inchoate claim for recovery of certain past CERCLA response costs EPA allegedly incurred in connection with the Cleve Reber site. Assuming this understanding in principle is subsequently implemented, the Company believes that total provisions now recorded are adequate to cover its share of the anticipated remaining costs. 2. In 1991, the Company received a notification from the State of New Jersey Department of Environmental Protection ("NJDEP") concerning a site located in Newark, New Jersey, which the Company previously owned and upon which the Company operated a chemicals production facility from the early 1960s until 1974. The notification contends that hazardous substances and pollutants contaminate the site and that a Remedial Investigation/ Feasibility Study ("RI/FS") is required in order to determine the nature and extent of such contamination and whether a remedial action plan with respect thereto should be developed. On August 20, 1993, two other allegedly responsible parties, Safety-Kleen Environsystems Company and Bristol-Meyers Squibb Company (collectively, the "Respondents"), entered into an Administrative Consent Order ("ACO") issued by the NJDEP concerning the site. The ACO contains certain provisions governing the conduct by the Respondents of an RI/FS for the site and remedial actions, if any, resulting therefrom. Under a separate agreement with Respondents and certain successors, the Company will share in the cost of the RI/FS. The Company has been informally advised by the NJDEP that, if the Company continues to participate in the RI/FS, the NJDEP will not seek to enforce a directive issued in 1991 requiring the Company to pay $1 million to the NJDEP to be used for the conduct of the RI/FS. Depending upon the results of the RI/FS, NJDEP will determine what site remediation is required under the ACO, if any. If remediation is required, the Respondents or the NJDEP may assert that the Company should bear some responsibility in connection with such remediation. At this time, however, it is impossible to predict the ultimate outcome of this matter. 3. In 1994, the EPA notified the Company that it was a CERCLA PRP with respect to the Jack's Creek/Sitkin Smelting Superfund Site, a Pennsylvania smelting facility operated by the Sitkin Smelting Company from 1958 until declaring bankruptcy in 1977. EPA claims that there are releases and threatened releases of various hazardous substances from this site. By the summer of 1996, EPA had undertaken investigative and response actions which reportedly cost approximately $6.4 million. Although a record of decision ("ROD") for this site has not yet been issued by the EPA, the RI/FS prepared by EPA's contractor favors a remedy involving chemical fixation and capping, with an estimated cost of $56.2 million. The Company is among some 880 PRPs that EPA claims shipped to the site a total of approximately 286 million pounds of material alleged to contain hazardous substances. EPA claims that the Company's shipments totaled approximately 1.8 million pounds over the five year period from 1972-1977. Although claiming the PRPs are jointly and severally liable under CERCLA for site response costs, EPA has prepared a volumetric ranking of those PRPs who allegedly sent material to the site during the 1972-77 period. Under that ranking, the percentage attributed to the Company is 0.877%; however, the percentage has not been agreed to by the Company or other PRPs as a basis for allocating responsibility at this site. The Company and over 30 other PRPs have formed a PRP group for this site ("PRP Group") to respond to the claims relating to the site which may be asserted by EPA and others. In April 1995, the PRP Group submitted to EPA a study prepared by an independent consultant to identify cost effective alternatives for remediating the site. The alternative proposed for implementation by this study was estimated to cost approximately $12 million. The PRP Group has subsequently commissioned and submitted to EPA additional studies and other evaluations to support the selection of this proposed alternative. At this point, EPA is reviewing those studies. EPA's stated objective is to issue a ROD by the second quarter of 1997, and EPA has indicated interest in negotiating with the PRP Group a possible settlement of alleged liabilities relating to this site. A negotiating team has been appointed by the PRP Group, and settlement negotiations with EPA are anticipated in the near future. In preparation for such negotiations, the PRP Group has adopted a proposed method for allocating among PRP Group members the costs of implementing the alternative remedy advocated by the PRP Group (assuming that remedy is selected by EPA). Under that allocation arrangement, the Company's share percentage would be approximately 2.18%. Under the circumstances, the Company is not able to predict the probability of a favorable or unfavorable outcome, or the amount of potential loss in the event of any unfavorable outcome. 4. Lawsuits naming the Company have been filed in the District Courts of Jefferson and Ector counties, Texas, by individual plaintiffs alleging silicosis arising from exposure to industrial sand used for abrasive blasting which was marketed by the Company from 1988 to 1994. The Company is one of from 20-40 defendants named in each case. Currently, 28 such cases are pending against the Company. At this time, the Company does not expect that settlements or adverse judgments, if any, will adversely affect the consolidated financial position of the Company to a material extent. 5. In August 1995, a complaint was filed in the District Court of Nueces County, Texas, 214th Judicial District, by 144 individual plaintiffs against 93 defendants, including the Company. Plaintiffs allege personal injuries and damages arising from exposure to petroleum products, asbestos, chemicals, solvents, minerals, metals and other products in connection with plaintiffs' employment at the Corpus Christi Army Depot in Corpus Christi, Texas. Plaintiffs' ad damnum plea is for $100 million in compensatory damages and "at least" $400 million in punitive damages from all defendants. The Company has retained counsel and is currently defending the action. The Company does not believe that its potential share, if any, of costs related to this action will adversely affect the consolidated financial position of the Company to a material extent. 6. In 1987, the Company sold its former Neville Island, Pennsylvania, detinning facility to AMG Resources Corporation ("AMG"). Under the terms of the sale and subsequent agreements, the Company retained responsibility for the assessment of environmental contamination at the site, the preparation of a remediation plan for submission to appropriate environmental agencies, and the implementation of the approved remediation plan. In 1991, the Company prepared and submitted to the Pennsylvania Department of Environmental Protection ("PADEP") the results of an extensive site investigation. Subsequently, the Company's independent consultants prepared a remediation proposal, and in November 1994, the Company presented its remediation concept to PADEP. In October 1995, the Company filed with PADEP a Notice of Intent to Remediate the site under certain applicable provisions of the Pennsylvania Land Recycling and Environmental Remediation Standards Act ("Act 2"). With PADEP's approval, the Company subsequently implemented a pilot remediation project which addressed soil contamination in an area of the site where AMG was constructing a new can recycling unit. Based on results of the pilot remediation effort, the Company has proposed to conduct additional remediation activities under Act 2 to address the remainder of the AMG site, including lead conditions in soils and arsenic conditions in groundwater. (A subsequent pilot test of injection techniques for pH adjustment to reduce arsenic solubility did not prove successful, and other options are being evaluated.) Under present circumstances, the Company can neither predict the probability of a favorable or unfavorable ultimate resolution of this matter nor the amount, if any, of costs in excess of current reserves which might be incurred in connection with resolving this matter. Note 10, Other Commitments and Contingent Liabilities on page 64 of the Company's 1996 Annual Report to Shareholders is hereby incorporated by reference. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to the Company's security holders through the solicitation of proxies or otherwise during the fourth quarter of 1996. ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT The names, positions and ages of the executive officers of the Company are as follows: NAME POSITION AGE Herbert A. Sklenar Chairman of the Board of Directors 65 Donald M. James President, Chief Executive Officer and Director 48 Peter J. Clemens, III Executive Vice President and Chief Administrative Officer 53 William F. Denson, III Vice President, Law and Secretary 53 Daniel F. Sansone Vice President, Finance 44 Richard K. Carnwath Vice President, Planning and Development 48 Ejaz A. Khan Controller 40 John A. Heilala President, Chloralkali Business Unit 56 Robert A. Wason IV President, Performance Systems Business Unit 45 Guy M. Badgett, III President, Southeast Division 48 Perry W. Donahoo President, Southern Division 42 William L. Glusac President, Midwest Division 46 Daniel J. Leemon President, Midsouth Division 58 Thomas R. Ransdell President, Southwest Division and President, 54 Vulcan Gulf Coast Materials, Inc. James W. Smack President, Mideast Division 53 The principal occupations of the executive officers during the past five years are set forth below: Herbert A. Sklenar was Chairman and Chief Executive Officer from May 1992 until February 1997 when he relinquished the position of Chief Executive Officer. Donald M. James was elected President and Chief Executive Officer in February 1997. He was elected President and Chief Operating Officer in February 1996. Mr. James joined the Company in 1992 as Senior Vice President and General Counsel. In January 1994, Mr. James was elected President of the Southern Division and in August 1995, he was also elected Senior Vice President, South, Construction Materials Group. Peter J. Clemens, III, was elected Executive Vice President and Chief Administrative Officer in May 1996. Prior to that time he served as Senior Vice President, West, Construction Materials Group and Senior Vice President, Finance. William F. Denson, III, has served as Secretary since April 1981. He served as Assistant General Counsel until May 1992, when he was elected Vice President and Assistant General Counsel, and was elected Vice President, Law effective January 1, 1994. Daniel F. Sansone was elected Vice President, Finance effective January 1994. Prior to that time he served as Vice President and Controller. Richard K. Carnwath has served as Vice President, Planning and Development since 1985. Ejaz A. Khan served as Controller, Chemicals Division, until September 1995, when he was elected Controller of the Company. John A. Heilala has served as President, Chloralkali Business Unit since May 1996. From 1994 until 1996, he served as Executive Vice President, Chloralkali, and prior to that time he served as Vice President, Manufacturing, Chemicals Division. Robert A. Wason IV has served as President, Performance Systems Business Unit, since May 1996. From 1994 until 1996, he served as Executive Vice President, Performance Systems, and prior to that time he served as Executive Vice President, Administration and Business Development, Chemicals Division. Guy M. Badgett, III, has served as President, Southeast Division, since 1992. Perry W. Donahoo has served as President, Southern Division, since October 1996. From August 1992 until June 1995, Mr. Donahoo served as President of Reed Crushed Stone Company (formerly a subsidiary of the Company) and as Executive Vice President, Southern Division, from June of 1995 until October 1996. William L. Glusac has served as President, Midwest Division, since 1994. Prior to that time he served as President, Southwest Division. Daniel J. Leemon has served as President, Midsouth Division, since 1993. Prior to that time he served as Senior Vice President, West, Construction Materials Group. Thomas R. Ransdell has served as President, Vulcan Gulf Coast Materials, Inc., since 1987 and also as President, Southwest Division since 1994. James W. Smack has served as President, Mideast Division, since 1991. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS "Common Stock Market Prices and Dividends" on page 44 of the Company's 1996 Annual Report to Shareholders is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA "Selected Financial Data" on page 41 of the Company's 1996 Annual Report to Shareholders is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS "Management's Discussion and Analysis" on pages 45 through 51 and "Financial Terminology" on page 40 of the Company's 1996 Annual Report to Shareholders are incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following information relative to this item is included in the Company's 1996 Annual Report to Shareholders on the pages shown below, which are incorporated herein by reference: PAGE Financial Statements and Notes 54 Management's Responsibility for Financial Reporting and Internal Control 67 Independent Auditors' Report 67 Supplementary Information-Quarterly Financial Data (Unaudited) 53 With the exception of the aforementioned information and the information incorporated by reference in Items 1, 3, 5, 6, 7, 8 and 14, the Company's 1996 Annual Report to Shareholders is not deemed filed as part of this Annual Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE No information is required to be included herein pursuant to Item 304 of Regulation S-K. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT On or before April 7, 1997, the Company will file a definitive proxy statement with the Securities and Exchange Commission pursuant to Regulation 14A (the Company's "1997 Proxy Statement"). The information under the headings "Election of Directors," "Nominees for Election to the Board of Directors" and "Directors Continuing in Office" included in the 1997 Proxy Statement are incorporated herein by reference. For the information required by Item 401 of Regulation S-K concerning executive officers of the registrant, reference is made to the information provided in Part I, Item 4(a) of this Annual Report on Form 10-K. Based solely on a review of Forms 3 and 4 and amendments thereto furnished to the Company pursuant to Rule 240.16a-3(e) during 1996, and of Form 5 and amendments thereto furnished to the Company pursuant to Rule 240.16a-3(e) with respect to 1996, the Company has identified certain persons subject to Section 16(a) of the Securities Exchange Act of 1934 who failed to file on a timely basis required forms. Information concerning such failures under the heading "Compliance with the Securities Exchange Act" included in the Company's 1997 Proxy Statement is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information under the headings "Compensation of Directors," "Executive Compensation," "Option Grants in 1996," "Shareholder Return Performance Presentation," "Retirement Income Plan" and "Employee Special Severance Plan" included in the Company's 1997 Proxy Statement is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information under the headings "Security Ownership of Certain Beneficial Owners" and "Security Holdings of Management" included in the Company's 1997 Proxy Statement is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS No information is required to be included herein pursuant to Item 404 of Regulation S-K, which requires disclosure of certain information with respect to certain relationships or related transactions of the directors and management. