-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, CBSMhM0lEcV9rzUdlnX3x6QInpKadNb2ZHlQ0DovC7UF+9zfHsadQ/iaPN9jibFj Sp9IgycXF9CZXkKMHCUdRw== 0000103973-94-000024.txt : 19941116 0000103973-94-000024.hdr.sgml : 19941116 ACCESSION NUMBER: 0000103973-94-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VULCAN MATERIALS CO CENTRAL INDEX KEY: 0000103973 STANDARD INDUSTRIAL CLASSIFICATION: 1400 IRS NUMBER: 630366371 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04033 FILM NUMBER: 94559958 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-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1994 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 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 APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Class at October 31, 1994 Common Stock, $1 Par Value 36,532,689 VULCAN MATERIALS COMPANY FORM 10-Q QUARTER ENDED SEPTEMBER 30, 1994 Contents Page No. PART I FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets. . . . . . . . . Condensed Consolidated Statements of Earnings. . . . . Condensed Consolidated Statements of Cash Flows. . . . Notes to Condensed Consolidated Financial Statements . Exhibit 11 - Computation of Earnings Per Share . . . . Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges. . . . . . . . . . . . . . . . . . Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition . . . . . . . PART II OTHER INFORMATION Item 1. Legal Proceedings Item 6. Exhibits and Reports on Form 8-K SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART I. FINANCIAL INFORMATION Item 1. Financial Statements VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS* (Amounts in thousands) September 30, December 31, September 30, Assets 1994 1993 1993 Current assets Cash and cash equivalents............................. $ 8,502 $ 13,996 $ 10,091 Accounts and notes receivable, less allowance for doubtful accounts: Sept. 30, 1994, $8,139; Dec. 31, 1993, $7,284; Sept. 30, 1993, $6,691................ 211,618 150,404 202,798 Inventories: Finished products................................... 75,250 75,954 86,737 Raw materials....................................... 8,397 3,856 4,924 Products in process................................. 1,019 965 905 Operating supplies and other........................ 24,977 24,242 16,357 Total inventories.............................. 109,643 105,017 108,923 Deferred income taxes................................. 24,478 26,898 27,354 Prepaid expenses...................................... 12,866 6,298 12,409 Total current assets........................... 367,107 302,613 361,575 Investments and long-term receivables................... 57,590 56,505 56,049 Property, plant and equipment, at cost less accumulated depreciation, depletion and amortization: Sept. 30, 1994, $1,099,928; Dec. 31, 1993, $1,040,220; Sept. 30, 1993, $1,022,698................ 717,019 657,785 656,599 Deferred charges and other assets....................... 74,104 61,648 64,251 Total.......................................... $1,215,820 $1,078,551 $1,138,474 Liabilities and Shareholders' Equity Current liabilities Current maturities of long-term obligations........... $ 4,684 $ 1,741 $ 737 Notes payable......................................... 76,843 - 50,705 Other current liabilities............................. 154,573 139,074 148,032 Total current liabilities...................... 236,100 140,815 199,474 Long-term obligations................................... 97,539 102,035 103,178 Deferred income taxes................................... 77,672 74,193 73,214 Other noncurrent liabilities(Note 3).................... 63,120 58,545 68,757 Other commitments and contingent liabilities (Note 3)... Shareholders' equity.................................... 741,389 702,963 693,851 Total.......................................... $1,215,820 $1,078,551 $1,138,474 *Balance sheets as of September 30 are unaudited. The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Amounts and shares in thousands, except per share data) Three Months Ended Nine Months Ended September 30* September 30* 1994 1993 1994 1993 Net sales...........................................$ 360,359 $ 331,467 $ 903,956 $ 851,530 Cost of goods sold................................... 269,950 246,375 715,188 662,671 Gross profit on sales................................ 90,409 85,092 188,768 188,859 Selling, administrative and general expenses......... 33,753 29,683 90,225 84,003 Other operating costs............................. 