10-Q 1 dectext.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark one) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended December 31, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-7159 FLORIDA ROCK INDUSTRIES, INC. (exact name of registrant as specified in its charter) Florida 59-0573002 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 155 East 21st Street, Jacksonville, Florida 32206 (Address of principal executive offices) (Zip Code) 904/355-1781 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of February 3, 2003: 28,561,448 shares of $.10 par value common stock. FLORIDA ROCK INDUSTRIES, INC. FORM 10-Q QUARTER ENDED DECEMBER 31, 2002 CONTENTS Page No. Part I. Financial Information Item 1. Financial Statements Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Income 2 Condensed Consolidated Statements of Cash Flows 3 Notes to Condensed Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk 15 Item 4. Controls and Procedures 15 Part II. Other Information Item 1. Legal Proceedings 16 Item 6. Exhibits and Reports on Form 8-K 17 Signatures 18 Exhibit 11. Computation of Earnings Per Common Share 26 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FLORIDA ROCK INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) December 31, September 30, 2002 2002 ASSETS Current assets: Cash and cash equivalents $ 3,239 3,845 Accounts and notes receivable, less allowance for doubtful accounts of $1,905 ($1,694 at September 30, 2002) 70,107 82,919 Inventories 32,189 31,571 Prepaid expenses and other 10,161 8,252 Total current assets 115,696 126,587 Other assets 61,171 61,326 Goodwill, at cost less accumulated amortization of $8,590 54,702 54,702 Property, plant and equipment, at cost: Land 168,442 168,512 Plant and equipment 778,515 764,653 Construction in process 10,219 10,860 957,176 944,025 Less accumulated depreciation, depletion and amortization 467,144 453,291 Net property, plant and equipment 490,032 490,734 $ 721,601 733,349 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term notes payable to banks $ 900 6,900 Accounts payable 33,714 42,521 Dividends payable 2,863 2,861 Federal and state income taxes 5,538 2,557 Accrued payroll and benefits 8,641 18,060 Accrued insurance reserve 5,017 3,331 Accrued liabilities, other 6,779 10,564 Long-term debt due within one year 374 387 Total current liabilities 63,826 87,181 Long-term debt 43,750 43,695 Deferred income taxes 62,430 62,430 Accrued employee benefits 17,276 17,026 Long-term accrued insurance reserves 8,281 8,281 Other accrued liabilities 5,117 4,089 Shareholders' equity: Preferred stock, no par value; 10,000,000 shares authorized, none issued - - Common stock, $.10 par value; 50,000,000 shares authorized, 28,597,163 shares issued 2,860 2,858 (28,578,383 shares at September 30, 2002) Capital in excess of par value 16,309 15,902 Retained earnings 501,752 491,887 Total shareholders' equity 520,921 510,647 $ 721,601 733,349 See accompanying notes. FLORIDA ROCK INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share amounts) (Unaudited) Three Months Ended December 31, 2002 2001 Net sales $160,741 173,962 Freight revenues 3,505 4,651 Total sales 164,246 178,613 Cost of sales 124,708 131,209 Freight expense 3,518 4,651 Total cost of sales 128,226 135,860 Gross profit 36,020 42,753 Selling, general and administrative 17,377 18,257 Operating profit 18,643 24,496 Interest expense (469) (1,152) Interest income 529 330 Other income (expense), net 423 1,394 Income before income taxes 19,126 25,068 Provision for income taxes 6,730 8,824 Income before cumulative effect of 12,396 16,244 accounting change Cumulative effect of accounting change, 333 - net of income taxes of $181 Net income $ 12,729 16,244 Earnings per share: Basic Income before cumulative effect of accounting change $ .43 .58 Cumulative effect of accounting change .01 - Net income $ .44 .58 Diluted Income before cumulative effect of accounting change $ .43 .56 Cumulative effect of accounting change .01 - Net income $ .44 .56 Cash dividends per common share $ .10 .085 Weighted average shares used in computing earnings per share: Basic 28,586 28,246 Diluted 29,037 28,789 See accompanying notes. FLORIDA ROCK INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED DECEMBER 31, 2002 AND 2001 (In thousands) (Unaudited) 2002 2001 Cash flows from operating activities: Net income $12,729 16,244 Cumulative effect of accounting change (333) - Adjustments to reconcile net income to net cash provided from operating activities: Depreciation, depletion and amortization 17,405 15,949 Gain on disposition of property, plant and equipment (321) (1,545) Net changes in operating assets and liabilities: Accounts receivable 12,713 11,964 Inventories (618) (1,613) Prepaid expenses and other (1,909) (2,454) Accounts payable and accrued liabilities (17,127) (14,927) Other, net (14) (308) Net cash provided by operating activities 22,525 23,310 Cash flows from investing activities: Purchase of property, plant and equipment (13,982) (7,563) Proceeds from the sale of property, plant and equipment 352 2,860 Additions to other assets (1,190) (21,242) Collections of notes receivable 99 146 Net cash used in investing activities (14,721) (25,799) Cash flows from financing activities: Proceeds from long-term debt 118 1,737 Increase (decrease)in short-term debt (6,000) 1,600 Repayment of long-term debt (76) (17,122) Exercise of employee stock options 409 669 Repurchase of Company stock - (2) Payment of dividends (2,861) (2,406) Net cash used in financing activities (8,410) (15,524) Net decrease in cash and cash equivalents (606) (18,013) Cash and cash equivalents at beginning of year 3,845 29,108 Cash and cash equivalents at end of period $ 3,239 $11,095 See accompanying notes. FLORIDA ROCK INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31,2002 (Unaudited) (1) Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company and its more than 50% owned subsidiaries. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for the interim period have been included. Operating results for the three months ended December 31, 2002, are not necessarily indicative of the results that may be expected for the fiscal year ended September 30, 2003. The accompanying condensed consolidated financial statements and the information included under the heading "Management's Discussion and Analysis" should be read in conjunction with the consolidated financial statements and related notes of Florida Rock Industries, Inc. for the year ended September 30, 2002. (2) Change in Accounting Principle Effective October 1, 2002, the Company adopted SFAS No. 143, "Accounting for Asset Retirement Obligations." The statement applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) normal use of the asset. Statement No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expenses. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. All legal obligations for asset retirement obligations were identified and the fair value of these obligations were determined as of October 1, 2002. Previously, the Company accrued for such costs on the units of production basis over the estimated reserves. Upon the adoption of the new standard, the Company recorded the current fair value of its expected cost of reclamation. The cumulative effect of the change on prior years resulted in income recognized in the first quarter of fiscal 2003 of $514,000 before income taxes and $333,000 after income taxes. The Company cannot reasonably estimate the fair value of the asset retirement obligation related to substantially all of its concrete products segment and all of the cement segment since the Company is unable to estimate the date the obligation would be incurred or the cost of the obligation. For the aggregates segment, an asset retirement obligation was provided where the Company has a legal obligation to reclaim the mining site. The analysis of asset retirement obligation for the three months ended December 31, 2002 is as follows: 2002 Initial liability on adoption of the new standard $8,385 Accretion of expenses 88 Payment of obligations (128) Balance at end of period $8,345 If the provisions of Statement 143 had been adopted for the first quarter of fiscal 2002, earnings before income taxes and net income would have been increased by $22,000 and $14,000, respectively. (3) New Accounting Pronouncements Financial Accounting Standards Board Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"), requires the guarantor to recognize a liability for the fair value of the obligation at the inception of the guarantee. The disclosure requirements of FIN 45 have been incorporated into these Notes to Consolidated Financial Statements, while the recognition provisions will be applied on a prospective basis to guarantees issued after December 31, 2002. FIN 46, "Consolidation of Variable Interest Entities", clarified the application of Accounting Research Bulletin No. 51, "Consolidated Financial Statements", to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is applicable immediately for variable interest entities created after January 31, 2003. For variable interest entities created prior to January 31, 2003, the provisions of FIN 46 are applicable no later than July 1, 2003. The Company does not expect this Interpretation to have an effect on the Consolidated Financial Statements. (4) Inventories Inventories consisted of the following (in thousands): December 31, September 30, 2002 2002 Finished products $ 22,121 21,473 Raw materials 4,307 4,094 Work in progress 1,343 1,450 Parts and supplies 4,418 4,554 $ 32,189 31,571 (5) Other Income During the first quarter of fiscal 2002, the Company sold land and recognized a pre-tax gain of $530,000, which is included in other income for the three months ended December 2001. (6) Business Segments The Company has identified three business segments, each of which is managed separately along product lines. All of the Company's operations are in the Southeastern and Mid-Atlantic States. The Aggregates segment mines, processes and sells construction aggregates. The Concrete products segment produces and sells ready-mix concrete and other concrete products. The Cement and Calcium products segment produces and sells cement and calcium products to customers in Florida, Georgia and Maryland. Operating results and certain other financial data for the Company's business segments are as follows (in thousands): Three Months Ended December 31, 2002 2001 Net sales, excluding freight Aggregates $ 54,854 59,573 Concrete products 111,014 121,581 Cement and calcium 14,414 10,539 Intersegment sales (19,541) (17,731) Total net sales, excluding freight $160,741 173,962 Operating profit Aggregates $ 11,671 13,374 Concrete products 5,005 11,863 Cement and calcium 3,330 820 Corporate overhead (1,363) (1,561) Total operating $ 18,643 24,496 Profit Identifiable assets, at quarter end Aggregates $319,500 328,502 Concrete products 212,557 211,638 Cement and calcium 113,924 119,400 Unallocated corporate assets 55,373 53,403 Cash items 3,239 11,097 Investments in affiliates 17,008 16,875 Total identifiable assets $721,601 740,915 (7) Supplemental Disclosures of Cash Flow Information Cash paid during the three months ended December 31, 2002 and 2001 for certain expense items are as follows (in thousands): 2002 2001 Interest expense, net of amount capitalized $ 451 3,142 Income taxes $ 3,608 561 The following schedule summarizes non-cash investing and financing activities for the three months ended December 31, 2002 and 2001 (in thousands): 2002 2001 Additions to property, plant and equipment from: Exchanges $ 729 6 (8) Contingent Liabilities In November 2000, the United States Environmental Protection Agency through the offices of the United States Attorney for the District of Columbia commenced an investigation of DC Materials, Inc. and Cardinal Concrete Company, both subsidiaries of Florida Rock Industries, Inc., with respect to a parcel of real property leased by DC Materials, Inc. in the District of Columbia. The investigation consists of looking into possible violations of the Clean Water Act in connection with the discharge of runoff water at the aforementioned site. Florida Rock Industries and its subsidiaries are cooperating fully with the investigation, which is still continuing. Based in part on advice of counsel in the opinion of management, the outcome is not expected to have a material adverse effect on the Company' consolidated financial statements. A lawsuit was filed by three national environmental groups on August 20, 2002 challenging federal agency decisions to authorize continued limestone mining in Miami-Dade County, Florida "Lake Belt." Specifically, the environmental plaintiffs challenge the U.S. Army Corps of