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1) FINANCIAL STATEMENTS The following financial statements are included in the Company's 1996 Annual Report to Shareholders on the pages shown below and are incorporated herein by reference: PAGE Consolidated Statements of Earnings 54 Consolidated Balance Sheets 55 Consolidated Statements of Cash Flows 56 Consolidated Statements of Shareholders' Equity 57 Notes to Financial Statements 58 Management's Responsibility for Financial Reporting and Internal Control 67 Independent Auditors' Report 67 Supplementary Information-Quarterly Financial Data (Unaudited) 53 (a) (2) FINANCIAL STATEMENT SCHEDULES The following financial statement schedule for the years ended December 31, 1996, 1995 and 1994 is included in Part IV of this report on the indicated pages: Schedule II Valuation and Qualifying Accounts and Reserves 19 Other schedules are omitted because of the absence of conditions under which they are required or because the required information is provided in the financial statements or notes thereto. Financial statements (and summarized financial information) of 50% or less owned entities accounted for by the equity method have been omitted because they do not, considered individually or in the aggregate, constitute a significant subsidiary. (a) (3) EXHIBITS The exhibits required by Item 601 of Regulation S-K and indicated below, other than Exhibit (12) which is on page 20 of this report, are either incorporated by reference herein or accompany the copies of this report filed with the Securities and Exchange Commission and the New York Stock Exchange. Copies of such exhibits will be furnished to any requesting shareholder of the Company upon payment of the costs of copying and transmitting the same. EXHIBIT (3)(i) Certificate of Incorporation (Restated 1988) of the Company filed as Exhibit 3(a) to the Company's 1988 Form 10-K Annual Report (File No. 1-4033).* EXHIBIT (3)(ii) By-laws of the Company, as restated February 2, 1990, and as last amended February 14, 1997. EXHIBIT (4)(a) Distribution Agreement dated as of May 14, 1991, by and among the Company, Goldman, Sachs & Co., Lehman Brothers and Salomon Brothers Inc., filed as Exhibit 1 to the Form S-3 filed on May 2, 1991 (Registration No. 33-40284).* EXHIBIT (4)(b) Indenture dated as of May 1, 1991, by and between the Company and First Trust of New York (as successor trustee to Morgan Guaranty Trust Company of New York) filed as Exhibit 4 to the Form S-3 on May 2, 1991 (Registration No. 33-40284).* EXHIBIT (10)(a) The Management Incentive Plan of the Company, as last amended and restated filed as Exhibit 10(a) to the Company's 1989 Form 10-K Annual Report (File No. 1-4033).** EXHIBIT (10)(b) The 1991 Long-Range Performance Share Plan of the Company filed as Exhibit A to the Company's definitive proxy statement for the annual meeting of its shareholders held May 16, 1991 (File No. 1-4033).** EXHIBIT (10)(c) The Employee Special Severance Plan of the Company filed as Exhibit 10(g) to the Company's 1989 Form 10-K Annual Report (File No. 1-4033).** EXHIBIT (10)(d) The Unfunded Supplemental Benefit Plan for Salaried Employees filed as Exhibit 10(d) to the Company's 1989 Form 10-K Annual Report (File No. 1-4033).** EXHIBIT (10)(e) The 1983 Long-Term Incentive Plan, as last amended and restated, filed as Exhibit 10(f) to the Company's 1989 Form 10-K Annual Report (File No. 1-4033).** EXHIBIT (10)(f) The Deferred Compensation Plan for Directors Who Are Not Employees of the Company, as last amended and restated on February 17, 1996. Exhibit 10(g) to the Company's 1995 Form 10-K Annual Report (File No. 4033).** EXHIBIT (10)(g) The 1996 Long-Term Incentive Plan of the Company filed as Exhibit 10(h) to the Company's 1995 Form 10-K Annual Report (File No. 4033).** EXHIBIT (10)(h) The Directors Deferred Stock Plan of the Company filed as Exhibit 10(i) to the Company's 1995 Form 10-K Annual Report (File No. 4033).** EXHIBIT (12) Computation of Ratio of Earnings to Fixed Charges for the five years ended December 31, 1996 (set forth on page 20 of this report). EXHIBIT (13) The Company's 1996 Annual Report to Shareholders. EXHIBIT (21) List of the Company's subsidiaries as of December 31, 1996. EXHIBIT (24) Powers of Attorney Information, financial statements and exhibits required by Form 11-K with respect to the Company's Thrift Plan for Salaried Employees, Construction Materials Divisions Hourly Employees Savings Plan and Chemicals Division Hourly Employees Savings Plan, for the fiscal year ended December 31, 1996, will be filed as one or more amendments to this Form 10-K on or before June 28, 1997, as permitted by Rule 15d-21 under the Securities Exchange Act of 1934. *Incorporated by reference. **Management Contract or Compensatory Plan. (b) REPORTS ON FORM 8-K None. INDEPENDENT AUDITORS' REPORT Vulcan Materials Company: We have audited the consolidated financial statements of Vulcan Materials Company and its subsidiary companies as of December 31, 1996, 1995 and 1994 and for the years then ended, and have issued our report thereon dated February 7, 1997; such consolidated financial statements and report are included in your 1996 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of Vulcan Materials Company and its subsidiary companies, listed in Item 14. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements as a whole, presents fairly in all material respects the information shown therein. /s/ DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Birmingham, Alabama February 7, 1997 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 on March 26, 1997. VULCAN MATERIALS COMPANY By /s/ D. M. James D. M. James President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE /s/ H. A. Sklenar Chairman of the Board of Directors March 26, 1997 H. A. Sklenar /s/ D. M. James President, Chief Executive March 26, 1997 D. M. James Officer and Director (Principal Executive Officer) /s/ D. F. Sansone Vice President, Finance and Treasurer March 26, 1997 D. F. Sansone (Principal Financial Officer) /s/ E. A. Khan Controller March 26, 1997 E. A. Khan (Principal Accounting Officer) The following directors: Marion H. Antonini Director Livio D. DeSimone Director John K. Greene Director Richard H. Leet Director Douglas J. McGregor Director Ann D. McLaughlin Director James V. Napier Director Donald B. Rice Director Orin R. Smith Director By /s/ William F. Denson, III March 26, 1997 William F. Denson, III Attorney-in-Fact EXHIBITS TO FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 OF VULCAN MATERIALS COMPANY FILED MARCH 26, 1997 COMMISSION FILE NUMBER 1-4033 EXHIBIT INDEX FORM 10-K FISCAL YEAR ENDED DECEMBER 31, 1996 EXHIBIT (3)(i) Certificate of Incorporation (Restated 1988) of the Company filed as Exhibit 3(a) to the Company's 1988 Form 10-K Annual Report (File No. 1-4033).* EXHIBIT (3)(ii) By-laws of the Company, as restated February 2, 1990, and as last amended February 14, 1997. EXHIBIT (4)(a) Distribution Agreement dated as of May 14, 1991, by and among the Company, Goldman, Sachs & Co., Lehman Brothers and Salomon Brothers Inc., filed as Exhibit 1 to the Form S-3 filed on May 2, 1991 (Registration No. 33-40284).* EXHIBIT (4)(b) Indenture dated as of May 1, 1991, by and between the Company and First Trust of New York (as successor trustee to Morgan Guaranty Trust Company of New York) filed as Exhibit 4 to the Form S-3 on May 2, 1991 (Registration No. 33-40284).* EXHIBIT (10)(a) The Management Incentive Plan of the Company, as last amended and restated filed as Exhibit 10(a) to the Company's 1989 Form 10-K Annual Report (File No. 1-4033).** EXHIBIT (10)(b) The 1991 Long-Range Performance Share Plan of the Company filed as Exhibit A to the Company's definitive proxy statement for the annual meeting of its shareholders held May 16, 1991 (File No. 1-4033).** EXHIBIT (10)(c) The Employee Special Severance Plan of the Company filed as Exhibit 10(g) to the Company's 1989 Form 10-K Annual Report (File No. 1-4033).** EXHIBIT (10)(d) The Unfunded Supplemental Benefit Plan for Salaried Employees filed as Exhibit 10(d) to the Company's 1989 Form 10-K Annual Report (File No. 1-4033).** EXHIBIT (10)(e) The 1983 Long-Term Incentive Plan, as last amended and restated, filed as Exhibit 10(f) to the Company's 1989 Form 10-K Annual Report (File No. 1-4033).** EXHIBIT (10)(f) The Deferred Compensation Plan for Directors Who Are Not Employees of the Company, as last amended and restated on February 17, 1996. Exhibit 10(g) to the Company's 1995 Form 10-K Annual Report (File No. 4033).** EXHIBIT (10)(g) The 1996 Long-Term Incentive Plan of the Company filed as Exhibit 10(h) to the Company's 1995 Form 10-K Annual Report (File No. 4033).** EXHIBIT (10)(h) The Directors Deferred Stock Plan of the Company filed as Exhibit 10(i) to the Company's 1995 Form 10-K Annual Report (File No. 4033).** EXHIBIT (12) Computation of Ratio of Earnings to Fixed Charges for the five years ended December 31, 1996 (set forth on page 20 of this report). EXHIBIT (13) The Company's 1996 Annual Report to Shareholders. EXHIBIT (21) List of the Company's subsidiaries as of December 31, 1996. EXHIBIT (24) Powers of Attorney Information, financial statements and exhibits required by Form 11-K with respect to the Company's Thrift Plan for Salaried Employees, Construction Materials Divisions Hourly Employees Savings Plan and Chemicals Division Hourly Employees Savings Plan, for the fiscal year ended December 31, 1996, will be filed as one or more amendments to this Form 10-K on or before June 28, 1997, as permitted by Rule 15d-21 under the Securities Exchange Act of 1934. *Incorporated by reference. **Management Contract or Compensatory Plan. EX-3.2 2 BY-LAWS BY - LAWS VULCAN MATERIALS COMPANY (Incorporated under the laws of the State of New Jersey) Restated: February 2, 1990 Amended: 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 I N D E X Page ARTICLE I Shareholders' Meetings Section 1.1 Annual Meetings................................1 Section 1.2 Special Meetings...............................1 Section 1.3 Notice and Purpose of Meetings.................1 Section 1.4 Quorum and Adjournments........................1 Section 1.5 Organization...................................2 Section 1.6 Voting.........................................2 Section 1.7 Selection of Inspectors........................3 Section 1.8 Duties of Inspectors...........................3 ARTICLE II Directors Section 2.1 Number, Qualification, Tenure, Term, Quorum, Vacancies, Removal (a) Number, Qualification and Tenure..........4 (b) Term......................................4 (c) Quorum....................................5 Section 2.2 Meetings of the Board of Directors.............5 Section 2.3 Committees of the Board of Directors...........6 Section 2.4 Participation in Meetings by Means of Conference Telephone or Similar Instrument.....7 Section 2.5 Action of Board of Directors and Committees Without a Meeting...................7 Section 2.6 Dividends......................................7 Section 2.7 Conflict of Interest...........................8 ARTICLE III Officers Section 3.1 (a) Corporate Officers........................8 (b) Group Officers............................8 (c) Division and Business Unit Officers.......9 Section 3.2 (a) Term and Removal of Officers of the Corporation...........................9 (b) Term and Removal of Group and Division Officers.........................9 Section 3.3 Chairman of the Board..........................9 Section 3.4 Chief Executive Officer.......................10 Section 3.5 Chief Operating Officer.......................10 Section 3.6 President.....................................10 Section 3.7 Chief Administrative Officer..................10 Section 3.8 Vice Presidents...............................11 Section 3.9 General Counsel...............................11 Section 3.10 Secretary.....................................11 Section 3.11 Treasurer.....................................11 Section 3.12 Controller....................................11 Section 3.13 Other Officers................................12 Section 3.14 Voting Corporation's Securities...............12 ARTICLE IV Indemnification of Directors, Officers and Employees.................................................12 ARTICLE V Certificates of Stock Section 5.1 Transfer of Shares............................14 Section 5.2 Transfer Agent and Registrar..................14 Section 5.3 Fixing Record Date............................14 Section 5.4 Lost, Stolen or Destroyed Certificates........15 ARTICLE VI Miscellaneous Section 6.1 Fiscal Year...................................16 Section 6.2 Corporate Seal................................16 Section 6.3 Delegation of Authority.......................16 Section 6.4 Notices.......................................16 ARTICLE VII By-Laws and Their Amendments..................................16 ARTICLE VIII National Emergency............................................17 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. 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. (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 minutes 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, consisting of 11 persons. However, effective at 9:30 a.m., Central Daylight Time on May 16, 1997, the Board of Directors shall consist of 10 persons. The number may, from time to time, be increased or decreased by resolution adopted by a majority of the entire Board of Directors, but the number shall not be less than nine nor more than 21. 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 70th birthday, regardless of the term for which they might have been elected; provided, however, that current outside directors who continue to serve until the annual meeting next following their 68th birthday shall have the option to retire then. 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 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 67th 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 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 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. (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. 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 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, and from time to time may elect or appoint one or more Assistants to any of such officers, and such one or more Assistant Secretaries, Assistant Treasurers, and Assistant Controllers, and such other officers, agents, and employees, and with such designations, as it may deem proper. Any two or more offices may be concurrently held by the same person at the same time. The Chairman of the Board and the President 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 and Business Unit Officers. The chief executive officer of the corporation may appoint such officers of any division or business unit of the corporation as he may deem proper, except that division and business unit chairmen and presidents may be appointed only by the Board of Directors. A division or business unit officer shall not be an officer of the corporation, and shall serve as an officer only of the division or business unit to which appointed, but a person who holds a division or business unit 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. (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. 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 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 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. 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 3.11. 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 3.12. 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 3.13. 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. SECTION 3.14. 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 or 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. (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 shall 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. 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 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 reason- able 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 stock transfer records of the corporation. 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 special 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 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. EX-12 3 EARNINGS TO FIXED CHARGES EXHIBIT 12
