10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2003 Commission file number: 1-4033 VULCAN MATERIALS COMPANY (Exact name of registrant as specified in its charter)
New Jersey (State or other jurisdiction of incorporation or organization)			63-0366371 (I.R.S. Employer Identification No.)
1200 Urban Center Drive, Birmingham, Alabama 35242        (Address, including zip code, of registrant's principal executive offices) (205) 298-3000 (Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Common Stock, $1 par value		Name of each exchange on which registered New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:   None
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   X   No     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by referenced in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the Act)    Yes   X   No
Aggregate market value of voting stock held by non-affiliates as of June 30, 2003:				$3,749,275,592
Number of shares of common stock, $1.00 par value, as of February 27, 2004:				102,036,421
DOCUMENTS INCORPORATED BY REFERENCE
(1)	Portions of the registrant's Annual Report to Shareholders for the year ended December 31, 2003, are incorporated by reference into Parts I, II and IV of this Annual Report on Form 10-K.
(2)	Portions of the registrant's annual proxy statement for the annual meeting of its shareholders to be held on May 14, 2004, are incorporated by reference into Part III of this Annual Report on Form 10-K.

VULCAN MATERIALS COMPANY Annual Report On Form 10-K Fiscal Year Ended December 31, 2003 CONTENTS
Part	Item		Page
I	1 2 3 4	Business Properties Legal Proceedings Submission of Matters to a Vote of Security Holders	2 7 10 12
II	5 6 7 7A 8 9 9A	Market for the Registrant's Common Equity, Related    Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion and Analysis of Financial Condition    and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and    Financial Disclosure Controls and Procedures	13 14 14 15 15 15 15
III	10 11 12 13 14	Directors and Executive Officers of the Registrant Executive Compensation Security Ownership of Certain Beneficial Owners and    Management and Related Stockholder Matters Certain Relationships and Related Transactions Principal Accountant Fees and Services	15 16 16 16 16
IV	15	Exhibits, Financial Statement Schedules, and Reports on    Form 8-K	16
	--	Signatures	21

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PART I

Item 1.  Business

         Vulcan Materials Company, a New Jersey corporation incorporated in 1956, and its subsidiaries ("the Company," "Vulcan," "we" or "our") are principally engaged in the production, distribution and sale of construction materials ("Construction Materials") and chloralkali and other industrial chemicals ("Chemicals"). Construction Materials and Chemicals are both reported as segments. Vulcan is the nation's largest producer of construction aggregates, a major producer of asphalt and ready-mixed concrete, and a significant chemicals producer, producing chloralkali and other industrial chemicals.

Segment Information

     Construction Materials

         Our Construction Materials business consists of the production, distribution and sale of construction aggregates and other construction materials and related services. Construction aggregates include crushed stone, sand and gravel, rock asphalt, recrushed concrete and crushed slag (a by-product of blast iron and steel production). Aggregates are employed in virtually all types of construction, including highway construction and maintenance, and in the production of asphaltic and portland cement concrete mixes. Aggregates also are widely used as railroad track ballast. Construction aggregates constituted approximately 72% of the dollar volume of the Construction Materials segment's 2003 net sales, as compared to 71% in 2002 and 70% in 2001. The remaining sales in the Construction Materials segment result from other products and services including asphalt mix and related products, ready-mixed concrete, trucking services, water transportation services , paving construction, and several other businesses.

         Each type of aggregate is sold in competition with producers of other types of aggregates, as well as the same type of aggregates. Because of the relatively high transportation costs inherent in the business, competition generally is limited to the areas in proximity to production facilities. Noteworthy exceptions are the areas along the Mississippi, Tennessee-Tombigbee and James river systems and the Gulf Coast, which are served from remote quarries by rail, barge or ocean-going vessels. Our Construction Materials segment served markets in 26 states, the District of Columbia and Mexico. Shipments of all construction aggregates totaled approximately 232.8 million tons in 2003.

         In 2003, we spent approximately $3.5 million on acquisitions. These acquisitions included an aggregates facility in Kentucky and a sales yard in Texas.

         At the end of 2003, we operated 216 aggregates production facilities located in 17 states and Mexico. These aggregates facilities included 162 crushed stone plants, 30 sand and gravel plants, 1 slag plant and 23 plants producing other aggregates (principally recycled concrete). Reserves largely determine the ongoing viability of an aggregates business. At the end of 2003, our estimated proven and probable aggregates reserves totaled 10.6 billion tons, sufficient to support our operations for approximately 48 years at current production rates.

         In addition to our aggregates production facilities, we operated 62 truck, rail and water distribution yards, located in select market areas, for the sale of aggregates products. Our other facilities included 43 asphalt plants; 2 emulsified asphalt plants; 27 ready-mixed concrete plants; and another 19 operations related to paving construction, service and repair, and transportation operations.

         The key end-use customers for our aggregates products are heavy construction and paving contractors; residential and commercial building contractors; concrete products manufacturers; state, county and municipal governments; and railroads. We serve our customers by truck, rail and water distribution networks. During 2003, domestic and international operations served markets in 20 states, the District of Columbia and Mexico with a full line of aggregates, and 6 additional states with railroad ballast only.

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         Environmental and zoning regulations have made it increasingly difficult for the construction aggregates industry to expand existing quarries or to develop new quarries in some markets. Although it cannot be predicted what policies will be adopted in the future by governmental bodies regarding environmental controls which affect the construction materials industry, we believe that future environmental control costs will not have a materially adverse effect upon our business. Furthermore, any future land use restrictions could make zoning and permitting more difficult. Any such restrictions, while curtailing expansion or acquisitions in certain areas, could potentially enhance the value of our reserves at existing locations.

         We believe that the Construction Materials segment's raw material reserves are sufficient for predicted production levels for the foreseeable future. We do not anticipate any material difficulties in either the number of sources or the availability of raw materials in the future.

         The Construction Materials segment strives to maintain a sufficient level of inventory of its aggregates to meet delivery requirements of its customers. The Construction Materials segment generally provides for standard payment terms, similar to those customary for the construction aggregates industry, of payment within 30 days of being invoiced.

     Chemicals

         In 2003, our Chemicals segment was organized into two business units: Chloralkali, operating under the Vulcan Chemicals name, managed our line of chloralkali products and related businesses, and Performance Chemicals, operating under the Vulcan Performance Chemicals name, which managed our specialty chemicals and services business. In 2003, we completed the sale of all of the businesses and operations relating to our Performance Chemicals business unit. See the discussion below.

         The Chemicals segment delivers its products upon receipt of orders or requests from customers. On occasion, when necessary to conform to regional industry practices, we have sold product under various payment terms.

         The Chloralkali Business. The Chloralkali business unit produces chlorine, caustic soda, hydrochloric acid, sodium chlorite, potassium chemicals and chlorinated organic chemicals, which are sold principally to the chemical processing, polymer, refrigerant, foam-blowing, food and pharmaceutical, pulp and paper, and water management industries. In the paper industry, caustic soda is used primarily in the kraft and sulfite pulping processes. Chlorine is used in potable water disinfection and sewage management, to remove impurities from recycled aluminum and as an ingredient to make other chlorinated products. Caustic soda and caustic potash (potassium hydroxide) are used in the production of soaps and detergents. Caustic soda also is used to demineralize water for steam production at electrical energy facilities and to remove sulfur from gas and coal. We supply hydrochloric acid to the energy industry for stimulation of oil and gas wells. H ydrochloric acid, caustic soda, caustic potash and methylene chloride are used by the food and pharmaceutical industries. Sodium chlorite is an inorganic biocide and strong oxidant used extensively in municipal and industrial water treatment and environmental compliance applications. Ethylene dichloride (EDC) is used in the manufacture of PVC. Pentachlorophenol is used as a wood preservative to extend the life of utility poles. The Chloralkali business unit's sales to the chemical processing industry serve companies that produce organic and inorganic chemical intermediates and finished products. Products sold in this market include hydrochloric acid, chlorine, caustic soda, caustic potash, potassium carbonate and various chlorinated hydrocarbons. Potassium carbonate is used in the manufacture of screen glass, rubber antioxidants, cleansers and other chemicals. We also sell chloroform, methyl chloroform, perchloroethylene and other chlorinated hydrocarbons to the fluorocarbons market as feedstocks for m anufacturing refrigerants.

         The Chloralkali business unit includes a joint venture with Mitsui & Co., Ltd., for the production and distribution of EDC. This joint venture is structured to take advantage of our production capabilities and Mitsui's access to global EDC markets. Mitsui, the world's leading EDC trader, purchases all of the EDC output of our joint venture facility.

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         Underground reserves of salt, a basic raw material used by the Chloralkali business unit in the production of chlorine and caustic soda, are located near our Wichita, Kansas and Geismar, Louisiana plants. We own or lease salt reserves at Wichita and Geismar, as discussed in Item 2 below. We purchase salt for our Port Edwards, Wisconsin plant from a number of regional supply sources. Ethylene, methanol and vinyl chloride monomer, the other major raw materials used in the Chloralkali business unit are purchased from several different suppliers. Sources of salt, ethylene, methanol, vinyl chloride monomer and various other raw material chemicals are believed to be adequate for our operations, and we do not anticipate any material difficulty in obtaining necessary raw materials.

         In the 1990s, the production of carbon tetrachloride and methyl chloroform for emissive uses was phased out to a large extent because of the ozone-depleting properties of these chemicals. In 2002, we completed construction of a plant at our Geismar complex that produces 5CP, a feedstock to make new environmentally-friendly fluorocarbons that will replace ozone-depleting hydrochlorofluorocarbons. Under long-term agreements, we supply 5CP to Honeywell Fluorine Products Group for its plant which is also located in Geismar. The resulting foam-blowing agent offers environmental benefits over present ozone-depleting compounds and it exhibits comparable or superior insulation performance.

         The Performance Chemicals Business. In 2003, we completed our exit strategy for the Performance Chemicals business unit. In December 2002, we sold the unit's municipal drinking water business to Altivia Corporation. In March 2003, we sold the assets of the unit's municipal wastewater treatment business to ALTIVIA Corporation. In July 2003, we sold the assets of the industrial water treatment and pulp and paper businesses to Kemira Oy, of Finland, including our Columbus, Georgia production plant and research and development facility, as well as production facilities in Shreveport, Louisiana and Vancouver, British Columbia. In two transactions, closed in June 2003 and November 2003, we sold our Smyrna, Georgia production facility, our Dalton, Georgia distribution center, and our specialty chemicals plant in Columbus, Georgia to Lynx Chemical Company. Accordingly, financial results referable to these businesses are reported in discontinue d operations. See Note 2 to the Consolidated Financial Statements in our 2003 Annual Report to Shareholders (pages 37 and 38). The collective impact from these transactions resulted in a small gain, which was offset by an operating loss. The sodium chlorite production facility was retained and transferred to the Chloralkali business unit.

Financial Results by Business Segments

         Net sales, total revenues, segment earnings, identifiable assets and related financial data for each of our business segments for the three years ended December 31, 2003, are reported on page 48 (Note 15 of the Notes to Consolidated Financial Statements) in our 2003 Annual Report to Shareholders, which are incorporated herein by reference.

Competition and Customers

         All of our products are marketed under highly competitive conditions, including competition in price, service and product performance. There are a substantial number of competitors in both the Construction Materials segment and the Chemicals segment.

         We are the largest construction aggregates producer in the United States. We estimate that the top ten producers in the nation represent less than a third of the total national market, resulting in highly fragmented markets in some areas. Therefore, depending on the market, we compete with a number of large, national and small, local producers. Since construction aggregates are expensive to transport, the main competitive factor in the construction aggregates business is having a transportation advantage over competitors. Our strategy is to gain a significant market presence in the metropolitan areas that demographers expect will experience the largest absolute growth in population in the future. We have facilities located on waterways and rail lines which substantially increase our geographic market reach through the availability of lower rail and water transportation cost per unit.  The Construction Materials segment sells a small amount of co nstruction aggregates outside of the United States. Nondomestic net sales in the Construction Materials segment were $6,884,000 in 2003, $4,422,000 in 2002 and $5,519,000 in 2001.

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         Our Chemicals segment competes throughout the United States with numerous companies, including some of the nation's largest chemical companies, in the production and sale of our lines of chemicals. The segment competes principally on the basis of quality, price and technical support for our products. The segment also competes for sales to customers outside the United States primarily, in Asia, South America and Europe. The segment's net sales to foreign customers were $30,956,000 in 2003, $27,491,000 in 2002 and $33,051,000 in 2001.

         No material part of the business of either segment of Vulcan is dependent upon one or a few customers, the loss of which would have a materially adverse effect on Vulcan. Our products are sold principally to private industry. Although historically the majority of our construction materials sales are used in public works, relatively insignificant sales are made directly to federal, state, county or municipal governments/agencies. Therefore, we do not believe any material portion of our business is subject to renegotiation of profits or termination of contracts at the election of a state or the federal government.

Research and Development Costs

         We conduct research and development activities for both of our business segments: the Construction Materials' research and development facility is located in Birmingham, Alabama; and the Chemicals' research and development laboratory is located in Wichita, Kansas. In general, our research and development efforts are directed toward new and more efficient uses of our Construction Materials and Chemicals products, as well as the production or processing of our Chemicals products. We spent approximately $1,440,000 in 2003, $1,240,000 in 2002 and $1,202,000 in 2001 on research and development activities for our Construction Materials segment. We spent approximately $4,636,000 in 2003, $4,513,000 in 2002 and $4,725,000 in 2001 on research and development activities for our Chemicals segment.

Environmental Costs and Governmental Regulation

         We estimate that capital expenditures for environmental control facilities in 2004 and 2005 will be approximately $7,000,000 and $6,500,000, respectively, for the Construction Materials segment, and $6,000,000 and $7,000,000, respectively, for the Chemicals segment.

         Certain operations of our Chemicals segment are subject to the Resource Conservation and Recovery Act ("RCRA"). Under the corrective action requirements of RCRA, the Environmental Protection Agency ("EPA") must identify facilities subject to RCRA's hazardous waste permitting provisions where past practices have caused releases of hazardous waste or constituents thereof. The owner of any such facility is then required to conduct a Remedial Facility Investigation ("RFI") defining the nature and extent of any such releases. If the results of the RFI determine that constituent concentrations from any such release exceed action levels specified by the EPA, the facility owner is further required to perform a Corrective Measures Study ("CMS") identifying feasible technological alternatives for addressing these releases. Depending upon the results reported to the EPA in the RFI and CMS, the EPA subsequently may require a Corrective Measures Implementation ("CMI" ) by the facility owner, such as implementation of a cleanup plan developed by the EPA based on the RFI and CMS.

         We expect to incur RFI and CMS costs over the next several years at our Geismar and Wichita chemical manufacturing facilities. For each of these two facilities, the RFI and CMS results will determine whether the EPA subsequently requires a CMI to address releases at the facility, and the scope and cost of any such CMI. With respect to those RFI and CMS costs that currently can be reasonably estimated, we have determined that our accrued reserves are adequate to cover such costs. The total costs which we may ultimately incur in connection with discharging our obligations under RCRA's corrective action requirements, have been estimated and accrued based on information currently available to us; however, there is no assurance that the actual costs, when incurred, will not exceed our current expectations.

         Our Construction Materials operations are subject to federal, state and local laws and regulations relating to the environment and health and safety, particularly noise, water discharge, air quality, dust control, zoning and permitting and all applicable state and federal mining regulations. In 1997, the Environmental Protection Agency ("EPA") promulgated changes to the National Ambient Air Quality Standards. These changes included modifying

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the existing PM10 standards, and introduced a new fine particulate PM2.5 standard (particles smaller than 2.5 microns in diameter). These revised standards will eventually affect many areas of the country by requiring a re-evaluation of whether the areas are in "attainment" with the new standards. However, testing jointly conducted by our leading industry trade association (National Stone, Sand and Gravel Association) and EPA has indicated that crushed stone, sand and gravel operations are not major sources of fine particulate (PM2.5) emissions. As such, we do not currently believe that the costs associated with compliance with the new standards will have a material adverse effect on our operations.

         Vulcan is usually required by state or local regulations or contractual obligations to reclaim its former mining sites. These reclamation liabilities are recorded in our financial statements as a liability at the time the obligation arises. The fair value of such obligations are capitalized and depreciated over the useful life of the owned or leased mining site. To determine the fair value, we estimate the cost of a third party performing the reclamation, adjusted for inflation and risk. All reclamation obligations are reviewed at least annually. See Notes 1 and 17 to the Consolidated Financial Statements on pages 35 and 49, respectively, of the 2003 Annual Report to Shareholders. Reclaimed quarries often have a future use in commercial or residential development or as reservoirs or landfills.

Patents and Trademarks

         As of March 1, 2004, we own, have the right to use, or have made applications for approximately 75 patents which have been granted or are pending in the United States and various other countries, as well as 15 trademarks registered or pending registration in the United States and other countries. These patents, patent applications and trademarks relate to our businesses, primarily, our Chemicals businesses. We believe our patents, patent applications and trademarks are valuable both individually and in the aggregate to our operations, but no single patent, patent application or trademark is material to the conduct of our business as a whole.

Other Information Regarding Vulcan

         Our principal sources of energy are electricity, natural gas and diesel fuel. We do not anticipate any material difficulty in obtaining the required sources of energy for our operations.

         In 2003, the Construction Materials segment employed an average of 7,418 people. The Chemicals segment employed an average of 1,192 people. Our corporate office employed an average of 228 people.

         Our financial results for any individual quarter are not necessarily indicative of results to be expected for the year, due primarily to the effect that weather can have on the sales and production volume of the Construction Materials segment. Normally, the highest sales and earnings of the Construction Materials segment are attained in the third quarter and the lowest are realized in the first quarter. A number of the products produced by the Chemicals segment are used primarily in materials for residential construction. Cyclical swings in the construction industry brought on by the level of interest rates, and public spending on infrastructure can impact our earnings.

         We do not consider our backlog of orders to be material to, or a significant factor in, evaluating and understanding either of our business segments or our business considered as a whole.

Investor Information
        We make available on our website, vulcanmaterials.com, free of charge, copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as well as all Forms 4 and 5 filed by our executive officers and directors, as soon as the filings are made publicly available by the Securities and Exchange Commission ("SEC") on its EDGAR database. In addition to accessing copies of our reports online, you may request a copy of our Annual Report on Form 10-K, including financial statements, by writing to William F. Denson, III, Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.

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         We have a Business Conduct Policy in place for all employees. Additionally, we have adopted a Code of Ethics for our Senior Financial Officers. Copies of the Business Conduct Policy and Senior Financial Officer Code of Ethics are available on our website at vulcanmaterials.com. If we make any amendment to, or waiver of, any provision of the Senior Financial Officer Code of Ethics, we will disclose such information on our website. Our Board of Directors has also adopted Corporate Governance Guidelines and revised the charters of our Audit Committee, Compensation Committee, and Governance Committee to meet all recently enacted SEC and New York Stock Exchange regulatory requirements. All of these documents are available on our website or you may request a copy of such documents in writing to William F. Denson, III, Secretary, Vulcan Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 35242.

Item 2. Properties

Construction Materials

         We have 193 locations in the United States and Mexico in which we engage in the extraction of stone, sand and gravel. The following map shows the locations of our quarries and sand and gravel facilities.



         Our current estimate of approximately 10,567 million tons of zoned and permitted aggregates reserves reflects an increase of 34 million tons from the estimate at the end of 2002. We believe that the quantities of zoned and permitted reserves at our aggregates facilities are sufficient to result in an average life of approximately 48 years at present operating levels. In calculating the average life of 48 years, an assumed annual operating aggregates production rate of 222 million tons was used. See Note 1 to the following table for a description of our

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method employed for estimating the years of life of reserves. This table presents, by regional division, the estimated aggregates reserve life and the percentage aggregates reserves by rock type.

		Percentage Aggregates Reserves by Rock Type
	Estimated Years of Life (1)	Limestone	Granite	Sand & Gravel	Other (2)
By Regional Division:
Mideast	55	7.9%	61.2%	1.4%	29.5%
Midsouth	68	98.6%	-	1.4%	-
Midwest	45	98.3%	-	1.7%	-
Southeast	48	8.0%	92.0%	-	-
Southern Gulf Coast	46	97.9%	-	0.8%	1.3%
Southwest	52	100.0%	-	-	-
Western	21	-	13.8%	85.9%	0.3%
Total	48	53.7%	32.8%	6.2%	7.3%

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(1)

Estimated years of life of aggregates reserves are based on the average annual rate of production of each regional division for the most recent three-year period, except that if reserves are acquired or if production has been reactivated during that period, the estimated years of life are based on the annual rate of production from the date of such acquisition or reactivation. Revisions may be necessitated by such occurrences as changes in zoning laws governing facility properties, changes in aggregates specifications required by major customers and passage of government regulations applicable to aggregates operations. Estimates also are revised when and if additional geological evidence indicates that a revision is necessary. For 2003, the total three-year average annual rate of production was 222 million tons based on the annual rate of production, as follows: 2003 - 223 million tons, 2002 - 215 million tons and 2001 - 228 million tons.

(2)

Other: gabbro, gneiss, diabase, metatuff, quartzite, amphibolite and sandstone.

         The foregoing estimates of reserves are of recoverable stone, sand and gravel of suitable quality for economic extraction, based on drilling and studies by our geologists and engineers, recognizing reasonable economic and operating restraints as to maximum depth of overburden and stone excavation.

         Of the 193 permanent reserve-supplied aggregates production facilities which we operate, 68 (representing 47% of total reserves) are located on owned land, 30 (representing 19% of total reserves) are on land owned in part and leased in part, and 95 (representing 34% of total reserves) are on leased land. While some of our leases run until reserves at the leased sites are exhausted, generally our leases have definite expiration dates which range from 2004 to 2104. Most of our leases have options to extend them well beyond their current terms by renewals at our discretion.

         Due to transportation costs, the market areas for most aggregates facilities in the construction aggregates industry are limited, often consisting of a single metropolitan area or one or more counties or portions thereof when transportation is by truck only. The following table provides specific information regarding our 10 largest active aggregates facilities determined on the basis of the quantity of aggregates reserves. None of the listed aggregates facilities contribute more than 5% to the net sales of our Construction Materials business.

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Location of Quarry (nearest major metropolitan area)	Product	Average Annual Production Rate (millions of tons)	Estimated Years of Life At Average Rate of Production (1)	Nature of Interest	Lease Expiration Date, if Applicable
Playa Del Carmen, Mexico	Limestone	7.4	97.2	Owned	-
McCook (Chicago), Illinois	Limestone	8.0	81.7	Owned	-
Grayson (Atlanta), Georgia	Granite	1.7	Over 100	Owned	-
Rockingham (Charlotte), North Carolina	Granite	3.7	87.2	79% Leased 21% Owned	(2)
Gray Court (Greenville), South Carolina	Granite	0.9	Over 100	Owned	-
Reed (Paducah), Kentucky	Limestone	7.9	26.0	Leased	(3)
Mount Misery (Hanover), Pennsylvania	Limestone	3.4	59.5	Owned	-
Calera (Birmingham), Alabama	Limestone	3.5	49.3	Owned	-
Jack (Richmond), Virginia	Granite	0.9	Over 100	66% Owned 34% Leased	(4)
Kennesaw (Atlanta), Georgia	Granite	3.8	38.4	Owned	-

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(1)	Estimated years of life of aggregates reserves are based on the average annual rate of production of the facility for the most recent three-year period, except that if reserves are acquired or if production has been reactivated during that period, the estimated years of life are based on the annual rate of production from the date of such acquisition or reactivation. Revisions may be necessitated by such occurrences as changes in zoning laws governing facility properties, changes in aggregates specifications required by major customers and passage of government regulations applicable to aggregates operations. Estimates also are revised when and if additional geological evidence indicates that a revision is necessary.
(2)	Leases expire as follows: 35% in 2025 and 65% in 2036.
(3)	Lease does not expire until reserves are exhausted. Surface rights at the Paducah, Kentucky facility are owned.
(4)	Renewable by us through 2059.