1,771 1,424 4,308 3,526 Other income, net.................................... 3,051 1,804 9,916 2,860 Earnings from continuing operations before interest expense and income taxes........... 57,936 55,789 104,151 104,190 Interest expense..................................... 2,804 2,345 7,219 7,229 Earnings from continuing operations before income taxes................................ 55,132 53,444 96,932 96,961 Provision for income taxes........................... 17,532 16,880 30,824 29,282 Net earnings .......................................$ 37,600 $ 36,564 $ 66,108 $ 67,679 Primary and fully diluted earnings per share of common stock.............................. $1.02 $0.99 $1.80 $1.82 Average common and common equivalent shares outstanding**............................... 36,763 36,718 36,750 37,114 Cash dividends per share of common stock............. $0.33 $0.315 $0.99 $0.945 Depreciation, depletion and amortization deducted above..................................... $27,055 $25,308 $79,691 $75,554 Effective tax rate................................... 31.8% 31.6% 31.8% 30.2% * Unaudited **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 period. Common share equivalents represent the number of shares contingently issuable under a long-range performance share plan. Refer to Exhibit 11 for computation. The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Nine Months Ended September 30* 1994 1993 Operations Net earnings .............................................. $66,108 $67,679 Adjustments to reconcile net earnings to net cash provided by continuing operations: Depreciation, depletion and amortization................ 79,691 75,554 Increase in assets before effects of business acquisitions................................. (50,897) (62,056) Increase in liabilities before effects of business acquisitions................................. 15,646 14,934 Other, net.............................................. 3,832 4,046 Net cash provided by continuing operations........... 114,380 100,157 Net cash used for discontinued operations................... (660) (757) Net cash provided by operations...................... 113,720 99,400 Investing Activities Purchases of property, plant and equipment.................. (76,313) (66,709) Payment for business acquisitions (net of acquired cash).... (78,630) (3,281) Proceeds from sale of property, plant and equipment......... 6,721 2,297 Investment in nonconsolidated companies..................... (1,779) (8,987) Withdrawal of earnings from nonconsolidated companies....... - 301 Net cash used for investing activities............... (150,001) (76,379) Financing Activities Net borrowings - commercial paper and bank lines of credit.. 76,843 50,705 Payment of short-term debt.................................. (1,668) (1,045) Payment of long-term debt................................... (8,233) (3,414) Purchases of common stock................................... - (39,980) Dividends paid.............................................. (36,155) (34,865) Net cash provided by financing activities............ 30,787 (28,599) Net decrease in cash and cash equivalents................... (5,494) (5,578) Cash and cash equivalents at beginning of year.............. 13,996 15,669 Cash and cash equivalents at end of period.................. $ 8,502 $10,091 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized).................. $ 5,297 $ 5,471 Income taxes.......................................... 26,996 30,688 SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Liabilities assumed in business acquisition............. $16,041 $ - Fair value of stock issued in business acquisition...... 7,476 - *Unaudited The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying condensed financial statements have been prepared in compliance with Form 10-Q instructions and thus do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the statements reflect all adjustments, including those of a normal recurring nature, necessary to present fairly the results of the reported interim periods. The statements should be read in conjunction with the summary of accounting policies and notes to financial statements included in the Company's latest annual report on Form 10-K. The reporting of segment data required by Statement of Financial Accounting Standards No. 14, Financial Reporting for Segments of a Business Enterprise, is confined to complete financial statements as provided in the Company's Form 10-K and annual report to shareholders. 