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES For the Years Ended December 31 Amounts in Thousands 1996 1995 1994 1993 1992 Fixed charges: Interest expense before capitalization credits... $ 9,263 $ 11,396 $ 10,699 $ 10,187 $ 10,441 Amortization of financing costs.................. 164 109 114 115 116 One-third of rental expense...................... 9,663 9,532 10,393 7,375 7,190 Total fixed charges........................... $ 19,090 $ 21,037 $ 21,206 $ 17,677 $ 17,747 Net earnings....................................... 188,595 166,240 97,976 88,229 90,980 Provisions for income taxes........................ 96,985 92,181 47,930 36,993 39,746 Fixed charges...................................... 19,090 21,037 21,206 17,677 17,747 Capitalized interest credits....................... (627) (297) (878) (1,016) (673) Amortization of capitalized interest............... 674 1,031 997 882 792 Earnings before income taxes as adjusted......... $304,717 $280,192 $167,231 $142,765 $148,592 Ratio of earnings to fixed charges................. 16.0 13.3 7.9 8.1 8.4
EX-13 4 ANNUAL REPORT VULCAN MATERIALS COMPANY 1996 ANNUAL REPORT
FINANCIAL REVIEW-SELECTED FINANCIAL DATA Amounts and shares in millions, except per share data 1996 1995 1994 1993 1992 Operations Net sales............................................ $1,568.9 $1,461.0 $1,253.4 $1,133.5 $1,078.0 Gross profit on sales................................ $ 453.5 $ 416.3 $ 268.2 $ 246.7 $ 249.1 As a percent of net sales.......................... 28.9% 28.5% 21.4% 21.8% 23.1% Interest expense..................................... $ 8.6 $ 11.1 $ 9.8 $ 9.2 $ 9.8 Net earnings before cumulative effect of accounting change.................................. $ 188.6 $ 166.2 $ 98.0 $ 88.2 $ 91.0 As a percent of average shareholders' equity..... 22.4% 21.9% 13.6% 12.8% 13.3% Cumulative effect ofaccounting change................ $ - $ - $ - $ - $ 3.0 Net earnings......................................... $ 188.6 $ 166.2 $ 98.0 $ 88.2 $ 94.0 Primary and fully diluted earnings per common share: Net earnings before cumulative effect of accounting change................................ $ 5.36 $ 4.63 $ 2.67 $ 2.39 $ 2.41 Cumulative effect of accounting change............. $ - $ - $ - $ - $ .08 Net earnings....................................... $ 5.36 $ 4.63 $ 2.67 $ 2.39 $ 2.49 Effective tax rate................................... 34.0% 35.7% 32.8% 29.5% 30.4% Operating income after taxes......................... $ 194.4 $ 173.4 $ 104.5 $ 93.3 $ 98.7 As a percent of average capital employed........... 17.8% 16.6% 10.5% 9.7% 10.3% LIQUIDITY AND CAPITAL RESOURCES Working capital...................................... $ 199.4 $ 184.7 $ 125.5 $ 161.8 $ 169.8 Current ratio........................................ 2.0 2.0 1.6 2.1 2.3 Net cash provided by continuing operations........... $ 346.4 $ 267.4 $ 209.2 $ 194.1 $ 199.1 As a percent of long-term obligations (year-end)... 405.1% 296.1% 214.8% 190.2% 185.6% Ratio of earnings to fixed charges................... 16.0 13.3 7.9 8.1 8.4 Total assets (year-end).............................. $1,320.6 $1,215.8 $1,181.1 $1,078.6 $1,083.9 Average capital employed: Short-term debt.................................... $ 14.1 $ 45.6 $ 39.4 $ 25.2 $ 24.1 Long-term obligations.............................. 86.9 93.3 99.1 105.6 108.2 Other noncurrent liabilities....................... 152.9 144.7 135.0 140.4 138.4 Shareholders' equity............................... 840.2 758.6 719.6 691.7 686.5 Total............................................ $1,094.1 $1,042.2 $ 993.1 $ 962.9 $ 957.2 Long-term obligations (year-end)..................... $ 85.5 $ 90.3 $ 97.4 $ 102.0 $ 107.3 As a percent of long-term capital................. 7.6% 8.7% 10.0% 10.9% 11.3% Dividends declared and paid per common share......... $ 1.68 $ 1.46 $ 1.32 $ 1.26 $ 1.20 Total common stock dividends......................... $ 58.4 $ 51.8 $ 48.1 $ 46.3 $ 45.1 Common shares outstanding (year-end)................. 34.2 35.0 35.9 36.3 37.2
SEGMENT FINANCIAL DATA Amount Percent of Company Total Amounts in millions 1996 1995 1994 1993 1992 1996 1995 1994 1993 1992 NET SALES Construction Materials............ $ 961.9 $ 884.7 $ 842.9 $ 756.7 $ 686.4 61% 61% 67% 67% 64% Chemicals......................... 607.0 576.3 410.5 376.8 391.6 39 39 33 33 36 Total.......................... $1,568.9 $1,461.0 $1,253.4 $1,133.5 $1,078.0 100% 100% 100% 100% 100% EARNINGS (LOSS) BEFORE INTEREST EXPENSE AND INCOME TAXES Construction Materials............ $ 197.3 $ 181.5 $ 162.5 $ 116.7 $ 88.3 67% 67% 104% 87% 63% Chemicals......................... 94.7 87.8 (7.3) 17.4 51.3 32 33 (5) 13 36 Segment earnings.................. 292.0 269.3 155.2 134.1 139.6 99 100 99 100 99 Interest income, etc.............. 2.2 .2 .5 .3 .9 1 - 1 - 1 Total........................... $ 294.2 $ 269.5 $ 155.7 $ 134.4 $ 140.5 100% 100% 100% 100% 100% OPERATING INCOME (LOSS) AFTER TAXES Construction Materials............ $ 134.9 $ 120.6 $ 108.8 $ 81.6 $ 65.3 69% 70% 104% 87% 66% Chemicals......................... 58.0 52.7 (4.7) 11.5 32.7 30 30 (4) 12 33 Interest income, etc.............. 1.5 .1 .4 .2 .7 1 - - 1 1 Total........................... $ 194.4 $ 173.4 $ 104.5 $ 93.3 $ 98.7 100% 100% 100% 100% 100% NET CASH PROVIDED BY CONTINUING OPERATIONS Construction Materials............ $ 219.8 $ 182.9 $ 182.5 $ 156.6 $ 141.9 64% 68% 87% 81% 71% Chemicals......................... 128.8 90.8 31.5 41.1 63.8 37 34 15 21 32 Interest expense, interest income, etc., net............... (2.2) (6.3) (4.8) (3.6) (6.6) (1) (2) (2) (2) (3) Total......................... $ 346.4 $ 267.4 $ 209.2 $ 194.1 $ 199.1 100% 100% 100% 100% 100% PROPERTY ADDITIONS Construction Materials............ $ 124.1 $ 94.4 $ 69.3 $ 59.3 $ 56.5 66% 75% 43% 59% 57% Chemicals......................... 63.1 31.2 90.5 41.3 42.0 34 25 57 41 43 Total........................... $ 187.2 $ 125.6 $ 159.8 $ 100.6 $ 98.5 100% 100% 100% 100% 100% DEPRECIATION, DEPLETION AND AMORTIZATION Construction Materials............ $ 75.2 $ 72.0 $ 72.8 $ 74.3 $ 75.5 67% 65% 68% 72% 73% Chemicals......................... 37.4 38.7 33.9 28.5 27.8 33 35 32 28 27 Total........................... $ 112.6 $ 110.7 $ 106.7 $ 102.8 $ 103.3 100% 100% 100% 100% 100% AVERAGE CAPITAL EMPLOYED Construction Materials............ $ 710.6 $ 681.5 $ 688.1 $ 707.4 $ 708.4 65% 65% 69% 73% 74% Chemicals......................... 356.0 353.9 294.0 248.5 226.4 33 34 30 26 24 Cash items........................ 27.5 6.8 11.0 7.0 22.4 2 1 1 1 2 Total........................... $1,094.1 $1,042.2 $ 993.1 $ 962.9 $ 957.2 100% 100% 100% 100% 100% OPERATING INCOME (LOSS) AFTER TAXES AS A PERCENT OF AVERAGE CAPITAL EMPLOYED Construction Materials............ 19.0% 17.7% 15.8% 11.5% 9.2% Chemicals......................... 16.3 14.9 (1.6) 4.6 14.5 Interest income, etc.............. 5.3 1.9 3.4 3.0 3.0 Total........................... 17.8% 16.6% 10.5% 9.7% 10.3% Definitions of certain financial terms used in this report are provided on page 40.
COMMON STOCK MARKET PRICES AND DIVIDENDS Range of Common Stock Market Prices Dividend Paid Per Share 1996 1995 Quarter Ended High Low High Low 1996 1995 March 31............. $58 1/4 $53 1/8 $57 5/8 $48 1/8 $ .42 $ .365 June 30.............. 59 3/8 55 3/8 58 3/4 54 .42 .365 September 30......... 66 1/2 54 1/2 60 3/8 51 3/4 .42 .365 December 31.......... 65 59 1/2 58 7/8 52 1/2 .42 .365 $1.68 $1.46
The Company's common stock is traded on the New York Stock Exchange (ticker symbol VMC). As of January 31, 1997, the number of shareholders of record approximated 4,000. Dividends paid in 1996 totaled $58,399,000 as compared with $51,848,000 paid in 1995. On February 14, 1997, the Board of Directors authorized a quarterly dividend of 47 cents per common share payable March 10, 1997. The new quarterly dividend represents a 12% increase over quarterly dividends paid in 1996. During the last five years, the Company's dividend payout rate has averaged 28% of prior year free funds flow. The Company's policy is to pay out a reasonable share of free funds flow as dividends, consistent on average with the payout record of past years, and consistent with the goal of maintaining debt ratios within prudent and generally acceptable limits. Additionally, management believes that purchases of the Company's stock frequently may represent an attractive long-term investment. Management intends to continue buying shares when appropriate based on prevailing market conditions and based on the Company's cash position and long-term capital requirements. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Vulcan is the largest producer of construction aggregates in the United States and is one of the nation's leading producers of chemicals. The following is a discussion and analysis of the results of operations and the financial condition of the Company. The discussion and analysis should be read in connection with the historical financial information included in the Consolidated Financial Statements and their notes. RESULTS OF OPERATIONS Vulcan's 1996 sales, net earnings and earnings per share were at record levels. Net earnings were $188.6 million, or $5.36 per share, as compared with 1995 net earnings and earnings per share of $166.2 million and $4.63, respectively. Sales in 1996 were $1.569 billion, up from the 1995 total of $1.461 billion. Pretax earnings totaled $285.6 million, up 11% from last year's amount of $258.4 million. CONSTRUCTION MATERIALS 1996 vs. 1995 For the fourth consecutive year, Construction Materials sales surpassed previous records. Net sales for 1996 totaled $961.9 million, up 9% from the 1995 result of $884.7 million. The 1996 result reflects a 7% increase in shipments and a 3% rise in the average unit selling price of crushed stone, the segment's principal product. Of the total increase in sales of $77.2 million, $54.4 million was related to increased volume and $22.8 million was due to higher prices. Segment earnings of $197.3 million, which are before interest expense and income taxes, also were at a record level and were up 9% from 1995's record level of $181.5 million. Results for 1996 include pretax gains totaling approximately $5.2 million from the sale of assets, primarily surplus land, as compared to the 1995 total of $16.5 million. When gains referable to asset sales are excluded from both years' results, 1996 earnings were 16% better than 1995 due principally to higher crushed stone shipments and improved prices. The favorable effects of higher volume and prices were partially offset by higher operating costs due mainly to the full-year impact of new operations. 1995 vs. 1994 Construction Materials sales in 1995 were at a record level of $884.7 million, up 5% from the 1994 result of $842.9 million. The improvement reflected a 3% increase in shipments and a 5% rise in the average unit selling price of crushed stone. Of the total increase in sales of $41.8 million, $13.0 million was related to increased volume and $28.8 million was due to higher prices. Segment earnings of $181.5 million also were at a record level and were up 12% from 1994's record level of $162.5 million. The improvement reflected better operating results as well as significant gains from asset sales, primarily surplus land. The favorable effects of higher volume and prices were partially offset by higher operating costs. The cost increases were due mainly to the development of several new quarry sites and a significant project to redesign the segment's procurement process. For the year, gains from the sale of assets, primarily surplus land, were $16.5 million as compared with 1994 gains of $7.6 million. The 1994 amount included a gain from the sale of the Company's industrial sand operation in Brady, Texas which had been operated jointly by the Construction Materials and Chemicals segments. Accordingly, the gain resulting from the sale of the business was shared equally by the two segments. The Construction Materials segment's $2.1 million share of the pretax gain was offset by provisions associated with the shutdown of an operating facility. CHEMICALS 1996 vs. 1995 Record 1996 sales of $607.0 million were up 5% from the 1995 level of $576.3 million. Excluding the effects of 1995 and 1996 acquisitions from both years' results, 1996 sales were effectively even with the prior year. Sales for Performance Systems increased due to the impact of recent acquisitions as well as internal growth. Sales for the Chloralkali Business Unit were virtually unchanged from 1995 as the effect of lower caustic soda prices was offset by higher revenues from chlorinated organic products and other inorganic products. Segment earnings reached a record of $94.7 million in 1996 as compared to $87.8 million in 1995. The increase reflects improved earnings in the Performance Systems Business Unit. Earnings for the Chloralkali Business Unit were even with results reported for 1995. Chloralkali results in 1995 included a $7.1 million pretax charge referable to the Company's suspended joint venture soda ash project, as well as a $3.5 million charge for environmental remediation at the Cleve Reber Superfund site. Chloralkali operating earnings declined in 1996 due to the decline in caustic soda prices, as well as higher costs referable to energy and plant maintenance. These effects were partially offset by higher earnings from chlorinated organic products. In 1996, the Company's Chemicals segment completed several acquisitions through its Performance Systems Business Unit, all with a focus on niche markets in the water management, textile, industrial cleaning, food processing, mining, and pulp and paper industries. The most significant of these was the acquisition of Mayo Chemical Company during the second quarter. These acquisitions contributed $22.0 million in sales during 1996. 1995 vs. 1994 In 1995, Chemicals sales of $576.3 million increased 40% from the 1994 level of $410.5 million. The increase was due to the recovery in caustic soda prices, higher prices for chlorinated organic products and the effects of acquisitions. The $165.8 million increase in sales reflected $53.1 million due to the effect of higher volume and $112.7 million due to higher prices. Excluding the effects of the Callaway Chemical acquisition on August 1, 1994 and the Rio Linda acquisition on June 1, 1995, sales increased 27%. Segment earnings were $87.8 million in 1995 as compared to a loss of $7.3 million in 1994. The increase reflected the effects of higher selling prices for caustic soda and chlorinated organic products. This was partially offset by higher raw material and maintenance costs. The 1995 results included a $7.1 million pretax charge referable to the Company's suspended joint venture soda ash project at Owens Lake, California and a $3.5 million environmental remediation provision. The loss in 1994 included that year's $7.0 million charge for environmental remediation and the Chemicals $2.1 million share of the gain on the sale of the industrial sand business. ENVIRONMENTAL ISSUES In 1991 the Environmental Protection Agency ("EPA") issued a unilateral administrative order which directed the named respondents, including the Company and other potentially responsible parties ("PRPs"), to clean up a now-closed third party waste disposal site to which the Chemicals segment last shipped waste materials in 1970. During the years 1986 through 1989, the Company recorded provisions totaling $28.8 million for environmental remediation at this site. In 1995 and 1994, the Company recorded additional provisions of $3.5 million and $7.0 million, respectively, for remedial actions at this site, for total provisions of $39.3 million. During 1996, the Company and the other participating PRPs completed all activities relating to site remediation, with the exception of ongoing operation and maintenance of the remedy. The EPA anticipates conducting its five-year review of site conditions mid-year 1998. If site conditions are satisfactory based on that review, the site will be removed from the National Priority List of Superfund sites. The Company believes that total provision In 1987 the Company discontinued its Metals segment and recorded a loss on disposal that reflected provisions for phaseout costs, including the estimated cost of contractual liabilities associated with remediation of environmental conditions at several Metals plants. An additional provision for estimated remediation costs was recorded in 1989. The Company has made significant progress in addressing these contractual liabilities by completing several environmental remediation projects at certain of these Metals plants. Expenditures for these projects were within recorded provisions. While the Company believes its recorded provisions are adequate to address the remainder of these contractual liabilities and other liabilities associated with these operations, factors that might impact the adequacy of provisions include the results of further environmental testing, engineering analyses and planning, and negotiations among interested parties. SELLING, ADMINISTRATIVE AND GENERAL Selling, administrative and general expenses of $175.1 million in 1996 increased 10% from the 1995 level of $159.8 million. This reflects principally the impact of Chemicals acquisitions and expenses referable to a significant project to redesign Construction Materials procurement process. In 1995 selling, administrative and general expenses were up 28% from the 1994 level. This increase principally reflects the effects of acquisitions by the Chemicals segment, and, to a lesser extent, higher provisions for incentive plans and professional fees. INCOME TAXES The Company's 1996 effective tax rate was 34.0%, down from the 1995 rate of 35.7%. The decrease reflects principally adjustments to close out provisions referable to completed tax audits for prior years, as well as the effect of statutory depletion due to relatively higher Construction Materials earnings. The effective tax rate increased in 1995 from the 1994 rate of 32.8%. The increase reflects principally the relatively greater impact of higher Chemicals earnings which diluted the effect on the tax rate of statutory depletion referable to construction aggregates production. 