Chemicals

         Our Chloralkali business unit operates production facilities in Wichita, Kansas; Geismar, Louisiana; and Port Edwards, Wisconsin. With a few exceptions, the Geismar and Wichita facilities produce the full line of products manufactured by our Chloralkali business unit. The Port Edwards plant produces chlorine, caustic soda, hydrochloric acid, caustic potash and potassium carbonate.

         All of the facilities at Wichita are located on a 2,239-acre tract of land which we own. We hold mineral rights for salt, which is used in production at this facility, under two leases that are automatically renewable from year-to-year unless terminated by us and under several other leases which may be kept in effect so long as production from the underlying properties is continued. In addition, we own 280 acres of salt reserves and 108 acres of water reserves. We maintain an electric power cogeneration facility at the Wichita plant site which is capable of generating approximately one-third of the plant's electricity and two-thirds of the plant's process steam requirements. We have placed this cogeneration facility in reserve and are purchasing most of our requirements for

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electric power from a local utility at favorable rates pursuant to a long-term agreement. Through a separate agreement with this utility, we operate our cogeneration unit upon the request of the utility at various times during the summer peak electricity demand period, selling the cogenerated electricity to the utility at profitable rates.

         The facilities at Geismar are located on a 2,185-acre tract of land which we own. We hold mineral rights for salt, which is used in the production process, under a lease which may be extended, at our option, through 2037. Included in the facilities at the Geismar plant are the operations associated with the joint venture with Mitsui & Co., Ltd. Long-term contracts with the regional utility are in place to supply the electrical power requirements of the Geismar facility including the joint venture plant. In 2003, we put the Geismar cogeneration facility in reserve.

         The plant facilities at Port Edwards are located on a 34-acre tract of land, on which we own the surface rights. Currently, we purchase our salt and electrical power requirements for the Port Edwards facility from regional supply sources.

         Our Chemicals production facilities are designed to permit a high degree of flexibility as to raw material feedstocks, product mix and product ratios; therefore, actual plant production capacities vary according to these factors.

Other Properties

         The headquarters for the corporate staff, the staffs for the Construction Materials, including the Southern and Gulf Coast Division, and Chemicals segments are located in an office complex in Birmingham, Alabama. The majority of this office space is leased through December 31, 2013 and consists of approximately 189,000 square feet. The annual rental for each year in the initial 5 year period, the second 5 year period and the final 5 year period of the lease will be approximately $3.0 million, $3.2 million and $3.4 million, respectively. Additional space is leased in an adjacent building for a term of five years ending 2005. The square footage of this additional space is 6,995 and the base rent starts at $136,402 and increases to $159,393 by the end of the term.

Item 3.  Legal Proceedings

         In the course of our Construction Materials and Chemicals operations, we are subject to occasional governmental proceedings and orders pertaining to occupational safety and health or to protection of the environment, such as proceedings or orders relating to noise abatement, air emissions or water discharges. As part of our continuing program of stewardship in safety, health and environmental matters, we have been able to resolve such proceedings and to comply with such orders without any materially adverse effects on our business.

         We are also a defendant in various lawsuits in the ordinary course of business. It is not possible to determine with precision the probable outcome of, or the amount of liability, if any, under these lawsuits; however, in our opinion, the disposition of these lawsuits will not adversely affect our consolidated financial position to a material extent. In addition to those lawsuits in which we are involved in the ordinary course of business, certain other legal proceedings are more specifically described below. It is our opinion that the disposition of these described lawsuits will not adversely affect our consolidated financial position to a material extent.

         We are involved in a number of cases as a result of our sale of the chemical product perchloroethylene. Among these cases is an action filed in November 1998 by the City of Modesto in state court in California. This claim arose from allegations of contamination of municipal water wells in the City of Modesto and alleges certain claims against us and other chemical manufacturers, distributors and dry cleaners. The trial of this case has been stayed by an appellate court in California while it reviews a decision of the trial court. We have retained local counsel in this case and intend to defend this action vigorously.

        Other perchloroethylene cases involve claims of IBM employees who allege personal injury as a result of workplace exposure at IBM semiconductor manufacturing plants. We are named as a defendant, along with IBM and other chemical manufacturers, in approximately 17 lawsuits involving more than 230 plaintiffs in state court in Westchester County, New York. We are engaged in discussions with plaintiffs' counsel to resolve this matter. No plaintiff's claim in which we are a named defendant are currently set for trial. We have retained local counsel

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in all of these cases and plan to defend the claims vigorously, absent resolution of these claims through discussions with plaintiffs' counsel.

         We have been named as a defendant in multiple lawsuits filed in 2001 and 2002 in state court and federal district court in Louisiana. The lawsuits claim damages for various personal injuries allegedly resulting from releases of chemicals at our Geismar, Louisiana, plant in 2001. To date, 87 lawsuits, involving approximately 3,015 named plaintiffs have been filed. A trial date for the issues of causation and damages for 10 plaintiffs related to the April 2001 release is set for July 1, 2004.

         In September 2001, we were named a defendant in a suit brought by the Illinois Department of Transportation ("IDOT"), in the Circuit Court of Cook County, Chancery Division, Illinois, alleging damage to a 0.9 mile section of Joliet Road that bisects our McCook Quarry in McCook, Illinois, a Chicago suburb. IDOT seeks damages to "repair, restore, and maintain" the road, or in the alternative, judgment for the cost to "improve and maintain other roadways to accommodate" vehicles that previously used the road. The complaint also requests that the court enjoin any McCook Quarry operations that will further damage the road. Discovery is ongoing.

         We have been named as one of numerous defendants in 133 lawsuits in Mississippi by 10,602 plaintiffs, 63 lawsuits in Texas by 1,146 plaintiffs, one case in California with 125 plaintiffs and one case in Louisiana with one plaintiff. The first of these lawsuits was filed in July 1993, and the most recent case was filed in February 2004. Most of the actions are in state court in the state in which it was filed; however, a small number have been removed to Federal district court. All of the plaintiffs in these cases allege personal damages arising from silicosis, or the threat of contracting silicosis, and failure to adequately warn, related to exposure to and use of industrial sand used for abrasive blasting. We produced and marketed industrial sand for blasting from 1988 to 1994, primarily in Texas. We are seeking dismissal from the cases in Mississippi due to the negligible amount of product sold in that state. The cases are in the early stages of d iscovery.

         In November 2002, we received a Directive and Notice to Insurers No. 2002-9 and Directive and Notice to Insurers No. 2002-10 (collectively, the "Directives") from the New Jersey Department of Environmental Protection ("NJDEP"). The NJDEP asserts in its Directives that the respondents named therein, including us, are strictly and jointly and severally liable under state law (specifically, the New Jersey Spill Compensation and Control Act, N.J.S.A 58:10-23.11) with respect to certain environmental conditions that allegedly affect two former asphalt plant sites. These two sites are referred to in the Directives as, respectively, the Roseland site, located in Essex County, New Jersey, and the Rockaway site, located in Morris County, New Jersey, (collectively, the "Sites"). On November 4, 2003, we executed NJDEP Administrative Consent Orders ("ACOs") concerning the two Sites. We agreed under these ACOs to complete the investigation and remediation of each of the Sites, and thereby resolve our liabilities, if any, in regard to the claims asserted by the NJDEP in its Directives. Furthermore, we intend to seek contribution from the former owners and operators of the Sites for all costs we have or will incur under the ACOs. We never operated either of the Sites. Prior to the sale to the current owner during the mid-1990's, the Sites were owned and operated by Tarmac Minerals, Inc. We acquired the stock of Tarmac Minerals, Inc. in October 2000 as part of the Tarmac acquisition.

         Note 12, Other Commitments and Contingent Liabilities on pages 46 and 47 of our 2003 Annual Report to Shareholders is hereby incorporated by reference.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

         Certain of the matters and statements made herein or incorporated by reference into this Annual Report on Form 10-K constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. All such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements reflect our intent, belief or current expectation. Often, forward-looking statements can be identified by the use of words such as "anticipate," "may," "believe," "estimate," "project," "expect," "intend" and words of similar import. In addition to the statements included in this Annual Report on Form 10-K, we may from time to time make other oral or written forward-looking statements. Forward-looking statements are not guarantees of future performance, and actual results could differ materially from those indicated by the forward-looking statements. All forward-looking statements invol ve certain assumptions, risks and uncertainties that could cause actual results to differ materially from those included in or contemplated by the

<PAGE 11>

statements. These assumptions, risks and uncertainties include, but are not limited to, general business conditions including the timing or extent of any recovery of the economy; the timing and amount of federal, state and local funding for infrastructure; the highly competitive nature of each of the industries in which we operate; pricing of our products; weather and other natural phenomena; energy costs; the cost of hydrocarbon-based raw materials; pension and healthcare costs; the risks set forth in Item 3 "Legal Proceedings," Note 12 "Other Commitments and Contingent Liabilities," Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations," Item 7A "Quantitative and Qualitative Disclosures About Market Risk"; and other risks and uncertainties. All such forward-looking statements may be affected by inaccurate assumptions or by known or unknown risks and uncertainties, and therefore the statements may turn out to be wrong. Consequently, we cannot guarantee the accu racy of the forward-looking statements. Actual future results may vary materially from currently anticipated results.

         All forward-looking statements are made as of the date of filing or publication. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Investors are advised, however, to consult any of our future disclosures in filings made with the Securities and Exchange Commission or in any of our press releases.

Item 4.  Submission of Matters to a Vote of Security Holders

         No matter was submitted to our security holders through the solicitation of proxies or otherwise during the fourth quarter of 2003.

Executive Officers of Registrant

         The names, positions and ages, as of March 1, 2004, of our executive officers are as follows:

Name	Position	Age
Donald M. James	Chairman and Chief Executive Officer	55
Guy M. Badgett, III	Senior Vice President-Construction Materials, East	55
William F. Denson, III	Senior Vice President, General Counsel and Secretary	60
Mark E. Tomkins	Senior Vice President, Chief Financial Officer and Treasurer	48
Robert A. Wason IV	Senior Vice President, Corporate Development	52
Ejaz A. Khan	Vice President, Controller and Chief Information Officer	46
Brad C. Rosenwald	President, Chemicals Division	51
Thomas R. Ransdell	President, Southwest Division	61
James W. Smack	President, Western Division	60

         The principal occupations of the executive officers during the past five years are set forth below:

         Donald M. James, was named Chief Executive Officer in February 1997, and was elected Chairman of the Board of Directors in May 1997.

         Guy M. Badgett, III, was elected Senior Vice President, Construction Materials, East in February 1999. He was elected Chairman, Southern Division in May 1997. Prior to that he served as President, Southeast Division.

         William F. Denson, III, was elected Senior Vice President and General Counsel in May 1999. Prior to that date he served as Senior Vice President-Law. He has also served as Secretary since April 1981.

<PAGE 12>

         Mark E. Tomkins was elected Senior Vice President and Chief Financial Officer in January 2001. He was also appointed Treasurer in May 2001. From August 1998 to January 2001 he served as Senior Vice President and Chief Financial Officer of Great Lakes Chemical Company where he was primarily responsible for finance, investor relations, strategic planning and information technology. From August 1996 to August 1998 he served as Vice President, Finance and Business Development Polymers Division of Allied Signal where he was responsible for finance, strategic planning and business development.

         Robert A. Wason IV was elected Senior Vice President, Corporate Development in December 1998.

         Ejaz A. Khan was elected Vice President and Controller in February 1999. Prior to that he served as Controller. He was appointed as Chief Information Officer as well in February 2000.

         Brad C. Rosenwald was appointed President of the Chloralkali Business Unit (now President, Chemicals Division) in January 2002. Prior to that he served as Vice President, Manufacturing of the Chloralkali Business Unit.

         Thomas R. Ransdell has served as President, Southwest Division since 1994.

         James W. Smack was appointed President of Western Division effective in January 1999.

PART II

Item 5.  Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

         Our Common Stock is traded on the New York Stock Exchange (ticker symbol VMC). As of February 27, 2004, the number of shareholders of record was 3,693. The closing price of the Common Stock on the New York Stock Exchange on February 27, 2004, was $47.30. The prices in the following table represent the high and low sales prices for our Common Stock as reported on the New York Stock Exchange and the quarterly dividends declared by our Board of Directors in 2002 and 2003.

	Common Stock Prices		Dividends Declared
2003 First Quarter Second Quarter Third Quarter Fourth Quarter	High $38.75 39.95 42.99 48.60	Low $28.75 29.90 36.20 39.76	$.245 ..245 ..245 ..245
2002 First Quarter Second Quarter Third Quarter Fourth Quarter	High $48.92 49.95 44.35 38.24	Low $44.95 42.46 34.15 32.35	$.235 ..235 ..235 ..235

         Our policy is to pay out a reasonable share of net cash provided by operating activities as dividends, consistent on average with the payout record of past years, and consistent with the goal of maintaining debt ratios within prudent and generally acceptable limits. The future payment of dividends, however, will be within the discretion of our Board of Directors and depends on our profitability, capital requirements, financial condition, growth, business opportunities and other factors which our Board of Directors may deem relevant.

          The information under the heading "Equity Compensation Plan Information" included in our 2004 Proxy Statement is hereby incorporated by reference.

<PAGE 13>

Item 6.  Selected Financial Data

         The selected statement of earnings, per share data and balance sheet data for each of the 5 years ended December 31, 2003, set forth below have been derived from our audited consolidated financial statements. The following data should be read in conjunction with our consolidated financial statements and notes to consolidated financial statements on pages 30 through 33 and 34 through 50, respectively, of our 2003 Annual Report to Shareholders, which under Item 8 hereof are incorporated herein by reference.

	Years ended December 31,
	2003	2002	2001	2000	1999
	(Amounts in millions, except per share data)
Net sales Total revenues	$2,618.8 $2,892.2	$2,405.4 $2,648.1	$2,602.0 $2,865.6	$2,327.3 $2,571.1	$2,179.3 $2,421.4
Earnings from continuing operations before    cumulative effect of accounting changes Gain (loss) on discontinued operations,    net of taxes(1) Cumulative effect of accounting changes(2) Net earnings	$223.5 (9.7) (18.8) $195.0	$196.7 (6.3) (20.5) $169.9	$241.9 (19.2) - - $222.7	$244.9 (25.0) - - $219.9	$238.4 1.3 - - $239.7
Basic - per share:   Earnings from continuing operations before      cumulative effect of accounting changes   Discontinued operations   Cumulative effect of accounting changes   Net earnings	$2.19 (0.09) (0.19) $1.91	$1.93 (0.06) (0.20) $1.67	$2.38 (0.18) - - $2.20	$2.42 (0.24) - - $2.18	$2.36 0.02 - - $2.38
Diluted - per share:   Earnings from continuing operations before      cumulative effect of accounting changes   Discontinued operations   Cumulative effect of accounting changes   Net earnings	$2.18 (0.10) (0.18) $1.90	$1.92 (0.06) (0.20) $1.66	$2.36 (0.19) - - $2.17	$2.40 (0.24) - - $2.16	$2.33 0.02 - - $2.35
Pro forma assuming FAS 143 applied retroactively:   Net earnings   Net earnings per share, basic   Net earnings per share, diluted		$168.4 $1.66 $1.64	$222.2 $2.19 $2.17	$217.5 $2.15 $2.13	$236.7 $2.35 $2.32
Total assets Long-term obligations Shareholders' equity Cash dividends declared per share	$3,636.9 $607.7 $1,802.8 $0.98	$3,448.2 $857.8 $1,697.0 $0.94	$3,413.3 $906.3 $1,604.3 $0.90	$3,250.4 $685.4 $1,471.5 $0.84	$2,839.5 $698.9 $1,323.7 $0.78

________________________________

(1)

In 2003, we completed our exit strategy for the Performance Chemicals business unit. Accordingly, financial results referable to these businesses are reported in discontinued operations. For additional information regarding discontinued operations, see Note 2 to the Consolidated Financial Statements.

(2)

The 2003 accounting change relates to our adoption of FAS 143, "Asset Retirement Obligations." The $18.8 million net-of-tax cumulative effect adjustment represents the impact of our recording asset retirement obligations, at estimated fair value, for which we have legal obligations for land reclamation. The 2002 accounting change relates to our adoption of FAS 142, "Goodwill and Other Intangible Assets." The $20.5 million net-of-tax transition adjustment represents the full impairment of goodwill in the Performance Chemicals reporting unit. For additional information regarding accounting changes, see Note 17 to the Consolidated Financial Statements.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations

         "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 19 through 28 and "Financial Terminology (Unaudited)" on page 51 of our 2003 Annual Report to Shareholders are incorporated herein by reference.

<PAGE 14>

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

         "Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 26 of our 2003 Annual Report to Shareholders is incorporated herein by reference.

Item 8.  Financial Statements and Supplementary Data

         The following information relative to this item is included in our 2003 Annual Report to Shareholders on the pages shown below, which are incorporated herein by reference:

	Page
Consolidated Financial Statements	30-33
Notes to Consolidated Financial Statements	34-50
Management's Responsibility for Financial Reporting and Internal Control	29
Independent Auditors' Report	29
Net Sales, Total Revenues, Net Earnings and Earnings Per Share Quarterly Financial      Data for Each of the 2 Years Ended December 31, 2003 and 2002 (Unaudited) (1)	59

________________________________

(1) In 2003, we completed our exit strategy for the Performance Chemicals business unit. Accordingly, financial results referable to these businesses are reported in discontinued operations. For additional information regarding discontinued operations, see Note 2 to the Consolidated Financial Statements.

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

         None.

Item 9A. Controls and Procedures

         We maintain a system of controls and procedures designed to ensure that information required to be disclosed in reports we file with the SEC is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer, with the participation of other management officials, evaluated the effectiveness of the design and operation of the disclosure controls and procedures as of December 31, 2003. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting the m to material information required to be included in our periodic Securities and Exchange Commission filings. No significant changes were made to our internal controls or other factors that could significantly affect these controls subsequent to the date of this evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART III

Item 10.  Directors and Executive Officers of the Registrant

         On or before April 1, 2004, we will file a definitive proxy statement with the Securities and Exchange Commission pursuant to Regulation 14A (our "2004 Proxy Statement"). The information under the headings "Election of Directors," "Nominees for Election to the Board of Directors," "Directors Continuing in Office," "Board of Directors and Committees - Audit Committee," "Code of Ethics for Senior Financial Officers" and "Section 16(a) Beneficial Ownership Reporting Compliance" included in the 2004 Proxy Statement is incorporated herein by reference.

<PAGE 15>

Item 11.  Executive Compensation

         The information under the headings "Compensation of Directors," "Executive Compensation," "Option Grants in 2003," "Report of the Compensation Committee," "Aggregated Option Exercises in 2003 and 2003 Option Values," "Approval of the Restricted Stock Plan for Nonemployee Directors," "Equity Compensation Plan Information," "Shareholder Return Performance Presentation," "Retirement Income Plan," and "Change of Control Employment Agreements" included in our 2004 Proxy Statement is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

         The information under the headings "Stock Ownership of Certain Beneficial Owners" and "Stock Ownership of Management" and the "Equity Compensation Plans" included in our 2004 Proxy Statement is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions

         None.

Item 14. Principal Accountant Fees and Services

         The information required by this section is incorporated by reference from the information in the section entitled "Principal Auditor Fees and Services" in the 2004 Proxy Statement.

PART IV

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

         (a) (1) Financial Statements

         The following financial statements are included in our 2003 Annual Report to Shareholders on the pages shown below and are incorporated herein by reference:

	Page
Consolidated Statements of Earnings	30
Consolidated Balance Sheets	31
Consolidated Statements of Cash Flows	32
Consolidated Statements of Shareholders' Equity	33
Notes to Consolidated Financial Statements	34-50
Management's Responsibility for Financial Reporting and Internal Control	29
Independent Auditors' Report	29
Net Sales, Total Revenues, Net Earnings and Earnings Per Share Quarterly Financial         Data for Each of the 2 Years Ended December 31, 2003 and 2002 (Unaudited)	59

         (a) (2) Financial Statement Schedules

         The following financial statement schedule for the years ended December 31, 2003, 2002 and 2001 is included in Part IV of this report on the indicated page:

Schedule II Valuation and Qualifying Accounts and Reserves 19

         Other schedules are omitted because of the absence of conditions under which they are required or because the required information is provided in the financial statements or notes thereto.

<PAGE 16>

         Financial statements (and summarized financial information) of 50% or less owned entities accounted for by the equity method have been omitted because they do not, considered individually or in the aggregate, constitute a significant subsidiary.

         (a) (3) Exhibits

         The exhibits required by Item 601 of Regulation S-K, other than Exhibit 12 which is on page 20 of this report, are either incorporated by reference herein or accompany the copies of this report filed with the Securities and Exchange Commission and the New York Stock Exchange. See the Index to Exhibits which are on pages 23 and 24 of this report. The Exhibits listed in the accompanying Index to Exhibits are filed as part of this report.

         (b) Reports on Form 8-K

         During the quarter ended December 31, 2003, we filed the following current report on Form 8-K:

Date of Report	Description
October 28, 2003	Vulcan issued a press release reporting its financial results for the third quarter ended September 30, 2003.

<PAGE 17>

INDEPENDENT AUDITORS' REPORT

Vulcan Materials Company:

We have audited the consolidated financial statements of Vulcan Materials Company and its subsidiary companies as of December 31, 2003, 2002, and 2001 and for the years then ended, and have issued our report thereon dated March 10, 2004 (which report expresses an unqualified opinion and includes an explanatory paragraph related to the adoption of Statement of Financial Accounting Standards (SFAS) No. 143, 142 and 133); such consolidated financial statements and report are included in your 2003 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedules of Vulcan Materials Company and its subsidiary companies, listed in Item 15. These consolidated financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information shown therein.

/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Birmingham, Alabama
March 10, 2004

<PAGE 18>

Schedule II

VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVESFor the Years Ended December 31, 2003, 2002 and 2001
Amounts in Thousands

Column A	Column B	Column C	Column D		Column E		Column F
Description	Balance at Beginning of Period	Additions Charged to Costs and Expenses	Additions Charged to Other Accounts		Deductions		Balance at End      of Period
2003
Accrued Environmental Costs Accrued Reclamation Costs Asset Retirement Obligations Doubtful Receivables Self-Insurance Reserves All Other (7)	$ 10,842 26,000 - - 8,931 22,383 7,238	$ 13,151 - - 5,130 2,949 37,631 3,758	- - - $110,966 - - - -	(3)	$ 2,844 26,000 8,413 3,162 21,205 8,434	(1) (2) (4) (5) (6)	$ 21,149 - - 107,683 8,718 38,809 2,562
2002
Accrued Environmental Costs Accrued Reclamation Costs Doubtful Receivables Self-Insurance Reserves All Other (7)	$ 13,406  26,091  6,903  19,037  8,423	$    345  7,148  4,636  24,760  4,058	- - - - - - -		$ 2,909  7,239  2,608  21,414  5,243	(1) (5) (6)	$ 10,842  26,000  8,931  22,383  7,238
2001
Accrued Environmental Costs Accrued Reclamation Costs Doubtful Receivables Self-Insurance Reserves All Other (7)	$ 13,777  23,963  8,982  19,113  8,848	$ 1,707  8,738  8,184  18,695  4,241	- - - - - - - - -		$ 2,078  6,610  10,263  18,771  4,666	(1) (5) (6)	$ 13,406  26,091  6,903  19,037  8,423

(1)   Expenditures on environmental remediation projects.
(2)   Reversal of pre-FAS 143 reclamation liabilities; liability now included in asset retirement obligations.
(3)   Cumulative catch-up adjustment for adoption of FAS 143 less net up/down revisions to asset
        retirement obligations.
(4)   Expenditures related to settlements of asset retirement obligations.
(5)   Write-offs of uncollected accounts and worthless notes, less recoveries.
(6)   Expenditures on self-insurance reserves.
(7)   Valuation and qualifying accounts and reserves for which additions, deductions and balances are
        individually insignificant.