Engineers' ("the Corps") April 2002 decision to issue twelve new mining permits pursuant to Section 404 of the federal Clean Water Act, and the U.S. Fish and Wildlife Service's June 2001 decision not to require formal consultation under the federal Endangered Species Act regarding those permits. The environmental plaintiffs claim that the two federal agencies violated the Clean Water Act, the Endangered Species Act, the Migratory Bird Treaty Act, and the National Environmental Policy Act. They ask the court to set aside the April 2002 permits and to enjoin the Corps from "authorizing any further mining within the Lake Belt project area unless and until the Corps fully complies with the requirements of the Clean Water Act, Migratory Bird Treaty Act, and National Environmental Policy Act." The mining companies holding the April 2002 permits were not named as defendants in the lawsuit by the environmental plaintiffs; however, since the mining companies would be adversely affected if the environmental group were to obtain all of the relief they seek, on September 18, 2002, two Motions to Intervene were filed on behalf of several of the mining companies, including the Company. The court has not yet ruled on the Motions to Intervene. The Company is unable to assess at this time, with any degree of certainty, the impact on the Company and its future financial performance of an adverse judgment in this lawsuit. On January 25, 1999 the City Commissioners of Newberry, Florida voted 4-0 to annex the Company's cement plant site into the city. The Company anticipates that future land use and zoning matters relating to the cement plant will be under the jurisdiction of the City of Newberry. The annexation of the land into the town of Newberry has been challenged by an individual, though the Company is not party to the litigation. In addition, various cases have been filed challenging amendments to the City of Newberry's comprehensive plan. The Company is not a party to the litigation. Alachua County has filed suit to seek to enforce the terms of the Developer's Agreement between the County and the Company. This action does not claim damages against the Company. On November 15, 2001, final summary judgment was entered in the Company's favor dismissing the County's complaint. The decision was appealed by the County. On January 14, 2003, the First District Court of Appeals affirmed the Summary Judgment thereby denying the County the authority to enforce the Developer's Agreement. The Company and its subsidiaries are involved in other litigation on a number of matters and are subject to certain claims which arise in the normal course of business, none of which, in the opinion of management, are expected to have a materially adverse effect on the Company's consolidated financial statements. The Company has retained certain self-insurance risks with respect to losses for third party liability and property damage. The Company has an 8% investment in a joint venture. In conjunction with its investment agreement, the Company has guaranteed 8% of the revolving credit agreement of the joint venture. The maximum amount of the loan is $20,000,000. At December 31, 2002, $1,542,000 was outstanding of which the Company's guarantee was $123,000. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS Operating Results The Company's operations are influenced by a number of external and internal factors. External factors include weather, competition, levels of construction activity in the Company's markets, the cost and availability of money, appropriations and construction contract lettings by federal and state governments, fuel costs, transportation costs, driver availability, labor costs and inflation. Internal factors include sales mix, plant location, quality and quantities of aggregates reserves, capacity utilization and other operating factors. 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 has on the Company's sales and production volume. Normally, the highest sales and earnings of the Company are attained in the Company's third and fourth quarters and the lowest sales and earnings are attained in the Company's first and second quarters. In addition, quarterly results will be affected by planned maintenance at the cement plant. The Company expenses maintenance costs at the cement plant, which can be significant, when incurred. For planned maintenance at the cement plant the Company expensed $1,878,000 in the first quarter of fiscal 2003 as compared to $1,520,000 in the first quarter of fiscal 2002. The plant was shut down for 9 days in the first quarter of fiscal 2003 and four weeks in the first quarter of fiscal 2002 for planned maintenance. For the first quarter of fiscal 2003, ended December 31, 2002, consolidated net sales excluding freight decreased 7.6% to $160,741,000 from $173,962,000 in the same quarter last year. The decrease in sales for the first quarter was due to decreased concrete and aggregates revenues. These decreases were partially offset by increased revenues of cement and calcium products. Revenues in the concrete products segments were lower due to decreased volumes of ready mix sales partially offset by slightly higher volumes of block and building materials and an increase in the average selling price. Revenues in the aggregates segment were lower as a result of a decrease in volumes slightly offset by higher average sales prices. Revenues increased in the cement and calcium segment due to higher volumes and sales prices. For the contribution made to net sales and operating profit from each business segment, see Note 6 to the Condensed Consolidated Financial Statements. Gross profit for the first quarter decreased 15.7% to $36,020,000 from $42,753,000 for the same quarter last year. Gross profit margin for the first quarter decreased to 22.4% from 24.6% last year. Gross profit and margin were adversely affected by a decrease in gross profit of the Aggregates and Concrete products segment. Gross profit in the Cement and Calcium products increased partially offsetting the decrease in the other segments. The reduction in gross profit of the Aggregates segment was the result of lower volumes, higher cost of maintenance and higher fuel costs. The reduction in gross profit in the Concrete products segment was due to lower volumes, higher cost of maintenance, fuel, insurance and depreciation. Gross