1997 OUTLOOK With regard to 1997, the Company's starting point is the assumption that moderate growth in GDP and stable interest rates will continue to provide a healthy economic environment for construction activity in the U.S. The market for construction aggregates should remain strong, overall. Demand in all major construction end-use markets should equal or exceed their 1996 levels, with the exception of residential construction, which is expected to decline modestly. Based on this outlook, 1997 earnings in the Construction Materials segment should equal or exceed 1996's record result. As for the Chemicals business, 1996 was another outstanding year, despite the significant decrease in caustic soda prices during the second half of the year. Progress continued in developing the Performance Systems Business Unit. During 1996, the Performance Systems Business Unit contributed to the improvement in earnings from 1995 and this trend is expected to continue in 1997, reflecting demand growth and further progress in integrating the Unit's recent acquisitions. Current market conditions in the Chloralkali Business Unit are mixed. The outlook for caustic soda prices remains uncertain and comparisons to 1996 are likely to be significantly unfavorable, particularly in the first half of 1997. Also, energy and maintenance costs are expected to be higher. On the other hand, continuing strong demand for chlorinated organic products should mitigate the adverse impact of these factors. Overall, for the Chemicals segment as a whole, earnings are expected to be down from 1996's record performance. The Company's 1996 effective tax rate benefited from adjustments to close out provisions referable to completed tax audits for prior years. Additional tax audits are expected to be closed out in 1997 and the effective tax rate currently is projected to be slightly lower than 1996's rate. Taking all of the current expectations into account, there is a good chance that the Company's 1997 net earnings and earnings per share will equal 1996's record results. If the upper range of the Company's outlook prevails, 1997 earnings should be at a record level. LIQUIDITY AND CAPITAL RESOURCES CASH FLOWS Net cash provided by continuing operations amounted to $346.4 million in 1996, up 30% from 1995's total of $267.4 million. Net cash provided by the Construction Materials segment increased 20% to $219.8 million, while net cash provided by the Chemicals segment rose $38.0 million, or 42%, to $128.8 million. The Company's long-standing ability to generate significant cash flows enabled it to fund capital requirements internally, reduce long-term debt, and return $103.6 million to shareholders through dividends and share purchases. Net cash provided by operations for each segment in each of the last three years, including the effect of working capital changes, is summarized below (amounts in millions): 1996 1995 1994 Construction Materials............. $219.8 $182.9 $182.5 Chemicals.......................... 128.8 90.8 31.5 Interest expense, interest income, etc., net................ (2.2) (6.3) (4.8) Total.......................... $346.4 $267.4 $209.2 Net cash used for investing activities totaled $205.8 million in 1996, up $99.4 million from the 1995 level. Cash expenditures for property, plant and equipment, including acquisitions, were $216.5 million in 1996, up $80.2 million. Cash spending for acquisitions totaled $64.8 million compared with $27.2 million in 1995. Net cash used for financing activities amounted to $110.8 million in 1996, down $35.1 million from the prior year's $145.9 million. Interest-bearing debt was reduced $7.2 million in 1996 compared with a net decrease of $43.9 million in 1995. No long-term debt was issued during 1996 or 1995. Purchases of the Company's common stock totaled $45.2 million in 1996, down $4.9 million from the 1995 level of $50.1 million. The Company's policy is to pay out a reasonable share of free funds flow as dividends consistent, on average, with the payout record of past years, and consistent with the goal of maintaining debt ratios within prudent and generally acceptable limits. Additionally, management believes that purchases of the Company's stock frequently may represent an attractive long-term investment. Management intends to continue buying shares when appropriate based on prevailing market conditions and based on the Company's cash position and long-term capital requirements. WORKING CAPITAL Working capital, exclusive of debt and cash items (cash, cash equivalents and short-term investments), totaled $158.1 million at December 31, 1996, down $16.7 million from the 1995 level. This decrease compares with increases of $8.2 million and $15.7 million in 1995 and 1994, respectively. The Company's overall position is summarized below (dollar amounts in millions as of year-end): 1996 1995 1994 Working capital, exclusive of debt and cash items.............. $158.1 $174.8 $166.6 Cash and cash equivalents.......... 50.8 21.9 7.7 Short-term debt (including current maturities).............. (8.3) (10.6) (47.5) Accrued interest................... (1.2) (1.4) (1.3) Total working capital (including debt and cash items).................. $199.4 $184.7 $125.5 Current ratio...................... 2.0 2.0 1.6 Acid test ratio.................... 1.2 1.1 .9 The current ratio remained unchanged in 1996. The increase in the current ratio from 1994 to 1995 is attributable to a reduced need for short-term borrowing, $3.6 million at year end 1995 as compared with $42.8 million at December 31, 1994. PROPERTY ADDITIONS Property additions, including acquisitions, totaled $187.2 million in 1996, up 49% from the 1995 level of $125.6 million. As explained on page 40, the Company classifies its property additions into three categories based upon the predominant purpose of the project. The table below summarizes property additions by each category (amounts in millions): Project Purpose 1996 1995 1994 Replacement....................... $ 84.5 $ 69.0 $ 53.0 Environmental control............. 9.9 8.4 3.9 Subtotal....................... 94.4 77.4 56.9 Profit adding: Acquisitions................... 33.9 12.3 58.1 Other.......................... 58.9 35.9 44.8 Subtotal....................... 92.8 48.2 102.9 Total....................... $187.2 $125.6 $159.8 Total property additions were significantly higher in 1996 due primarily to increased spending on profit-adding projects. This includes several acquisitions by Chemicals Performance Systems Business Unit, the most significant of which was the acquisition of Mayo Chemical Company during the second quarter. The Construction Materials segment also completed several acquisitions during the year. These included stone quarries in Alabama, Arkansas and Texas, an aggregates distribution facility in northern Illinois, and an aggregates distribution business in Louisana. Also, significant spending occurred on a greenfield site in Alabama, a new lime production facility in Illinois, a second stone distribution facility in northern Illinois and plant rebuilds in Tennessee and North Carolina. The decrease in property additions in 1995 reflects principally lower spending for acquisitions. Commitments for capital expenditures were $23.2 million at December 31, 1996. This included $9.8 million referable to various Chemicals projects. Cash flow for the next year is expected to be adequate to cover commitments. SHORT-TERM BORROWINGS AND INVESTMENTS During most of the years 1994 through 1996, the Company was in a net short-term borrowing position. Short-term borrowings in 1996 reached a maximum of $48.2 million, averaged $9.7 million and were $3.3 million at year end. Comparable 1995 amounts were $93.9 million, $41.8 million and $3.6 million, respectively. Details pertaining to short-term borrowings during the last three years (amounts in millions) are as follows: 1996 1995 1994 Year-end.......................... $ 3.3 $ 3.6 $42.8 Maximum outstanding............... $48.2 $93.9 $91.7 Average outstanding............... $ 9.7 $41.8 $36.0 Weighted average interest rate.... 5.4% 6.1% 4.8% The above interest rate averages were computed using daily outstanding principal amounts. The Company's policy is to maintain unused bank lines of credit and/or committed credit facilities at least equal to its outstanding commercial paper. Unsecured bank lines of credit totaling $130.0 million were maintained at the end of 1996. Standard & Poor's Corporation and Moody's Investors Services, Inc. have assigned ratings of A-1+ and P-1, respectively, to the Company's commercial paper. The investment of excess cash during the last three years (amounts in millions) is shown below: 1996 1995 1994 Year-end.......................... $43.6 $16.0 $ - Maximum invested.................. $ 4.8 $45.0 $45.1 Average invested.................. $26.7 $ 3.5 $ 7.7 Taxable-equivalent yield.......... 5.8% 6.2% 4.0% LONG-TERM OBLIGATIONS During 1996 the Company reduced its total long-term obligations by $4.8 million to $85.5 million as compared with a net decrease of $7.1 million in 1995. During the three-year period ended December 31, 1996, long-term obligations decreased cumulatively by $16.5 million from the $102.0 million outstanding at December 31, 1993. During the same three year period, shareholders' equity, net of common stock purchases of $123.9 million and dividends of $158.4 million, increased by $180.7 million to $883.7 million. The Company's overall long-term capital position is shown in the following table (dollar amounts in millions as of year-end): 1996 1995 1994 Long-term debt.................... $ 85.5 $ 90.3 $ 97.4 Other noncurrent liabilities...... 156.8 151.5 140.8 Shareholders' equity.............. 883.7 796.6 731.6 Total long-term capital......... $1,126.0 $1,038.4 $969.8 Long-term debt as a percent of: Total long-term capital....... 7.6% 8.7% 10.0% Shareholders' equity.......... 9.7% 11.3% 13.3% Net cash provided by continuing operations as a percent of long-term debt....... 405% 296% 215% Ratio of earnings to fixed charges................... 16.0 13.3 7.9 In the future, the ratio of long-term debt to total long-term capital will depend upon specific investment and financing decisions. Nonetheless, management believes the Company's cash-generating capability, along with its financial strength and business diversification, can reasonably support a ratio of 25% to 30%. The actual ratio at the end of 1996 was 7.6%. The Company has made acquisitions from time to time and will continue actively to pursue attractive investment opportunities. If financing is required for this purpose, it may be accomplished either temporarily on a short-term basis or by incurring long-term debt. The Company's long-term borrowing requirements can be satisfied in either the public debt or private placement markets. The Company's medium-term notes issued in 1991 are rated AA- by Standard & Poor's and A1 by Moody's. COMMON STOCK During 1996 the Company purchased 765,400 shares of its common stock at a cost of $45.2 million, equal to an average price of $59.03 per share. The acquired shares are being held for general corporate purposes, including distributions under management incentive plans. The Company's decisions to purchase shares of common stock are made based upon the common stock's valuation and price, the Company's liquidity, its actual and projected needs for cash for investment projects and regular dividends, and the Company's debt level. The number and cost of shares purchased during each of the last three years is shown below: 1996 1995 1994 Shares purchased: Number.......................... 765,400 947,908 603,700 Total cost (millions)........... $ 45.2 $ 50.1 $ 28.6 Average cost.................... $59.03 $52.90 $47.39 Shares in treasury at year-end: Number........................ 12,332,047 11,602,590 10,666,952 Average cost.................. $38.73 $37.34 $35.93 The number of shares remaining under the current purchase authorization was 834,392 shares as of December 31, 1996. On February 14, 1997, the Company's Board of Directors increased the authorization to 4,000,000 shares, which represents 11.7% of shares outstanding as of year-end 1996. CAPITAL EMPLOYED During 1996 total average capital employed in continuing operations was $1,094.1 million, up $51.9 million from the 1995 average of $1,042.2 million. The latter figure reflects an increase of $49.1 million, or 5%, from the $993.1 million employed on average in 1994. Average capital employed in the Company's business segments is shown in the table below (amounts in millions): 1996 1995 1994 Construction Materials............ $ 710.6 $ 681.5 $688.1 Chemicals......................... 356.0 353.9 294.0 Cash items........................ 27.5 6.8 11.0 Total........................... $1,094.1 $1,042.2 $993.1 The sources and deployment of the year-to-year increases in total average capital employed are shown below (amounts in millions; parenthesis indicate a decrease): 1995-96 1994-95 Sources: Short-term debt................. $(31.5) $ 6.2 Long-term obligations........... (6.4) (5.8) Other noncurrent liabilities.... 8.2 9.7 Shareholders' equity............ 81.6 39.0 Total......................... $ 51.9 $49.1 Deployment: Construction Materials.......... $ 29.1 $(6.6) Chemicals....................... 2.1 59.9 Cash items...................... 20.7 (4.2) Total......................... $ 51.9 $49.1 During the period 1992 through 1996, total average capital employed in continuing operations grew at an average annual compound rate of 2.5%, or by the cumulative amount of $116.5 million. During this period, interest-bearing debt decreased by $38.2 million and, as a percent of average capital employed, decreased from 14.2% to 9.2%. The following summary indicates the sources and deployment of the increase in average capital employed from 1992 to 1996 (amounts in millions): Amount of Increase % of (Decrease) Total Sources: Short-term debt................. $(58.6) (50)% Long-term obligations........... 20.4 17 Other noncurrent liabilities.... (2.8) (2) Shareholders' equity............ 157.5 135 Total......................... $116.5 100 % Deployment: Construction Materials.......... $(37.8) (32)% Chemicals....................... 129.9 111 Cash items...................... 24.4 21 Total......................... $116.5 100 %