2. Effective Tax Rate In accordance with generally accepted accounting principles, it is the Company's practice at the end of each interim reporting period to make a best estimate of the effective tax rate expected to be applicable for the full fiscal year. The rate so determined is used in providing for income taxes on a current year-to-date basis. 3. Contingent Liabilities On October 5, 1994, the Company received an Administrative Complaint, Findings of Violation, Notice of Proposed Assessment of a Civil Penalty and Notice of Opportunity to Request a Hearing Thereon (the "Complaint") from the EPA alleging that the Company violated various provisions of the Clean Water Act. The Complaint proposes to issue a final order assessing administrative penalties in the amount of $125,000. The Company has requested a hearing to contest certain of the violations alleged and the amount of the penalty, but no hearing date has yet been set. The Company does not believe that any penalty imposed will adversely affect the consolidated financial statements of the Company to a material effect. As previously reported in the Company's 10-K, during the spring of 1992, representatives of the EPA conducted certain inspections of the Company's chemicals manufacturing plant in Geismar, Louisiana. Subsequent to completing those inspections, on March 18, 1993, a Complaint, Compliance Order, and Notice of Opportunity for Hearing (the "Multimedia Complaint and Order") was issued to the Company by the EPA. In the Multimedia Complaint and Order, the EPA made certain findings of fact and law, and based upon such findings, alleged multiple count violations of RCRA, CERCLA and the Clean Air Act, for which violations EPA sought civil penalties in the total amount of $298,650. On April 30, 1993, the Company filed its Answer to Complaint and Compliance Order and Request for Hearing (the "Answer") with the EPA, including a request for an adjudicatory hearing as provided in the Multimedia Complaint and Order on all factual and legal issues raised by the Company in its Answer. Subsequent to filing the Answer, the Company and EPA engaged in negotiations regarding the settlement of this matter. These settlements have reached a conclusion, and the Company expects to enter into an Administrative Consent Agreement and Consent Order (the "Consent Order") pursuant to which the Company will pay civil penalties totalling $164,370 to the EPA. In addition, the Consent Order provides that the Company will pay $15,000 as a Supplemental Environmental Project to the State of Louisiana. On October 6, 1994, a complaint was filed in the United States District Court for the Western District of Oklahoma by 325 individual plaintiffs against 70 defendants, including the Company. Plaintiffs allege personal injuries and damages arising from exposure to chemicals, solvents, minerals and metals in connection with plaintiffs' employment at Tinker Air Force Base in Oklahoma City, Oklahoma. Plaintiffs seek actual damages in the amount of $400,000,000 and exemplary damages in the amount of $850,000,000 from all defendants. At this point, the extent of the Company's liability, if any, in this matter is unknown, and the potential for economic loss to the Company cannot be gauged with any certainty at this time. As previously reported in the Company's Form 8-K Current Report dated June 12, 1992, an antidumping petition was filed on May 20, 1992, with the International Trade Commission ("ITC"), by two stone producers and a distributor in southeast Texas alleging that a U.S. industry was being injured by imports of crushed limestone from Mexico. The companies involved in the Crescent Market Project quarry and crush limestone from Mexico's Yucatan Peninsula for sale along the U.S. Gulf Coast. On June 29, 1992, the ITC, in a 5-0 vote (with one commissioner not participating), determined that a U.S. industry was not being injured by the importation of crushed limestone from Mexico. This ruling was appealed to the United States Court of International Trade ("CIT") where the determination of the ITC was sustained and the action was dismissed. The judgment of the CIT was appealed to the United States Court of Appeals for the Federal Circuit. Oral argument occurred on February 9, 1994. On September 15, 1994, the United States Court of Appeals for the Federal Circuit affirmed the ruling of the CIT. The Company's consolidated balance sheets include accrued environmental cleanup costs for the Chemicals segment of $9,506,600 as of September 30, 1994, $19,100,000 as of December 31, 1993 and $20,419,000 as of September 30, 1993. These amounts include noncurrent liabilities of $5,701,000 at September 30, 1994 and December 31, 1993 and $15,239,000 at September 30, 1993.
EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE (Amounts and shares in thousands, except per share data) Three Months Ended Nine Months Ended September 30 September 30 1994 1993 1994 1993 Primary and fully diluted earnings: Average common shares outstanding.......... 36,533 36,503 36,514 36,894 Common share equivalents: Performance share plan................... 230 215 236 220 Total shares....................... 36,763 36,718 36,750 37,114 Net earnings................................. $37,600 $36,564 $66,108 $67,679 Primary and fully diluted earnings per share of common stock: $ 1.02 $ 0.99 $ 1.80 $ 1.82
EXHIBIT 12 VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Amounts in thousands) For the Years Ended December 31 1993 1992 1991 1990 1989 Fixed charges: Interest expense before capitalization credits .........$ 10,187 $ 10,441 $ 11,336 $ 9,349 $ 6,873 Amortization of financing costs .......... 115 116 75 44 42 One-third of rental expense .......... 7,375 8,711 4,815 5,678 3,979 Total fixed charges .........$ 17,677 $ 19,268 $ 16,226 $ 15,071 $ 10,894 Net earnings from continuing operations .........$ 88,229 $ 90,980 $ 52,580 $120,278 $133,420 Provision for income taxes .......... 36,993 39,746 20,867 58,951 67,943 Fixed charges .......... 17,677 19,268 16,226 15,071 10,894 Capitalized interest credits .......... (1,016) (673) (131) (1,591) (756) Amortization of capitalized interest .......... 882 792 840 705 603 Earnings from continuing operations before income taxes as adjusted .........$142,765 $150,113 $ 90,382 $193,414 $212,104 Ratio of earnings to fixed charges .......... 8.1 7.8 5.6 12.8 19.5 For the Nine Months Ended September 30, 1994 Fixed charges: Interest expense before capitalization credits .........$ 7,773 Amortization of financing costs .......... 86 One-third of rental expense .......... 6,058 Total fixed charges .........$ 13,917 Net earnings .........$ 66,108 Provision for income taxes .......... 30,824 Fixed charges .......... 13,917 Capitalized interest credits .......... (554) Amortization of capitalized interest .......... 683 Earnings before income taxes as adjusted .........$110,978 Ratio of earnings to fixed charges .......... 8.0 NOTE: Since 1987, the Company has guaranteed a portion of certain debts of two of the entities through which it participates in the Crescent Market Project. In addition, since February 1994, the Company has guaranteed a portion of certain debt of a third entity. The fixed charges associated with such guaranties (under which the Company has not been required to make any payments) for the nine months ended September 30, 1994, were $1,972,000 and for the one-year periods ended December 31, 1993, 1992, 1991,1990, and 1989 were $2,731,000, $3,583,000, $3,525,000, $2,535,000 and $1,046,000, respectively. Because the Company's ownership interest in the Crescent Market Project are accounted for by the equity method, these amounts have not been included in the computation of the ratios of earnings to fixed charges presented above.
Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition GENERAL COMMENTS Seasonality of the Company's Business Results of any individual quarter are not necessarily indicative of results to be expected for the year due principally to the effect that weather can have on the sales and production 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 when sales and earnings are substantially below the levels realized in all subsequent quarters of the year. Basis of Determining Sales Volume and Price Variances Sales volume variances are calculated by multiplying the period-to-period change in sales units by the prior period's unit sales prices. Sales price variances are calculated by multiplying the period-to-period change in unit sales prices by the current period's sales units. To the extent that products and market areas are combined for these computations, the resultant "volume" and "price" variances may each be affected by period-to-period changes in the "mix" of product and market area sales. Segment Sales and Earnings Segment sales and earnings have been determined on the same basis as used in prior Form 10-Q reports. Segment earnings are 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. RESULTS OF OPERATIONS CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS THIRD QUARTER 1994 AS COMPARED WITH THIRD QUARTER 1993 Sales in the third quarter of $360.4 million increased 9% from the 1993 third quarter level. The segment detail of that increase is as follows (amounts in millions): Third Quarter Sales