profit in the cement and calcium segment improved as a result of higher volumes. Gross profit was adversely effective as the result of higher planned maintenance at the cement plant for which the Company recorded expenses of $1,878,000 as compared to $1,520,000 for the same quarter last year. Selling, general and administrative expenses for the first quarter decreased to $17,377,000 from $18,257,000 last year constituting 10.8% of net sales as opposed to 10.5% last year. The decrease in the dollar amount for the first quarter is primarily due to lower profit sharing expense (which is linked to profitability) and a slight decrease in salary expense. Interest expense for the first quarter decreased to $469,000 from $1,152,000 for the same quarter last year. This decline is attributable to the elective application during fiscal 2002 to use cash flows to reduce debt outstanding under the Company's revolver. Interest income for the first quarter increased to $529,000 as compared to $330,000 for the same quarter last year. Included in other income for the first quarter of fiscal 2002 is a gain of $530,000 recognized from sales of real estate during the first quarter of fiscal 2002. There were no gains on the sale of real estate in the first quarter of this year. Also included in other income is the Company's equity in operating results of the 50% owned joint ventures. The equity in these ventures was income of $13,000 for the first quarter of fiscal 2003 as compared to $352,000 for last year. Income tax expense decreased $2,094,000 for first quarter of fiscal 2003. This is due to lower income before taxes. The effective tax rate is 35.2% for both periods. Liquidity and Capital Resources. For the first three months of fiscal 2003, cash provided by operating activities of $22,525,000, exercise of stock options of $409,000 and proceeds from sale of property, plant and equipment of $352,000 funded the repayment of $6,000,000 of short-term overnight lines; purchases of property, plant and equipment of $13,982,000 and payment of dividends of $2,861,000. For the first quarter of fiscal 2002, cash provided by operating activities of $23,310,000 and short-term investment of $25,300,000 at September 30, 2001, funded the repayment of debt of $17,122,000, payment of insurance policy loans of $18,771,000, purchases of property, plant and equipment of $7,563,000 and payment of dividends of $2,406,000. The payment of the policy loans increased other assets since the loans were netted against the cash surrender value of the policies. Based on current expectations, management believes that its internally generated cash flow and access to existing credit facilities are sufficient to meet the liquidity requirements necessary to fund operations, capital requirements, debt service and future dividend payments. At December 31, 2002, there was available $200,000,000 under long-term revolver and $44,100,000 available under overnight lines of credit. In addition, there is approximately $20,000,000 that could be re-borrowed under insurance policies. It may be necessary to obtain additional levels of financing in the event opportunities arise for the Company to make a strategic acquisition. Working capital at December 31, 2002 was $51,870,000 as compared to $39,406,000 at September 30, 2002. This increase was due to excess cash flow generated during the first quarter of fiscal 2003. While the Company is affected by environmental regulations, such regulations are not expected to have a major effect on the Company's capital expenditures or operating results except as otherwise disclosed in Part II, Item 1. "Legal Proceedings". Additional information concerning environmental matters is presented in Part II, Item 1 "Legal Proceedings" in this Form 10-Q and such information is incorporated herein by reference. The following table summarizes the Company's contractual obligations and commitments. Balance of There- 2003 2004 2005 2006 2007 2008 after Total Long-term debt $ 311 234 1,960 2,764 5,043 4,048 29,764 44,124 Operating leases 1,196 1,572 1,236 968 671 671 4,442 10,756 Total $1,507 1,806 3,196 3,732 5,614 4,719 34,206 54,880 Critical Accounting Policies. The Consolidated Financial Statements and Notes to Consolidated Financial Statements included in the Company's Form 10-K for the year ended September 30, 2002 contain information that is pertinent to Management's Discussion and Analysis. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities. Future events and their effects cannot be estimated with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment based on various assumptions and other factors such as historical experience, current and expected economic conditions, and in some cases, actuarial calculations. We constantly review these significant factors and make adjustments where facts and circumstances dictate. Actual results could differ from those estimates. Historically, actual results have not significantly deviated from estimated results determined using the factors described above. Note 1 to the Consolidated Financial Statements included in the Company's Form 10-K for the year ended September 30, 2002 provides details on the application of these and other accounting policies. These critical accounting policies and Note 1 should be read in conjunction with this Management's Analysis of Financial Condition and Results of Operations. The following is a discussion of the accounting policies considered to be most critical to the Company. These accounting policies are both most important to the portrayal of the financial condition and results, and require management's most difficult, subjective or complex judgments often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Self-insurance reserves. It is our policy to self insure for certain insurable risks consisting primarily of physical loss to property, business interruptions, workers' compensation, comprehensive general liability, product liability and auto liability. Insurance coverage is obtained for catastrophic property and casualty exposures as well as those risks required to be insured by law or contract. Based on an independent actuary's estimate of the aggregate liability for claims incurred, a provision for claims under the self-insured program is recorded and revised annually. The actuarial estimates are subject to uncertainty from various sources, including