EX-99 3 pr3rdqtr2003.htm October 27, 2003

October 27, 2003
FOR IMMEDIATE RELEASE
Investor Contact: Mark Warren (205) 298-3220
Media Contact: David Donaldson (205) 298-3220

VULCAN EARNINGS INCREASE OVER 20 PERCENT

Birmingham, Alabama - October 27, 2003 - Vulcan Materials Company (NYSE:VMC) today announced net sales of $748 million and earnings of $0.91 per diluted share from continuing operations. In the third quarter of 2002, sales and earnings from continuing operations were $680 million and $0.75 per diluted share. Including discontinued operations, the Company reported record net earnings of $0.96 per diluted share as compared with $0.75 per diluted share in the prior year.

Don James, Chairman and CEO of Vulcan, stated, "We are extremely pleased with the Company's performance in the quarter. Both segments achieved significantly higher sales and improved earnings. Record aggregates shipments benefited from favorable weather conditions after being impacted by significantly wet weather in the first half of the year. Improved Chemicals results were driven primarily by higher pricing for most products.

"Our businesses continue to generate strong cash flows. Through the first three quarters of 2003, cash from operations less capital expenditures was $209 million, a $100 million increase over the first three quarters of last year."

As previously reported, the Company has substantially completed the divestiture of its Performance Chemicals business unit. Accordingly, financial results referable to these businesses are reported in discontinued operations. In the third quarter, discontinued operations added 5 cents per diluted share to earnings. For the year, discontinued operations are estimated to reflect a loss of approximately 10 cents per diluted share.

The Company's financial results exclude the effects of possible adoption of FAS 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." On October 29, 2003, the Financial Accounting Standards Board will meet to review this standard and its accounting implications. This pronouncement, if adopted, is not expected to have a material effect on the Company's financial statements.

Segment Results

For the quarter, Construction Materials reported record net sales of $616 million. The 9 percent sales growth over the prior year was driven by strong aggregates shipments in most markets. Pricing for aggregates remained relatively flat with the prior year, reflecting a higher proportion of sales from lower-priced products and geographic markets.

Segment earnings were $144 million compared to $132 million in the prior year. Aggregates margins were up despite the impact of higher costs for diesel, pension and healthcare. Margins from asphalt were lower due to the effects of a slight decline in volume and higher costs for liquid asphalt and natural gas.

The Chemicals segment reported net sales of $131 million, up approximately $18 million from the prior year. Sales prices for caustic soda and chlorine were higher than the third quarter of 2002. Segment earnings were a loss of approximately $6 million compared to a loss of $16 million in the prior year. Earnings were favorably impacted by improvements in product pricing and the results of cost reduction efforts. These improvements were somewhat offset by higher costs for energy and key raw materials.

Outlook

Mr. James stated, "Assuming normal weather patterns, aggregates shipments should remain strong in most of our markets. Costs will continue to be impacted by increases in pension, healthcare, diesel and liquid asphalt costs. We expect full year 2003 segment earnings for Construction Materials to be in the range of $360 to $370 million.

"With respect to Chemicals, we are projecting a full year loss in the range of $25 to $30 million. We continue to be encouraged by improvement in the operating performance of our plants and increased earnings contribution from our plant commissioned late last year to produce the feedstock for a new non-ozone depleting foam-blowing agent.

"Full year earnings per share from continuing operations for the Company should be in the range of $1.95 to $2.10 per diluted share, an increase from our earlier guidance."

As stated previously, the Company will give quarterly and annual earnings guidance, and will issue press releases to revise earnings guidance if new information indicates earnings per share, on either a quarterly basis or an annual basis, are likely to be outside its last published guidance.

Conference Call
Vulcan will host a broadcast of the quarterly earnings conference call scheduled for 10:00 a.m. CST on October 28, 2003. Investors and other interested parties may access the teleconference live by calling (800) 901-5226 (access code is 52400421) or via the Internet through Vulcan's home page at www.vulcanmaterials.com.

Vulcan Materials Company, a member of the S&P 500 index, is a producer of industrial materials with significant positions in two industries. It is the nation's foremost producer of construction aggregates, a major producer of other construction materials, and a significant industrial chemicals manufacturer.

Certain matters discussed in this release contain forward-looking statements that are subject to risks, assumptions and uncertainties that could cause actual results to differ materially from those projected. These risks, assumptions and uncertainties include, but are not limited to, those associated with general business conditions; the timing and amount of federal, state and local funding for infrastructure; the depressed demand for the Company's chemical products; the highly competitive nature of the industries in which the Company operates; pricing; weather and other natural phenomena; energy costs; costs of hydrocarbon-based raw materials; increasing pension and healthcare costs; and other risks, assumptions and uncertainties detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year.