SUPPLEMENTARY INFORMATION-QUARTERLY FINANCIAL DATA First Second Third Fourth Full Amounts in millions, except per share data Quarter Quarter Quarter Quarter Year 1996 Net sales............................................. $308.5 $419.2 $443.6 $397.6 $1,568.9 Gross profit on sales................................. 70.1 129.3 139.6 114.5 453.5 Net earnings.......................................... 20.1 58.6 62.1 47.8 188.6 Primary and fully diluted earnings per share.......... .57 1.65 1.77 1.37 5.36 1995 Net sales............................................. $294.4 $382.8 $422.0 $361.8 $1,461.0 Gross profit on sales................................. 58.8 113.2 133.8 110.5 416.3 Net earnings.......................................... 6.0 47.7 59.1 43.4 166.2 Primary and fully diluted earnings per share.......... .44 1.32 1.64 1.23 4.63 1994 Net sales............................................. $216.9 $326.7 $360.4 $349.4 $1,253.4 Gross profit on sales................................. 21.0 77.4 90.4 79.4 268.2 Net earnings (loss)................................... (5.2) 33.7 37.6 31.9 98.0 Primary and fully diluted earnings (loss) per share... (.14) .92 1.02 .87 .67
CONSOLIDATED STATEMENTS OF EARNINGS Vulcan Materials Company and Subsidiary Companies For the Years Ended December 31, 1996, 1995 and 1994 Amounts and shares in thousands, except per share data 1996 1995 1994 Net sales................................................ $1,568,945 $1,460,974 $1,253,360 Cost of goods sold....................................... 1,115,442 1,044,710 985,198 Gross profit on sales.................................... 453,503 416,264 268,162 Selling, administrative and general expenses............. 175,128 159,829 125,036 Other operating costs.................................... 3,887 6,347 5,526 Other income, net Interest income........................................ 3,179 1,099 1,224 Other, net............................................. 16,549 18,333 16,903 Total other income, net.............................. 19,728 19,432 18,127 Earnings before interest expense and income taxes........ 294,216 269,520 155,727 Interest expense (Note 4)................................ 8,636 11,099 9,821 Earnings before income taxes............................. 285,580 258,421 145,906 Provision for income taxes (Note 7) Current................................................ 95,443 86,437 41,339 Deferred............................................... 1,542 5,744 6,591 Total provision for income taxes..................... 96,985 92,181 47,930 Net earnings............................................. $ 188,595 $ 166,240 $ 97,976 Primary and fully diluted net earnings per share......... $5.36 $4.63 $2.67 Dividends per share...................................... $1.68 $1.46 $1.32 Average common and common equivalent shares outstanding..................................... 35,173 35,933 36,683 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
CONSOLIDATED BALANCE SHEETS Vulcan Materials Company and Subsidiary Companies As of December 31, 1996, 1995 and 1994 Amounts in thousands, except per share data 1996 1995 1994 ASSETS Current assets Cash and cash equivalents (Note 2)..................... $ 50,816 $ 21,869 $ 7,717 Accounts and notes receivable: Customers, less allowance for doubtful accounts: 1996, $8,106; 1995, $8,176; 1994, $8,244........... 176,864 170,757 170,954 Other................................................ 8,671 10,303 11,174 Inventories (Note 3)................................... 128,578 126,801 112,481 Deferred income taxes (Note 7)......................... 23,474 26,555 29,074 Prepaid expenses....................................... 5,642 5,836 5,398 Total current assets.............................. 394,045 362,121 336,798 Investments and long-term receivables.................... 61,274 56,272 58,138 Property, plant and equipment, net (Note 4).............. 764,490 698,033 701,757 Deferred charges and other assets (Note 8, 14)........... 100,836 99,368 84,451 Total............................................. $1,320,645 $1,215,794 $1,181,144 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current maturities of long-term debt................... $ 5,021 $ 7,070 $ 4,687 Notes payable (Note 2)................................. 3,289 3,569 42,779 Trade payables and accruals............................ 98,528 98,253 102,394 Accrued income taxes................................... 29,606 22,262 19,423 Accrued salaries and wages............................. 38,253 28,658 23,068 Accrued interest....................................... 1,221 1,300 1,415 Other accrued liabilities (Note 9)..................... 18,736 16,297 17,582 Total current liabilities......................... 194,654 177,409 211,348 Long-term debt (Note 5).................................. 85,535 90,278 97,380 Deferred income taxes (Note 7)........................... 86,968 85,935 82,507 Deferred management incentive and other compensation (Note 9)............................ 26,251 26,618 21,575 Other postretirement benefits (Note 8)................... 36,222 32,717 29,835 Other noncurrent liabilities (Note 10)................... 7,351 6,199 6,870 Other commitments and contingent liabilities (Note 10)... Shareholders' equity..................................... Common stock, $1 par value............................. 46,573 46,573 46,573 Capital in excess of par value......................... 10,344 9,089 8,585 Retained earnings...................................... 1,304,367 1,174,171 1,059,779 Total............................................. 1,361,284 1,229,833 1,114,937 Less cost of stock in treasury......................... 477,620 433,195 383,308 Total shareholders' equity........................ 883,664 796,638 731,629 Total............................................. $1,320,645 $1,215,794 $1,181,144 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS Vulcan Materials Company and Subsidiary Companies For the Years Ended December 31, 1996, 1995 and 1994 Amounts in thousands 1996 1995 1994 OPERATIONS Net earnings............................................. $188,595 $166,240 $ 97,976 Adjustments to reconcile net earnings to net cash provided by continuing operations: Depreciation, depletion and amortization............. 112,600 110,677 106,695 (Increase) decrease in assets before effects of business acquisitions: Accounts and notes receivable..................... 1,381 3,634 (21,188) Inventories....................................... 3,915 (11,899) 965 Deferred income taxes............................. 3,081 2,519 (2,176) Prepaid expenses.................................. 194 (362) 1,056 Increase (decrease) in liabilities before effects of business acquisitions: Accrued interest and income taxes................. (105) (355) (84) Trade payables, accruals, etc..................... 14,118 (1,352) 16,457 Deferred income taxes............................. 1,032 3,428 8,314 Other noncurrent liabilities...................... 4,290 7,255 (266) Issuance of common stock in connection with Performance Share Plan............................ 2,010 699 998 Other, net........................................... 15,333 (13,126) 470 Net cash provided by continuing operations........ 346,444 267,358 209,217 Net cash used for discontinued operations (Note 10)....................................... (912) (902) (958) Net cash provided by operations................... 345,532 266,456 208,259 INVESTING ACTIVITIES Purchases of property, plant and equipment............... (151,767) (109,174) (100,090) Payment for business acquisitions........................ (64,765) (27,172) (87,540) Proceeds from sale of property, plant and equipment...... 11,952 31,881 15,358 Net investment in nonconsolidated companies.............. (1,233) (1,913) (2,112) Net cash used for investing activities............ (205,813) (106,378) (174,384) FINANCING ACTIVITIES Net borrowings (payments) - commercial paper and bank lines of credit............................... (280) (39,211) 42,779 Payment of short-term debt............................... (6,849) (4,687) (1,809) Payment of long-term debt................................ (62) (32) (4,403) Purchases of common stock (Note 11)...................... (45,182) (50,148) (28,612) Dividends paid........................................... (58,399) (51,848) (48,109) Net cash used for financing activities............ (110,772) (145,926) (40,154) Net increase (decrease) in cash and cash equivalents..... 28,947 14,152 (6,279) Cash and cash equivalents at beginning of year........... 21,869 7,717 13,996 Cash and cash equivalents at end of year................. $ 50,816 $ 21,869 $ 7,717 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Vulcan Materials Company and Subsidiary Companies For the Years Ended December 31, 1996, 1995 and 1994 Amounts and shares in thousands, 1996 1995 1994 except per share data Shares Amount Shares Amount Shares Amount Common stock, $1 par value Authorized: 160,000 shares Issued (no changes in 1996, 1995 and 1994)................................ 46,573 $ 46,573 46,573 $ 46,573 46,573 $ 46,573 Capital in excess of par value Balance at beginning of year.................... 9,089 8,585 4,587 Shares issued in connection with the acquisition of business................... - - 3,490 Distributions under Performance Share Plan.................................... 1,253 414 514 Distributions under Stock Plan for Nonemployee Directors..................... - 24 23 Other........................................... 2 66 (29) Balance at end of year.......................... 10,344 9,089 8,585 Retained earnings Balance at beginning of year.................... 1,174,171 1,059,779 1,009,912 Net earnings.................................... 188,595 166,240 97,976 Cash dividends on common stock.................. (58,399) (51,848) (48,109) Balance at end of year.......................... 1,304,367 1,174,171 1,059,779 Common stock held in treasury Balance at beginning of year (11,602) (433,195) (10,666) (383,308) (10,224) (358,109) Shares issued in connection with the acquisition of business................... - - - - 140 2,952 Purchase of common shares....................... (765) (45,182) (948) (50,148) (604) (28,612) Distributions under Performance Share Plan.................................... 35 757 11 247 21 442 Distributions under Stock Plan for Nonemployee Directors..................... - - 1 14 1 19 Balance at end of year.......................... (12,332) (477,620) (11,602) (433,195) (10,666) (383,308) Total...................................... $ 883,664 $ 796,638 $ 731,629 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Vulcan Materials Company and Subsidiary Companies 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and all majority or wholly-owned subsidiary companies. All significant intercompany transactions and accounts have been eliminated in consolidation. Investments in joint ventures and the common stock of associated companies in which the Company has ownership interests of 20% to 50% are accounted for by the equity method. All other investments are carried at the lower of cost or market, and income is recorded as dividends are received or interest is earned. CASH EQUIVALENTS The Company classifies as cash equivalents all highly liquid securities with a maturity of three months or less at the time of purchase. INVENTORIES The Company uses the last-in, first-out ("LIFO") method of valuation for most of its inventories because it results in a better matching of costs with revenues. Inventories, other than operating supplies, are stated at the lower of cost, as determined by the LIFO method, or market. Such cost includes raw materials, direct labor and production overhead. Substantially all operating supplies are carried at average cost, which does not exceed market. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are carried at cost less allowances for accumulated depreciation, depletion and amortization. The cost of properties held under capital leases is equal to the lower of the net present value of the minimum lease payments or the fair value of the leased property at the inception of the lease. DEPRECIATION, DEPLETION AND AMORTIZATION Depreciation is computed by the straight-line method at rates based upon the estimated service lives of the various classes of assets, which include machinery and equipment, buildings, and land improvements. Amortization of capitalized leases is included with depreciation expense. Cost depletion on depletable quarry land is computed by the unit of production method based upon estimated recoverable units. Leaseholds are amortized over varying periods not in excess of applicable lease terms. GOODWILL Goodwill represents the excess of the cost of net assets acquired in business combinations over their fair value. Goodwill is amortized on a straight-line basis over periods ranging from fifteen to twenty years. OTHER COSTS Income is charged as costs are incurred for start-up of new plants and for normal recurring costs of mineral exploration, removal of overburden from active mineral deposits, and research and development. Repairs and maintenance are charged to costs and operating expenses. Renewals and betterments which add materially to the utility or useful lives of property, plant and equipment are capitalized. Environmental expenditures that pertain to current operations or relate to future revenues are expensed or capitalized consistent with the Company's capitalization policy. Expenditures that relate to an existing condition caused by past operations and do not contribute to future revenue are expensed. Environmental compliance costs include maintenance and operating costs with respect to pollution control facilities, the cost of ongoing monitoring programs and similar costs. Costs are expensed and accrued as liabilities when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. These amounts are accrued no later than the feasibility study and/or when the Company commits to a formal plan of action. INCOME TAXES Annual provisions for income taxes are based primarily on reported earnings before income taxes and include appropriate provisions for deferred income taxes resulting from the tax effect of the difference between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes. In addition, such provisions reflect adjustments for the following items: Permanent differences, principally the excess of percentage depletion over the tax basis of depletable properties. An estimate of additional cost that may be incurred, including interest on deficiencies but excluding adjustments representing temporary differences, upon final settlement of returns after audit by various taxing authorities. Balances or deficiencies in prior year provisions that become appropriate as audits of those years progress. EARNINGS PER SHARE Primary and fully diluted earnings per share of common stock are computed by dividing net earnings by the weighted average number of common shares and common share equivalents outstanding during the year. Common share equivalents relate to stock options and shares contingently issuable under long-term performance share plans. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. RECLASSIFICATIONS Certain items previously reported in specific financial statement captions have been reclassified to conform with the 1996 presentation. 2. CASH Bank lines of credit amounted to $130,000,000 at year-end 1996, 1995 and 1994. At year-end 1996 and 1995 the Company did not have any commercial paper outstanding, but did have $3,100,000 and $3,400,000, respectively, in bank borrowings referable to a Canadian subsidiary. At the end of 1994, $35,000,000 was used to back up commercial paper outstanding and $7,800,000 was drawn down as bank borrowings. All of the lines of credit extended to the Company in 1996, 1995 and 1994 were based on a commitment fee arrangement. The Company also maintained balances or paid fees to compensate its banks for certain services. The Company was in compliance with these informal compensation arrangements during all three years. Because the arrangements are evaluated on a twelve-month average basis, the Company does not consider any of its cash balances to be restricted as of any specific date. 3. INVENTORIES Inventories at December 31 are as follows (in thousands of dollars): 1996 1995 1994 Finished products................... $ 87,459 $ 90,009 $ 77,721 Raw materials....................... 10,115 10,062 9,248 Products in process................. 873 979 622 Operating supplies and other........ 30,131 25,751 24,890 Total inventories............... $128,578 $126,801 $112,481 The above amounts include inventories valued under the LIFO method totaling $96,045,000, $97,959,000 and $79,909,000 at December 31, 1996, 1995 and 1994, respectively. Estimated current cost exceeded LIFO cost at December 31, 1996, 1995 and 1994 by $35,747,000, $36,899,000 and $29,049,000, respectively. If all inventories valued at LIFO cost had been valued under the methods (substantially average cost) used prior to the adoption of the LIFO method, the approximate effect on net earnings would have been a decrease of $702,000 ($.02 per share effect) in 1996, an increase of $4,784,000 ($.13 per share effect) in 1995, and a decrease of $2,476,000 ($.07 per share effect) in 1994. 