changes in claim reporting patterns, claims settlement patterns, judicial decisions, legislation, and economic conditions. Although the Company believes that the actuarial estimates are reasonable, significant differences related to the items noted above could materially affect the Company's self-insurance obligations and future expense. Long-lived assets. The Company periodically evaluates the period of depreciation or amortization for long-lived assets to determine whether current circumstances warrant revised estimates of useful lives. The Company reviews its property, plant and equipment for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount to the net undiscounted cash flows expected to be generated by the asset. An impairment loss would be recorded for the excess of net carrying value over the fair value of the asset impaired. The fair value is estimated based on expected discounted future cash flows. The results of impairment tests are subject to management's estimates and assumptions of projected cash flows and operating results. The Company believes that, based on current conditions, materially different reported results are not likely to result from long-lived asset impairments. However, a change in assumptions or market conditions could result in a change in estimated future cash flows and the likelihood of materially different reported results. Intangible assets and goodwill. In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets." SFAS 142 requires companies to cease amortizing goodwill that existed at the time of adoption and establish a new method for testing goodwill for impairment on an annual basis at the reporting unit level (or an interim basis if an event occurs that might reduce the fair value of a reporting unit below its carrying value). The Company has determined that it has three reporting units and the annual impairment test will be performed for these three reporting units. For identifiable intangible assets with indefinite lives, the SFAS also requires that the carrying value be determined by using a fair value based approach. The valuation of goodwill and intangibles with indefinite useful lives for impairment requires management to use significant judgments and estimates including, but not limited to, projected future revenue and cash flows. The Company believes that, based on current conditions, materially different reported results are not likely to result from goodwill and intangible impairments. However, a change in assumptions or market conditions could result in a change in estimated future cash flows and the likelihood of materially different reported results. Inventories. Inventories for the aggregates segment on a quarterly basis is based on internal estimates of production during the period. Semi-annually an outside consultant measures the volume of aggregates inventory. Aggregates inventory are adjusted to the amounts shown in the report of the outside consultant. Assessments, Claims and Litigation. From time to time, the Company is involved with assessments, claims and litigation. The Company uses both in-house and outside legal counsel to assess the probability of loss. The Company establishes an accrual when the claims and litigation represent a probable loss and the cost can be reasonably estimated. Accruals for remediation efforts are recorded no later than the time a feasibility study is undertaken and the Company commits to a formal plan of action. Additionally, legal fees associated with these matters are accrued at the time such claims are made. There can be no assurance that the ultimate resolution of these assessments, claims and litigation will not differ materially from the Company estimates. Employee Benefits. Under the provisions of SFAS No.87, "Employer's Accounting for Pensions" and SFAS No. 106, "Employer's Accounting for Postretirement Benefits Other Than Pensions," measurement of the obligations under employee benefits plans are subject to a number of assumptions. These include the rate of return on plan assets, health care cost trend rates and the rate at which the future obligations are discounted to the value of the liability. Related Party Transactions. Patriot Transportation Holding, Inc. ("Patriot"), a related party, hauls diesel fuel and other supplies for the Company. Charges for such services are based on prevailing market prices. The Company also leases various aggregate mining and other properties paying rent or royalties based on long- term contracts entered into during mid 1980's and early 1990's. In addition, the Company provides administrative services to Patriot and Patriot provides construction management services to the Company. These services are provided at market prices. During fiscal 2002, Patriot agreed to sell land for $15,000,000 to the Company. This transaction was reviewed and approved on behalf of the Company by a committee of independent directors. In April 2002, the Company purchased for $67,000 a parcel of land in which an officer had an undivided 12/15ths interest. New Accounting Pronouncements. In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," which addresses financial accounting and reporting for obligations with the retirement of tangible long-lived assets and the associated asset retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) normal use of the asset. Statement No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expenses. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. The provisions of Statement No. 143 were adopted as of October 1, 2002 for the first quarter ending December 31, 2002. (see Note 2,Change in Accounting Principle). In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". This statement supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of". SFAS No. 144, which retains the fundamental provisions of SFAS No. 121 for (a) recognition and measurement of the impairment of long-lived assets to be held and used and (b) measurement of long-lived assets to be disposed of by sales was adopted effective October 1, 2002 and had no impact on the Company. In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with Exit or Disposal Activities." This statement nullifies Emerging Issues Task Force (EITF) issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." This statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred rather than the date of an entity's