 

 

TABLE A

Vulcan Materials Company and Subsidiary Companies
 

(Amounts in thousands, except per share data)

Consolidated Statements of Earnings
(Condensed and unaudited)

Three Months Ended
September 30

Nine Months Ended
September 30
 

2003

2002

2003

2002

Net sales

$747,584

$679,837

$1,961,259

$1,824,158

Delivery revenues

82,321

69,052

202,192

183,772

Total revenues

829,905

748,889

2,163,451

2,007,930

Cost of goods sold

550,902

516,046

1,537,315

1,422,913

Delivery costs

82,321

69,052

202,192

183,772

Cost of revenues

633,223

585,098

1,739,507

1,606,685

Gross profit

196,682

163,791

423,944

401,245

Selling, administrative and general expenses

56,777

49,304

161,398

147,877

Other operating costs

3,448

3,500

12,146

6,208

Minority interest in (earnings) losses

(1,476)

(498)

1,520

1,111

Other income, net

2,784

5,653

8,853

9,295

Earnings from continuing operations before
    interest and income taxes


137,765


116,142


260,773


257,566

Interest income

1,125

873

3,047

2,616

Interest expense

13,760

13,946

40,890

40,634

Earnings from continuing operations before
    income taxes


125,130


103,069


222,930


219,548

Provision for income taxes

31,074

25,782

60,414

60,376

Earnings from continuing operations before
    cumulative effect of accounting changes


94,056


77,287


162,516


159,172

Earnings (loss) on discontinued operations

5,093

(468)

(6,081)

(5,360)

Cumulative effect of accounting changes

       -

       -

(18,811)

(20,537)

Net earnings

$99,149

$76,819

$137,624

$133,275

Basic net earnings per share:

        

Earnings from continuing operations before
    cumulative effect of accounting changes


$0.92


$0.76


$1.60


$1.57

Discontinued operations

0.05

(0.01)

(0.06)

(0.06)

Cumulative effect of accounting changes

       -

       -

(0.19)

(0.20)

Net earnings per share

$0.97

$0.75

$1.35

$1.31

Diluted net earnings per share:

        

Earnings from continuing operations before
    cumulative effect of accounting changes


$0.91


$0.75


$1.58


$1.55

Discontinued operations

0.05

-

(0.06)

(0.05)

Cumulative effect of accounting changes

       -

       -

(0.18)

(0.20)

Net earnings per share

$0.96

$0.75

$1.34

$1.30

Weighted-average common shares outstanding:

        

Basic

101,859

101,749

101,812

101,690

Assuming dilution

102,805

102,482

102,583

102,573

Cash dividends per share of common stock

$0.245

$0.235

$0.735

$0.705

Depreciation, depletion, accretion and
    amortization from continuing operations


$66,916


$66,464


$198,925


$190,389

Effective tax rate

24.8%

25.0%

27.1%

27.5%

See accompanying Notes to Condensed Consolidated Financial Statements

 

TABLE B

Vulcan Materials Company and Subsidiary Companies
 

(Amounts in thousands)


Operating Results by Reportable Segment (Unaudited)

Three Months Ended
September 30

Nine Months Ended
September 30
 

2003

2002

2003

2002

Net Sales

        

Construction Materials

$616,280

$566,701

$1,564,949

$1,513,271

Chemicals

131,304

113,136

396,310

310,887

      Total

$747,584

$679,837

$1,961,259

$1,824,158

Total Revenues

        

Construction Materials

$685,534

$623,489

$ 1,729,729

$ 1,661,400

Chemicals

144,371

125,400

433,722

346,530

      Total

$829,905

$748,889

$ 2,163,451

$ 2,007,930

Earnings from Continuing Operations Before
    Interest and Income Taxes

Construction Materials

$144,093

$131,789

$ 282,261

$ 305,661

Chemicals

(6,328)

(15,647)

(21,488)

(48,095)

Segment* earnings

$137,765

$116,142

$ 260,773

$ 257,566

Depreciation, Depletion, Accretion and
    Amortization from Continuing Operations

Construction Materials

$54,338

$52,644

$160,582

$151,069

Chemicals

12,578

13,820

38,343

39,320

      Total

$66,916

$66,464

$198,925

$190,389

* After allocation of corporate expenses and income, other than interest, and after assignment of equity income to the segments with which it is related in terms of products and services. Allocations are based on average capital employed and net sales.