4. PROPERTY, PLANT AND EQUIPMENT Balances of major classes of assets and allowances for depreciation, depletion and amortization at December 31 are as follows (in thousands of dollars): 1996 1995 1994 Land and land improvements.......... $ 222,546 $ 203,920 $ 206,457 Buildings........................... 82,049 77,732 76,629 Machinery and equipment............. 1,630,089 1,536,742 1,486,577 Leaseholds.......................... 7,118 6,483 6,471 Construction in progress............ 60,362 34,559 32,754 Total.......................... 2,002,164 1,859,436 1,808,888 Less allowances for depreciation, depletion and amortization........ 1,237,674 1,161,403 1,107,131 Property, plant and equipment, net.. $ 764,490 $ 698,033 $ 701,757 The Company capitalized interest costs of $627,000 in 1996, $297,000 in 1995 and $878,000 in 1994 with respect to qualifying construction projects. Total interest costs incurred before recognition of the capitalized amount was $9,263,000 in 1996, $11,396,000 in 1995 and $10,699,000 in 1994. 5. DEBT Long-term debt, exclusive of current maturities, at December 31 is summarized as follows (in thousands of dollars): 1996 1995 1994 Medium-term notes................... $66,000 $ 71,000 $76,000 Variable rate pollution control revenue bonds............. 8,200 1,200 3,000 6 5/8% pollution control revenue bonds..................... - 6,800 6,800 6 3/8% pollution control revenue bonds..................... 5,800 5,800 5,800 Other notes......................... 5,535 5,478 5,780 Total.......................... $85,535 $ 90,278 $97,380 Estimated fair value................ $93,507 $101,782 $98,597 In May 1991 the Company filed a shelf registration statement with the Securities and Exchange Commission for the registration of $200,000,000 principal amount of debt securities. The issuances of the medium-term notes in 1991 totaled $81,000,000. The dollar-weighted average maturity of the notes, as calculated from the dates of issuance, approximated 13 years. Maturities at the time of issuance ranged from three to thirty years with a maximum of $10,000,000 due in any one year. At that time, the weighted average interest rate on the notes was 8.53% with a range of 7.59% to 8.85%. The $66,000,000 in notes outstanding as of December 31, 1996 have a weighted average maturity of 9.5 years with a weighted average interest rate of 8.70%. The 6 5/8% pollution control revenue bonds and the variable rate pollution control revenue bonds were called and refunded in 1996. In connection with the refunding, $8,200,000 of tax exempt bonds were issued and currently bear interest at a variable rate which is reset weekly by the remarketing agent. The interest rate on these bonds may be changed to another variable rate option, or to a fixed rate, in accordance with the provisions of the trust indenture. The 6 3/8% pollution control revenue bonds issued in 1992 mature in 2012. Other notes include $3,000,000 representing a fixed rate tax exempt industrial development bond issue which matures in 2011 and notes issued for businesses acquired. The aggregate principal payments for the five years subsequent to December 31, 1996 are: 1997-$5,021,000; 1998-$5,185,000; 1999-$5,184,000; 2000-$5,182,000 and 2001-$5,165,000. The Company is not subject to any contractual restrictions on the aggregate amount of its indebtedness or minimum working capital, or the amount it may expend for cash dividends and purchases of its stock. The estimated fair value amounts of long-term debt have been determined by discounting expected future cash flows using interest rates on U.S. Treasury bills, notes or bonds, as appropriate. For cash equivalents, accounts and notes receivable, current portion of deferred income taxes, accounts payable, accrued income taxes, accrued interest, and other applicable accrued liabilities, the carrying amounts are a reasonable estimate of fair value. The fair value estimates presented are based on information available to management as of December 31, 1996, 1995 and 1994. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued since those dates. 6. OPERATING LEASES Total rental expense of nonmineral leases, exclusive of rental payments made under leases of one month or less, is summarized as follows (in thousands of dollars): 1996 1995 1994 Minimum rentals..................... $17,188 $14,260 $16,138 Contingent rentals (based principally on usage)............. 10,677 11,205 11,212 Total............................ $27,865 $25,465 $27,350 Future minimum operating lease payments under all leases with initial or remaining noncancellable lease terms in excess of one year, exclusive of mineral leases, at December 31, 1996 range from $4,100,000 to $11,948,000 annually through 2001 and aggregate $13,502,000 thereafter. Lease agreements frequently include renewal options and require that the Company pay for utilities, taxes, insurance and maintenance expense. Options to purchase also are included in some lease agreements. 7. INCOME TAXES The components of earnings before income taxes are as follows (in thousands of dollars): 1996 1995 1994 Domestic............................ $279,801 $253,991 $143,502 Foreign............................. 5,779 4,430 2,404 Total............................ $285,580 $258,421 $145,906 Provisions for income taxes consist of the following (in thousands of dollars): 1996 1995 1994 Current: Federal........................... $80,704 $72,332 $34,194 State and local................... 14,595 14,087 7,135 Foreign........................... 144 18 10 Total.......................... 95,443 86,437 41,339 Deferred: Federal........................... 1,446 4,861 5,953 State and local................... 96 883 578 Foreign........................... - - 60 Total.......................... 1,542 5,744 6,591 Total provision..................... $96,985 $92,181 $47,930 The effective tax rate varied from the federal statutory income tax rate due to the following: 1996 1995 1994 Federal statutory tax rate.......... 35.0% 35.0% 35.0% Increase (decrease) in tax rate resulting from: Depletion....................... (4.8) (4.5) (7.2) State and local income taxes, net of federal income tax benefit............ 3.3 3.8 3.4 Miscellaneous items............. .5 1.4 1.6 Effective tax rate.................. 34.0% 35.7% 32.8% Deferred income taxes on the balance sheet result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The components of the net deferred income tax liability are as follows (in thousands of dollars): 1996 1995 1994 Deferred tax assets related to: Accrual for post-retirement benefits......................... $ 14,149 $ 13,318 $12,123 Accrual for environmental reclamation...................... 396 1,604 5,902 Accounts receivable, principally allowance for doubtful accounts............ 3,493 3,592 3,780 Inventory adjustments............. 6,101 7,278 7,079 Pensions, incentives and deferred compensation............ 10,463 10,066 7,142 Other items....................... 10,339 9,518 7,765 Total deferred tax assets...... 44,941 45,376 43,791 Deferred tax liabilities related to: Fixed assets, principally depreciation................... 101,316 98,821 92,120 Other items...................... 7,119 5,935 5,259 Total deferred tax liabilities................. 108,435 104,756 97,379 Net deferred tax liability......... $ 63,494 $ 59,380 $53,588 8. PENSION AND POSTRETIREMENT BENEFIT PLANS PENSION PLANS The Company sponsors three noncontributory, defined benefit pension plans. These plans cover substantially all employees other than those covered by union-administered plans. Normal retirement age is 65, but the plans contain provisions for earlier retirement. Benefits for the Salaried Plan and the Chemicals Hourly Plan are based on salaries or wages and years of service; the Construction Materials Hourly Plan provides benefits equal to a flat dollar amount for each year of service. Charges to earnings referable to company administered pension plans totaled $5,185,000 in 1996, $1,187,000 in 1995 and $3,088,000 in 1994. Components of the net periodic pension charges are as follows (in thousands of dollars): 1996 1995 1994 Service cost - benefits earned during the period................. $11,631 $ 8,665 $ 9,551 Interest cost....................... 19,069 18,019 17,167 Actual return on plan assets........ (43,867) (51,744) (3,923) Net amortization and deferral....... 18,352 26,247 (19,707) Net periodic pension charge....... $ 5,185 $ 1,187 $ 3,088 The Company's qualified pension plans have assets in excess of the accumulated benefit obligation. Plan assets are composed primarily of marketable domestic and international equity securities and corporate and government debt securities. Unrecognized net plan assets at the implementation of SFAS No. 87, Employers' Accounting for Pensions, in 1986 are being amortized over the average of the covered employees' remaining service lives, which range from 12 to 16 years. The following table reconciles the funded status of all the Company's plans with the related amounts recognized in the Company's consolidated balance sheets at December 31 (in thousands of dollars): 1996 1995 1994 Actuarial present value of benefit obligations: Based on employment service to date and current salary levels: Vested........................ $(173,166) $(174,436) $(134,409) Nonvested..................... (8,693) (7,143) (4,792) Accumulated benefit obligation.................. (181,859) (181,579) (139,201) Effect of projected future salary increases........ (85,430) (83,011) (68,107) Projected benefit obligation..... (267,289) (264,590) (207,308) Plan assets at fair market value.... 337,326 305,398 264,174 Plan assets in excess of projected benefit obligation...... 70,037 40,808 56,866 Unamortized portion of unrecognized net asset at implementation of SFAS No. 87..... (10,212) (13,225) (16,696) Unrecognized net gain............... (68,163) (26,057) (38,748) Unrecognized prior service cost..... 12,632 8,148 9,151 Net prepaid pension cost....... $ 4,294 $ 9,674 $ 10,573 Annual net periodic pension charges and credits are calculated using plan assumptions as of the end of the prior year, whereas the funded status and related pension obligations are determined using the assumptions as of the end of the current year. Plan assumptions at December 31 were as follows: 1996 1995 1994 Discount rates used to determine the pension obligations........... 7.50% 7.00% 8.50% Discount rates used to determine the net periodic cost and other recognized gains - First 18 years................ 7.00 8.50 7.25 - Thereafter.................... 7.00 8.50 7.25 Rates of increase in compensation levels (for salary-related plans)........ 4.25 4.25 5.00 Expected long-term rates of return on plan assets.......... 8.25 8.25 8.25 The Company funds the pension trusts currently in amounts determined under the individual entry age level premium method, including benefit increases expected as a result of projected wage and salary increases occurring between the date of valuation and the individual retirement dates. Certain of the Company's hourly employees in unions are covered by multi-employer defined benefit pension plans. Contributions to these plans approximated $2,090,000 in 1996, $1,859,000 in 1995 and $1,617,000 in 1994. The actuarial present value of accumulated plan benefits and net assets available for benefits for employees in the union-administered plans are not determinable from available information. Seventeen percent of the labor force is covered by collective bargaining agreements and 23% are covered by labor agreements that expire within one year. POSTRETIREMENT PLANS In addition to pension benefits, the Company provides certain health care benefits and life insurance for some retired employees. Substantially all of the Company's salaried employees and, where applicable, hourly employees may become eligible for those benefits if they reach at least age 55 and meet certain service requirements while working for the Company. Generally, company-provided health care benefits terminate when covered individuals become eligible for Medicare benefits or reach age 65, whichever first occurs. The components of net periodic postretirement benefit charges and credits are as follows (in thousands of dollars): 1996 1995 1994 Service cost - benefits attributed to service during the period...... $2,045 $1,965 $1,742 Interest cost....................... 3,013 3,558 2,919 Actual return on assets............. (196) (158) (150) Net amortization and deferral....... 88 209 329 Net periodic postretirement benefit cost................... $4,950 $5,574 $4,840 The Company funds the postretirement benefits plan each year through contributions to a trust fund for health care benefits and through payments of premiums to providers of life insurance. All assets of the plan relate to the life insurance and are composed of reserves held by the insurer. The following table sets forth the combined funded status of the plan and its reconciliation with the related amounts recognized in the Company's consolidated balance sheets at December 31 (in thousands of dollars): 1996 1995 1994 Accumulated postretirement benefit obligation:............... Retirees.......................... $ (9,991) $(11,355) $(10,570) Fully eligible active plan participants............... (13,227) (13,658) (11,934) Other active plan participants.... (20,415) (19,478) (18,439) Total accumulated postretirement benefit obligation.............. (43,633) (44,491) (40,943) Plan assets at fair market value.... 3,119 2,842 2,628 Accumulated postretirement benefit obligation in excess of plan assets.................... (40,514) (41,649) (38,315) Unrecognized prior service cost..... 5 6 6 Unrecognized net loss............... 4,287 7,726 7,274 Accrued postretirement benefit cost.................... $(36,222) $(33,917) $(31,035) Annual net periodic postretirement benefit charges and credits are calculated using plan assumptions as of the end of the prior year, whereas the funded status and related benefit obligations are determined using the assumptions as of the end of the current year. Plan assumptions at December 31 were as follows: 1996 1995 1994 Discount rates...................... 7.50% 7.00% 8.50% Expected long-term rate of return on plan assets.......... 7.00 7.00 7.00 Rate of increase in per capita claims cost - First year................... 9.00 10.00 12.00 - Ultimate rate................ 5.00 5.00 6.00 If the health care cost trend rates were increased 1.0% each year, the accumulated postretirement benefit obligation as of December 31, 1996 would have increased by $4,537,000 (or 10.9%) and the aggregate of the service and interest cost for 1996 would have increased by $613,000 (or 12.1%). 