commitment to an exit plan. The Company is required to implement SFAS No. 146 on January 1, 2003. The adoption of this statement will not have an impact on the consolidated financial position or results of operations of the Company. Financial Accounting Standards Board Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"), requires the guarantor to recognize a liability for the fair value of the obligation at the inception of the guarantee. The disclosure requirements of FIN 45 have been incorporated into these Notes to Consolidated Financial Statements, while the recognition provisions will be applied on a prospective basis to guarantees issued after December 31, 2002. FIN 46, "Consolidation of Variable Interest Entities", clarified the application of Accounting Research Bulletin No. 51, "Consolidated Financial Statements", to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is applicable immediately for variable interest entities created after January 31, 2003. For variable interest entities created prior to January 31, 2003, the provisions of FIN 46 are applicable no later than July 1, 2003. The Company does not expect this Interpretation to have an effect on the Consolidated Financial Statements. Outlook. The state of the Company's markets for the balance of the year remains uncertain. Commercial construction remains significantly below 2002 levels and highway construction spending in the Company's Mid-Atlantic markets is clearly reduced from the prior year. Counter balancing these trends is the strong construction spending in the Company's Florida markets. The current volatility in the U.S. Capital markets current poses a threat to the overall U.S. economic outlook. While the Company is comfortable that its financial condition provides it the strength to weather this short-term volatility, if these volatile conditions continue into the longer term, demand for the Company's products and consequently cash flow from operations may be negatively affected. Due to dramatically increasing insurance premiums for automobile and general liability insurance programs, the Company has increased its self-insurance retention to $2,000,000 for general liability and to $3,000,000 for automobile liability. In addition, the Company has formed a captive insurance company and will pay premiums to the captive insurance company to insure the claims up to $3,000,000. Assuming no significant increase in the Company's loss experience, this higher risk retention should result in a lower cost to the Company than outside insurance. Fuel Oil Price Risk. To manage the impact on operations of an increase in the price of diesel fuel the Company hedged a portion of the projected annual diesel fuel requirements for fiscal 2003. A heating oil derivative contract was entered into because heating oil prices have a high correlation to diesel fuel prices. The intent was to reduce the risk of increasing diesel fuel prices. In September 2002, a one-time payment of $270,000 was made to purchase a contract that would reimburse the Company if the average monthly price of heating oil exceeds 85 cents for any month during fiscal 2003. This contract was for approximately 55% of our diesel fuel requirements. Forward-Looking Statements. Certain matters discussed in this report contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by such forward-looking statements. These forward-looking statements relate to, among other things, capital expenditures, liquidity, capital resources and competition and may be indicated by words or phrases such as "anticipate," "estimate," "plans," "project," "continuing," "ongoing," "expects," "management believes," "the Company believes," "the Company intends" and similar words or phrases. The following factors are among the principal factors that could cause actual results to differ materially from the forward-looking statements: availability and terms of financing; the weather; competition; levels of construction activity in the Company's markets; cement shipments; fuel costs; transportation costs; inflation; quality and quantities of the Company's aggregates reserves; residential and nonresidential construction; public spending for highways and infrastructure; governmental regulations and management's ability to determine appropriate sales mix, plant location and capacity utilization. However, this list is not a complete statement of all potential risks or uncertainties. These forward-looking statements are made as of the date hereof based on management's current expectations and the Company does not undertake an obligation to update such statements, whether as a result of new information, future events or otherwise. Additional information regarding these and other risks factors may be found in the Company's other filings made from time to time with the Securities and Exchange Commission. Item 3. Quantitative and Qualitative Disclosures About Market Risk. There are no material changes to the disclosures made in Form 10-K for the fiscal year ended September 30, 2002 on this matter. Item 4. Controls and Procedures. (a) Evaluation of disclosure controls and procedures. As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to the filing date of this report, the Company carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of the Company's management, including the Company's President and Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. Based upon that evaluation, the Company's President and Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer have concluded that the Company's disclosure controls and procedures are effective in alerting them in a timely manner to material information required to be included in periodic SEC filings. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company's Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate, to allow timely decisions regarding required disclosures. (b) Changes in internal controls. There have been no changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. PART II OTHER INFORMATION Item 1. Legal Proceedings In November 2000, the United States Environmental Protection Agency through the offices of the United States Attorney for the District of Columbia commenced an investigation of DC Materials, Inc. and Cardinal Concrete Company, both subsidiaries of the Company, with respect to a parcel of real property leased by DC Materials, Inc. in the District of Columbia. The investigation consists of looking into possible violations of the Clean Water Act in connection with the discharge of runoff water at the aforementioned site. The Company including its subsidiaries is cooperating fully with the investigation, which is still continuing. In the opinion of management, the outcome is not expected to have a material adverse effect on the Company's consolidated financial statements. A lawsuit was filed by three national environmental groups on August 20, 2002 challenging federal agency decisions to authorize continued limestone mining in the Miami-Dade County, Florida "Lake Belt." Specifically, the environmental plaintiffs challenge the U.S. Army Corps of Engineers' (the "Corp") April 2002 decision to issue twelve new mining permits pursuant to Section 404 of the federal Clean Water Act, and the U.S. Fish and Wildlife Service's June 2001 decision not to require formal consultation under the federal Endangered Species Act regarding those permits. The environmental plaintiffs claim that the two federal agencies violated the Clean Water Act, the Endangered Species Act, the Migratory Bird Treaty Act, and the National Environmental Policy Act. They ask the court to set aside the April 2002 permits and to enjoin the Corps from "authorizing any further mining within the Lake Belt project area unless and until the Corps fully complies with the requirements of the Clean Water Act, Migratory Bird Treaty Act, and National Environmental Policy Act." The mining companies holding the April 2002 permits were not named as defendants in the lawsuit by the environmental plaintiffs; however, since the mining companies would be adversely affected if the environmental groups were to obtain all of the relief they seek, on September 18, 2002, two Motions to Intervene were filed on behalf of several of the mining companies, including the Company. The court has not yet ruled on the Motions to Intervene. The Company is unable to assess at this time, with any degree of certainty, the impact on the Company and its future financial performance of an adverse judgment in this lawsuit. On January 25, 1999 the City Commissioners of Newberry, Florida voted 4-0 to annex the Company's cement plant site into the city. The Company anticipates that future land use and zoning matters relating to the cement plant will be under the jurisdiction of the City of Newberry. The annexation of the land into the town of Newberry has been challenged by an individual, though the Company is not party to the litigation. In addition, various cases have been filed challenging amendments to the City of Newberry's comprehensive plan. The Company is not a party to the litigation. Alachua County has filed suit to seek to enforce the terms of the Developer's Agreement between the County and the Company. This action does not claim damages against the Company. On November 15, 2001, final summary judgment was entered in the Company's favor dismissing the County's complaint. The decision was appealed by the County. On January 14, 2003, the First Court of Appeals affirmed the Summary Judgment thereby denying the County the authority to enforce the Developer's Agreement. The Company and its subsidiaries are involved in other litigation on a number of matters and are subject to certain claims which arise in the normal course of business, none of which, in the opinion of management, are expected to have a materially adverse effect on the Company's consolidated financial statements. The Company has retained certain self-insurance risks with respect to losses for third party liability and property damage. Note 8 to the Consolidated Condensed Financial Statements included in this Form 10-Q is incorporated by reference. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. The response to this item is submitted as a separate section entitled "Exhibit Index" starting on page 13 of this Form 10-Q. (b) Reports on Form 8-K. During the three months ended December 31, 2002, the Company did not file any reports on Form 8-K. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. February 5, 2003 FLORIDA ROCK INDUSTRIES, INC. JOHN D. BAKER, II John D. Baker, II President and Chief Executive Officer JOHN D. MILTON, JR. John D. Milton, Jr. Executive Vice President, Treasurer and Chief Financial Officer WALLACE A PATZKE, JR. Wallace A. Patzke, Jr. Vice President, Controller and Chief Accounting Officer CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of Florida Rock Industries, Inc. JOHN D. BAKER, II John D. Baker, II President and Chief Executive Officer JOHN D. MILTON,JR. John D. Milton, Jr. Executive Vice President, Treasurer and Chief Financial Officer WALLACE A PATZKE, JR. Wallace A. Patzke, Jr. Vice President, Controller and Chief Accounting Officer CERTIFICATIONS I, John D. Baker II, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Florida Rock Industries, Inc. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15-d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: February 5, 2003 JOHN D. BAKER, II JOHN D. BAKER, II President and Chief Executive Officer I, John D. Milton, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Florida Rock Industries, Inc. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15-d-14) for the registrant and have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: February 5, 2003 JOHN D. MILTON, JR. JOHN D. MILTON, JR. Executive Vice President, Treasurer and Chief Financial Officer I, Wallace A. Patzke, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Florida Rock Industries, Inc. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15-d-14) for the registrant and have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: February 5, 2003 WALLACE A. PATZKE, JR. WALLACE A. PATZKE, JR. Vice President, Controller and Chief Accounting Officer FLORIDA ROCK INDUSTRIES, INC. FORM 10-Q FOR THE QUARTER ENDED DECEMBER, 2002 EXHIBIT INDEX (3)(a)(1) Restated Articles of Incorporation of Florida Rock Industries, Inc., filed with the Secretary of State of Florida on May 9, 1986, incorporated by reference to an exhibit previously filed with Form 10-Q for the quarter ended December 31, 1986. File No. 1-7159. (3)(a)(2) Amendment to the Articles of Incorporation of Florida Rock Industries, Inc. filed with the Secretary of State of Florida on February 19, 1992, incorporated by reference to an exhibit previously filed with Form 10-Q for the quarter ended September 30, 1993. File No. 1-7159. (3)(a)(3) Amendments to the Articles of Incorporation of Florida Rock Industries, Inc. filed with the Secretary of the State of Florida on February 7, 1995, incorporated by reference to an appendix to the Company's Proxy Statement dated December 15, 1994. (3)(a)(4) Amendment to the Articles of Incorporation of Florida Rock Industries, Inc. filed with the Secretary of State of Florida on February 4, 1998, incorporated by reference to an exhibit previously filed with Form 10-Q for the quarter ended March 31, 1998. File No. 1-7159. (3)(a)(5) Amendment to the Articles of Incorporation of Florida Rock Industries, Inc. filed with the Secretary of State of Florida on May 5, 1999. A form of such amendment was previously filed as Exhibit 4 to the Company Form 8-K dated May 5, 1999 and is incorporated by reference herein. File No.1-7159. (3)(b)(1) Restated Bylaws of Florida Rock Industries, Inc., adopted December 1, 1993, incorporated by reference to an exhibit previously filed with Form 10-K for the fiscal year ended September 30, 1993. File No. 1-7159. (3)(b)(2) Amendment to the Bylaws of Florida Rock Industries, Inc. adopted October 5, 1994, incorporated by reference to an exhibit previously filed with Form 10-K for the fiscal year ended September 30, 1994. File No. 1- 7159. (3)(b)(3) Amendment to the Bylaws of Florida Rock Industries, Inc. adopted February 4, 1998, incorporated by reference to an exhibit previously filed with Form 10-Q for the quarter ended March 31, 1998. File No. 1-7159. (3)(b)(4) Amendment to the Bylaws of Florida Rock Industries, Inc. adopted December 5, 2001. incorporated by reference to an exhibit previously filed with Form 10-Q for the quarter ended December 31, 2001. File No. 1-7159. (4)(a) Articles III, VII, and XIII of the Articles of Incorporation of Florida Rock Industries, Inc. incorporated by reference to exhibits previously filed with Form 10-Q for the quarter ended December 31, 1986 and Form 10-K for the fiscal year ended September 30, 1993 and Articles XIV and XV, of the Articles of Incorporation of Florida Rock Industries, Inc. incorporated by reference as appendix to the Company's Proxy Statement dated December 15, 1994. File No. 1- 7159. (4)(b) Credit Agreement dated as of June 28, 2000 among Florida Rock Industries, Inc.; First Union National Bank; Bank of America, N.A.; SunTrust Bank; and First Union Securities, Inc.; incorporated by reference to an exhibit previously filed with Form 10-Q for the quarter ended June 30, 2000. File No. 1-7159. (4)(c) The Company and its consolidated subsidiaries have other long-term debt agreements which do not exceed 10% of the total consolidated assets of the Company and its subsidiaries, and the Company agrees to furnish copies of such agreements and constituent documents to the Commission upon request. (4)(d) Rights Agreements, dated as of May 5, 1999 between the Company and First Union National Bank, incorporated by reference to Exhibit 4 to the Company's Form 8-K dated May 5, 1999. File No. 1-7159. (10)(a) Employment Agreement dated June 12, 1972 between Florida Rock Industries, Inc. and Charles J. Shepherdson, Sr. and form of Addendum thereto, incorporated by reference to an exhibit previously filed with Form S-1 dated June 29, 1972. File No. 2-44839. (10)(b) Addendums dated April 3, 1974 and November 18, 1975 to Employment Agreement dated June 12, 1972 between Florida Rock Industries, Inc., and Charles J. Shepherdson, Sr., incorporated by reference to an exhibit previously filed with Form 10-K for fiscal year ended September 30, 1975. File No. 1-7159. (10)(c) Amended Medical Reimbursement Plan of Florida Rock Industries, Inc., effective May 24, 1976, incorporated by reference to an exhibit previously filed with Form 10-K for the fiscal year ended September 30, 1980. File No. 1-7159. (10)(d) Amendment No. 1 to Amended Medical Reimbursement Plan of Florida Rock Industries, Inc. effective July 16, 1976, incorporated by reference to an exhibit previously filed with Form 10-K for the fiscal year ended September 30, 1980. File No. 1-7159. (10)(e) Tax Service Reimbursement Plan of Florida Rock Industries, Inc. effective October 1, 1976, incorporated by reference to an exhibit previously filed with Form 10-K for the fiscal year ended September 30, 1980. File No. 1- 7159. (10)(f) Amendment No. 1 to Tax Service Reimbursement Plan of Florida Rock Industries, Inc., incorporated by reference to an exhibit previously filed with Form 10-K for the fiscal year ended September 30, 1981. File No. 1- 7159. (10)(g) Amendment No. 2 to Tax Service Reimbursement Plan of Florida Rock Industries, Inc., incorporated by reference to an exhibit previously filed with Form 10-K for the fiscal year ended September 30, 1985. File No. 1- 7159. (10)(h) Summary of Management Incentive Compensation Plan as amended effective October 1, 1992. Previously filed with Form 10-K for the fiscal year ended September 30, 1993. File No. 1-7159. (10)(i) Florida Rock Industries, Inc. Management Security Plan, incorporated by reference to an exhibit previously filed with Form 10-K for the fiscal year ended September 30, 1985. File No. 1-7159. (10)(j) Various mining royalty agreements with Patriot Transportation Holding, Inc. or its subsidiary, none of which are presently believed to be material individually, but all of which may be material in the aggregate, incorporated by reference to exhibits previously filed with Form 10-K for the fiscal year ended September 30, 1986. File No. 1-7159. (10)(k) Florida Rock Industries, Inc. 1991 Stock Option Plan. Previously filed with Form 10-K for the fiscal year ended September 30, 1992; and February 1, 1995 Amendment to Florida Rock Industries, Inc. 1991 Stock Option Plan, incorporated by reference to an appendix previously filed as appendix to the Company's Proxy Statement dated December 15, 1994. File No. 1-7159. (10)(l) Form of Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as collateral between Florida Rock Industries, Inc. and each of Edward L. Baker and John D. Baker, II with aggregate face amounts of $5.4 million and $8.0 million, respectively, incorporated by reference to an exhibit previously filed with Form 10-Q for the quarter ended December 31, 1996. File No. 1-7159. (11) Computation of Earnings Per Common Share. 1 25