  

See accompanying Notes to Condensed Consolidated Financial Statements

 

TABLE C

Vulcan Materials Company and Subsidiary Companies

(Amounts in thousands)


Consolidated Balance Sheets (Condensed and unaudited)

September 30
2003

December 31
2002

September 30
2002

Assets

      

Cash and cash equivalents

$330,205

$170,728

$82,752

Short-term investments

4,972

-

-

Accounts and notes receivable:

      

    Accounts and notes receivable, gross

446,668

341,057

406,372

    Less: Allowance for doubtful accounts

(10,124)

(8,931)

(9,903)

        Accounts and notes receivable, net

436,544

332,126

396,469

Inventories:

      

    Finished products

162,080

189,378

186,936

    Raw materials

8,206

10,191

12,692

    Products in process

271

486

525

    Operating supplies & other

39,768

39,531

36,931

        Inventories

210,325

239,586

237,084

Deferred income taxes

36,009

37,698

43,158

Prepaid expenses

19,429

9,550

12,306

        Total current assets

1,037,484

789,688

771,769

Investments and long-term receivables

20,965

15,964

16,222

Property, plant and equipment:

      

    Property, plant and equipment, cost

4,149,684

4,098,543

4,095,607

    Less: Reserve for depr., depl., and amort.

(2,216,337)

(2,122,490)

(2,088,186)

        Property, plant and equipment, net

1,933,347

1,976,053

2,007,421

Goodwill

579,180

575,791

564,536

Deferred charges and other assets

88,624

90,725

100,913

        Total

$3,659,600

$3,448,221

$3,460,861

Liabilities and Shareholders' Equity

      

Current maturities of LTD

$284,783

$41,641

$6,271

Notes payable

30,500

37,298

37,378

Trade payables and accruals

138,307

122,053

141,254

Other current liabilities

132,197

96,717

120,631

        Total current liabilities

585,787

297,709

305,534

Long-term debt

608,188

857,757

892,749

Deferred income taxes

361,312

345,181

332,507

Other noncurrent liabilities

248,002

157,930

154,588

Minority interest

91,138

92,658

94,032

Shareholders' equity

1,765,173

1,696,986

1,681,451

        Total

$3,659,600

$3,448,221

$3,460,861

Current ratio

1.8

2.7

2.5

See accompanying Notes to Condensed Consolidated Financial Statements

 

TABLE D

Vulcan Materials Company and Subsidiary Companies




(Amounts in thousands)
Nine Months Ended September 30

Consolidated Statements of Cash Flows (Condensed and unaudited)

2003

2002

  

Operating Activities

      

Net earnings

$137,624

$133,275

  

Adjustments to reconcile net earnings to
    net cash provided by operating activities:

      Depreciation, depletion, accretion and amortization

208,097

198,230

  

      Cumulative effect of accounting changes

18,811

20,537

  

      Increase in assets before effects of business acquisitions

(107,641)

(56,641)

  

      Increase in liabilities before effects of business acquisitions

106,190

6,954

  

      Other, net

(12,927)

11,274

  

        Net cash provided by operating activities

350,154

313,629

  

Investing Activities

      

Purchases of property, plant and equipment

(141,243)

(204,357)

  

Pmt. for businesses acquired, net of acquired cash

(2,493)

(42,138)

  

Increase in short-term investments

(4,972)

-

  

Proceeds from sale of property, plant & equipment

48,387

18,014

  

        Net cash used for investing activities

(100,321)

(228,481)

  

Financing Activities

      

Net payments - commercial paper and bank lines of credit

(6,798)

(6,501)

  

Payment of short-term debt

(6,391)

(17,017)

  

Payment of long-term debt

(197)

(7,000)

  

Dividends paid

(74,658)

(71,526)

  

Other, net

(2,312)

(1,154)

  

        Net cash used for financing activities

(90,356)

(103,198)

  

Net increase (decrease) in cash and cash equivalents

159,477

(18,050)

  

Cash and cash equivalents at beginning of period

170,728

100,802

  

Cash and cash equivalents at end of period

$330,205

$82,752

  

See accompanying Notes to Condensed Consolidated Financial Statements

      

 

TABLE E

Notes to Condensed Consolidated Financial Statements


1.  Supplemental Cash Flow Information
Supplemental information referable to the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30 is summarized below (amounts in thousands):

 

2003

2002

  

Supplemental Disclosure Of Cash Flow Information

      

Cash paid during the period for:

      

  Interest, net of amount capitalized

$34,896

$35,006

  

  Income taxes

11,934

37,134