<PAGE 19>

Exhibit 12

VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Years Ended December 31
Amounts in Thousands

	2003	2002	2001	2000	1999
Fixed charges:    Interest expenses before capitalization       credits    Amortization of financing costs    One-third of rental expense        Total fixed charges	$   56,236  291      20,818  $   77,345	$   57,736  298       23,190  $   81,224	$   63,823  494       24,044  $   88,361	$   53,988  348       21,288  $   75,624	$   52,750  267       20,457  $   73,474
Earnings from continuing operations    before income taxes Minority interest in (earnings) losses of    a consolidated subsidiary Fixed charges Capitalized interest credits Amortization of capitalized interest    Earnings before income taxes as adjusted	$ 311,425  (671) 77,345  (2,116)         630  $ 386,613	$  268,086  (2,486)  81,224  (2,896)          767  $  344,695	$  354,184  (8,483)  88,361  (2,708)           754  $  432,108	$  352,990  (7,843) 75,624  (6,101)          686  $  415,356	$  349,213  54  73,474  (4,445)           693  $  418,989
Ratio of earnings to fixed charges	5.0	4.2	4.9	5.5	5.7

<PAGE 20>

SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 12, 2004.

VULCAN MATERIALS COMPANY

By               Donald M. James
   Chairman and Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
Donald M. James	Chairman, Chief Executive Officer and Director (Principal Executive Officer)	March 12, 2004
Mark E. Tomkins	Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)	March 12, 2004
Ejaz A. Khan	Vice President, Controller and Chief Information Officer (Principal Accounting Officer)	March 12, 2004
The following directors: Philip J. Carroll, Jr. Livio D. DeSimone Phillip W. Farmer H. Allen Franklin Ann McLaughlin Korologos Douglas J. McGregor James V. Napier Donald B. Rice Orin R. Smith Vincent J. Trosino	Director Director Director Director Director Director Director Director Director Director
By              William F. Denson, III               Attorney-in-Fact		March 12, 2004

<PAGE 21>

EXHIBITS


TO


FORM 10-K


Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2003


OF


VULCAN MATERIALS COMPANY


FILED MARCH 12, 2004


Commission file number 1-4033

<PAGE 22>

EXHIBIT INDEX Form 10-K Fiscal Year Ended December 31, 2003
Exhibit (3)(a)	Certificate of Incorporation (Restated 1988) as amended in 1989 and 1999 filed as Exhibit 3(a) to the Company's 1989 Form 10-K Annual Report and Exhibit 3(i) to the Company's 1999 Form 10-K Annual Report.1
Exhibit (3)(b)	By-laws, as restated February 2, 1990, and as last amended October 10, 2003.
Exhibit (4)(a)	Distribution Agreement dated as of May 14, 1991, by and among the Company, Goldman, Sachs & Co., Lehman Brothers and Salomon Brothers Inc., filed as Exhibit 1 to the Form S-3 filed on May 2, 1991 (Registration No. 33-40284).1
Exhibit (4)(b)	Indenture dated as of May 1, 1991, by and between the Company and First Trust of New York (as successor trustee to Morgan Guaranty Trust Company of New York) filed as Exhibit 4 to the Form S-3 on May 2, 1991 (Registration No. 33-40284).1
Exhibit (4)(c)	Senior Debt Indenture between the Company and The Bank of New York as trustee, dated as of August 31, 2001 filed as Exhibit 4.1 to the Company's Registration Statement on Form S-3 filed on September 5, 2001 (Registration No. 333-67586). 1
Exhibit (4)(d)	Subordinated Debt Indenture between the Company and The Bank of New York as trustee, dated August 31, 2001 filed as Exhibit 4.3 to the Company's Registration Statement on Form S-3 filed on September 5, 2001 (Registration No. 333-67586). 1
Exhibit (10)(a)	The Management Incentive Plan of the Company, as amended filed as Exhibit 10(a) to the Company's 2002 Form 10-K Annual Report.1,2
Exhibit (10)(b)	The Unfunded Supplemental Benefit Plan for Salaried Employees filed as Exhibit 10(d) to the Company's 1989 Form 10-K Annual Report.1,2
Exhibit (10)(c)	Amendment to the Unfunded Supplemental Benefit Plan for Salaried Employees filed as Exhibit 10(c) to the Company's 2001 Form 10-K Annual Report.1,2
Exhibit (10)(d)	The Deferred Compensation Plan for Directors Who Are Not Employees of the Company filed as Exhibit 10(d) to the Company's 2001 Form 10-K Annual Report. 1,2
Exhibit (10)(e)	The 1996 Long-Term Incentive Plan of the Company filed as Exhibit 10(h) to the Company's 1995 Form 10-K Annual Report.1,2
Exhibit (10)(f)	The Deferred Stock Plan for Nonemployee Directors of the Company filed as Exhibit 10(f) to the Company's 2001 Form 10-K Annual Report.1,2
Exhibit (10)(g)	The Restricted Stock Plan for Nonemployee Directors of the Company filed as Exhibit 10(g) to the Company's 2001 Form 10-K Annual Report (File No. 1-4033).1,2
Exhibit (10)(h)	Executive Deferred Compensation Plan, as amended filed as Exhibit 10(h) to the Company's 2002 Form 10-K Annual Report.1,2
Exhibit (10)(i)	Change of Control Employment Agreement Form.2
<PAGE 23>
Exhibit (10)(j)	Change of Control Employment Agreement Form filed as Exhibit 10(j) to the Company's 2002 Form 10-K Annual Report.1,2
Exhibit (10)(k)	Executive Incentive Plan of the Company filed as Exhibit (10)(n) to the Company's 2000 Form 10-K Annual Report. 1,2
Exhibit (10)(l)	Supplemental Executive Retirement Agreement filed as Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001. 1,2
Exhibit (10)(m)	Rights Agent Agreement dated October 19, 1998 between Vulcan Materials Company and The Bank of New York, as amended, filed as Exhibit 10(m) to the Company's 2002 Form 10-K Annual Report. 1
Exhibit (12)	Computation of Ratio of Earnings to Fixed Charges for the five years ended December 31, 2003 (set forth on page 20 of this report).
Exhibit (13)	The Company's 2003 Annual Report to Shareholders.
Exhibit (21)	List of the Company's subsidiaries as of December 31, 2003.
Exhibit (23)	Consent of Deloitte & Touche LLP.
Exhibit (24)	Powers of Attorney.
Exhibit (31)(a)	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
Exhibit (31)(b)	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
Exhibit (32)(a)	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
Exhibit (32)(b)	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.

¹Incorporated by reference.
²Management contract or compensatory plan.

<PAGE 24>

EX-3

Exhibit 3(b)
BY-LAWS VULCAN MATERIALS COMPANY (Incorporated under the laws of the State of New Jersey)
Restated: Amended:	February 2, 1990 June 27, 1990 March 27, 1991 February 5, 1992 (eff. 5/11/92) May 11, 1992 December 8, 1992 February 12, 1993 March 5, 1995 February 17, 1996 May 17, 1996 February 14, 1997 February 12, 1999 July 14, 2000 May 11, 2001 July 13, 2001 February 8, 2002 February 14, 2003 October 10, 2003

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

           SECTION 1.1.    Annual Meetings

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

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

           SECTION 1.2.    Special Meetings

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

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

           SECTION 1.3.    Notice and Purpose of Meetings

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

           SECTION 1.4.    Quorum and Adjournments

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

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

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           SECTION 1.5.    Organization

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

           SECTION 1.6.    Voting

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

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

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

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

           SECTION 1.7.    Selection of Inspectors

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

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

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

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

           SECTION 1.8.    Duties of Inspectors

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

ARTICLE II    Directors

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

           (a)    Number, Qualification and Tenure. The business and affairs of the corporation shall be managed by or under the direction of its Board of Directors, consisting of 11 persons. The number may, from time to time, be increased or decreased by resolution adopted by a majority of the entire Board of Directors, but the number shall not be less than nine nor more than 12. Any directorship to be filled by reason of an increase in the number of directors may be filled by the affirmative vote of two-thirds of the directors in office at the time. Directors shall be at least 25 years of age and need not be United States citizens or residents of New Jersey or shareholders of the corporation.

           Any outside director shall retire from the Board of Directors at the annual meeting next following their 70th birthday, regardless of the term for which they might have been elected; provided, however, that current outside directors who continue to serve until the annual meeting next following their 68th birthday shall have the option to retire then. Any outside director who ceases to hold the position with the business or professional organization with which such person was associated when most recently elected a director shall automatically be deemed to have offered his or her resignation as a director of the corporation, and the Director and Management Succession Committee shall make a recommendation to the Board of Directors with respect to such resignation; and, if the deemed offer to resign is

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

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

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

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

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

           SECTION 2.2.    Meetings of the Board of Directors

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

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

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

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

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

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

           SECTION 2.3.    Committees of the Board of Directors

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

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

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

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

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

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

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

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

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

           SECTION 2.6.    Dividends

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

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           SECTION 2.7.    Conflict of Interest

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

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

ARTICLE III    Officers

           SECTION 3.1

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

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

           (c)    Division and Business Unit Officers. The Chief Executive Officer of the corporation may appoint such officers of any division or business unit of the

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

           SECTION 3.2

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

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

           SECTION 3.3.

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

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

           SECTION 3.4.    Chief Executive Officer

           The Chief Executive Officer may execute bonds, mortgages, and bills of sale, assignments, conveyances, and all other contracts, except those required by law to be otherwise signed and executed, or except when the signing and execution thereof when permitted by law shall be

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expressly delegated by the Board of Directors to some other officer or agent of the corporation. The Chief Executive Officer shall be responsible to the Board of Directors for planning and directing the business of the corporation and for initiating and directing those actions essential to its profitable growth and development and shall perform such other duties as may be assigned to him by the Board of Directors.

           SECTION 3.5.    Chief Operating Officer

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

           SECTION 3.6.    President

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

           SECTION 3.7.    Chief Administrative Officer

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

           SECTION 3.8.    Vice Presidents

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

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           SECTION 3.9.    General Counsel

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

           SECTION 3.10.    Associate General Counsel

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

           SECTION 3.11.    Secretary

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

           SECTION 3.12.    Treasurer

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

           SECTION 3.13.    Controller

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

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           SECTION 3.14.    Other Officers

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

           SECTION 3.15.    Voting Corporation's Securities

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

ARTICLE IV    Indemnification of Directors, Officers and Employees

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

           (b)    Anything herein to the contrary notwithstanding, the corporation shall not be obligated under this Article IV to provide indemnification (i) to any bank, trust company, insurance company, partnership or other entity, or any director, officer, employee or agent thereof or (ii) to any other person who is not a

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director, officer or employee of the corporation, in respect of any service by such person or entity, whether at the request of the corporation or by agreement therewith, as investment advisor, actuary, custodian, trustee, fiduciary or consultant to any employee benefit plan.

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

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

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

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

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

ARTICLE V    Certificates of Stock

           SECTION 5.1.    Transfer of Shares

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

           SECTION 5.2.    Transfer Agent and Registrar

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

           SECTION 5.3.    Fixing Record Date

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

           SECTION 5.4.    Lost, Stolen or Destroyed Certificates

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

           (b) Subject to the foregoing, where the owner of shares claims that the certificate representing shares has been lost, destroyed or wrongfully taken, the corporation shall issue a new certificate in place of the original certificate if the owner thereof requests the issue of a new certificate before the corporation has notice that the certificate has been acquired by a bona fide purchaser, makes proof in affidavit form, satisfactory to the Secretary or Assistant Secretary of the corporation and to its transfer agent, of his or her ownership of the shares

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represented by the certificate and that the certificate has been lost, destroyed or wrongfully taken; files an indemnity bond for an open or unspecified amount or if authorized in a specific case by the corporation, for such fixed amount as the chief executive officer, or a Vice President, or the Secretary of the corporation may specify, in such form and with such surety as may be approved by the transfer agent and the Secretary or Assistant Secretary of the corporation, indemnifying the corporation and the transfer agent and registrar of the corporation against all loss, cost and damage which may arise from issuance of a new certificate in place of the original certificate; and satisfies any other reasonable requirements imposed by the corporation or transfer agent. In case of the surrender of the original certificate, in lieu of which a new certificate has been issued, or the surrender of such new certificate, for cancellation, the bond of indemnity given as a condition of the issuance of such new certifi cate may be surrendered.

ARTICLE VI    Miscellaneous

           SECTION 6.l.    Fiscal Year

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

           SECTION 6.2.    Corporate Seal

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

           SECTION 6.3.    Delegation of Authority

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

           SECTION 6.4    Notices

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

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ARTICLE VII    By-Laws and Their Amendments

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

ARTICLE VIII    National Emergency

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

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

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

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

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EX-10

Exhibit 10(i)

FORM OF EMPLOYMENT AGREEMENT

          AGREEMENT by and between Vulcan Materials Company, a New Jersey corporation (the "Company") and (Named Executive - See Schedule A) (the "Executive"), dated as of the ___ day of __________, _____.

          The Board of Directors of the Company (the "Board"), has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive's full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accompl ish these objectives, the Board has caused the Company to enter into this Agreement.

          NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

          1.          Certain Definitions.

          (a)           The "Effective Date" shall mean the first date during the Change of Control Period (as defined in Section 1(b)) on which a Change of Control (as defined in Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive's employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination of employment.

          (b)          The "Change of Control Period" shall mean the period commencing on the date hereof and ending on the third anniversary of the date hereof; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the "Renewal Date"), unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate three years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Company shall give notice to the Executive that the Change of Control Period shall not be so extended.

          2.          Change of Control. For the purpose of this Agreement, a "Change of Control" shall mean:

          (a)          The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or

          (b)          Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered

<PAGE 1>

as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

          (c)          Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or al l or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incum bent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

          (d)          Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

          3.          Employment Period. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the second anniversary of such date (the "Employment Period").

          4.          Terms of Employment.

          (a)          Position and Duties. (i) During the Employment Period, (A) the Executive's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Effective Date and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than 35 miles from such location.

                    (ii)          During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Execu tive's responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company.

          (b)          Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary ("Annual Base Salary"), which shall be paid at a monthly rate, at least equal to twelve times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the

<PAGE 2>

Executive by the Company and its affiliated companies in respect of the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased. As used in this Agreement, the term "affiliated companies" shall include any company controlled by, controlling or under common control with the Company.

                    (ii)          Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the "Annual Bonus") in cash at least equal to the greater of (A) the average of the Executive's bonuses under the Company's Management Incentive Plan, or any comparable bonus under any predecessor or successor plan (the "Bonus Plan") for the last three full fiscal years prior to the Effective Date and (B) the Executive's annual bonus under the Bonus Plan, determined based on the target annual bonus percentage and the Annual Base Salary in effect with respect to the Executive immediately prior to the Effective Date for the fiscal year in which the Effective Date occurs (and, in all cases, annualized in the event that the Executive was not employed by the Company for t he whole of any such fiscal year) (the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus.

                    (iii)          Long-Term Incentives. During the Employment Period, the Executive shall be entitled to participate in all long-term incentive plans, practices, policies and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or if more favorable to the Executive , those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies.

                    (iv)          Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all savings and retirement plans, practices, policies and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies.

                    (v)          Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any t ime during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies.

                    (vi)          Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

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                    (vii)          Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, tax and financial planning services, payment of club dues, and, if applicable, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

                    (viii)          Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its affiliated companies at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

                    (ix)          Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and its affiliated companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

          5.          Termination of Employment.

          (a)          Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Ex ecutive's duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness or injury which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative.

          (b)          Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean:

                    (i)          the willful and continued failure of the Executive to perform substantially the Executive's duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive's duties, or

                    (ii)          the willful engaging by the Executive in illegal conduct which is materially and demonstrably injurious to the Company.

          For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the B oard at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

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          (c)          Good Reason. The Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall mean:

                    (i)          the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

                    (ii)          any failure by the Company to comply with any of the provisions of Section 4(b) of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

                    (iii)          the Company's requiring the Executive to be based at any office or location other than as provided in Section 4(a)(i)(B) hereof or the Company's requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date;

                    (iv)          any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement; or

                    (v)          any failure by the Company to comply with and satisfy Section 11(c) of this Agreement.

For purposes of this Section 5(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive.

          (d)          Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of T ermination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder.

          (e)          Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.

          6.          Obligations of the Company upon Termination.

          (a)          Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive's employment other than for Cause or Disability or the Executive shall terminate employment for Good Reason:

                    (i)          the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts:

<PAGE 5>

                              A.          the sum of (1) the Executive's Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the higher of (I) the Annual Bonus for the full fiscal year in which the Date of Termination occurs, determined based on actual individual and corporate performance through the Date of Termination, and (II) the Recent Annual Bonus (such higher amount being referred to as the "Highest Annual Bonus") and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365, to the extent not theretofore paid and (3) any compensation previously deferred by the Executive, including, without limitation, amounts credited to the "bonus bank" (the "Bonus Bank") pursuant to the Bonus Plan (less any administrative credits included in the Bonus Bank), and any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2), and (3) shall be hereinafter referred to as the "Accrued Obligations"); and

                              B.          the amount equal to the product of (1) three and (2) the sum of (x) the Executive's Annual Base Salary, (y) the Highest Annual Bonus and (z) the aggregate dollar value of the annual long-term incentive awards granted to the Executive as determined in accordance with the Company's policies and procedures for determining annual long-term incentive awards as in effect immediately prior to the Effective Date based on the Executive's Annual Base Salary and the Executive's annual long-term incentive award percentage in effect immediately prior to the Effective Date for the fiscal year in which the Effective Date occurs; and

                              C.          an amount equal to the excess of (a) the actuarial equivalent of the benefit under the Company's qualified defined benefit retirement plan (the "Retirement Plan") (utilizing actuarial assumptions no less favorable to the Executive than those in effect under the Company's Retirement Plan immediately prior to the Effective Date), and the Unfunded Supplemental Benefit Plan for Salaried Employees or its successor plan or any other excess or supplemental retirement plan in which the Executive participates (together, the "SERP") which the Executive would receive if the Executive's employment continued for three years after the Date of Termination assuming for this purpose that all accrued benefits are fully vested, and, assuming that the Executive's compensation in each of the three years is that required by Section 4(b)(i) and Section 4(b)(ii), over (b) the actuarial equivalent of the Executive's actual benefit (paid or payable), if any, under the Retirement Plan and the SERP as of the Date of Termination; and

                              D.          an amount equal to the additional Company matching contributions that would have been made on the Executive's behalf in the Company's Thrift Plan for Salaried Employees or any successor plan (the "Thrift Plan") (assuming continued participation on the same basis as immediately prior to the Effective Date), plus the additional amount of any benefit the Executive would have accrued under the SERP as a result of contribution limitations in the Thrift Plan, which the Executive would receive if the Executive's employment continued for three years after the Date of Termination, assuming for this purpose that the Executive's compensation in each of the three years is that required by Section 4(b)(i) and Section 4(b)(ii) and that the Company's matching contributions are determin ed pursuant to the applicable provisions of the Thrift Plan and the SERP, as in effect during the 12-month period immediately prior to the Effective Date; and

                    (ii)          for three years after the Executive's Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue benefits to the Executive and/or the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Section 4(b)(v) of this Agreement if the Executive's employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families; provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. For purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until three years after the Date of Termination and to have retired on the last day of such period; and

                    (iii)          for three years after the Executive's Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue to provide to the Executive and/or the Executive's family fringe benefits at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Section 4(b)(vii) of this Agreement if the Executive's employment had not been terminated or, if more favorable to the Executive, as in

<PAGE 6>

effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families; and

                    (iv)          upon the Date of Termination, the Executive shall have the right and option to purchase the automobile which the Company was providing to the Executive immediately prior to the Date of Termination in accordance with the Company's practice for retiring employees as in effect immediately prior to the Effective Date; and

                    (v)          the Company shall, at its sole expense as incurred, provide the Executive with outplacement services the scope and provider of which shall be selected by the Executive in his sole discretion, provided that the aggregate cost of such services shall not exceed $50,000; and

                    (vi)          to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits").

          (b)          Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall include, without limitation, and the Executive's estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and affiliated companies to the estates and beneficiaries of peer executives of the Company and s uch affiliated companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive's estate and/or the Executive's beneficiaries, as in effect on the date of the Executive's death with respect to other peer executives of the Company and its affiliated companies and their beneficiaries.

          (c)          Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disab ility, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter generally with respect to other peer executives of the Company and its affiliated companies and their families.

          (d)          Cause; Other than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive (x) his Annual Base Salary through the Date of Termination, (y) the amount of any compensation previously deferred by the Executive, including, without limitation, amounts credited to the Bonus Bank pursuant to the Bonus Plan (less any administrative credits included in the Bonus Bank), and (z) Other Benefits, in each case to the extent theretofore unpaid. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Be nefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination.

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          7.          Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive may qualify, nor, subject to Section 12(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

          8.          Full Settlement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, o r liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").

          9.          Certain Additional Payments by the Company.

          (a)          Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company or its affiliates to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (inclu ding any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 9(a), if it shall be determined that the Executive is entitled to a Gross-Up Payment, but that the Executive, after taking into account the Payments and the Gross-Up Payment, would not receive a net after-tax benefit of at least $50,000 (taking into account both income taxes and any Excise Tax) as compared to the net after-tax proceeds to the Executive resulting from an elimination of the Gross-Up Payment and a reduction of the Payment, in the aggregate, to an amount (the "Reduced Amount") such that the receipt of the Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive a nd the Payments, in the aggregate, shall be reduced to the Reduced Amount.

          (b)          Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Deloitte & Touche LLP or such other certified public accounting firm as may be designated by the Executive (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another nationally recognized accounting firm to make the det erminations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the

<PAGE 8>

calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

          (c)          The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

                    (i)          give the Company any information reasonably requested by the Company relating to such claim,

                    (ii)          take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

                    (iii)          cooperate with the Company in good faith in order effectively to contest such claim, and

                    (iv)          permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdict ion and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other is sue raised by the Internal Revenue Service or any other taxing authority.

          (d)           If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 9(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 9(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance s hall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

<PAGE 9>

          10.          Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive's employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an ass erted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

          11.          Successors.

          (a)          This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives.

          (b)           This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

          (c)          The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

          12.          Miscellaneous.

          (a)          This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

          (b)          All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

          If to the Executive:

                    The most recent address on file at the Company

          If to the Company:

                    Vulcan Materials Company
                    P.O. Box 385014
                    Birmingham, Alabama 35238-5014
                    Attention: General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

          (c)          The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

          (d)          The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

<PAGE 10>

          (e)          The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

          (f)          The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will" and, subject to Section 1(a) hereof, prior to the Effective Date, the Executive's employment and/or this Agreement may be terminated by either the Executive or the Company at any time prior to the Effective Date, in which case the Executive shall have no further rights under this Agreement; provided, that this Agreement may not be terminated by the Company if it is reasonably demonstrated by the Executive that such termination (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control. From and after the Effective Date this Agreement shall s upersede any other agreement between the parties with respect to the subject matter hereof.

          IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

	[Named Executive]
	VULCAN MATERIALS COMPANY By:                                                             Name: Donald M. James Title: Chairman and Chief Executive Officer
Schedule A to Exhibit 10(i)
In accordance with Item 601(a)(4) of Regulation S-K, the following executive entered into an Employment Agreement substantially in the form as Exhibit 10(i). All agreements were substantially identical in all material respects except as to the name of the executive and the date of execution. Following is a list of executives who are party to such an agreement:
Guy M. Badgett, III Richard K. Carnwath Sherrod B. Clarke, Jr. J. Wayne Houston Ejaz A. Khan Ronald G. McAbee Thomas R. Ransdell Bradley C. Rosenwald Daniel F. Sansone Danny R. Shepherd James W. Smack Robert R. Vogel

<PAGE 11>

EX-13

Exhibit (13)

Management's Discussion And Analysis Of Financial Condition And Results Of Operations

Vulcan is the nation's leading producer of construction aggregates, a major producer of asphalt and ready-mixed concrete and a significant chloralkali chemicals producer. We operate principally in North America under two business segments: Construction Materials and Chemicals.

Our Construction Materials segment accounts for approximately 80% of our total net sales. Our principal product - aggregates - is consumed in virtually all types of public and privately funded construction, including highway construction and maintenance, as well as residential and nonresidential construction. Historically, public construction has accounted for more than half of our aggregates demand. In 2003, and for the first time in more than 10 years, public construction accounted for less than half (45%) of our aggregates shipments. Lower spending at the state level on highways and strong housing demand contributed to this end-market shift in our aggregates sales volume. In the future, we expect public construction demand to approximate historical levels by accounting for more than half of our aggregates demand.

Funding for highway construction and maintenance comes from federal, state and local sources, primarily motor fuel taxes with supplements from other taxes and general fund appropriations. Most of the federal receipts are credited to the Highway Trust Fund for right-of-way acquisition, engineering and construction of major highways, including major improvements to existing highways. States obligate these funds for qualifying projects with 80% federal dollars and 20% state dollars up to the limits of a six-year authorization bill and an annual budget appropriation from the U.S. Congress. States' receipts are largely credited to state highway trust funds, many of which are dedicated to highway projects. These funds are used not only to match federal funds but also to build additional roads beyond the federal funding limits. Significant portions are transferred to counties and municipalities to fund their local street maintenance and construction programs.

Customers for our products include heavy construction and paving contractors; residential and commercial building contractors; concrete products manufacturers; state, county and municipal governments; and railroads. From 278 aggregates production facilities and sales yards concentrated mostly in the southern half of the United States, we serve our customers by truck, rail and water distribution networks. Due to the low value to weight ratio, aggregates markets are generally local in nature. Truck delivery accounts for the vast majority of total shipments. Additionally, we produce and sell asphalt and ready-mixed concrete in California, Texas, Tennessee, Arizona and New Mexico.

In 2003, Construction Materials' end markets showed varied levels of strength. Residential construction remained at high levels, while private nonresidential activity remained weak. Public spending on infrastructure, principally highways, was down due in part to state budget deficits and uncertainty about the size and timing of the next six-year federal highway bill to succeed TEA-21. In the first quarter of 2003, aggregates shipments were down 3% versus the first quarter of 2002. However, construction activity strengthened in many of our markets as the year progressed, resulting in record shipments in the second half of the year. Pricing for aggregates was up slightly but offset by a product mix weighted more toward lower-priced products.

In September 2003, prior to the expiration of TEA-21, Congress extended funding for the federal highway program for five months at an annualized level of $31.6 billion through February 29, 2004. This annualized amount approximated the fiscal year 2003 appropriation level. In late January 2004, Congress passed and the President signed the appropriation level for fiscal year 2004 at $33.6 billion. The $2 billion increase should allow state departments of transportation to release highway projects that have been on hold or pending the outcome of the fiscal year 2004 appropriation process. Furthermore, in early February the President released his fiscal year 2005 budget plan that includes a new six-year highway reauthorization amount of approximately $202 billion, up from the $193 billion included in his original proposal. By contrast, in early February the Senate passed a new six-year highway reauthorization bill providing $255 billion, while the House is considering a $298 billion amount for highways. While th e timing and size of the next six-year bill for highways remains uncertain, there appears to be strong evidence the reauthorization level will be a sizable increase from TEA-21.

Our Chemicals segment comprises three production facilities and a network of distribution terminals. From these facilities, chloralkali products are produced and sold into various industrial markets including chemical processing, polymer, refrigerant, foam-blowing, food and pharmaceutical, pulp and paper, and water management. The products produced in the chloralkali process are caustic soda and chlorine in a fixed ratio of 1.1:1. Substantially all caustic soda we produce is sold directly in the merchant market, while most chlorine we produce is used internally as feedstock to produce higher-valued chlorinated organic chemicals. Other products produced and sold include hydrochloric acid and potassium chemicals. Key energy and raw material costs include electricity, natural gas, ethylene and methanol.

In our Chemicals segment, we progressed on several key management objectives during 2003. We completed the divestiture of the Performance Chemicals business unit and, accordingly, its results are reported as discontinued operations. We achieved significantly higher operating efficiencies in our chloralkali plants. The first full year of operation of our new 5CP plant contributed significantly to the segment's improvement in sales and earnings. The 5CP plant produces the feedstock for a non-ozone depleting foam-blowing agent that replaces a product phased out by the Montreal Protocol. Pricing for both caustic soda and chlorine improved in 2003. Volumes for caustic soda, chlorine and certain chlorinated organic products were higher than in 2002 due to a rationalization of some chloralkali industry capacity and a pickup in industrial activity in the second half of the year.

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In the discussion that follows, the results from operations for prior years have been restated to exclude discontinued operations. The comparative analysis is based on net sales and cost of goods sold, which exclude delivery revenues and costs, and is consistent with the basis on which management reviews results of operations.

Results of Operations
2003 vs. 2002
Net sales were a record $2.619 billion in 2003, increasing 9% from 2002. Net earnings were $195.0 million, or $1.90 per diluted share, as compared with $169.9 million, or $1.66 per diluted share in 2002. Earnings from continuing operations before cumulative effect of accounting changes increased 14% from the prior year to $2.18 per diluted share.

Earnings from continuing operations before interest and income taxes increased 13%, or $41.6 million, to $361.0 million in 2003. The earnings improvement resulted mainly from record aggregates shipments in the second half of the year and improved pricing for caustic soda and chlorine. Included in the $41.6 million earnings increase was approximately $20.6 million in gains on sale of excess real estate, offset by an $11.1 million pretax impairment charge reflecting the write-down to fair value for similar parcels and $9.3 million in charges for estimated future groundwater monitoring and remediation costs at our Chemicals plants. Higher pension and healthcare costs and performance-based incentive compensation negatively impacted both segments in 2003.

Operating cash flows less capital expenditures were a record $325.1 million, an increase of 55% from 2002.

During the first quarter of 2003, we adopted Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset Retirement Obligations" (FAS 143), which requires the recording of the estimated fair value of asset retirement obligations when incurred. The implementation of this accounting standard resulted in a one-time, noncash charge to earnings of $0.18 per diluted share. The ongoing operating cost for the year was $10.5 million and is included in cost of goods sold.

Additionally, during the year we completed the divestiture of our Performance Chemicals business unit. The loss on discontinued operations of $9.7 million or $0.10 per diluted share is referable to this business unit.

2002 vs. 2001
Sales volume and earnings in both segments were negatively impacted by economic weakness, particularly in private nonresidential construction and industrial manufacturing. Our 2002 net sales of $2.405 billion were down 8% from 2001's net sales of $2.602 billion. Net earnings were $169.9 million, or $1.66 per diluted share, as compared with net earnings and diluted earnings per share of $222.7 million and $2.17, respectively, in 2001. Earnings from continuing operations before interest and income taxes equaled $319.5 million, down 22% from the prior year's amount of $410.9 million.

In 2002 we adopted SFAS No. 142, "Goodwill and Other Intangible Assets" (FAS 142), resulting in the impairment of Performance Chemicals' goodwill of $20.5 million. The impact of the adoption of FAS 142 was slightly favorable to net earnings as the elimination of goodwill amortization more than offset the goodwill impairment charge.

Construction Materials
2003 vs. 2002
Net sales increased 5% to $2.087 billion in 2003. Record net sales were recorded in the third and fourth quarters as aggregates shipments increased 14% from the second half of 2002. This increase was attributable to improved economic conditions, pent-up demand from wet weather in the Southeast during the first half, and continued strength in residential construction. Full-year aggregates shipments increased 7% to 232.8 million tons. Pricing for aggregates was up slightly, but offset by a product mix weighted more toward lower-priced products. Segment earnings, which are before interest and income taxes, increased $5.5 million from the prior year to $388.7 million. The increased earnings were due to the impact of stronger aggregates volumes offset by the effects of lower asphalt volumes, higher energy-related costs and increased pension and healthcare expenses. This information is summarized below (in millions of dollars):

Construction Materials 2003 vs. 2002
2002 earnings	$383
Aggregates	42
Asphalt	(16)
Increased pension and healthcare costs	(13)
FAS 143 (net of prior-year reclamation costs)	(2)
All other	(5)
2003 earnings	$389

In 2003, we sold $34.2 million of excess real estate properties in California and Arizona. The resulting pretax gain of $20.6 million was included in gain on sale of property, plant and equipment. Additionally, the values of certain similar real estate properties were adjusted to market values, resulting in a pretax impairment charge of $11.1 million; and a pretax impairment charge of $2.9 million referable to the closure of a lime plant near Chicago, Illinois was recorded. These charges were included in impairment of long-lived assets and account for most of this account's increase from 2002.

<PAGE 20>

2002 vs. 2001
Net sales in our Construction Materials segment of $1.981 billion were down 6% from the 2001 record of $2.114 billion. Aggregates shipments of 217.3 million tons decreased 8% from the 2001 level, while the average unit selling price increased approximately 2.5%. The reduction in volume was due mainly to the significant weakness in private nonresidential construction.

Segment earnings of $383.2 million for 2002 declined 4% from the record $400.5 million in 2001 while segment earnings as a percentage of net sales approximated prior year. The shortfall in segment earnings was due primarily to reduced volume, offset in part by improved pricing and the elimination of goodwill amortization. We continued to achieve operating cost reductions at the former Tarmac and CalMat operations. This information is summarized below (in millions of dollars):

Construction Materials 2002 vs. 2001
2001 earnings	$400
Aggregates	(30)
Elimination of goodwill amortization	23
Asphalt	(4)
All other	(6)
2002 earnings	$383

Chemicals
2003 vs. 2002
In 2003, our Chemicals segment reported net sales of $531.9 million compared with $424.8 million in the prior year. The dramatic increase in 2003's net sales was due mainly to improved pricing for caustic soda, chlorine and chlorinated organic products, particularly in the first half of the year when prices compared favorably to the depressed pricing levels experienced in 2002. Volumes for caustic soda, chlorine and certain chlorinated organic products were higher than in 2002 due to a rationalization of some chloralkali industry capacity and a pickup in industrial activity in the second half of the year. Segment earnings improved $36.0 million to a loss of $27.7 million. Segment results exclude the Performance Chemicals business unit sold in 2003. The ramp-up in sales from our 5CP plant contributed to both revenue growth and the improvement in segment results. During the year, our plant operating performance improved, resulting in higher plant operating efficiencies. Operating efficiency, which we defin e as effective available time after scheduled maintenance outages, improved from 89% to 96% in 2003. These gains in segment results were somewhat offset by the effects of higher prices for energy and key raw materials. Additionally, the segment results included $9.3 million of environmental charges for estimated future groundwater monitoring and remediation costs. These costs were reported in other operating costs in the accompanying Consolidated Statements of Earnings. This information is summarized below (in millions of dollars):

Chemicals 2003 vs. 2002
2002 loss	$(64)
Higher caustic, chlorine and chlorinated organic pricing	34
5CP	12
Improved plant operating efficiencies	10
Higher energy and raw materials costs	(13)
Environmental accruals	(9)
All other	2
2003 loss	$(28)

2002 vs. 2001
Net sales for 2002 totaled $424.8 million, down 13% from the 2001 result of $488.4 million. Pricing for caustic soda was down approximately 50% compared with 2001. Continued softness in the industrial sector of the economy resulted in lower pricing and volume for most chlorinated organic products. At a loss of $63.7 million, segment earnings, which are earnings from continuing operations before interest and income taxes, were down significantly from the 2001 earnings of $10.4 million. The 2002 loss included approximately $16 million in higher plant costs due primarily to increased spending for plant reliability, efficiency and maintenance. Our joint venture with Mitsui showed improved results due to increased ethylene dichloride (EDC) sales price, improved plant efficiencies and increased volume for all products. Additionally, we commenced commercial operation of our new 5CP plant. This information is summarized below (in millions of dollars):

Chemicals 2002 vs. 2001
2001 earnings	$10
Lower caustic pricing	(62)
Lower natural gas costs	13
Increased plant costs	(16)
Lower chlorinated organic pricing	(12)
Improved joint venture results	6
All other	(3)
2002 loss	$(64)

Selling, Administrative and General
Selling, administrative and general expenses of $217.1 million in 2003 increased 10% from the 2002 level of $196.9 million. This increase resulted primarily from higher pension and healthcare costs and performance-based incentive compensation. In 2002, selling, administrative and general expenses were down approximately 1% from the 2001 level. This decrease resulted primarily from lower bad debt charges and overhead reduction initiatives in our Chemicals segment.

Impairment of Long-lived Assets
During 2003, we recorded asset impairment losses totaling $15.7 million (Construction Materials $14.5 million; Chemicals $1.2 million) related to our long-lived assets. Included in this impairment loss was the $11.1 million write-down to fair value of four surplus land parcels in California; the write-down of a closed lime plant near Chicago, Illinois for $2.9 million; the write-down to fair value of owned property surrounding our Wichita, Kansas Chemicals facility for $1.2 million; and various smaller write-downs related to operating facilities for $0.5 million. During 2002, we recorded asset impairment losses totaling $4.3 million (Construction Materials $1.1 million; Chemicals $3.2 million) related to our long-lived assets. Included in 2002's impairment loss was the write-down of the methyl chloroform plant at our Geismar, Louisiana Chemicals facility for $3.2 million; the write-down of a fine-grind facility near Houston, Texas for $0.8 million; and the write-down of surplus land in northern Virginia for $0.3 million. There were no impairment losses in 2001. For additional information regarding impairment losses, see Note 4.

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Gain on Sale of PP&E
During 2003, we recorded gains on sale of property, plant and equipment of $27.9 million, an increase of $18.7 million from the prior year. The increase from 2002 was due primarily to gains on sale of excess real estate in California and Arizona of $20.6 million. Other gains recorded in 2003 included those related to the sale of excess or idle equipment. In 2002, gain on sale of property, plant and equipment was up $2.4 million from the 2001 level due primarily to the gain realized from the sale of the corporate aircraft. As none of these asset sales met the definition of a "component of an entity" as described in SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets" (FAS 144), the gains were reported in continuing operations.

Other Operating Costs
Other operating costs increased $12.0 million to $25.5 million in 2003. The increase was due primarily to $9.3 million of charges for estimated future groundwater monitoring and remediation costs at our Chemicals facilities. In 2002, other operating costs were down $19.3 million from the 2001 level, due primarily to the elimination of goodwill amortization pursuant to the adoption of FAS 142.

Minority Interest
Minority interest income of $0.7 million and $2.5 million in 2003 and 2002, respectively, was referable to the minority partner's share of the loss for our Chloralkali joint venture. We are the Chloralkali joint venture's majority partner with a 51% interest and, as such, our consolidated financial statements include the accounts of this joint venture. The $1.8 million decrease in minority interest income was due mostly to stronger demand in Asia for EDC, a strengthening industrial economy in the United States in the second half of the year and improved plant operations resulting in lower plant costs.

Other Income
In 2003, other income, net of other charges, was $7.2 million compared with the 2002 amount of $6.0 million. The increase was due mostly to higher rent income from properties in California. In 2002, other income was $3.7 million higher than the prior year due primarily to settlement proceeds for land acquired by the City of Wilmington, California through eminent domain.

Interest Expense
Interest expense was $54.1 million in 2003 compared with the 2002 amount of $54.8 million. Excluding capitalized interest credits, gross interest expense of $56.2 million decreased $1.5 million due to slightly lower average short-term borrowing and lower long-term debt. In 2002, interest expense decreased $6.3 million from the 2001 level. This decrease reflected a reduction in interest-bearing debt outstanding during the period.

Income Taxes
Our effective tax rate was 28.2% for the year, up from 26.6% in 2002. The higher rate resulted principally from a higher state tax rate. The effective rate decreased in 2002 from the 2001 rate of 31.7%. This reduction reflected the favorable effect of statutory depletion, a lower state tax rate and the impact of the elimination of goodwill amortization.

Discontinued Operations
In 2003, we completed our exit strategy for the Performance Chemicals business unit. Accordingly, financial results referable to these businesses are reported in discontinued operations. In separate transactions in the first and second quarters, the municipal wastewater treatment business was sold as well as the Dalton and Smyrna, Georgia plants. In the third quarter, the sale of the industrial water treatment and pulp and paper businesses was completed. In the fourth quarter, the remaining Columbus, Georgia production plant was sold. The collective impact from these transactions resulted in a gain on disposal of $6.3 million, offset by a pretax operating loss of $22.4 million. Net of income taxes, the loss on discontinued operations totaled $9.7 million in 2003. For additional information regarding discontinued operations, see Note 2.

Accounting Changes
On January 1, 2003, we adopted FAS 143, "Accounting for Asset Retirement Obligations." FAS 143 applies to legal obligations associated with the retirement of long-lived assets resulting from the acquisition, construction, development and/or normal use of the underlying assets. With the adoption of FAS 143, we recorded, at estimated fair value, all asset retirement obligations for which we have legal obligations for land reclamation. This accounting change resulted in a charge to net earnings of $18.8 million or $0.18 per diluted share.

On January 1, 2002, we adopted FAS 142, "Goodwill and Other Intangible Assets," and, accordingly, discontinued goodwill amortization and recognized goodwill impairment in the Performance Chemicals reporting unit. Goodwill in the Performance Chemicals reporting unit of $30.2 million was fully impaired, resulting in a net-of-tax cumulative effect of accounting change that reduced 2002 earnings by $20.5 million or $0.20 per diluted share.

For additional information regarding the accounting changes, see Note 17.

2004 Outlook
Construction Materials
The outlook for 2004 in our Construction Materials markets is cautiously optimistic given the strong demand and shipments in the second half of 2003. Residential construction has been robust for some time and we anticipate the pace in 2004 to approximate the level of activity in 2003. Highway construction is projected to increase modestly in 2004 while we anticipate an increase in private nonresidential construction late in the year. As a result, we expect aggregates shipments and pricing in our markets to increase modestly.

State spending for highways has been impacted by state budget deficits and a lack of clarity surrounding the amount and timing of reauthorization of TEA-21. The approval of a new six-year highway bill coupled with a general increase in economic activity would enhance planning and budgeting for new highway projects.

Chemicals
Demand in the industrial manufacturing sector of the economy (as measured by the industrial production index) remained relatively flat from December 2001 (five-year low) through the first half of 2003. However, the second half of 2003 showed signs of recovery as the index increased for six months in a row. Going into 2004, we anticipate demand for key chlorinated organic products to increase as the strength experienced in late 2003 continues. Pricing for caustic soda is projected to decline from 2003 while chlorine should be relatively even with 2003 pricing.

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We remain focused on improving plant operating performance and lowering controllable costs at our plants. Costs for energy and key raw materials are expected to increase in 2004. Higher natural gas costs will be offset somewhat by our hedging program.

Overall
Operating cash flows are expected to be strong in 2004. We will retire approximately $250 million of debt maturing in 2004 with cash generated from the business. We will also increase dividends to shareholders for the 12th consecutive year.

In 2004, we expect capital expenditures, which exclude business acquisitions, around the $230 million level, which approximates 80%-90% of projected depreciation, depletion and amortization. Construction Materials' capital projects, particularly those in California, will be a priority as we invest the majority of our new capital in that segment.

Liquidity and Capital Resources
We believe that we have sufficient financial resources, including cash provided by operating activities and open lines of credit, to meet business requirements in the future including capital expenditures, dividend payments, potential future acquisitions and debt service obligations.

Cash Flows
Net cash provided by operating activities equaled $519.0 million in 2003, up $61.0 million from the 2002 level due primarily to higher earnings, liquidation of Performance Chemicals' working capital and the timing of cash payments to suppliers. Net operating cash provided by the Construction Materials segment decreased $18.6 million to $466.9 million, while net operating cash provided by the Chemicals segment increased $79.1 million to $83.1 million.

Net cash used for investing activities of $126.0 million in 2003 decreased $142.9 million from the 2002 level due to lower capital and acquisition spending and increased sales of fixed assets. Cash expenditures for property, plant and equipment, excluding acquisitions, equaled $193.9 million in 2003, which was $54.9 million below the 2002 level. Cash spending for acquisitions, including amounts referable to working capital and other items, totaled $3.5 million compared with $43.4 million in 2002. Proceeds from sale of property, plant and equipment of $81.7 million increased $55.8 million from 2002 due primarily to the disposition of our Performance Chemicals business unit and the sale of excess real estate in California and Arizona.

We used $147.1 million of cash for financing activities during 2003. We retired debt obligations totaling $50.1 million and paid $99.6 million in dividends from available cash. During 2002 we used $119.3 million of cash for financing activities. We used available cash to repay $23.8 million of short-term borrowings and debt and to retire early $7.4 million of long-term notes. Additionally, we paid dividends of $95.4 million during the year from available cash.

Our policy is to pay out a reasonable share of net cash provided by operating activities as dividends, consistent on average with the payout record of past years, as well as with the goal of maintaining debt ratios within prudent and generally acceptable limits.

Working Capital
Working capital, the excess of current assets over current liabilities, totaled $507.3 million at December 31, 2003, up $15.3 million from the 2002 level. The 2003 increase resulted primarily from an increase in cash items of $250.9 million, offset in part by the reclassification from long-term debt of $243.0 million of five-year notes issued in 1999, due on April 1, 2004, and certain accrued liabilities. We expect to pay these notes upon maturity using available cash balances. We have $350.0 million in unused bank lines of credit, which serve as liquidity support for commercial paper outstanding. Working capital totaled $492.0 million at December 31, 2002, up $106.5 million from the 2001 level resulting from a $69.9 million increase in cash and a reduction in federal income tax liability, partially offset by an increase in current debt of $17.8 million. This compares with an increase of $263.2 million in 2001, primarily attributable to a reduction in notes payable of $226.5 million due to the conversion of short-term debt to long-term debt.

The current ratio decreased to 1.9 at year-end 2003, compared with 2.7 for 2002 and 2.1 for 2001. The 2003 decrease in the current ratio resulted primarily from the above-mentioned reclassification of $243.0 million of notes, while the 2002 increase was due primarily to an increase in cash and cash equivalents and a decrease in current liabilities.

Capital Expenditures
Capital expenditures, which exclude business acquisitions, totaled $200.1 million in 2003, down $49.5 million from the 2002 level of $249.6 million. As explained on page 51, we classify our capital expenditures into three categories based on the predominant purpose of the project. In 2003, profit-adding projects of $84.8 million accounted for the majority of the $164.9 million spending in the Construction Materials segment. Capital expenditures in the Chemicals segment totaled $35.2 million, with replacement projects accounting for the majority.

Commitments for capital expenditures were $27.7 million at December 31, 2003. We expect to fund these commitments using internally generated cash flow.