9. INCENTIVE PLANS STOCK-BASED COMPENSATION PLANS In 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). This new standard defines a fair value method of accounting for stock-based compensation. Under the fair value method, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. Pursuant to the new standard, companies are encouraged, but are not required, to adopt the fair value method of accounting for employee stock-based transactions. Companies also are permitted to continue to account for such transactions under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), but are required to disclose in a note to the financial statements pro forma information as if the company had applied the new method of accounting. The Company has elected to continue to follow APB 25, and the required pro forma disclosures are presented below. The Company's 1996 Long-Term Incentive Plan authorizes the granting of stock-based awards to key salaried employees of the Company and its affiliates. The Plan permits the granting of: stock options (including incentive stock options), stock appreciation rights, restricted stock and restricted stock units, performance share awards, dividend equivalents, and other awards valued in whole or in part by reference to or otherwise based on common stock of the Company. The number of shares available for awards is .95% of the issued common shares of the Company (including treasury shares) as of the first day of each calendar year plus the unused shares that are carried over from prior years. Stock options issued during 1996 were granted at the fair market value of the stock on the date of the grant. They vest ratably over five years and expire ten years subsequent to the grant. Performance share awards were granted through 1995. These awards are based on the achievement of established performance goals and the majority of the awards vest over five years. Expense provisions referable to these plans amounted to $4,373,000 in 1996, $6,742,000 in 1995 and $3,894,000 in 1994. Expense provisions were also affected by changes in the market value of the Company's common stock. Pro forma information regarding net income and earnings per share is required by SFAS 123, and has been determined as if the Company had accounted for its employee stock options and performance share awards under the fair value method of that Statement. The fair value for options was estimated at the date of the grant using a Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rate of 6.4%; dividend yields of 2.9%; volatility factors of the expected market price of the Company's common stock of 14.5% and a weighted-average expected life of the option of five years. The fair value for performance share awards was based on a discounted fair market value of the Company's stock at grant date. For purposes of pro forma disclosures, the estimated fair value of the options and performance share awards is amortized to expense over the options' vesting period. The effects of applying SFAS 123 on a pro forma basis would be immaterial to 1996 and 1995 net earnings and earnings per share. A summary of the Company's stock option activity, related information as of December 31, 1996 and changes during the year is presented below: Weighted Average Shares Exercise Price Outstanding at beginning of year.... - $ - Granted........................... 429,800 $56.61 Forfeited......................... 850 $56.56 Outstanding at end of year.......... 428,950 $56.61 Options exercisable at year-end..... - Weighted-average grant date fair value of each option granted during the year........... $10.35 Exercise prices for options outstanding at December 31, 1996 ranged from $55.75 to $59.19. The weighted-average remaining contractual life of the options is 9.38 years. The number and weighted-average grant date fair value of performance share awards is presented below: 1996 1995 Number of awards.................... - 126,760 Weighted-average grant date fair value of each award granted during the year........... - $39.35 CASH BASED COMPENSATION PLANS The Company has a management incentive plan under which cash awards may be made annually to officers and key employees. Expense provisions referable to the plans amounted to $8,500,000 in 1996, $5,550,000 in 1995 and $3,600,000 in 1994. 10. OTHER COMMITMENTS AND CONTINGENT LIABILITIES In 1987 the Company formed three jointly owned companies with Industrias ICA, S.A. de C.V., ("Indica"), a principal member of Grupo ICA, one of Mexico's leading diversified industrial entities, to develop and operate a limestone quarry on Mexico's Yucatan Peninsula and to import Mexican crushed stone for sale along the U.S. Gulf Coast. The shareholder agreements for these three companies provide that each sponsor will contribute its share of the equity required to fund the joint venture. The Company's share of $71,903,000 had been contributed as of December 31, 1996; Indica contributed a substantially equal pro rata amount. The jointly owned companies have entered into credit agreements which have loan balances totaling $41,596,000. The Company and Indica have agreed to guarantee these loans on a several and pro rata basis equal to approximately 50% each. Certain of the loan guarantees will be terminated if and when the project meets defined financial tests. In addition, the Company has approximately $3,700,000 outstanding from the three companies at December 31, 1996 as its share of loans to the joint venture. The carrying amount of net assets of the entities located outside the United States was $49,723,000 as of December 31, 1996. Other commitments of the Company include the purchase of property, plant and equipment approximating $23,221,000 at December 31, 1996. The Company is a defendant in various lawsuits incident to the ordinary course of business. It is not possible to determine with precision the probable outcome or the amount of liability, if any, under these lawsuits; however, in the opinion of the Company and its counsel, the disposition of these lawsuits will not adversely affect the consolidated financial statements of the Company to a material extent. In 1991 the Environmental Protection Agency ("EPA") issued a unilateral administrative order which directed the named respondents, including the Company and other potentially responsible parties ("PRPs"), to clean up a now-closed third party waste disposal site to which the Chemicals segment last shipped waste materials in 1970. During the years 1986 through 1995, the Company recorded provisions totaling $39,300,000 for environmental remediation at this site. During 1996 the Company and the other participating PRPs completed all activities relating to site remediation, with the exception of ongoing operation and maintenance of the remedy. The EPA anticipates conducting its five-year review of site conditions mid-year 1998. If site conditions are satisfactory based on that review, the site will thereafter be removed from the National Priority List of Superfund sites. The Company believes that total provisions now recorded are adequate to cover its share of the anticipated remaining costs. Provisions for other environmental expenses for the last three years have not been material. The Company's consolidated balance sheets as of December 31 include accrued environmental cleanup costs for the Chemicals segment of $3,732,000 in 1996, $2,765,000 for 1995 and $12,867,000 for 1994. In 1987 the Company discontinued its former Metals segment and recorded a loss on disposal that reflected provisions for phaseout costs, including the estimated cost of contractual liabilities associated with remediation of environmental conditions at several Metals plants. An additional provision for estimated phaseout costs was recorded in 1989. The Company has made significant progress in addressing these contractual liabilities by completing several environmental remediation projects at certain of these Metals plants. Expenditures for these projects were within recorded provisions. While the Company believes its recorded provisions are adequate to address the remainder of these contractual liabilities and other liabilities associated with these operations, factors that might impact the adequacy of provisions include the results of further environmental testing, engineering analyses and planning, and negotiations among interested parties. Current liabilities reported on the Company's consolidated balance sheets include accrued provisions for discontinued operations in the following amounts as of December 31: $905,000 in 1996; $1,805,000 in 1995 and $2,649,000 in 1994. In addition, other noncurrent liabilities include $240,000 in 1996 and $493,000 each in 1995 and 1994 referable to discontinued operations. 11. COMMON STOCK A total of 12,816,971 shares has been purchased at a cost of $487,852,000 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. The number of shares remaining under the current purchase authorization was 834,392 shares as of December 31, 1996. On February 14, 1997, the Company's Board of Directors increased the authorization to 4,000,000 shares. 12. SEGMENT DATA Operations in the Company's Construction Materials segment principally involve the production and sale of aggregates and related products and services. Sales are in 17 states located in the southeast, midwest and southwest regions of the United States. Customers primarily use aggregates in the construction and maintenance of highways, roads and streets and in the construction of housing and nonresidential, commercial and industrial facilities. The Chemicals segment, through its Chloralkali Business Unit, produces and sells basic industrial and specialty chemicals, including chlorine, caustic soda and chlorinated organic chemicals. Principal markets for these chemicals include pulp and paper, energy, food and pharmaceuticals, textiles, water management, and chemical processing. The Performance Systems Business Unit offers a unique blend of products, services, technologies and manufacturing capabilities for a variety of customer needs in the pulp and paper, textile, water management, and food processing industries. Products are principally marketed throughout the United States, but are also exported to Mexico, the Far East and Western Europe. Segment data referable to net sales to unaffiliated customers, property additions, and depreciation, depletion and amortization are provided in Segment Financial Data on pages 74 and 75. The Company's determination of segment earnings recognizes equity in the income or losses of nonconsolidated affiliates as part of segment earnings and also reflects allocations of general corporate expenses to the segments. SFAS No. 14, Financial Reporting for Segments of a Business Enterprise, does not provide for the inclusion of these items in "operating profit or loss of reportable segments." The net amounts of those items were expenses of $16,231,000 in 1996, $22,533,000 in 1995 and $14,110,000 in 1994. Segment earnings are reconciled with earnings before income taxes as follows (in thousands of dollars): 1996 1995 1994 Segment Earnings: Construction Materials............ $197,315 $181,528 $162,505 Chemicals......................... 94,707 87,792 (7,349) 292,022 269,320 155,156 Interest income, etc................ 2,194 200 571 Interest expense.................... (8,636) (11,099) (9,821) Earnings before income taxes........ $285,580 $258,421 $145,906 Identifiable assets by segment at December 31 are as follows (in thousands of dollars): 1996 1995 1994 Construction Materials.............. $ 719,618 $ 690,044 $ 678,793 Chemicals........................... 441,088 395,487 389,491 Total identifiable assets........... 1,160,706 1,085,531 1,068,284 Investment in nonconsolidated affiliates........................ 56,043 50,780 53,902 General corporate assets............ 53,080 57,614 51,241 Cash items.......................... 50,816 21,869 7,717 Total assets........................ $1,320,645 $1,215,794 $1,181,144 13. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental information referable to the Consolidated Statements of Cash Flows is summarized below (in thousands of dollars): 1996 1995 1994 Cash payments: Interest (exclusive of amount capitalized)............. $ 8,715 $11,214 $ 9,762 Income taxes...................... 85,492 85,324 36,846 Noncash investing and financing activities: Amounts referable to business acquisitions: Liabilities assumed........... 5,051 1,382 12,198 Fair value of stock issued.... - - 6,443 14. ACQUISITIONS At various dates during 1996 the Company acquired the net assets and businesses of several companies. The combined purchase price was approximately $64,000,000. Funds for the purchases were primarily provided by internally generated cash flows. The amount by which the total cost of these acquisitions exceeded the fair value of the assets acquired was recognized as goodwill and will be amortized under the Company's normal amortization policy. All of the 1996 acquisitions described above were accounted for as purchases and accordingly, the results of operations of the acquired businesses are included in the accompanying financial statements from their respective dates of acquisition. On a pro forma basis, as if the assets and business had been acquired at the beginning of fiscal 1995, revenue, net income and earnings per share would not differ materially from the amounts reflected in the accompanying consolidated financial statements for 1996 and 1995. On August 1, 1994, the Company acquired the net assets and business of Callaway Chemical Company from Exxon Chemical Company. In a related transaction, the Company also acquired the net assets and business of Comcor Chemicals Limited from Exxon Corporation's affiliated Canadian company, Imperial Oil Limited. The Company paid cash for the assets acquired. The purchase price paid for all assets, including net working capital, was approximately $82,000,000. Funds for the purchase price were primarily obtained by the Company through issuance and sale of short-term notes. Goodwill recorded on the Company's balance sheet as of December 31, 1996 amounted to $69,523,000. MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING AND INTERNAL CONTROL The Shareholders of Vulcan Materials Company: Vulcan's management acknowledges and accepts its responsibility for all the information contained in the financial statements and other sections of this report. The statements were prepared in conformity with generally accepted accounting principles appropriate in the circumstances and we believe they reflect fairly the Company's financial position, results of operations and cash flows for the periods shown. The financial statements necessarily reflect our informed judgments and estimates of the expected outcome of numerous current events and transactions. The Company maintains an internal control structure which we believe provides reasonable assurance that the Company's financial statements, books and records accurately reflect the Company's financial condition, results of operations and cash flows and that the Company's assets are safeguarded from loss or unauthorized use. This internal control structure includes well-defined and communicated policies and procedures, organizational structures that provide for appropriate separations of responsibilities, high standards applied in the selection and training of management personnel and adequate procedures for properly assessing and applying accounting principles, including careful consideration of the accuracy and appropriateness of all significant accounting estimates. Vulcan also has an internal audit function that continually reviews compliance with established policies and procedures. The Company's independent auditors, Deloitte & Touche LLP, consider the internal control structure as a part of their audits of the Company's financial statements and provide an independent opinion as to the fairness of the presentation of those statements. Their report is presented below. The Board of Directors pursues its oversight role for the financial statements and internal control structure in major part through the Audit Review Committee, which is composed of five outside directors. In addition, the full Board regularly reviews detailed management reports covering all aspects of the Company's financial affairs. The Audit Review Committee meets periodically with management, the independent auditors and the internal auditors to review the work of each and to ensure that each is properly discharging its responsibilities. To ensure independence, the Committee also meets on these matters with the internal and independent auditors without the presence of management representatives. /s/ D. F. Sansone D. F. Sansone Vice President, Finance /s/ E. A. Khan E. A. Khan Controller February 7, 1997 INDEPENDENT AUDITORS' REPORT The Shareholders of Vulcan Materials Company: We have audited the accompanying consolidated balance sheets of Vulcan Materials Company and its subsidiary companies as of December 31, 1996, 1995, and 1994, and the related consolidated statements of earnings, shareholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Vulcan Materials Company and its subsidiary companies at December 31, 1996, 1995 and 1994, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ Deloitte & Touche LLP Deloitte & Touche LLP Birmingham, Alabama February 7, 1997 FINANCIAL TERMINOLOGY Capital employed For the Company: the sum of interest-bearing debt, other noncurrent liabilities and shareholders' equity; for a segment: the net sum of the segment's assets, current liabilities, and allocated corporate assets and current liabilities, exclusive of cash items and short-term