Increase 1994 1993 (Decrease) Construction Materials $251.1 $234.1 $ 17.0 Chemicals 109.3 97.4 11.9 Total $360.4 $331.5 $ 28.9 Construction Materials sales totaled $251.1 million in the third quarter, up 7% from the same period last year. This increase reflects continued improvement in the demand for crushed stone as well as higher unit selling prices. Shipments and average prices of crushed stone in the quarter increased 4% and 5%, respectively, from last year's levels. Chemicals sales of $109.3 million increased 12% from last year's third quarter level. This increase reflects the acquisition of Callaway Chemical Company on August 1, 1994. Excluding the effects of 1994 acquisitions, third quarter Chemicals sales decreased 8% from last year's level due to lower caustic soda volume as well as lower volumes and prices in certain chlorinated organic products. These declines were partially offset by higher caustic soda prices, as well as improved prices for chlorine and muriatic acid. The average price of caustic soda increased sharply from the second quarter level and also exceeded the 1993 third quarter price. Cost of goods sold in the third quarter of 1994 increased 10% from 1993 levels. The increase reflected the acquisition of Callaway Chemical, higher operating costs in the Construction Materials segment and higher raw materials prices and costs related to production outages at both major plants in the Chemicals segment. Selling, administrative and general expenses of $33.8 million increased 14% from last year's third quarter level, principally reflecting the effect of acquisitions by the Chemicals segment. Other income, net of other charges, totaled $3.1 million in the third quarter, up $1.2 million as compared to the same period last year. The increase principally reflects higher gains on the sales of assets and improved results referable to joint ventures. The profitability of the Crescent Market Project continues to improve. Favorable earnings comparisons for the third quarter and the nine months to date reflect higher volumes and prices in most areas of the market served by the Project. Earnings before interest expense and income taxes were $57.9 million in the third quarter of 1994, up 4% from comparable 1993 earnings. The segment detail of this result is shown in the following summary (amount in millions): Third Quarter Earnings (Loss) Before Interest Expense and Income Taxes Increase 1994 1993 (Decrease) Construction Materials $59.4 $51.1 $ 8.3 Chemicals (1.7) 4.7 (6.4) Segment earnings * 57.7 55.8 1.9 Interest income, etc. .2 - .2 Total $57.9 $55.8 $ 2.1 * After allocation of corporate expense and income, other than "interest income, etc." (principally interest income earned on short-term investment of funds 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. Construction Materials segment earnings were $59.4 million, up 16% from the 1993 level. Higher volumes and prices contributed equally to the improved result, which was partially offset by higher operating costs. The Chemicals segment reported a loss of $1.7 million as compared with last year's third quarter earnings of $4.7 million. Higher raw materials prices and costs related to production outages, as well as lower volume, were the principal causes of the earnings decline. Plant outages adversely impacted third quarter Chemicals pretax earnings by approximately $5 million, equivalent to 8 cents per share. The provision for income taxes for the third quarter was $17.5 million, as compared with last year's third quarter expense of $16.9 million. The increase reflects the higher pretax earnings as well as the higher tax rate. Net earnings and earnings per share totaled $37.6 million, as compared with $36.6 million for the third quarter of 1993. Earnings per share for the quarter were $1.02, up 3% from the 99 cents earned in the same period last year. CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS YEAR-TO-DATE COMPARISONS AS OF SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1993 Sales for the first nine months of 1994 were up $52.5 million from the same period in 1993. Sales of the segments are summarized as follows (amounts in millions): Sales for the Nine Months Ended September 30 Increase 1994 1993 (Decrease) Construction Materials $621.4 $565.4 $56.0 Chemicals 282.6 286.1 (3.5) Total $904.0 $851.5 $52.5 Construction Materials sales were $621.4 million, up 10% over 1993. Crushed stone shipments increased 6% and average prices improved 5%. Chemicals sales of $282.6 million declined slightly due primarily to depressed caustic soda