Acquisitions
In 2003, the combined purchase prices of acquisitions amounted to $3.5 million, down $39.9 million from the prior year. Acquisitions completed during 2003 included the addition of an aggregates production facility in Kentucky and a sales yard in Texas. The 2002 acquisitions included the addition of five aggregates production facilities in Alabama, Illinois and Tennessee and five sales yards in Mississippi, Tennessee and Texas.

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Short-term Borrowings and Investments
Net short-term borrowings and investments at December 31 consisted of the following (in thousands of dollars):

	2003	2002	2001
Short-term investments:
Other marketable securities	$408,139	$170,728	$86,678
Short-term borrowings:
Bank borrowings	$29,000	$37,255	$43,879
Net short-term investments	$379,139	$133,473	$42,799

We were a net short-term investor throughout 2003 and ended the year in a short-term investing position. Bank borrowing and other notes payable reached a maximum of $37.3 million and amounted to $29.0 million at year end. The entire year-end balance was attributable to financing by the Chloralkali joint venture. Combined commercial paper and bank borrowing in 2002 reached a peak of $43.9 million and amounted to $37.3 million at year end. Comparable 2001 combined commercial paper and bank borrowing peaked at $306.7 million and amounted to $43.9 million at year end.

Our policy is to maintain committed credit facilities at least equal to our outstanding commercial paper. Unsecured bank lines of credit totaling $350 million were maintained at the end of 2003, none of which was in use. In addition, the Chloralkali joint venture had an uncommitted bank credit facility in the amount of $40 million available at year-end 2003, of which $29.0 million was drawn.

Our commercial paper is rated A-1/P-1 by Standard & Poor's and Moody's Investors Service, Inc. (Moody's), respectively.

Current Maturities
Current maturities of long-term debt as of December 31 are summarized below (in thousands of dollars):

	2003	2002	2001
5.75% 5-year notes issued 1999	$243,000	$     -	$     -
Private placement notes	-	35,000	2,205
Medium-term notes	5,000	5,000	5,000
Tax-exempt bonds	-	-	8,800
Other notes	1,721	1,641	1,259
Total	$249,721	$41,641	$17,264

Maturity dates for our current maturities as of December 31, 2003 are as follows: April 1, 2004 - $243.0 million, September 11, 2004 - $5.0 million and various dates for the remaining $1.7 million. We expect to retire this debt using available cash.

Long-term Obligations
Long-term obligations and measures as of December 31 are summarized below (amounts in thousands, except percentages):

	2003	2002	2001
Long-term obligations:
Long-term debt	$607,654	$857,757	$906,299
Total long-term obligations	$607,654	$857,757	$906,299
Long-term capital:
Long-term debt	$607,654	$857,757	$906,299
Deferred income taxes	338,913	345,181	318,545
All other noncurrent liabilities	252,518	157,930	144,499
Shareholders' equity	1,802,836	1,696,986	1,604,274
Total long-term capital	$3,001,921	$3,057,854	$2,973,617
Long-term obligations as a percent of:
Long-term capital	20.2%	28.1%	30.5%
Shareholders' equity	33.7%	50.5%	56.5%

During 2003, total long-term obligations decreased by $250.1 million to $607.7 million, compared with a net reduction of $48.5 million in 2002. These reductions resulted primarily from the reclassification of debt from long-term to current maturities in the amounts of $249.7 million in 2003 and $41.6 million in 2002. The 2002 reduction also included the early retirement of $7.4 million of long-term debt. The reclassifications are reflected as payments of short-term debt in the accompanying Consolidated Statements of Cash Flows in the years payments are made. During the three-year period ended December 31, 2003, long-term obligations decreased cumulatively by $77.7 million from the $685.4 million outstanding at December 31, 2000. At year end, our long-term borrowings reflected weighted-average interest rates of 6.41% in 2003, 6.24% in 2002 and 6.29% in 2001.

During the same three-year period, shareholders' equity, net of dividends of $286.0 million, increased by $331.3 million to $1.803 billion.

In the future, the ratio of total debt to total capital will depend upon specific investment and financing decisions. Nonetheless, management believes our cash-generating capability, combined with our financial strength and business diversification, can comfortably support a ratio of 30% to 35%. The actual ratio at the end of 2003 was 33.0%, down from 35.6% at the end of 2002. We have made acquisitions from time to time and will continue to pursue attractive investment opportunities. These acquisitions could be funded by using internally generated cash flow, incurring debt or issuing equity instruments.

In January 2002, we reduced our outstanding long-term debt by purchasing $7.0 million of our $250.0 million five-year notes (5.75% coupon rate, maturing in April 2004) at 103.5% of par value. Additionally, in January and February 2002, respectively, the Company exercised call options to retire two fixed-rate bond issues: (1) $3.0 million of 7.50% coupon bonds maturing in 2011 and (2) $5.8 million of 6.375% coupon bonds maturing in 2012.

In February 2001, we issued $240.0 million of five-year senior unsecured notes due February 2006 with a coupon of 6.40%. We used some of the proceeds from the sale of the notes to fund the acquisition of our partner's interests in the Crescent Market Companies. The remaining proceeds from the sale of the notes were used to retire commercial paper indebtedness and for general corporate purposes.

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The $94.6 million increase in 2003 for all other noncurrent liabilities (as noted in the preceding table) was attributable to the adoption of FAS 143 and the resulting recording of asset retirement obligations that totaled $107.7 million as of December 31, 2003. For additional information regarding the adoption of FAS 143 and asset retirement obligations, see Note 17.

Standard & Poor's and Moody's rate our public long-term debt at the A+/A1 level, respectively. Standard & Poor's has assigned a stable outlook to its rating while Moody's outlook is negative.

Contractual Obligations and Contingent Credit Facilities
Our obligations to make future payments under contracts as of December 31, 2003 are summarized in the table below (in millions of dollars):

	Payments Due by Year
	Note Reference	Total	2004	2005-2006	2007-2008	Thereafter
Cash Contractual Obligations
Short-term debt:
Principal payments		$     29.0	$  29.0	$     -	$    -	$    -
Interest payments		0.4	0.4	-	-	-
Long-term debt:
Principal payments	Note 6	854.9	249.8	276.0	34.0	295.1
Interest payments		179.5	46.0	69.3	41.1	23.1
Operating leases	Note 7	108.2	20.8	33.3	21.0	33.1
Mineral royalties	Note 12	77.4	9.2	12.8	9.9	45.5
Unconditional purchase obligations:
Capital	Note 12	27.7	27.7	-	-	-
Noncapital*	Note 12	149.3	41.0	51.5	15.5	41.3
Total cash contractual obligations		$1,426.4	$423.9	$442.9	$121.5	$438.1
* Noncapital unconditional purchase obligations relate primarily to transportation and electrical contracts.

In 2004, we estimate cash requirements for income taxes at $72.2 million. Additionally, we estimate 2004 cash contributions for the benefit plans at $4.0 million for pension plans and $4.3 million for postretirement plans.

We have a number of contracts containing commitments or contingent obligations that are not material to our earnings. These contracts are discrete in nature, and it is unlikely that the various contingencies contained within the contracts would be triggered by a common event. The future payments under these contracts are not included in the table set forth above.

Our contingent credit facilities existing as of December 31, 2003 are summarized in the table below (in millions of dollars):

	Amount and Year of Expiration
	Total Facilities	2004	2005-2006	2007-2008	Thereafter
Contingent Credit Facilities
Lines of credit	$390.0	$240.0	$   -	$150.0	$   -
Standby letters of credit	26.4	26.4	-	-	-
Total contingent credit facilities	$416.4	$266.4	$   -	$150.0	$   -

Bank lines of credit amounted to $390.0 million, of which $240.0 million expires in 2004 and $150.0 million in 2007. Only $29.0 million of the lines of credit was in use at the end of 2003. We expect to renew the one-year credit lines expiring in 2004 in full, and continue to maintain the $150.0 million maturing in 2007. Virtually all standby letters of credit are renewable annually at the option of the beneficiary.

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

Our standby letters of credit as of December 31, 2003 are summarized in the table below (in millions of dollars):

	Amount	Term	Maturity
Standby Letters of Credit
Risk management requirement for insurance claims	$18.0	One year	Renewable annually
Payment surety required by utilities	5.1	One year	Renewable annually
Contractual reclamation/restoration requirements	3.3	One year	Renewable annually
Total standby letters of credit	$26.4

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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, such as financing or unconsolidated variable interest entities, that either have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in our financial condition, revenues or expenses, results of our operations, liquidity, capital expenditures or capital resources.

Common Stock
During 2003, 2002 and 2001, we did not purchase any shares of our common stock. Previously acquired shares are being held for general corporate purposes, including distributions under long-term incentive plans. Our decisions to purchase shares of our common stock are made based on valuation and price, our liquidity and debt level, and our actual and projected needs for cash for investment projects and regular dividends. The amount, if any, of future share purchases will be determined by management from time to time based upon various factors, including those listed above.

Shares held in treasury at year end are shown below:

	2003	2002	2001
Number	37,894,479	38,148,071	38,384,750
Average cost	$15.17	$15.13	$15.08

The number of shares remaining under the current purchase authorization of the Board of Directors was 8,473,988 as of December 31, 2003.

Market Risk
We are exposed to certain market risks arising from transactions that are entered into in the normal course of business. In order to manage or reduce this market risk, we utilize derivative financial instruments. To date, we have used commodity swap and option contracts to reduce our exposure to fluctuations in prices for natural gas. The fair values of these contracts were as follows: December 31, 2003 - $4.2 million favorable; December 31, 2002 -$3.9 million favorable; and December 31, 2001 - $13.3 million unfavorable. As a result of a hypothetical 10% reduction in the price of natural gas, we would experience a potential decline in the fair value of the underlying commodity swap and option contracts based on the fair value at December 31, 2003 of approximately $1.1 million.

We are exposed to interest rate risk due to our various long-term debt instruments. Substantially all this debt is at fixed rates; therefore, a decline in interest rates would result in an increase in the fair market value of the liability. At times, we use interest rate swap agreements to manage this risk. In November 2003, we entered into an interest rate swap agreement with a counterparty in the stated (notional) amount of $50 million. Under this agreement, we pay a variable London Interbank Offered Rate (LIBOR) plus a fixed spread and receive a fixed rate of interest of 6.40% from the counterparty. The six-month LIBOR rates approximated 1.22% at both November 3, 2003 and December 31, 2003. The interest rate swap agreement is scheduled to terminate February 1, 2006 coinciding with the maturity of our 6.40% five-year notes issued in 2001 in the amount of $240 million. The realized gains and losses related to the swap agreement are reflected in interest expense concurrent with the hedged interest payments o n the debt. At December 31, 2003, the estimated fair value of our interest rate swap agreement reflected projected proceeds of $0.3 million.

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

At December 31, 2003, the estimated fair market value of our debt instruments was $925.0 million as compared to a book value of $857.4 million. The effect of a hypothetical decline in interest rates of 1% would increase the fair market value of the liability by approximately $24.3 million.

We are exposed to certain economic risks related to the costs of our pension and other postretirement benefit plans. These economic risks include changes in the discount rate for high-quality bonds, the expected return on plan assets, the rate of compensation increase for salaried employees and the rate of increase in the per capita cost of covered healthcare benefits. The impact of a change in these assumptions on our annual pension and other postretirement benefits costs is discussed in greater detail within the Critical Accounting Policies section of this annual report on pages 27 through 28.

New Accounting Standards
In May 2003, the Financial Accounting Standards Board (FASB) issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity" (FAS 150). FAS 150 clarified the accounting for certain financial instruments with characteristics of both liabilities and equity and required that those instruments be classified as liabilities in statements of financial position. Previously, many of these financial instruments were classified as equity. FAS 150 was effective for all financial instruments entered into or modified after May 31, 2003 and was otherwise effective at the beginning of the first interim period after June 15, 2003. However, on October 29, 2003 the FASB voted to indefinitely defer the application of paragraph 9 of FAS 150 as it relates to certain mandatorily redeemable noncontrolling interests. With the exception of paragraph 9, we adopted the provisions of FAS 150 with no material impact on our consolidated financial statements.

In December 2003, the FASB issued SFAS No. 132 (revised 2003), "Employers' Disclosures about Pensions and Other Postretirement Benefits, an amendment of FASB Statements No. 87, 88, and 106" (FAS 132 revised 2003). FAS 132 (revised 2003) requires disclosures about defined benefit pension plans' and other postretirement benefit plans' assets, obligations, cash flows and net cost, and retains a number of disclosures required by SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." The annual disclosure provisions of FAS 132 (revised 2003) are effective for this fiscal year ended December 31, 2003. We will adopt the interim disclosure provisions of FAS 132 (revised 2003) beginning in the first quarter of 2004.

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Critical Accounting Policies
We follow certain significant accounting policies when preparing our consolidated financial statements. A summary of these policies is included in Note 1 to the consolidated financial statements on pages 34 through 37. The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that affect reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities at the date of the financial statements. We evaluate these estimates and judgments on an ongoing basis and base our estimates on historical experience, current conditions and various other assumptions that are believed to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and con tingencies. Our actual results may differ from these estimates.

We believe the following critical accounting policies require the most significant judgments and estimates used in the preparation of our consolidated financial statements.

Reclamation Costs
As a result of our January 1, 2003 adoption of FAS 143, we changed our accounting policy for reclamation costs. We consider this revised policy a critical accounting policy due to the significant level of estimates, assumptions and judgments and its potentially significant impact on our consolidated financial statements.

Reclamation costs resulting from the normal use of long-lived assets are recorded as incurred only if there is a legal obligation to incur these costs upon retirement of the assets. Additionally, reclamation costs resulting from the normal use under a mineral lease are recorded as incurred only if there is a legal obligation to incur these costs upon expiration of the lease. The obligation, which cannot be reduced by estimated offsetting cash flows, is recorded at fair value as a liability at the obligating event date and is accreted through charges to operating expenses. This fair value is also capitalized as part of the carrying amount of the underlying asset and depreciated over the estimated useful life of the asset. If the obligation is settled for other than the carrying amount of the liability, a gain or loss is recognized on settlement.

In determining the fair value of the obligation, we estimate the cost for a third party to perform the legally required reclamation tasks including a reasonable profit margin. This cost is then increased for both future estimated inflation and an estimated market risk premium related to the estimated years to settlement. Once calculated, this cost is then discounted to fair value using present value techniques and a credit-adjusted risk-free rate commensurate with the estimated years to settlement.

In estimating the settlement date, we evaluate the current facts and conditions to determine the most likely settlement date. If this evaluation identifies alternative estimated settlement dates, we use a weighted-average settlement date considering the probabilities of each alternative.

Reclamation obligations are reviewed at least annually for a revision to the cost or a change in the estimated settlement date. Additionally, reclamation obligations are reviewed in the period that a triggering event occurs that would result in either a revision to the cost or a change in the estimated settlement date. Examples of a triggering change in the cost would include a new reclamation law or amendment of an existing mineral lease. Examples of a triggering change in the estimated settlement date would include the acquisition of additional reserves or the closure of a facility.

Pension and Other Postretirement Benefits
We follow the guidance of SFAS No. 87, "Employers' Accounting for Pensions," and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," when accounting for pension and postretirement benefits. Under these accounting standards, assumptions are made regarding the valuation of benefit obligations and the performance of plan assets. Delayed recognition of differences between actual results and expected or estimated results is a guiding principle of these standards. This delayed recognition of actual results allows for a smoothed recognition of changes in benefit obligations and plan performance over the working lives of the employees who benefit under the plans. The primary assumptions are as follows:

- Discount Rate - The discount rate is used in calculating the present value of benefits, which is based on projections of benefit payments to be made in the future.

- Expected Return on Plan Assets - We project the future return on plan assets based principally on prior performance and our expectations for future returns for the types of investments held by the plan as well as the expected long-term asset allocation of the plan. These projected returns reduce the recorded net benefit costs.

- Rate of Compensation Increase (for salary-related plans) - For salary-related plans we project employees' annual pay increases, which are used to project employees' pension benefits at retirement.

- Rate of Increase in the Per Capita Cost of Covered Healthcare Benefits - We project the expected increases in the cost of covered healthcare benefits.

During 2003, we made changes to our assumptions related to the discount rate, the rate of compensation increase (for salary-related plans) and the rate of increase in the per capita cost of covered healthcare benefits. We consult with our actuaries when selecting each of these assumptions.

In selecting the discount rate, we consider fixed-income security yields, specifically high-quality bonds. At December 31, 2003, we decreased the discount rate for our plans from 6.75% to 6.25% as a result of decreasing yields for long-term, high-quality bonds.

In estimating the expected return on plan assets, we consider past performance and future expectations for the types of investments held by the plan as well as the expected long-term allocation of plan assets to these investments. At December 31, 2003, we made no change in the expected 8.25% return on plan assets.

In projecting the rate of compensation increase, we consider past experience in light of movements in inflation rates. At December 31, 2003, we decreased the assumed inflation component of the rate of compensation increase from 4.0% to 2.8% for our pension plans.

In selecting the rate of increase in the per capita cost of covered healthcare benefits, we consider past performance and forecasts of future healthcare cost trends. At December 31, 2003, we increased our previously assumed rate of increase in the per capita cost of covered healthcare benefits. The new assumed rates of increase are 10% for 2004 and 2005, then decreasing 1% per year until reaching 5% in 2010, remaining level thereafter. The previously assumed rate was 8% for 2003 decreasing 1% per year until reaching 5% in 2006, remaining level thereafter. This change, combined with the reduction in the discount rate as well as other actuarial gains and losses, led to an actuarial loss in 2003 of $30.6 million in the postretirement plans. In addition, we expect these changes will result in an increase of approximately $5.0 million to the net periodic postretirement benefit cost in 2004.

<PAGE 27>

A variance in the assumptions listed above would have an impact on the projected benefit obligations, the accrued other postretirement benefit liabilities, and the annual net periodic pension and other postretirement benefit cost. The following table reflects the sensitivities associated with a hypothetical change in certain assumptions (in millions of dollars):

	(Favorable) Unfavorable
	0.5% Increase		0.5% Decrease
	Increase (Decrease) in Benefit Obligation	Increase (Decrease) in Benefit Cost	Increase (Decrease) in Benefit Obligation	Increase (Decrease) in Benefit Cost
Actuarial Assumptions
Discount rate:
Pension	$(30.2)	$(1.7)	$33.6	$1.9
Other postretirement benefits	(4.3)	(0.3)	4.7	0.3
Expected return on plan assets	not applicable	(2.4)	not applicable	2.4
Rate of compensation increase (for salary-related plans)	10.3	1.6	(9.4)	(1.5)
Rate of increase in the per capita cost of covered healthcare benefits	4.8	0.5	(4.6)	(0.4)

For the year ended December 31, 2003, the pension plans' fair value of assets increased from $388.9 million to $478.6 million due primarily to our employer contributions to the plans and gains in the equity and bond markets. Earnings on assets above or below the expected return are reflected in the calculation of pension expense through the calculation of the "market-related value," which recognizes changes in fair value averaged on a systematic basis over five years. This change combined with the other actuarial assumptions for discount rate, expected return on plan assets and rate of compensation increase, as well as other actuarial gains and losses, leads us to expect that the net periodic pension expense of $8.0 million recognized in 2003 will be a periodic pension expense of approximately $9.4 million in 2004.

In addition to normal cash payments made for pension benefits under the unfunded plan, estimated at $1.0 million, we expect to make contributions to the funded pension plans relating to fiscal year 2004. The amount of these contributions has been estimated at $3.0 million.

For additional information regarding pension and other postretirement benefits, see Note 10.

Environmental Compliance
We incur environmental compliance costs, particularly in our Chemicals segment. These costs include maintenance and operating costs for pollution control facilities, the cost of ongoing monitoring programs, the cost of remediation efforts and other similar costs. Environmental expenditures that pertain to current operations or that relate to future revenues are expensed or capitalized consistent with our capitalization policy. Expenditures that relate to an existing condition caused by past operations that do not contribute to future revenues are expensed. Costs associated with environmental assessments and remediation efforts are accrued when management determines that a liability is probable and the cost can be reasonably estimated. Accrual amounts may be based on engineering cost estimations, recommendations of third-party consultants, or costs associated with past compliance efforts that were similar in nature and scope. Our Safety, Health and Environmental Affairs Management Committee reviews and ap proves cost estimates, including key assumptions, for accruing environmental compliance costs; however, a number of factors, including adverse agency rulings and encountering unanticipated conditions as remediation efforts progress, may cause actual results to differ materially from accrued costs.

Claims and Litigation
We are involved with claims and litigation, including items covered under our self-insurance program. We use both internal and outside legal counsel to assess the probability of loss. We establish an accrual when the claims and litigation represent a probable loss and the cost can be reasonably estimated. Additionally, estimated legal fees associated with these matters are accrued at the time such claims are made. Significant judgment is used in determining the timing and amount of the accruals for probable losses, and the actual liability could differ materially from the accrued amounts.

Impairment of Long-lived Assets
We evaluate the carrying value of long-lived assets, including intangible assets subject to amortization, when events and circumstances warrant such a review. The carrying value of long-lived assets is considered impaired when the anticipated undiscounted cash flows from such assets are less than their carrying value. In that event, a loss is recognized equal to the amount by which the carrying value exceeds the fair value of the long-lived assets. Our estimate of net future cash flows is based on historical experience and assumptions of future trends, which may be different from the actual results.

Special Note Regarding Forward-looking Information
Our disclosures and analysis in this report contain forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. Specifically, forward-looking statements are set forth in the "Looking Forward" section of the Letter to Shareholders and the section of Management's Discussion and Analysis entitled "2004 Outlook." Whenever possible, we have identified these forward-looking statements by words such as "anticipate," "may," "believe," "estimate," "project," "expect," "intend" and words of similar import. Forward-looking statements involve certain assumptions, risks and uncertainties that could cause actual results to differ materially from those projected. These assumptions, risks and uncertainties include, but are not limited to, those associated with general business conditions including the timing or extent of any recovery of the economy; the timing and amount of federal, state and local funding for infrastructure; the highly competitive nature of the in dustries in which we operate; pricing; weather and other natural phenomena; energy costs; costs of hydrocarbon-based raw materials; increasing pension and healthcare costs; and other risks and uncertainties. We undertake no obligation to publicly update any forward-looking statements, as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our future filings with the Securities and Exchange Commission or in any of our press releases.

<PAGE 28>

Management's Responsibility for Financial Reporting and Internal Control

The Shareholders of Vulcan Materials Company:
Vulcan's management acknowledges and accepts its responsibility for all the information contained in the financial statements and other sections of this report. The statements were prepared in conformity with accounting principles generally accepted in the United States of America appropriate in the circumstances, and based on our knowledge they fairly present in all material respects our Company's financial position, results of operations and cash flows for the periods shown. The financial statements necessarily reflect our informed judgments and estimates of the expected outcome of numerous current events and transactions.

Our Company maintains an internal control structure that based on our knowledge provides reasonable assurance that our Company's financial statements, books and records accurately reflect our Company's financial condition, results of operations and cash flows, and that our Company's assets are safeguarded from loss or unauthorized use. This internal control structure includes well-defined and well-communicated policies and procedures; organizational structures that provide for appropriate separations of responsibilities; high standards applied in the selection and training of management personnel; and adequate procedures for properly assessing and applying accounting principles, including careful consideration of the accuracy and appropriateness of all significant accounting estimates. Vulcan also has an internal audit function that continually reviews compliance with established policies and procedures.

Our Company's independent auditors, Deloitte & Touche LLP, consider the internal control structure as a part of their audits of our Company's financial statements and provide an independent opinion as to the fairness of the presentation of those statements. Their report is presented below.