debt Cash items The sum of cash, cash equivalents and short-term investments Common shareholders' equity The sum of common stock (less the cost of common stock in treasury), capital in excess of par value and retained earnings, as reported in the balance sheet Long-term capital The sum of long-term debt, other noncurrent liabilities and shareholders' equity Operating income from continuing operations after taxes For the Company: net earnings from continuing operations plus the after-tax cost of interest expense; for a segment: segment earnings less the segment's computed share of the consolidated provision for income taxes Property additions* Capitalized replacements of and additions to property, plant and equipment (and such assets of businesses acquired), including capitalized leases, renewals and betterments; each segment's property additions include allocated corporate amounts Ratio of earnings to fixed charges The sum of earnings from continuing operations before income taxes, amortization of capitalized interest and fixed charges net of interest capitalization credits, divided by fixed charges. Fixed charges are the sum of interest expense before capitalization credits, amortization of financing costs and one-third of rental expense. Segment earnings Earnings before interest expense and income taxes and after allocation of corporate expenses and income, other than "interest income, etc.," (principally interest income earned on cash items and gains or losses on corporate financing transactions), and after assignment of equity income to the segments with which it is related in terms of products and services. Allocations are based primarily on one or a combination of the following factors: average gross investment, average equity and sales. Short-term debt The sum of current interest-bearing debt, including current maturities of long-term debt and interest-bearing notes payable * The Company classifies its property additions into three categories based upon the predominant purpose of the project expenditures. Thus, a project is classified entirely as a replacement if that is the principal reason for making the expenditure even though the project may involve some cost saving and/or capacity improvement aspects. Likewise, a profit-adding project is classified entirely as such if the principal reason for making the expenditure is to add operating facilities at new locations (which occasionally replace facilities at old locations), to add product lines, to expand the capacity of existing facilities, to reduce costs, to increase mineral reserves or to improve products, etc. Property additions classified as environmental control expenditures do not reflect those expenditures for environmental control activities, including industrial health programs, which are expensed currently. Such expenditures are made on a continuing basis and at significant levels in each of the Company's segments. Frequently, profit-adding and major replacement projects also include expenditures for environmental control purposes. EX-21 5 SUBSIDIARIES
VULCAN MATERIALS COMPANY SUBSIDIARIES AS OF DECEMBER 31, 1996 STATE OR OTHER % OWNED JURISDICTION OF DIRECTLY OR INCORPORATION INDIRECTLY ENTITY OR ORGANIZATION BY VULCAN Subsidiaries Atlantic Granite Company * South Carolina 33 1/3 Birmingham Slag Company * Alabama 100 BRT Transfer Terminal, Inc. Kentucky 100 Calizas Industriales del Carmen, S.A. de C. V. Mexico 49 Callaway Chemical Company New Jersey 100 Callaway Chemical Limited British Columbia 100 Dixie Sand and Gravel Company * Tennessee 100 Knoxville Mack Distributors, Inc. * Tennessee 100 Lambert Bros., Inc. * Tennessee 100 Midsouth Machine and Service Company Tennessee 100 RECO Transportation, Inc. Kentucky 100 Statewide Transport, Inc. Texas 100 Vulcan Chemical Technologies, Inc. Delaware 100 Vulcan/ICA Distribution Company (Partnership) Texas 51 Vulcan Gulf Coast Aggregates, Inc. New Jersey 100 Vulcan Gulf Coast Materials, Inc. New Jersey 100 Vulcan International, Ltd. U. S. Virgin Island 100 Vulcan Lands, Inc. New Jersey 100 Vulcan Soda Ash Company California 100 VULICA Shipping Company, Limited Bahamas 50 Wanatah Trucking Co., Inc. Indiana 100 Wesco Contracting Company * Tennessee 100 White's Mines, Inc. * Texas 100 * Inactive
EX-24.1 6 POWERS OF ATTORNEY POWER OF ATTORNEY The undersigned director of Vulcan Materials Company, a New Jersey corporation, hereby nominates, constitutes and appoints William F. Denson, III, and E. Starke Sydnor, and each of them, the true and lawful attorneys of the undersigned to sign the name of the undersigned as director to the Annual Report on Form 10-K for the year ended December 31, 1996 of said corporation to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to any and all amendments to said report. The undersigned hereby grants to said attorneys full power of substitution, resubstitution and revocation, all as fully as the undersigned could do if personally present, hereby ratifying all that said attorneys or their substitutes may lawfully do by virtue hereof. IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company has executed this Power of Attorney this 5th day of March, 1997. /s/Marion H. Antonini Marion H. Antonini EX-24.2 7 POWERS OF ATTORNEY POWER OF ATTORNEY The undersigned director of Vulcan Materials Company, a New Jersey corporation, hereby nominates, constitutes and appoints William F. Denson, III, and E. Starke Sydnor, and each of them, the true and lawful attorneys of the undersigned to sign the name of the undersigned as director to the Annual Report on Form 10-K for the year ended December 31, 1996 of said corporation to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to any and all amendments to said report. The undersigned hereby grants to said attorneys full power of substitution, resubstitution and revocation, all as fully as the undersigned could do if personally present, hereby ratifying all that said attorneys or their substitutes may lawfully do by virtue hereof. IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company has executed this Power of Attorney this 6th day of March, 1997. /s/Livio D. DeSimone Livio D. DeSimone EX-24.3 8 POWERS OF ATTORNEY POWER OF ATTORNEY The undersigned director of Vulcan Materials Company, a New Jersey corporation, hereby nominates, constitutes and appoints William F. Denson, III, and E. Starke Sydnor, and each of them, the true and lawful attorneys of the undersigned to sign the name of the undersigned as director to the Annual Report on Form 10-K for the year ended December 31, 1996 of said corporation to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to any and all amendments to said report. The undersigned hereby grants to said attorneys full power of substitution, resubstitution and revocation, all as fully as the undersigned could do if personally present, hereby ratifying all that said attorneys or their substitutes may lawfully do by virtue hereof. IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company has executed this Power of Attorney this 5th day of March, 1997. /s/John K. Greene John K. Greene EX-24.4 9 POWERS OF ATTORNEY POWER OF ATTORNEY The undersigned director of Vulcan Materials Company, a New Jersey corporation, hereby nominates, constitutes and appoints William F. Denson, III, and E. Starke Sydnor, and each of them, the true and lawful attorneys of the undersigned to sign the name of the undersigned as director to the Annual Report on Form 10-K for the year ended December 31, 1996 of said corporation to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to any and all amendments to said report. The undersigned hereby grants to said attorneys full power of substitution, resubstitution and revocation, all as fully as the undersigned could do if personally present, hereby ratifying all that said attorneys or their substitutes may lawfully do by virtue hereof. IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company has executed this Power of Attorney this 10th day of March, 1997. /s/Donald M. James Donald M. James EX-24.5 10 POWERS OF ATTORNEY POWER OF ATTORNEY The undersigned director of Vulcan Materials Company, a New Jersey corporation, hereby nominates, constitutes and appoints William F. Denson, III, and E. Starke Sydnor, and each of them, the true and lawful attorneys of the undersigned to sign the name of the undersigned as director to the Annual Report on Form 10-K for the year ended December 31, 1996 of said corporation to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to any and all amendments to said report. The undersigned hereby grants to said attorneys full power of substitution, resubstitution and revocation, all as fully as the undersigned could do if personally present, hereby ratifying all that said attorneys or their substitutes may lawfully do by virtue hereof. IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company has executed this Power of Attorney this 5th day of March, 1997. /s/Richard H. Leet Richard H. Leet EX-24.6 11 POWERS OF ATTORNEY POWER OF ATTORNEY The undersigned director of Vulcan Materials Company, a New Jersey corporation, hereby nominates, constitutes and appoints William F. Denson, III, and E. Starke Sydnor, and each of them, the true and lawful attorneys of the undersigned to sign the name of the undersigned as director to the Annual Report on Form 10-K for the year ended December 31, 1996 of said corporation to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to any and all amendments to said report. The undersigned hereby grants to said attorneys full power of substitution, resubstitution and revocation, all as fully as the undersigned could do if personally present, hereby ratifying all that said attorneys or their substitutes may lawfully do by virtue hereof. IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company has executed this Power of Attorney this 5th day of March, 1997. /s/Douglas J. McGregor Douglas J. McGregor EX-24.7 12 POWERS OF ATTORNEY POWER OF ATTORNEY The undersigned director of Vulcan Materials Company, a New Jersey corporation, hereby nominates, constitutes and appoints William F. Denson, III, and E. Starke Sydnor, and each of them, the true and lawful attorneys of the undersigned to sign the name of the undersigned as director to the Annual Report on Form 10-K for the year ended December 31, 1996 of said corporation to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to any and all amendments to said report. The undersigned hereby grants to said attorneys full power of substitution, resubstitution and revocation, all as fully as the undersigned could do if personally present, hereby ratifying all that said attorneys or their substitutes may lawfully do by virtue hereof. IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company has executed this Power of Attorney this 5th day of March, 1997. /s/Ann D. McLaughlin Ann D. McLaughlin EX-24.8 13 POWERS OF ATTORNEY POWER OF ATTORNEY The undersigned director of Vulcan Materials Company, a New Jersey corporation, hereby nominates, constitutes and appoints William F. Denson, III, and E. Starke Sydnor, and each of them, the true and lawful attorneys of the undersigned to sign the name of the undersigned as director to the Annual Report on Form 10-K for the year ended December 31, 1996 of said corporation to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to any and all amendments to said report. The undersigned hereby grants to said attorneys full power of substitution, resubstitution and revocation, all as fully as the undersigned could do if personally present, hereby ratifying all that said attorneys or their substitutes may lawfully do by virtue hereof. IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company has executed this Power of Attorney this 5th day of March, 1997. /s/James V. Napier James V. Napier EX-24.9 14 POWERS OF ATTORNEY POWER OF ATTORNEY The undersigned director of Vulcan Materials Company, a New Jersey corporation, hereby nominates, constitutes and appoints William F. Denson, III, and E. Starke Sydnor, and each of them, the true and lawful attorneys of the undersigned to sign the name of the undersigned as director to the Annual Report on Form 10-K for the year ended December 31, 1996 of said corporation to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to any and all amendments to said report. The undersigned hereby grants to said attorneys full power of substitution, resubstitution and revocation, all as fully as the undersigned could do if personally present, hereby ratifying all that said attorneys or their substitutes may lawfully do by virtue hereof. IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company has executed this Power of Attorney this 6th day of March, 1997. /s/Donald B. Rice Donald B. Rice EX-24.10 15 POWERS OF ATTORNEY POWER OF ATTORNEY The undersigned director of Vulcan Materials Company, a New Jersey corporation, hereby nominates, constitutes and appoints William F. Denson, III, and E. Starke Sydnor, and each of them, the true and lawful attorneys of the undersigned to sign the name of the undersigned as director to the Annual Report on Form 10-K for the year ended December 31, 1996 of said corporation to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to any and all amendments to said report. The undersigned hereby grants to said attorneys full power of substitution, resubstitution and revocation, all as fully as the undersigned could do if personally present, hereby ratifying all that said attorneys or their substitutes may lawfully do by virtue hereof. IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company has executed this Power of Attorney this 5th day of March, 1997. /s/Herbert A. Sklenar Herbert A. Sklenar EX-24.11 16 POWERS OF ATTORNEY POWER OF ATTORNEY The undersigned director of Vulcan Materials Company, a New Jersey corporation, hereby nominates, constitutes and appoints William F. Denson, III, and E. Starke Sydnor, and each of them, the true and lawful attorneys of the undersigned to sign the name of the undersigned as director to the Annual Report on Form 10-K for the year ended December 31, 1996 of said corporation to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to any and all amendments to said report. The undersigned hereby grants to said attorneys full power of substitution, resubstitution and revocation, all as fully as the undersigned could do if personally present, hereby ratifying all that said attorneys or their substitutes may lawfully do by virtue hereof. IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company has executed this Power of Attorney this 5th day of March, 1997. /s/Orin R. Smith Orin R. Smith EX-27 17
5 This schedule contains summary financial information extracted from the Consolidated Statement of Earnings for the twelve months ended December 31, 1996, and the Consolidated Balance Sheet as of December 31, 1996 and is qualified in its entirety by reference to such financial statements. YEAR DEC-31-1996 DEC-31-1996 50816 0 184970 8106 128578 394045 2002164 1237674 1320645 194654 85535 0 0 46573 837091 1320645 1568945 1568945 1115442 1115442 3887 652 8636 285580 96985 188595 0 0 0 188595 5.36 5.36
EX-99 18 SCHEDULE II
SCHEDULE II VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES VALUATION AND QUALIFYING ACCOUNTS AND RESERVES For the Years Ended December 31, 1996, 1995 and 1994 Amounts in Thousands Column A Column B Column C Column D Column E Column F Balance at Additions Charged To Balance at Beginning Costs and Other End Description Of Period Expenses Accounts Deductions Of Period 1996 Accrued Environmental Costs... $2,765 $285 $3,000 $2,318 (1) $3,732 Doubtful Receivables.......... 8,176 732 802 (2) 8,106 All Other (3)................. 1,395 1,687 1995 Accrued Environmental Costs... $12,867 $3,998 $14,100 (1) $2,765 Doubtful Receivables.......... 8,244 984 $18 1,070 (2) 8,176 All Other (3)................. 2,005 1,395 1994 Accrued Environmental Costs... $19,100 $7,833 $14,066 (1) $12,867 Doubtful Receivables.......... 7,284 1,001 $70 111 (2) 8,244 All Other (3)................. 2,428 2,005 (1) Expenditures on environmental remendiation projects (2) Write-offs of uncollected accounts and worthless notes, less recoveries (3) Valuation and qualifying accounts and reserves for which additions, deductions and balances are not individually significant
-----END PRIVACY-ENHANCED MESSAGE-----