prices, offset by the effect of acquisitions. Cost of goods sold for the current year-to-date increased 8% due to higher volumes in the Construction Materials segment, the Chemicals acquisitions and higher operating costs in both segments. Selling, administrative and general expenses were $90.2 million, up 7% over comparable 1993 levels. This reflected the effect of acquisitions by the Chemicals segment and higher provisions for stock based incentive plans. Other income, net of other charges, increased $7.1 million from comparable 1993 levels due to higher gains on the sales of assets and improved results from joint ventures. Earnings for the current year-to-date before interest expense and income taxes were $104.2 million, equal to comparable 1993 earnings. Segment detail is shown below (amounts in millions): Third Quarter Earnings (Loss) Before Interest Expense and Income Taxes Increase 1994 1993 (Decrease) Construction Materials $113.8 $ 85.7 $ 28.1 Chemicals (10.1) 18.3 (28.4) Segment earnings * 103.7 104.0 (.3) Interest income .5 .2 .3 Total $104.2 $104.2 $ - * After allocation of corporate expense and income, other than "interest income, etc." (principally interest income earned on short-term investment of funds 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. Construction Materials segment earnings were $113.8 million, up 33% from last year. The increase was the result of higher volumes as well as improved sales prices. The Chemicals segment had a loss of $10.1 million as compared with 1993 earnings of $18.3 million, reflecting principally net lower prices. The provision for income taxes for the first nine months of 1994 was $30.8 million as compared with last year's expense of $29.3 million. The increase reflects the higher tax rate. Net earnings of $66.1 million and earnings per share of $1.80 decreased slightly from comparable 1993 levels. Outlook On October 21, 1994, H. A. Sklenar, Chairman and Chief Executive Officer of Vulcan made certain statements concerning the Company's earnings outlook. Excerpts of the relevant press release quoting Mr. Sklenar are as follows: "After unusually wet weather in July depressed crushed stone sales, shipments recovered to strong levels in August and September. This resulted in a 4% volume increase for the quarter as compared with last year's third quarter shipments. Demand levels continue to be strong in most of our crushed stone markets so weather will again be an important variable impacting the fourth quarter results of our Construction Materials segment. "Caustic soda prices improved sharply in the third quarter. As a result, for the first time since the fourth quarter of 1991, Vulcan's average price for caustic soda reflected an increase as compared with the same quarter of the preceding year. Unfortunately, sharply higher raw material costs for our organic products and two plant outages - one of which was unplanned - more than offset the favorable effect of improved pricing. Our current view is that caustic prices will continue to improve into 1995, so we are optimistic about next year's earnings prospects for our Chemicals segment. "For the fourth quarter, we expect normal operating results to produce a good earnings improvement for the Chemicals segment, especially if we succeed in achieving needed price increases for our chlorosolvents. However, some or all of the improvement may be offset by an additional accrual for environmental remediation costs at the Cleve Rever superfund site. Remediation of that site has been underway since August 1993, but testing for regulatory approvals of the incinerator have only recently been concluded. We expect to reach a decision regarding the need for an additional accrual in light of information available at year-end." LIQUIDITY AND CAPITAL RESOURCES CONDENSED CONSOLIDATED BALANCE SHEETS - SEPTEMBER 30, 1994 AS COMPARED WITH DECEMBER 31, 1993 AND SEPTEMBER 30, 1993 AND CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS COMPARISONS FOR THE YEAR TO DATE AS OF SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1993 Working Capital Working capital, exclusive of debt and cash items, was $207.3 million at September 30, 1994, up 37% from the 1993 year-end total. This included the impact of acquisitions of the Chemicals segment. Receivables were also impacted by increased sales. Working capital was level with last year's third quarter amount, as an increase in receivables was offset by a higher level of other current liabilities. These increases were related to the Chemicals acquisitions. The Company's current ratio, which