Your Board of Directors pursues its oversight role for the financial statements and internal control structure in major part through the Audit Committee, which is composed of five outside directors. In addition, the full Board regularly reviews detailed management reports covering all aspects of the Company's financial affairs. The Audit Committee meets periodically with management, the independent auditors and the internal auditors to review the work of each and to ensure that each is properly discharging its responsibilities. To ensure independence, the Audit Committee also meets on these matters with the internal and independent auditors without the presence of management representatives.

/s/Mark E. Tomkins Mark E. Tomkins Senior Vice President, Chief Financial Officer and Treasurer	/s/Ejaz A. Khan Ejaz A. Khan Vice President, Controller and Chief Information Officer
March 10, 2004

Independent Auditors' Report

The Shareholders of Vulcan Materials Company:
We have audited the accompanying consolidated balance sheets of Vulcan Materials Company and its subsidiary companies as of December 31, 2003, 2002 and 2001, and the related consolidated statements of earnings, shareholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Vulcan Materials Company and its subsidiary companies at December 31, 2003, 2002 and 2001, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 17 to the consolidated financial statements, effective January 1, 2003, the Company changed its method of accounting for reclamation costs to conform to Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations." Effective January 1, 2002, the Company changed its method of accounting for goodwill to conform to Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." Effective January 1, 2001, the Company changed its method of accounting for derivative instruments to conform to Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities."

/s/Deloitte & Touche LLP
Deloitte & Touche LLP
Birmingham, Alabama
March 10, 2004

<PAGE 29>

Consolidated Statements of Earnings
Vulcan Materials Company and Subsidiary Companies

For the years ended December 31	2003	2002	2001
Amounts and shares in thousands, except per share data
Net sales	$2,618,823	$2,405,444	$2,602,046
Delivery revenues	273,363	242,607	263,586
Total revenues	2,892,186	2,648,051	2,865,632
Cost of goods sold	2,035,349	1,888,973	1,977,994
Delivery costs	273,363	242,607	263,586
Cost of revenues	2,308,712	2,131,580	2,241,580
Gross profit	583,474	516,471	624,052
Selling, administrative and general expenses	217,096	196,921	197,951
Impairment of long-lived assets	15,709	4,276	-
Gain on sale of property, plant and equipment, net	27,900	9,212	6,830
Other operating costs	25,453	13,478	32,792
Minority interest in losses of a consolidated subsidiary	671	2,486	8,483
Other income, net	7,230	5,960	2,251
Earnings from continuing operations before interest and income taxes	361,017	319,454	410,873
Interest income	4,528	3,473	4,425
Interest expense	54,120	54,841	61,115
Earnings from continuing operations before income taxes	311,425	268,086	354,183
Provision for income taxes
Current	55,252	36,253	76,492
Deferred	32,719	35,174	35,832
Total provision for income taxes	87,971	71,427	112,324
Earnings from continuing operations before cumulative    effect of accounting changes	223,454	196,659	241,859
Discontinued operations
Loss from discontinued operations	(22,398)	(10,426)	(30,130)
Gain on disposal of discontinued operations	6,257	-	-
Income tax benefit	6,450	4,180	10,951
Loss on discontinued operations, net of income taxes	(9,691)	(6,246)	(19,179)
Cumulative effect of accounting changes, net of income taxes	(18,811)	(20,537)	-
Net earnings	$194,952	$169,876	$222,680
Basic earnings per share:
Earnings from continuing operations before cumulative       effect of accounting changes	$2.19	$1.93	$2.38
Discontinued operations	$(0.09)	$(0.06)	$(0.18)
Cumulative effect of accounting changes	$(0.19)	$(0.20)	$-
Net earnings per share	$1.91	$1.67	$2.20
Diluted earnings per share:
Earnings from continuing operations before cumulative       effect of accounting changes	$2.18	$1.92	$2.36
Discontinued operations	$(0.10)	$(0.06)	$(0.19)
Cumulative effect of accounting changes	$(0.18)	$(0.20)	$-
Net earnings per share	$1.90	$1.66	$2.17
Dividends per share	$0.98	$0.94	$0.90
Weighted-average common shares outstanding	101,849	101,709	101,445
Weighted-average common shares outstanding, assuming dilution	102,710	102,515	102,497
Pro forma assuming FAS 143 applied retroactively:
Net earnings		$168,396	$222,190
Net earnings per share (basic)		$1.66	$2.19
Net earnings per share (diluted)		$1.64	$2.17
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

<PAGE 30>

Consolidated Balance Sheets
Vulcan Materials Company and Subsidiary Companies

As of December 31	2003	2002	2001
Amounts and shares in thousands, except per share data
Assets
Current assets
Cash and cash equivalents	$416,689	$170,728	$100,802
Medium-term investments	4,974	-	-
Accounts and notes receivable:
Customers, less allowance for doubtful accounts:          2003 $8,718; 2002 $8,931; 2001 $6,903	345,040	306,581	333,639
Other	14,913	25,545	6,424
Inventories	219,376	239,586	228,415
Deferred income taxes	34,358	37,698	53,040
Prepaid expenses	14,892	9,550	7,632
Total current assets	1,050,242	789,688	729,952
Investments and long-term receivables	21,111	15,964	13,352
Property, plant and equipment, net	1,892,648	1,976,053	2,000,030
Goodwill	579,817	575,791	588,562
Deferred charges and other assets	93,042	90,725	81,360
Total	$3,636,860	$3,448,221	$3,413,256
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt	$249,721	$41,641	$17,264
Notes payable	29,000	37,298	43,879
Trade payables and accruals	129,361	122,053	153,619
Accrued salaries and wages	42,261	41,145	44,138
Accrued interest	14,314	14,505	15,020
Accrued self-insurance reserve	28,439	15,578	14,100
Other accrued liabilities	49,856	25,489	56,475
Total current liabilities	542,952	297,709	344,495
Long-term debt	607,654	857,757	906,299
Deferred income taxes	338,913	345,181	318,545
Deferred management incentive and other compensation	45,950	39,952	36,997
Other postretirement benefits	64,373	61,228	58,189
Asset retirement obligations	107,683	-	-
Other noncurrent liabilities	34,512	56,750	49,313
Total liabilities	1,742,037	1,658,577	1,713,838
Minority interest in a consolidated subsidiary	91,987	92,658	95,144
Other commitments and contingent liabilities (Note 12)
Shareholders' equity
Common stock, $1 par value; 139,705 shares issued       as of 2003, 2002 and 2001	139,705	139,705	139,705
Capital in excess of par value	49,664	41,555	35,638
Retained earnings	2,185,839	2,090,319	2,015,809
Accumulated other comprehensive income (loss)	2,649	2,438	(8,083)
Total	2,377,857	2,274,017	2,183,069
Less cost of stock in treasury	575,021	577,031	578,795
Total shareholders' equity	1,802,836	1,696,986	1,604,274
Total	$3,636,860	$3,448,221	$3,413,256
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

<PAGE 31>

Consolidated Statements of Cash Flows
Vulcan Materials Company and Subsidiary Companies

For the years ended December 31	2003	2002	2001
Amounts in thousands
Operating Activities
Net earnings	$194,952	$169,876	$222,680
Adjustments to reconcile net earnings to net cash    provided by operating activities:
Depreciation, depletion, accretion and amortization	277,091	267,676	278,209
Net (gain) loss on disposal of property, plant and equipment	(22,931)	4,418	(5,872)
Cumulative effect of accounting changes	18,811	20,537	-
(Increase) decrease in assets before effects of business acquisitions:
Accounts and notes receivable	(28,891)	26,465	43,168
Inventories	20,609	(7,545)	(15,628)
Deferred income taxes	3,341	15,342	(8,383)
Prepaid expenses	(5,342)	(1,918)	6,786
Customer long-term receivables	100	(91)	(117)
Deferred charges and other assets	(20,650)	(11,227)	(10,702)
Increase (decrease) in liabilities before effects of business acquisitions:
Accrued interest and income taxes	22,343	(16,261)	9,836
Trade payables and other accruals	23,378	(52,370)	(41,148)
Deferred income taxes	5,516	29,647	43,292
Other noncurrent liabilities	26,561	10,946	(12,894)
Other, net	4,158	2,548	2,839
Net cash provided by operating activities	519,046	458,043	512,066
Investing Activities
Purchases of property, plant and equipment	(193,923)	(248,778)	(286,854)
Payment for businesses acquired, net of acquired cash	(3,543)	(43,445)	(138,794)
Increase in medium-term investments	(4,974)	-	-
Proceeds from sale of property, plant and equipment	81,700	25,888	38,990
Change in investments and long-term receivables	(5,247)	(2,521)	337
Net cash used for investing activities	(125,987)	(268,856)	(386,321)
Financing Activities
Net payments - commercial paper and bank lines of credit	(8,298)	(6,582)	(226,450)
Payment of short-term debt	(41,593)	(17,264)	(6,765)
Payment of long-term debt	(245)	(7,427)	-
Proceeds from issuance of long-term debt	-	-	238,560
Dividends paid	(99,580)	(95,384)	(91,080)
Proceeds from exercise of stock options	5,116	4,443	5,550
Other, net	(2,498)	2,953	(34)
Net cash used for financing activities	(147,098)	(119,261)	(80,219)
Net increase in cash and cash equivalents	245,961	69,926	45,526
Cash and cash equivalents at beginning of year	170,728	100,802	55,276
Cash and cash equivalents at end of year	$416,689	$170,728	$100,802
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

<PAGE 32>

Consolidated Statements of Shareholders' Equity
Vulcan Materials Company and Subsidiary Companies

For the years ended December 31	2003		2002		2001
Amounts and shares in thousands, except per share data	Shares	Amount	Shares	Amount	Shares	Amount
Common stock, $1 par value
Authorized: 480,000 shares in 2003, 2002 and 2001
Issued at beginning of year	139,705	$139,705	139,705	$139,705	139,705	$139,705
Issued at end of year	139,705	139,705	139,705	139,705	139,705	139,705
Capital in excess of par value
Balance at beginning of year		41,555		35,638		28,359
Distributions under stock-based incentive      plans, net of tax benefit		8,109		5,917		7,279
Balance at end of year		49,664		41,555		35,638
Retained earnings
Balance at beginning of year		2,090,319		2,015,809		1,884,269
Net earnings		194,952		169,876		222,680
Cash dividends on common stock		(99,580)		(95,384)		(91,080)
Other		148		18		(60)
Balance at end of year		2,185,839		2,090,319		2,015,809
Accumulated other comprehensive income   (loss), net of taxes
Fair value adjustment to cash flow hedges:
Balance at beginning of year		2,438		(8,083)		-
Cumulative effect of accounting change		-		-		3,828
Fair value adjustment to cash flow hedges,         net of reclassification adjustment		211		10,521		(11,911)
Balance at end of year		2,649		2,438		(8,083)
Common stock held in treasury
Balance at beginning of year	(38,148)	(577,031)	(38,385)	(578,795)	(38,661)	(580,837)
Distributions under stock-based incentive plans	254	2,010	237	1,764	276	2,042
Balance at end of year	(37,894)	(575,021)	(38,148)	(577,031)	(38,385)	(578,795)
Total		$1,802,836		$1,696,986		$1,604,274
Reconciliation of comprehensive income:
Net earnings		$194,952		$169,876		$222,680
Other comprehensive income (loss)		211		10,521		(8,083)
Total comprehensive income		$195,163		$180,397		$214,597
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

<PAGE 33>

Notes to Consolidated Financial Statements

note 1
Summary of Significant Accounting Policies

Nature of Operations
Vulcan Materials Company (the "Company," "Vulcan," "we," "our"), a New Jersey corporation, is the nation's foremost producer of construction aggregates; primarily crushed stone, sand and gravel. We are also a significant producer of chemicals, producing chloralkali and other industrial chemicals.

Due to the divestiture of our Chemicals segment's Performance Chemicals business unit as presented in Note 2, the operating results of these businesses have been presented as discontinued operations in the accompanying Consolidated Statements of Earnings. Assets and liabilities of our discontinued operations were not considered material for separate presentation in the accompanying Consolidated Balance Sheets.

Principles of Consolidation
The consolidated financial statements include the accounts of Vulcan Materials Company and all our majority or wholly owned subsidiary companies. All significant intercompany transactions and accounts have been eliminated in consolidation. Investments in which we have ownership interests of 20% to 50% are accounted for by the equity method.

Cash Equivalents
We classify as cash equivalents all highly liquid securities with a maturity of three months or less at the time of purchase. Other marketable securities with a maturity of more than three months, but not more than one year, at the time of purchase are classified as medium-term investments.

Accounts and Notes Receivable
Accounts and notes receivable from customers result from our extending credit to trade customers for the purchase of our products. The terms generally provide for payment within 30 days of being invoiced. On occasion, when necessary to conform to regional industry practices, we sell product under extended payment terms, which may result in either secured or unsecured short-term notes; or, on occasion, notes with durations of less than one year are taken in settlement of existing accounts receivable. Other accounts and notes receivable result from short-term transactions (less than one year) other than the sale of our products, such as interest receivable; insurance claims; freight claims; tax refund claims; bid deposits; rents receivable; etc. Receivables are aged and appropriate allowances for doubtful accounts and bad debt expense are recorded.

Inventories
Inventories and supplies are stated at the lower of cost or market. We use the last-in, first-out (LIFO) method of valuation for most of our inventories because it results in a better matching of costs with revenues. Such costs include raw materials, direct labor and production overhead. Substantially all operating supplies are carried at average cost.

Property, Plant and Equipment
Property, plant and equipment are carried at cost less allowances for accumulated depreciation, depletion and amortization. The cost of properties held under capital leases is equal to the lower of the net present value of the minimum lease payments or the fair value of the leased property at the inception of the lease.

Repairs and maintenance are charged to operating expenses. Renewals and betterments that add materially to the utility or useful lives of property, plant and equipment are capitalized.

Depreciation, Depletion, Accretion and Amortization
Depreciation is computed by the straight-line method at rates based upon the estimated service lives (ranging from 3 to 30 years) of the various classes of assets, which include machinery and equipment, buildings and land improvements. Amortization of capitalized leases is included with depreciation expense.

Cost depletion on depletable quarry land is computed by the unit-of-production method based on estimated recoverable units.

Accretion reflects the period-to-period increase in the carrying amount for the liability of asset retirement obligations. It is computed using the same credit-adjusted risk-free rate used to initially measure the liability at fair value.

Leaseholds are amortized over varying periods not in excess of applicable lease terms.

Goodwill
Goodwill represents the excess of the cost of net assets acquired in business combinations over their fair value. Prior to 2002, goodwill was amortized on a straight-line basis over periods ranging from 15 to 30 years. Starting in 2002, goodwill was no longer amortized but reviewed for impairment annually, or more frequently if certain indicators arise. Additional disclosures regarding our adoption of Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets" (FAS 142), are presented in Note 17.

Fair Value of Financial Instruments
The carrying values of our cash equivalents, accounts and notes receivable, trade payables, accrued expenses and notes payable approximate their fair values because of the short-term nature of these instruments. Additional fair value disclosures for derivative instruments and interest-bearing debt are presented in Notes 5 and 6, respectively.

Derivative Instruments
We use derivative instruments (primarily commodity swap and option contracts) to manage volatility related to natural gas prices, and interest rate swap agreements to better manage interest rate risks. We do not use derivative financial instruments for speculative or trading purposes. Additional disclosures regarding our derivative financial instruments are presented in Note 5.

Impairment of Long-lived Assets Excluding Goodwill
We evaluate the carrying value of long-lived assets, including intangible assets subject to amortization, when events and circumstances warrant such a review. The carrying value of long-lived assets is considered impaired when the anticipated undiscounted cash flows from such assets are less than their carrying value. In that event, a loss is recognized equal to the amount by which the carrying value exceeds the fair value of the long-lived assets. We periodically review the appropriateness of the estimated useful lives of our long-lived assets.

Revenue Recognition
Revenue is recognized at the time the sale price is fixed, the product's title is transferred to the buyer and collectibility of the sales proceeds is reasonably assured. Total revenues include sales of products to customers, net of any discounts, and third-party delivery costs billed to customers.

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Other Costs
Costs are charged to earnings as incurred for the start-up of new plants and for normal recurring costs of mineral exploration, removal of overburden from active mineral deposits, and research and development. Research and development costs for continuing operations totaled $6,076,000 in 2003, $5,753,000 in 2002 and $5,927,000 in 2001.

Stock-based Compensation
For the years ended December 31, 2003, 2002 and 2001, we utilized three types of stock-based employee compensation - deferred stock units, stock options and performance share awards - all of which are described more fully in Note 11. We account for these plans under the intrinsic value recognition and measurement principles of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25), and related interpretations. Compensation expense for the deferred stock unit awards is recognized in net earnings ratably over their 10-year maximum vesting life based on the market value of our underlying common stock on the date of grant. There is usually no compensation expense recognized in net earnings for the stock options, as all options granted had an exercise price equal to the market value of our underlying common stock on the date of grant. However, in 2003 we modified the terms of select stock options for certain terminated employees resulting in expense recognition of $156 ,000. Performance share unit awards were granted in 2003 and cliff vest in three years. Compensation expense for these awards is recognized in net earnings over their three-year life based on internal performance measures along with changes in the market value of our common stock and total shareholder return versus a preselected comparison group. The pro forma effect on net earnings and earnings per share if we had applied the fair value recognition provision of SFAS No. 123, "Accounting for Stock-based Compensation" (FAS 123), to stock-based employee compensation for the years ended December 31 is illustrated below (amounts in thousands, except per share data):

	2003	2002	2001
Net earnings, as reported	$194,952	$169,876	$222,680
Add: Total stock-based employee compensation expense   included in reported net earnings under intrinsic value   based method for all awards, net of related tax effects	2,630	576	234
Deduct: Total stock-based employee compensation   expense determined under fair value based method for   all awards, net of related tax effects	(7,128)	(5,442)	(4,461)
Pro forma net earnings	$190,454	$165,010	$218,453
Earnings per share:
Basic - as reported	$1.91	$1.67	$2.20
Basic - pro forma	$1.87	$1.62	$2.15
Diluted - as reported	$1.90	$1.66	$2.17
Diluted - pro forma	$1.85	$1.61	$2.13

Reclamation Costs
As a result of our January 1, 2003 adoption of SFAS No. 143, "Accounting for Asset Retirement Obligations" (FAS 143), we changed our accounting policy for reclamation costs.

Reclamation costs resulting from the normal use of long-lived assets are recorded as incurred only if there is a legal obligation to incur these costs upon retirement of the assets. Additionally, reclamation costs resulting from the normal use under a mineral lease are recorded as incurred only if there is a legal obligation to incur these costs upon expiration of the lease. The obligation, which cannot be reduced by estimated offsetting cash flows, is recorded at fair value as a liability at the obligating event date and is accreted through charges to operating expenses. This fair value is also capitalized as part of the carrying amount of the underlying asset and depreciated over the estimated useful life of the asset. If the obligation is settled for other than the carrying amount of the liability, a gain or loss is recognized on settlement.

In determining the fair value of the obligation, we estimate the cost for a third party to perform the legally required reclamation tasks including a reasonable profit margin. This cost is then increased for both future estimated inflation and an estimated market risk premium related to the estimated years to settlement. Once calculated, this cost is then discounted to fair value using present value techniques and a credit-adjusted risk-free rate commensurate with the estimated years to settlement.

In estimating the settlement date, we evaluate the current facts and conditions to determine the most likely settlement date. If this evaluation identifies alternative estimated settlement dates, we use a weighted-average settlement date considering the probabilities of each alternative.

Reclamation obligations are reviewed at least annually for a revision to the cost or a change in the estimated settlement date. Additionally, reclamation obligations are reviewed in the period that a triggering event occurs that would result in either a revision to the cost or a change in the estimated settlement date. Examples of a triggering change in the cost would include a new reclamation law or amendment of an existing mineral lease. Examples of a triggering change in the estimated settlement date would include the acquisition of additional reserves or the closure of a facility.

Pension and Other Postretirement Benefits
We follow the guidance of SFAS No. 87, "Employers' Accounting for Pensions" (FAS 87), and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," when accounting for pension and postretirement benefits. Under these accounting standards, assumptions are made regarding the valuation of benefit obligations and the performance of plan assets. Delayed recognition of differences between actual results and expected or estimated results is a guiding principle of these standards. This delayed recognition of actual results allows for a smoothed recognition of changes in benefit obligations and plan performance over the working lives of the employees who benefit under the plans. The primary assumptions are as follows:

- Discount Rate - The discount rate is used in calculating the present value of benefits, which is based on projections of benefit payments to be made in the future.

<PAGE 35>

- Expected Return on Plan Assets - We project the future return on plan assets based principally on prior performance and our expectations for future returns for the types of investments held by the plan as well as the expected long-term asset allocation of the plan. These projected returns reduce the recorded net benefit costs.

- Rate of Compensation Increase (for salary-related plans) - For salary-related plans we project employees' annual pay increases, which are used to project employees' pension benefits at retirement.

- Rate of Increase in the Per Capita Cost of Covered Healthcare Benefits - We project the expected increases in the cost of covered healthcare benefits.

For additional information regarding pension and other postretirement benefits, see Note 10.

Insurance
We are self-insured for losses related to workers' compensation up to $2,000,000 per occurrence, and automotive and general/product liability up to $3,000,000 per occurrence. We have excess coverage on a per occurrence basis beyond these deductible levels. Losses under these self-insurance programs are accrued based upon our estimates of the liability for claims using certain actuarial assumptions from the insurance industry and based on our experience.

Environmental Compliance
We incur environmental compliance costs, particularly in our Chemicals segment. These costs include maintenance and operating costs for pollution control facilities, the cost of ongoing monitoring programs, the cost of remediation efforts and other similar costs. Environmental expenditures that pertain to current operations or that relate to future revenues are expensed or capitalized consistent with our capitalization policy. Expenditures that relate to an existing condition caused by past operations that do not contribute to future revenues are expensed. Costs associated with environmental assessments and remediation efforts are accrued when management determines that a liability is probable and the cost can be reasonably estimated. Accrual amounts may be based on engineering cost estimations, recommendations of third-party consultants, or costs associated with past compliance efforts that were similar in nature and scope. Our Safety, Health and Environmental Affairs Management Committee reviews and ap proves cost estimates, including key assumptions, for accruing environmental compliance costs; however, a number of factors, including adverse agency rulings and encountering unanticipated conditions as remediation efforts progress, may cause actual results to differ materially from accrued costs.

Claims and Litigation
We are involved with claims and litigation, including items covered under our self-insurance program. We use both internal and outside legal counsel to assess the probability of loss. We establish an accrual when the claims and litigation represent a probable loss and the cost can be reasonably estimated. Additionally, estimated legal fees associated with these matters are accrued at the time such claims are made. Significant judgment is used in determining the timing and amount of the accruals for probable losses, and the actual liability could differ materially from the accrued amounts.

Minority Interest
In 2000, we completed and put into operation the facilities for our Chloralkali joint venture with Mitsui & Co. The joint venture expanded our ethylene dichloride (EDC) production and added a new chloralkali plant. Minority interest reflected in the accompanying Consolidated Statements of Earnings consists of the minority partner's share of the Chloralkali joint venture's earnings or loss. We are this joint venture's majority partner with a 51% interest and as such our consolidated financial statements include the accounts of this joint venture.