is based on all components of working capital, including cash and debt items, was 1.6 as of September 30, 1994. This was down from a 2.1 ratio at year-end 1993 and a 1.8 ratio at September 30, 1993. Cash Flows Cash provided from continuing operations in the first nine months of 1994 amounted to $114.4 million, up 14% from the $100.2 million generated in the same period last year. The increase reflects primarily a lower increase in working capital during the first nine months of 1994 as compared with 1993. Cash used for investing activities was $150.0 million as compared with the 1993 total of $76.4 million, reflecting an increase in spending for business acquisitions. Net cash provided by financing activities totaled $30.8 million. The comparable 1993 amount was a $28.6 million use of funds. The change reflects the lack of treasury stock purchases in 1994 and an increase in net borrowings. Cash and cash equivalents, which totaled $8.5 million at September 30, 1994, decreased $5.5 million in the first nine months of 1994 as compared with a similar decrease last year of $5.6 million. Property Additions Property additions in the first nine months of 1994 totaled $142.5 million as compared with 1993's comparable level of $70.1 million. This increase reflects principally acquisitions by the Chemicals segment. On August 1, 1994, the assets and business of Callaway Chemical Company were acquired from Exxon Chemical Company. In a related transaction the assets and business of Comcor Chemicals Limited were acquired from Exxon's affiliated company, Imperial Oil Limited. The total purchase price paid for all assets approximated $83 million, which included $60 million for plant, property and equipment. Callaway Chemical is a leading supplier of process aids for the pulp and paper, water treatment and textile industries. Comcor, which is being operated as Callaway Chemical Limited, manufactures and supplies pulp and paper process aids, principally in Canada. Peroxidation Systems Inc. was acquired in January 1994 and is being operated under the name of Vulcan Peroxidation Systems Inc. (VPSI). VPSI provides equipment, chemicals and services to the municipal, industrial and environmental water treatment markets. Short-Term Borrowings Short-term borrowings as of September 30, 1994 consisted of notes payable to banks totaling $76.8 million. There were no short-term borrowings as of December 31, 1993. Short-term borrowings as of September 30, 1993 totaled $50.7 million of commercial paper. Long-Term Obligations As of September 30, 1994, long-term obligations were 10.0% of long-term capital and 13.2% of shareholders' equity. The corresponding 1993 percentages were 11.0% and 14.9%. Common Stock Transactions There were no share purchases made pursuant to the Company's common stock purchase program in the first nine months of 1994. Third quarter 1993 purchases were 354,524 shares at a total cost of $16.1 million, equal to an average price per share of $45.44. For the first nine months of 1993, common stock purchases totaled 894,888 shares at a cost of $40.0 million, equal to $44.68 per share. The Company's purchases of shares of common stock are made based upon the common stock's valuation and price, the Company's liquidity and its actual and projected needs for cash for investment projects and regular dividends, and the Company's levels of debt. PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 3 of the Notes to Condensed Consolidated Financial Statements are incorporated herein by reference. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits furnished in accordance with Item 601 of Regulation S-K and included in Part I: Exhibit 11 - Computation of Earnings per Share Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges (b) Reports on Form 8-K There were no reports on Form 8-K filed for the three months ended September 30, 1994. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. VULCAN MATERIALS COMPANY Date November 14, 1994 /s/ D. F. Sansone Vice President, Finance EX-27 2
5 This schedule contains summary financial information extracted from the Consolidated Balance Sheets as of September 30, 1994 and the Consolidated Statements of Earnings for the nin months ended September 30, 1994 and is qualified in its entirety by reference to such financial statements. 1000 QTR-3 DEC-31-1994 SEP-30-1994 0000 8502 218902 7284 109643 367107 718118 1099 1215820 236100 97539 46574 0 0 694815 1215820 903956 914506 715188 715188 94442 725 7219 96932 30824 66108 0 0 0 66108 1.80 1.80
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