Income Taxes
Annual provisions for income taxes are based primarily on reported earnings before income taxes and include appropriate provisions for deferred income taxes resulting from the tax effect of the difference between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes. In addition, such provisions reflect adjustments for the following items:

- permanent differences, principally the excess of percentage depletion over the tax basis of depletable properties

- an estimate of additional cost that may be incurred, including interest on deficiencies but excluding adjustments representing temporary differences, upon final settlement of returns after audit by various taxing authorities

- balances or deficiencies in prior-year provisions that become appropriate as audits of those years progress

Comprehensive Income
We report comprehensive income in our Consolidated Statements of Shareholders' Equity. Comprehensive income includes charges and credits to equity from nonowner sources. Comprehensive income comprises two subsets: net earnings and other comprehensive income (loss). Our other comprehensive income (loss) includes fair value adjustments to cash flow hedges pertaining to our commodity swap and option contracts to purchase natural gas. Additionally, in 2001 other comprehensive loss included the cumulative effect of adopting SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (FAS 133), as amended.

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

	2003	2002	2001
Weighted-average common shares outstanding	101,849	101,709	101,445
Dilutive effect of:
Stock options	623	677	980
Other	238	129	72
Weighted-average common shares outstanding,   assuming dilution	102,710	102,515	102,497

All dilutive common stock equivalents are reflected in our earnings per share calculations. Antidilutive common stock equivalents for the 12 months ended December 31 were as follows: 2003 - 4,132,912; 2002 - 4,077,550; and 2001 - 2,152.

<PAGE 36>

Recent Accounting Pronouncements
In May 2003, the Financial Accounting Standards Board (FASB) issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity" (FAS 150). FAS 150 clarified the accounting for certain financial instruments with characteristics of both liabilities and equity and required that those instruments be classified as liabilities in statements of financial position. Previously, many of these financial instruments were classified as equity. FAS 150 was effective for all financial instruments entered into or modified after May 31, 2003 and was otherwise effective at the beginning of the first interim period after June 15, 2003. However, on October 29, 2003 the FASB voted to indefinitely defer the application of paragraph 9 of FAS 150 as it relates to certain mandatorily redeemable noncontrolling interests. With the exception of paragraph 9, we adopted the provisions of FAS 150 with no material impact on our consolidated financial statements.

In December 2003, the FASB issued SFAS No. 132 (revised 2003), "Employers' Disclosures about Pensions and Other Postretirement Benefits, an amendment of FASB Statements No. 87, 88, and 106" (FAS 132 revised 2003). FAS 132 (revised 2003) requires disclosures about defined benefit pension plans' and other postretirement benefit plans' assets, obligations, cash flows and net cost, and retains a number of disclosures required by SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." The annual disclosure provisions of FAS 132 (revised 2003) are effective for this fiscal year ended December 31, 2003. We will adopt the interim disclosure provisions of FAS 132 (revised 2003) beginning in the quarter ending March 31, 2004.

Use of Estimates in the Preparation of Financial Statements
The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that affect reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities at the date of the financial statements. We evaluate these estimates and judgments on an ongoing basis and base our estimates on historical experience, current conditions and various other assumptions that are believed to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Actual results may differ from these estimates under different assumptions or conditions.

Reclassifications
Certain items previously reported in specific financial statement captions have been reclassified to conform with the 2003 presentation.

note 2
Discontinued Operations

In May 2003, we announced our intention to sell substantially all our Performance Chemicals businesses. Under the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets" (FAS 144), the financial results of these operations have been classified as discontinued operations in the accompanying Consolidated Statements of Earnings for all periods presented. The Performance Chemicals business unit consisted of specialty chemicals production and services businesses and was one of the two business units within our Chemicals segment.

The following transactions resulted in our disposition of substantially all the assets of the Performance Chemicals business unit:

- March 2003 - Sold the assets of the municipal wastewater business to ALTIVIA Corporation and recognized a pretax gain on disposal of $2.0 million.

- May 2003 - Announced our intention to sell the assets of our industrial water treatment and pulp and paper businesses to Kemira Oy, of Finland, including our Columbus, Georgia production plant and research and development facility, as well as production facilities in Shreveport, Louisiana and Vancouver, British Columbia. This sale was subsequently closed in July 2003, resulting in a pretax gain on disposal of $17.0 million.

- June 2003 - Sold our Smyrna, Georgia production facility and our Dalton, Georgia distribution center to Lynx Chemical Group, resulting in a pretax loss on disposal of $12.4 million.

- July 2003 - Sold certain technology, patents and machinery used to produce textile chemical products to Apollo Corporation resulting in a pretax gain on disposal of $0.6 million.

- November 2003 - Sold our remaining Columbus, Georgia production plant to Lynx Chemical Group, resulting in a pretax loss on disposal of $0.9 million.

Operating results of our discontinued operations were as follows (in millions of dollars):

	2003	2002	2001
Net sales	$65.4	$139.7	$153.3
Total revenues	70.2	148.5	154.4
Loss before interest and income taxes	(22.0)	(10.4)	(30.0)
Pretax loss	(22.4)	(10.4)	(30.1)

<PAGE 37>

Assets and liabilities of our discontinued operations were not considered material for separate presentation in the accompanying Consolidated Balance Sheets. The major classes of assets and liabilities of our discontinued operations at December 31 were as follows (in millions of dollars):

	2003	2002	2001
Current assets	$8.4	$43.5	$44.9
Property, plant and equipment, net	-	39.0	48.2
Goodwill	-	-	30.2
Deferred charges and other assets	-	9.0	0.3
Total assets	$8.4	$91.5	$123.6
Current liabilities	$4.5	$12.0	$38.6
Deferred income taxes	-	-	1.3
Other noncurrent liabilities	16.5	1.4	2.9
Total liabilities	$21.0	$13.4	$42.8

note 3
Inventories

Inventories at December 31 are as follows (in thousands of dollars):

	2003	2002	2001
Finished products	$174,778	$189,378	$176,940
Raw materials	7,483	10,191	13,284
Products in process	476	486	564
Operating supplies and other	36,639	39,531	37,627
Total inventories	$219,376	$239,586	$228,415

The above amounts include inventories valued under the LIFO method totaling $134,051,000, $156,005,000 and $143,531,000 at December 31, 2003, 2002 and 2001, respectively. This 2003 reduction in LIFO-valued inventories resulted in a liquidation of LIFO inventory layers carried at lower costs prevailing in prior years as compared with the cost of current-year purchases. The effect of this liquidation on 2003 results was to decrease cost of goods sold by $1,850,000, decrease the pretax loss from discontinued operations by $663,000, increase earnings from continuing operations before cumulative effect of accounting changes by $1,138,000 ($0.01 per share effect) and increase net earnings by $1,545,000 ($0.02 per share effect).

Estimated current cost exceeded LIFO cost at December 31, 2003, 2002 and 2001 by $47,072,000, $48,662,000 and $44,620,000, respectively. We use the LIFO method of valuation for most of our inventories as it results in a better matching of costs with revenues. We provide supplemental income disclosures to facilitate comparisons with companies not on LIFO. The supplemental income calculation is derived by tax effecting the historic change in the LIFO reserve for the periods presented. If all inventories valued at LIFO cost had been valued under the methods (substantially average cost) used prior to the adoption of the LIFO method, the approximate effect on net earnings would have been an increase of $260,000 ($0.00 per share effect) in 2003, an increase of $1,913,000 ($0.02 per share effect) in 2002 and an increase of $2,940,000 ($0.03 per share effect) in 2001.

note 4
Property, Plant and Equipment

Balances of major classes of assets and allowances for depreciation, depletion and amortization at December 31 are as follows (in thousands of dollars):

	2003	2002	2001
Land and land improvements	$681,073	$693,891	$681,330
Buildings	118,369	126,888	122,768
Machinery and equipment	3,174,693	3,197,646	3,011,781
Leaseholds	6,565	6,555	6,627
Deferred asset retirement costs	76,471	-	-
Construction in progress	58,475	73,563	121,448
Total	4,115,646	4,098,543	3,943,954
Less allowances for depreciation, depletion   and amortization	2,222,998	2,122,490	1,943,924
Property, plant and equipment, net	$1,892,648	$1,976,053	$2,000,030

We capitalized interest costs of $2,116,000 in 2003, $2,896,000 in 2002 and $2,708,000 in 2001 with respect to qualifying construction projects. Total interest costs incurred before recognition of the capitalized amount were $56,236,000 in 2003, $57,736,000 in 2002 and $63,823,000 in 2001.

During 2003, we recorded asset impairment losses totaling $15,709,000 (Construction Materials $14,500,000; Chemicals $1,209,000) related to our long-lived assets. Included in this impairment loss was the $11,053,000 write-down to fair value of four surplus land parcels in California; the write-down of a closed lime plant near Chicago, Illinois for $2,939,000; the write-down of owned property surrounding our Wichita, Kansas Chemicals facility for $1,155,000; and various smaller write-downs related to operating facilities for $562,000.

During 2002, we recorded asset impairment losses totaling $4,276,000 (Construction Materials $1,076,000; Chemicals $3,200,000) related to our long-lived assets. Included in this impairment loss was the write-down of the methyl chloroform plant at our Geismar, Louisiana Chemicals facility for $3,200,000; the write-down of a fine-grind facility near Houston, Texas for $750,000; and the write-down of surplus land in northern Virginia for $326,000.

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These 2003 and 2002 impairment losses represent the amount by which the carrying value exceeded the fair value of the long-lived assets. The write-down of the surplus land parcels resulted from our marketing efforts to sell the land and the valuations were based on quoted market prices, comparables or independent third-party appraisals. The write-downs at operating facilities resulted from decreased utilization related to changes in the marketplace and were based on discounted cash flow analysis.

note 5
Derivative Instruments

Effective January 1, 2001, we adopted FAS 133, "Accounting for Derivative Instruments and Hedging Activities," as amended, which established accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. The cumulative effect of adopting this statement in 2001 was $6,276,000 reflected in other comprehensive income, net of income tax expense of $2,448,000, related to our natural gas over-the-counter commodity swap and option contracts.

Natural gas used in our Chemicals segment is subject to price volatility caused by supply conditions, political and economic variables, and other unpredictable factors. We use over-the-counter commodity swap and option contracts to manage the volatility related to future natural gas purchases. We have designated these instruments as effective cash flow hedges in accordance with FAS 133. Accordingly, the fair value of the open contracts, which extend through December 2004, has been reflected as a component of accumulated other comprehensive income of $4,246,000, less income tax expense of $1,597,000, in our consolidated financial statements as of December 31, 2003. If market prices for natural gas remained at the December 31, 2003 level, earnings of $4,246,000 would be classified into pretax earnings within the next 12 months. As of December 31, 2002, our consolidated financial statements reflected the fair value of the open contracts as a component of accumulated other comprehensive income of $3,906,000, les s income taxes of $1,468,000. As of December 31, 2001, our consolidated financial statements reflected the fair value of the open contracts as a component of accumulated other comprehensive loss of $13,307,000, less an income tax benefit of $5,224,000.

During the year ended December 31, 2002, we elected to terminate early certain of our natural gas swaps. The fair value of such swaps, which totaled $471,000 favorable as of the termination date, will continue to be reported within accumulated other comprehensive income and will be reclassified into earnings as the forecasted transaction impacts earnings.

In November 2003, we entered into an interest rate swap agreement for a stated (notional) amount of $50,000,000 under which we pay the six-month London Interbank Offered Rate (LIBOR) plus a fixed spread and receive a fixed rate of interest of 6.40% from the counterparty to the agreement. We have designated this instrument as an effective fair value hedge in accordance with FAS 133. Accordingly, the mark-to-market value of the hedge, which will terminate February 1, 2006, has been reflected in our Consolidated Balance Sheets and Consolidated Statements of Earnings. As of December 31, 2003, the estimated fair value of our interest rate swap agreement reflected projected proceeds of $302,000.

There was no impact to earnings due to hedge ineffectiveness during the 12 months ended December 31, 2003, 2002 and 2001.

note 6
Credit Facilities, Notes Payable and Long-term Debt

Notes payable at December 31 is summarized as follows (in thousands of dollars):

	2003	2002	2001
Bank borrowings	$29,000	$37,255	$43,879
Other notes payable	-	43	-
Total notes payable	$29,000	$37,298	$43,879

We had no commercial paper outstanding at the end of years 2003, 2002 and 2001.

At the end of 2003, we had unused committed lines of credit with a group of banks that provide for borrowings of up to $350,000,000, of which $200,000,000 expires March 2004 and the remaining $150,000,000 expires March 2007. We expect to renew the one-year credit facility expiring March 2004 in full with no substantive changes in terms, conditions or covenants. Interest rates are determined at the time of borrowing based on current market conditions.

As of December 31, 2003, our Chloralkali joint venture had an uncommitted bank line of credit with a foreign bank in the amount of $40,000,000, of which $29,000,000 was drawn. The interest rate on this note is a floating rate based on the LIBOR plus 35 basis points. As a joint venture partner, we guaranteed a portion of the amounts borrowed under the credit line on a several basis, which reflects our pro rata ownership interest (51%). At December 31, 2003, our Chloralkali joint venture was in compliance with the minimum net worth covenant contained in the attendant credit agreement.

Other notes of $43,000 were issued in 2002 to acquire land.

All lines of credit extended to us in 2003, 2002 and 2001 were based solely on a commitment fee, thus no compensating balances were required. In the normal course of business, we maintain balances for which we are credited with earnings allowances. To the extent the earnings allowances are not sufficient to fully compensate banks for the services they provide, we pay the fee equivalent for the differences.

<PAGE 39>

Long-term debt at December 31 is summarized as follows (in thousands of dollars):

	2003	2002	2001
6.40% 5-year notes issued 2001	$240,000	$240,000	$240,000
5.75% 5-year notes issued 1999	243,000	243,000	250,000
6.00% 10-year notes issued 1999	250,000	250,000	250,000
Private placement notes	84,121	120,574	122,112
Medium-term notes	28,000	33,000	38,000
Tax-exempt bonds	8,200	8,200	17,000
Other notes	4,054	4,624	6,451
Total debt excluding notes payable	$857,375	$899,398	$923,563
Less current maturities of long-term debt	249,721	41,641	17,264
Total long-term debt	$607,654	$857,757	$906,299
Estimated fair value of long-term debt	$675,249	$932,148	$934,569

During 2002, we purchased $7,000,000 of our $250,000,000 five-year notes with a 5.75% coupon rate maturing in April 2004 for 103.5% of par value, resulting in a $7,000,000 reduction in the principal balance of these notes. The premium from par on this early retirement of debt was fully expensed in 2002.

During 2001, we accessed the public debt market by issuing $240,000,000 of five-year notes with a 6.40% coupon maturing in February 2006.

During 1999, we accessed the public debt market by issuing $500,000,000 of 5-year and 10-year notes in two related series (tranches) of $250,000,000 each. The 5.75% coupon notes mature in April 2004 and the 6.00% notes mature in April 2009. The combined discount from par recorded on these notes is being amortized over the lives of the notes.

In 1999, we purchased all the outstanding common shares of CalMat Co. The private placement notes were issued by CalMat in December 1996 in a series of four tranches at interest rates ranging from 7.19% to 7.66%. Principal payments on the notes began in December 2003 and end December 2011. We entered into an agreement with the noteholders effective February 1999 whereby we guaranteed the payment of principal and interest.

During 1991, we issued $81,000,000 of medium-term notes ranging in maturity from 3 to 30 years, and in interest rates from 7.59% to 8.85%. The $28,000,000 in notes outstanding as of December 31, 2003 have a weighted-average maturity of 8.7 years with a weighted-average interest rate of 8.76%.

The $8,200,000 of tax-exempt bonds consists of variable-rate obligations maturing in 2009. During 2002, we called and redeemed two fixed-rate bond issues: (1) $3,000,000 of 7.50% coupon bonds maturing in 2011 and (2) $5,800,000 of 6.375% coupon bonds maturing in 2012.

Other notes of $4,054,000 were issued at various times to acquire land or businesses.

The aggregate principal payments of long-term debt, including current maturities, for the five years subsequent to December 31, 2003 are: 2004 - $249,794,000; 2005 - $3,330,000; 2006 - $272,654,000; 2007 - $575,000; and 2008 - $33,429,000.

Our debt agreements do not subject us to contractual restrictions with regard to working capital or the amount we may expend for cash dividends and purchases of our stock. Pursuant to a provision in our bank credit facility agreements, the percentage of consolidated debt to total capitalization must be less than 60%. The total debt to total capitalization ratio was 33.0% as of December 31, 2003; 35.6% as of December 31, 2002; and 37.6% as of December 31, 2001.

The estimated fair value amounts of long-term debt have been determined by discounting expected future cash flows based on interest rates on U.S. Treasury bills, notes or bonds, as appropriate. The fair value estimates presented are based on information available to management as of December 31, 2003, 2002 and 2001. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued since those dates.

note 7
Operating Leases

Total rental expense from continuing operations under operating leases primarily for machinery and equipment, exclusive of rental payments made under leases of one month or less, is summarized as follows (in thousands of dollars):

	2003	2002	2001
Minimum rentals	$29,680	$32,653	$32,654
Contingent rentals (based principally on usage)	18,586	16,454	15,667
Total	$48,266	$49,107	$48,321

Future minimum operating lease payments under all leases with initial or remaining noncancelable lease terms in excess of one year, exclusive of mineral leases, at December 31, 2003 are payable as follows: 2004 - $20,766,000; 2005 - $17,824,000; 2006 - $15,477,000; 2007 - $12,046,000; 2008 - $8,918,000; and aggregate $33,142,000 thereafter. Lease agreements frequently include renewal options and require that we pay for utilities, taxes, insurance and maintenance expense. Options to purchase are also included in some lease agreements.

<PAGE 40>

note 8
Accrued Environmental Costs

Our Consolidated Balance Sheets as of December 31 include accrued environmental remediation costs by segment, as follows (in thousands of dollars):

	2003	2002	2001
Construction Materials	$7,270	$7,544	$7,640
Chemicals	13,878	3,298	5,766
Total	$21,148	$10,842	$13,406

The accrued environmental remediation costs in the Construction Materials segment relate primarily to the former CalMat and Tarmac facilities acquired in 1999 and 2000, respectively.

The 2003 increase in the accrued environmental remediation costs in the Chemicals segment relates to a $10,514,000 undiscounted charge for estimated future groundwater monitoring and remediation, of which $1,233,000 relates to discontinued operations.

note 9
Income Taxes

The components of earnings from continuing operations before income taxes are as follows (in thousands of dollars):

	2003	2002	2001
Domestic	$296,147	$261,117	$342,959
Foreign	15,278	6,969	11,224
Total	$311,425	$268,086	$354,183

Provision (benefit) for income taxes consists of the following (in thousands of dollars):

	2003	2002	2001
Current
Federal	$43,022	$27,356	$64,966
State and local	7,956	6,704	10,540
Foreign	4,274	2,193	986
Total	55,252	36,253	76,492
Deferred
Federal	24,443	37,029	29,436
State and local	8,098	(2,377)	6,236
Foreign	178	522	160
Total	32,719	35,174	35,832
Total provision	$87,971	$71,427	$112,324

The effective income tax rate varied from the federal statutory income tax rate due to the following:

	2003	2002	2001
Federal statutory tax rate	35.0%	35.0%	35.0%
Increase (decrease) in tax rate resulting from:
Depletion	(7.6)	(8.4)	(6.5)
State and local income taxes, net of federal      income tax benefit	3.4	1.0	3.1
Amortization of goodwill	-	-	1.5
Miscellaneous items	(2.6)	(1.0)	(1.4)
Effective tax rate	28.2%	26.6%	31.7%

Deferred income taxes on the balance sheet result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The components of the net deferred income tax liability are as follows (in thousands of dollars):

	2003	2002	2001
Deferred tax assets related to:
Postretirement benefits	$24,623	$23,473	$23,102
Accruals for asset retirement obligations and      environmental accruals	19,651	10,358	11,714
Accounts receivable, principally allowance for      doubtful accounts	4,011	3,205	4,611
Inventory adjustments	4,270	5,803	5,212
Deferred compensation, vacation pay and incentives	24,773	18,898	19,520
Other items	9,517	15,980	20,475
Total deferred tax assets	86,845	77,717	84,634
Deferred tax liabilities related to:
Fixed assets	345,382	351,689	313,105
Pensions	17,460	17,896	16,288
Other items	28,558	15,615	20,746
Total deferred tax liabilities	391,400	385,200	350,139
Net deferred tax liability	$304,555	$307,483	$265,505

The above amounts are reflected in the accompanying Consolidated Balance Sheets as follows (in thousands of dollars):

	2003	2002	2001
Deferred income taxes:
Current assets	$(34,358)	$(37,698)	$(53,040)
Deferred liabilities	338,913	345,181	318,545
Net deferred tax liability	$304,555	$307,483	$265,505

<PAGE 41>

note 10
Benefit Plans

Pension Plans
We sponsor three funded, noncontributory defined benefit pension plans. These plans cover substantially all employees other than those covered by union-administered plans. Normal retirement age is 65, but the plans contain provisions for earlier retirement. Benefits for the Salaried Plan are based on salaries or wages and years of service; the Construction Materials Hourly Plan and the Chemicals Hourly Plan provide benefits equal to a flat dollar amount for each year of service.

Additionally, we sponsor unfunded, nonqualified pension plans that are included in the tables below. The projected benefit obligation, accumulated benefit obligation and fair value of assets for these plans were: $23,474,000, $19,747,000 and $0 at December 31, 2003; $19,322,000, $15,184,000 and $0 at December 31, 2002; and $14,367,000, $10,115,000 and $0 at December 31, 2001.

The following table sets forth the combined funded status of the plans and their reconciliation with the related amounts recognized in our consolidated financial statements at the December 31 measurement date (in thousands of dollars):

	2003	2002	2001
Change in Benefit Obligation
Benefit obligation at beginning of year	$426,579	$373,263	$350,815
Service cost	18,263	16,443	15,064
Interest cost	28,251	28,133	25,937
Amendments	-	3,889	2,565
Discontinued operations	(2,212)	-	-
Actuarial (gain) loss	4,510	22,970	(2,884)
Benefits paid	(19,898)	(18,119)	(18,234)
Benefit obligation at end of year	$455,493	$426,579	$373,263
Change in Plan Assets
Fair value of assets at beginning of year	$388,947	$468,972	$553,115
Actual return on plan assets	93,756	(62,814)	(66,886)
Employer contribution	15,812	908	977
Benefits paid	(19,898)	(18,119)	(18,234)
Fair value of assets at end of year	$478,617	$388,947	$468,972
Funded status	$23,124	$(37,632)	$95,709
Unrecognized net actuarial (gain) loss	(8,523)	39,731	(95,767)
Unrecognized prior service cost	12,774	16,110	14,509
Net amount recognized	$27,375	$18,209	$14,451
Amounts Recognized in the Consolidated   Balance Sheets
Prepaid benefit cost	$51,376	$47,378	$43,767
Accrued benefit liability	(25,527)	(29,169)	(29,316)
Intangible asset	1,526	-	-
Net amount recognized	$27,375	$18,209	$14,451

The accumulated benefit obligation for all defined benefit pension plans was $408,672,000 at December 31, 2003; $360,182,000 at December 31, 2002; and $301,306,000 at December 31, 2001.

The following table sets forth the components of net periodic benefit cost, additional information and weighted-average assumptions of the plans at December 31 (amounts in thousands, except percentages):

	2003	2002	2001
Components of Net Periodic Pension Benefit Cost
Service cost	$18,263	$16,443	$15,064
Interest cost	28,251	28,133	25,937
Expected return on plan assets	(39,681)	(42,451)	(41,645)
Amortization of transition asset	-	-	(957)
Amortization of prior service cost	2,438	2,288	1,750
Recognized actuarial gain	(1,255)	(7,263)	(9,022)
Net periodic pension benefit cost (income)	$8,016	$(2,850)	$(8,873)
Additional Information
Actual return (loss) on plan assets	$93,755	$(62,814)	$(66,886)
Curtailment gain	1,370	-	-
Assumptions Weighted-average assumptions used to   determine benefit obligation at December 31
Discount rate	6.25%	6.75%	7.25%
Rate of compensation increase (for salary-related plans)
Inflation	2.80%	4.00%	4.25%
Merit/Productivity	2.20%	2.20%	2.20%
Total rate of compensation increase	5.00%	6.20%	6.45%
Weighted-average assumptions used to   determine net periodic benefit cost for   years ended December 31
Discount rate	6.50%	7.25%	7.25%
Expected return on assets	8.25%	8.25%	8.25%
Rate of compensation increase (for salary-related plans)
Inflation	3.40%	4.25%	4.25%
Merit/Productivity	2.20%	2.20%	2.20%
Total rate of compensation increase	5.60%	6.45%	6.45%

The 2003 disposition of the Performance Chemicals business unit reduced the number of active plan participants by approximately 11%, which resulted in a curtailment gain of $1,370,000.

<PAGE 42>

Plan assets are composed primarily of marketable domestic and international equity securities and corporate and government debt securities. Our pension plan allocation range for 2004 and asset allocation percentages at December 31, 2003, 2002 and 2001 are presented below:

Asset Category	Allocation Range	Percentage of Plan Assets at December 31
	2004	2003	2002	2001
Equity securities	53-80%	69%	66%	67%
Debt securities	18-35%	25%	28%	26%
Real estate	-	-	-	-
Other	5-15%	6%	6%	7%
Total		100%	100%	100%

Equity securities include domestic equities in the Russell 3000 Index and foreign equities in the Europe, Australasia and Far East (EAFE) and International Finance Corporation (IFC) Emerging Market Indices. Debt securities include cash reserves while the other asset category includes investments in venture capital, buyout and mezzanine debt private partnerships.

We establish our pension investment policy by evaluating asset/liability studies periodically performed by our consultants. These studies estimate trade-offs between expected returns on our investments and the variability in anticipated cash contributions to fund our pension liabilities. Our policy accepts a relatively high level of variability in potential pension fund contributions in exchange for higher expected returns on our investments and lower expected future contributions. We believe this policy is prudent given our strong pension funding, balance sheet and cash flows.

Our strategy for implementing this policy is to invest a relatively high proportion (53%-80%) in publicly traded equities, a moderate amount (18%-35%) in long-term publicly traded debt and a relatively small amount (5%-15%) in private, nonliquid opportunities for high returns such as venture capital, buyouts and mezzanine debt.

The policy, set by the Board's Finance and Pension Funds Committee, is articulated through guideline ranges and targets for each asset category: domestic equities, foreign equities, bonds, specialty investments and cash reserves. Management implements the strategy within these guidelines and reviews the financial results monthly, while the Finance and Pension Funds Committee reviews them semi-annually.

Assumptions regarding our expected return on plan assets are based primarily on judgments made by management and the Board committee. These judgments take into account the expectations of our pension plan consultants and actuaries and our investment advisors, and the opinions of market professionals. We base our expected return on the long term, not recent history. Accordingly, the expected return has remained at 8.25% since our 1986 adoption of FAS 87 and has not varied due to short-term results above or below our long-term expectations.

Total employer contributions for the pension plans are presented below (in thousands of dollars):

	Pension
Employer Contributions
2001	$977
2002	908
2003	15,812
2004 (estimated)	4,000

Certain of our hourly employees in unions are covered by multiemployer defined benefit pension plans. Contributions to these plans approximated $5,744,000 in 2003, $5,702,000 in 2002 and $5,844,000 in 2001. The actuarial present value of accumulated plan benefits and net assets available for benefits for employees in the union-administered plans are not determinable from available information. Twenty-nine percent of the hourly labor force were covered by collective bargaining agreements. Of the hourly workforce covered by collective bargaining agreements, 7% were covered by agreements that expire in 2004.

Postretirement Plans
In addition to pension benefits, we provide certain healthcare benefits and life insurance for some retired employees. Substantially all our salaried employees and, where applicable, hourly employees may become eligible for those benefits if they reach at least age 55 and meet certain service requirements while working for the Company. Generally, Company-provided healthcare benefits terminate when covered individuals become eligible for Medicare benefits or reach age 65, whichever first occurs.

The following table sets forth the combined funded status of the plans and their reconciliation with the related amounts recognized in our consolidated financial statements at the December 31 measurement date (in thousands of dollars):

	2003	2002	2001
Change in Benefit Obligation
Benefit obligation at beginning of year	$60,865	$55,207	$56,212
Service cost	2,976	2,458	2,364
Interest cost	4,314	3,916	3,883
Amendments	-	-	(3,159)
Actuarial (gain) loss	30,611	2,391	(1,461)
Benefits paid	(3,916)	(3,107)	(2,632)
Benefit obligation at end of year	$94,850	$60,865	$55,207
Change in Plan Assets
Fair value of assets at beginning of year	$-	$-	$3,507
Actual return on plan assets	-	-	(348)
Amendments	-	-	(3,159)
Fair value of assets at end of year	$-	$-	$-
Funded status	$(94,850)	$(60,865)	$(55,207)
Unrecognized net (gain) loss	32,003	1,390	(1,001)
Unrecognized prior service cost	(1,526)	(1,753)	(1,981)
Net amount recognized	$(64,373)	$(61,228)	$(58,189)
Amounts Recognized in the Consolidated   Balance Sheets
Accrued postretirement benefits	$(64,373)	$(61,228)	$(58,189)

During 2001, we used the assets available for retiree life insurance to purchase policies for retirees covered under the program.

<PAGE 43>

The following table sets forth the components of net periodic benefit cost, additional information and weighted-average assumptions of the plans at December 31 (in thousands of dollars):

	2003	2002	2001
Components of Net Periodic Postretirement Benefit Cost
Service cost	$2,976	$2,458	$2,364
Interest cost	4,314	3,916	3,883
Expected return on plan assets	-	-	(245)
Amortization of prior service cost	(228)	(228)	(228)
Net periodic postretirement benefit cost	$7,062	$6,146	$5,774
Additional Information
Actual return on plan assets	n/a	n/a	n/a
Assumptions Weighted-average assumptions used to   determine benefit obligation at December 31
Discount rate	6.25%	6.75%	7.25%
Weighted-average assumptions used to   determine net periodic benefit cost for years   ended December 31
Discount rate	6.75%	7.25%	7.25%
Expected return on assets	n/a	n/a	n/a
Assumed Healthcare Cost Trend Rates at December 31
Healthcare cost trend rate assumed for next year	10%	8%	5%
Rate to which the cost trend rate gradually declines	5%	5%	5%
Year that the rate reaches the rate it is assumed   to maintain	2010	2006	2002

Assumed healthcare cost trend rates have a significant effect on the amounts reported for the healthcare plans. A one-percentage-point change in the assumed healthcare cost trend rate would have the following effects (in thousands of dollars):

	One-percentage-point Increase	One-percentage-point Decrease
Effect on total of service and interest cost	$930	$(793)
Effect on postretirement benefit obligation	9,688	(9,264)

Total employer contributions for the postretirement plans are presented below (in thousands of dollars):

	Postretirement
Employer Contributions
2001	$2,632
2002	3,107
2003	3,916
2004 (estimated)	4,229

The employer contributions shown above are equal to the cost of benefits during the year. The plans are not funded and are not subject to any regulatory funding requirements.

Contributions by participants to the postretirement benefit plans were $505,000, $405,000 and $325,000 for the years ending December 31, 2003, 2002 and 2001, respectively.

Pension and Other Postretirement Benefits Assumptions
During 2003, we made changes to our assumptions related to the discount rate, the rate of compensation increase (for salary-related plans) and the rate of increase in the per capita cost of covered healthcare benefits. We consult with our actuaries when selecting each of these assumptions.

In selecting the discount rate, we consider fixed-income security yields, specifically high-quality bonds. At December 31, 2003, we decreased the discount rate for our plans from 6.75% to 6.25% as a result of decreasing yields for long-term, high-quality bonds.

In estimating the expected return on plan assets, we consider past performance and future expectations for the types of investments held by the plan as well as the expected long-term allocation of plan assets to these investments. At December 31, 2003, we made no change in the expected 8.25% return on plan assets.

In projecting the rate of compensation increase, we consider past experience in light of movements in inflation rates. At December 31, 2003, we decreased the inflation component of the assumed rate of compensation increase from 4.0% to 2.8% for our pension plans.

<PAGE 44>

In selecting the rate of increase in the per capita cost of covered healthcare benefits, we consider past performance and forecasts of future healthcare cost trends. At December 31, 2003, we increased our previously assumed rate of increase in the per capita cost of covered healthcare benefits. The new assumed rates of increase are 10% for 2004 and 2005, then decreasing 1% per year until reaching 5% in 2010, remaining level thereafter. The previously assumed rate was 8% for 2003, decreasing 1% per year until reaching 5% in 2006, remaining level thereafter. This change, combined with the reduction in the discount rate as well as other actuarial gains and losses, led to an actuarial loss in 2003 of $30,611,000 in the postretirement plans.

Defined Contribution Plans
We sponsor four defined contribution plans, which cover substantially all salaried and nonunion hourly employees. Expense recognized in connection with these plans equaled $9,899,000, $7,100,000 and $9,456,000, for 2003, 2002 and 2001, respectively.

Termination Benefits
In connection with the disposition of the Performance Chemicals business unit, we provided special and contractual termination benefits. In 2003, we recognized expense totaling $4,174,000 in connection with these benefits. This expense is included with the loss from discontinued operations caption of the accompanying Consolidated Statements of Earnings.

note 11
Incentive Plans

Stock-based Compensation Plans
Our 1996 Long-term Incentive Plan authorizes the granting of stock-based awards to our key salaried employees. The Plan permits the granting of stock options (including incentive stock options), stock appreciation rights, restricted stock and restricted stock units, performance share awards, dividend equivalents and other stock-based awards (such as deferred stock units) valued in whole or in part by reference to or otherwise based on our common stock. The number of shares available for awards is 0.95% of our issued common shares (including treasury shares) as of the first day of each calendar year, plus the unused shares that are carried over from prior years.

Deferred stock unit awards were granted beginning in 2001 with the accrual of dividend equivalents starting one year after grant of the underlying stock unit award. These awards vest ratably over years 6 through 10 from the date of grant. Deferred stock unit grants were as follows: 2003 - 142,700 units with vesting beginning in 2009; 2002 - 98,100 units with vesting beginning in 2008; and 2001 - 102,600 units with vesting beginning in 2007. Expense provisions referable to these awards amounted to $1,576,000 in 2003, $924,000 in 2002 and $383,000 in 2001.

Stock options issued during the years 1996 through 2003 were granted at the fair market value of the stock on the date of the grant. They vest ratably over 5 years and expire 10 years subsequent to the grant. There was a $156,000 expense provision for stock options in 2003 related to a plan modification for the employees terminated with the divestiture of the Performance Chemicals business unit. There were no other expense provisions referable to these awards, as all options granted had an exercise price equal to the market value of our underlying common stock on the date of grant.

Performance share unit awards were granted under the 1996 Long-term Incentive Plan beginning in 2003. These awards are based on the achievement of established performance goals, and cliff vest in three years. Expense provisions referable to these awards amounted to $2,527,000 in 2003. Expense provisions are affected by internal performance measures along with changes in the market value of our common stock and total shareholder return versus a preselected comparison group.

We use the intrinsic value method per APB 25 in accounting for our stock-based compensation. Pro forma information regarding net earnings and earnings per share is required by FAS 123 and SFAS No. 148, "Accounting for Stock-based Compensation - Transition and Disclosure, an Amendment of FASB Statement No. 123" (FAS 148), and has been determined as if we had accounted for our stock-based compensation under the fair value method of those statements. The fair value for options was estimated at the date of the grant using a Black-Scholes option pricing model with the following weighted-average assumptions for the years ended December 31, 2003, 2002 and 2001 as presented below:

	2003	2002	2001
Risk-free interest rate	3.42%	4.73%	4.85%
Dividend yields	2.99%	1.96%	2.00%
Volatility factors of the expected market   price of our common stock	24.31%	23.25%	23.82%
Weighted-average expected life of the option	7 years	7 years	5 years

The pro forma disclosure is presented in tabular format in Note 1.

<PAGE 45>

A summary of our stock option activity; related information as of December 31, 2003, 2002 and 2001; and changes during each year is presented below:

	2003		2002		2001
	Shares	Weighted-average Exercise Price	Shares	Weighted-average Exercise Price	Shares	Weighted-average Exercise Price
Outstanding at beginning of year	6,747,504	$36.90	5,940,125	$34.80	5,157,958	$32.16
Granted at fair value	704,300	$31.48	1,066,400	$45.92	1,093,600	$44.93
Exercised	(221,340)	$23.11	(204,571)	$21.72	(247,338)	$22.49
Forfeited	(50,365)	$46.62	(54,450)	$41.46	(64,095)	$42.41
Outstanding at year end	7,180,099	$36.73	6,747,504	$36.90	5,940,125	$34.80
Options exercisable at year end	4,447,989	$33.87	3,711,409	$30.99	2,945,545	$27.96
Weighted-average grant date   fair value of each option   granted during the year	$4.43		$8.37		$7.26

The following table summarizes information about stock options outstanding and exercisable at December 31, 2003:

	Options Outstanding			Options Exercisable
Range of Exercise Price	Number of Shares	Weighted-average Remaining Contractual Life (Years)	Weighted-average Exercise Price	Number of Shares	Weighted-average Exercise Price
$18.58-$21.31	1,534,509	2.77	$20.18	1,534,509	$20.18
$29.20-$32.95	1,511,930	6.40	$32.26	816,130	$32.94
$38.39-$42.48	1,143,380	6.09	$42.33	689,680	$42.34
$43.71-$47.44	2,990,280	6.80	$45.34	1,407,670	$45.19
Total/Average	7,180,099	5.74	$36.73	4,447,989	$33.87

Cash-based Compensation Plans
We have incentive plans under which cash awards may be made annually to officers and key employees. Expense provisions referable to these plans amounted to $8,895,000 in 2003, $7,561,000 in 2002 and $6,893,000 in 2001.

note 12
Other Commitments and Contingent Liabilities

We have commitments in the form of unconditional purchase obligations as of December 31, 2003. These include commitments for the purchase of property, plant and equipment of $27,672,000 and commitments for noncapital purchases of $149,297,000. The commitments for the purchase of property, plant and equipment are due in 2004; the commitments for noncapital purchases are due as follows: 2004, $40,994,000; 2005-2006, $51,505,000; 2007-2008, $15,478,000; and aggregate $41,320,000 thereafter. Expenditures under the noncapital purchase commitments totaled $155,524,000 in 2003, $100,752,000 in 2002 and $106,837,000 in 2001.

We have commitments in the form of contractual obligations related to our mineral royalties as of December 31, 2003 in the amount of $77,382,000, due as follows: 2004, $9,158,000; 2005-2006, $12,793,000; 2007-2008, $9,874,000; and aggregate $45,557,000 thereafter. Expenditures under the contractual obligations related to mineral royalties totaled $37,872,000 in 2003, $36,711,000 in 2002 and $35,265,000 in 2001.

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

<PAGE 46>

Our standby letters of credit as of December 31, 2003 are summarized in the table below (in millions of dollars):

	Amount	Term	Maturity
Standby Letters of Credit
Risk management requirement for insurance claims	$18.0	One year	Renewable annually
Payment surety required by utilities	5.1	One year	Renewable annually
Contractual reclamation/restoration requirements	3.3	One year	Renewable annually
Total standby letters of credit	$26.4

We are a defendant in various lawsuits incident to the ordinary course of business. It is not possible to determine with precision the probable outcome or the amount of liability, if any, with respect to these lawsuits; however, in our opinion, the disposition of these lawsuits will not adversely affect our consolidated financial statements to a material extent.

note 13
Shareholders' Equity

We have purchased a total of 42,511,981 shares of our common stock at a cost of $608,423,000 pursuant to a common stock purchase plan initially authorized by the Board of Directors in July 1985 and increased in subsequent years, and pursuant to a tender offer during the period November 5, 1986 through December 4, 1986. As of December 31, 2003, 8,473,988 shares remained under the current purchase authorization. No shares were purchased in 2003, 2002 or 2001.

note 14
Other Comprehensive Income (Loss)

Comprehensive income includes charges and credits to equity from nonowner sources. Comprehensive income comprises two subsets: net earnings and other comprehensive income (loss). Our other comprehensive income (loss) includes fair value adjustments to cash flow hedges pertaining to our commodity swap and option contracts to purchase natural gas. The components of other comprehensive income (loss) are presented in the Consolidated Statements of Shareholders' Equity, net of applicable taxes.

The amount of income tax (expense) benefit allocated to each component of other comprehensive income (loss) at December 31, 2003, 2002 and 2001 is summarized as follows (in thousands of dollars):

	Before-tax Amount	Tax (Expense) Benefit	Net-of-tax Amount
December 31, 2003
Other comprehensive income (loss), net of taxes:
Fair value adjustment to cash flow hedges	$(5,922)	$2,247	$(3,675)
Less reclassification adjustment for gains included     in net earnings	6,262	(2,376)	3,886
Total other comprehensive income, net of taxes	$340	$(129)	$211
December 31, 2002
Other comprehensive income (loss), net of taxes:
Fair value adjustment to cash flow hedges	$28,902	$(11,237)	$17,665
Less reclassification adjustment for losses included     in net earnings	(11,689)	4,545	(7,144)
Total other comprehensive income, net of taxes	$17,213	$(6,692)	$10,521
December 31, 2001
Other comprehensive income (loss), net of taxes:
Cumulative effect of accounting change	$6,276	$(2,448)	$3,828
Fair value adjustment to cash flow hedges	(25,859)	10,120	(15,739)
Less reclassification adjustment for gains included     in net earnings	6,276	(2,448)	3,828
Net fair value adjustment to cash flow hedges	(19,583)	7,672	(11,911)
Total other comprehensive loss, net of taxes	$(13,307)	$5,224	$(8,083)

<PAGE 47>

note 15
Segment Data

Our reportable segments are organized around products and services and continue to be Construction Materials and Chemicals. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Our determination of segment earnings (a) does not reflect discontinued operations; (b) recognizes equity in the earnings or losses of nonconsolidated companies as part of segment earnings; (c) reflects allocations of general corporate expenses to the segments; (d) does not reflect interest income or expense; and (e) is before income taxes.

The Construction Materials segment produces and sells aggregates and related products and services in seven regional divisions. These divisions have been aggregated for reporting purposes. During 2003, this segment served markets in 20 states, the District of Columbia and Mexico with a full line of aggregates, and 6 additional states with railroad ballast. Customers use aggregates primarily in the construction and maintenance of highways, streets and other public works and in the construction of housing and commercial, industrial and other nonresidential facilities.

As the result of our decision in 2003 to sell our Performance Chemicals businesses, the results of operations of this business unit, which were previously included in our Chemicals segment's earnings, have been reclassified as discontinued operations in the accompanying Consolidated Statements of Earnings. The Chloralkali business unit produces and sells chlorine, caustic soda, hydrochloric acid, potassium chemicals and chlorinated organic chemicals principally to the chemical processing, polymer, refrigerant, foam-blowing, food and pharmaceutical, pulp and paper, and water management industries.

Because the majority of our activities are domestic, assets outside the United States are not material. The Construction Materials segment sells a relatively small amount of construction aggregates outside the United States. Nondomestic net sales in the Construction Materials segment were $6,884,000 in 2003, $4,422,000 in 2002 and $5,519,000 in 2001. The Chemicals segment sells to customers outside the United States primarily in Asia, South America and Europe. This segment's net sales to foreign customers were $30,956,000 in 2003, $27,491,000 in 2002 and $33,051,000 in 2001.

Segment Financial Disclosure

Amounts in millions	2003	2002	2001
Net Sales
Construction Materials	$2,086.9	$1,980.6	$2,113.6
Chemicals	531.9	424.8	488.4
Total	$2,618.8	$2,405.4	$2,602.0
Total Revenues
Construction Materials	$2,309.6	$2,175.9	$2,331.9
Chemicals	582.6	472.2	533.7
Total	$2,892.2	$2,648.1	$2,865.6
Earnings (Loss) from Continuing Operations    Before Interest and Income Taxes
Construction Materials	$388.7	$383.2	$400.5
Chemicals	(27.7)	(63.7)	10.4
Total	$361.0	$319.5	$410.9
Identifiable Assets
Construction Materials	$2,620.1	$2,635.9	$2,624.7
Chemicals	518.8	579.8	626.0
Identifiable assets	3,138.9	3,215.7	3,250.7
Investment in nonconsolidated companies	5.0	1.6	1.4
General corporate assets	76.3	60.2	60.4
Cash items	416.7	170.7	100.8
Total	$3,636.9	$3,448.2	$3,413.3
Depreciation, Depletion, Accretion and Amortization    from Continuing Operations
Construction Materials	$215.7	$204.7	$212.5
Chemicals	52.2	52.5	55.2
Total	$267.9	$257.2	$267.7
Capital Expenditures
Construction Materials	$164.9	$206.7	$230.6
Chemicals	35.2	42.9	57.6
Total	$200.1	$249.6	$288.2
Net Sales by Product
Construction Materials
Aggregates	$1,507.4	$1,397.8	$1,483.0
Asphaltic products and placement	287.7	304.7	342.8
Ready-mixed concrete	207.9	181.8	186.2
Other	83.9	96.3	101.6
Total	$2,086.9	$1,980.6	$2,113.6
Chemicals
Chloralkali - Inorganic	$291.3	$208.9	$274.9
Chloralkali - Organic	240.6	215.9	213.5
Total	$531.9	$424.8	$488.4

<PAGE 48>

note 16
Supplemental Cash Flow Information

Supplemental information referable to the Consolidated Statements of Cash Flows is summarized below (in thousands of dollars):

	2003	2002	2001
Cash payments:
Interest (exclusive of amount capitalized)	$54,409	$55,465	$55,484
Income taxes	47,890	39,177	57,408
Noncash investing and financing activities:
Amounts referable to business acquisitions:
Liabilities assumed	-	1,573	30,505

note 17
Accounting Changes

2003 - FAS 143
On January 1, 2003, we adopted FAS 143, "Accounting for Asset Retirement Obligations." FAS 143 applies to legal obligations associated with the retirement of long-lived assets resulting from the acquisition, construction, development and/or normal use of the underlying assets.

FAS 143 requires us to recognize a liability for an asset retirement obligation in the period in which it is incurred, at its estimated fair value. The associated asset retirement costs are capitalized as part of the carrying amount of the underlying asset and depreciated over the estimated useful life of the asset. The liability is accreted through charges to operating expenses. If the asset retirement obligation is settled for other than the carrying amount of the liability, we will then recognize a gain or loss on settlement.

Prior to the adoption of FAS 143, we accrued the estimated cost of land reclamation over the life of the reserves based on tons sold in relation to total estimated tons. Our Consolidated Balance Sheets as of December 31 include accrued undiscounted land reclamation costs for the Construction Materials segment of $26,000,000 in 2002 and $26,091,000 in 2001. These accrued costs related to the acquired CalMat facilities. With the adoption of FAS 143, we recorded all asset retirement obligations, at estimated fair value, for which we have legal obligations for land reclamation. Essentially all these asset retirement obligations related to our underlying land parcels, including both owned properties and mineral leases. This accounting change resulted in an increase in long-term assets of $44,341,000; an increase in long-term liabilities of $63,152,000; and a cumulative effect of adoption that reduced shareholders' equity and 2003 net earnings by $18,811,000. Additionally, FAS 143 results in ongoing costs related to the depreciation of the assets and accretion of the liability. For the year ended December 31, 2003, we recognized operating costs related to FAS 143 totaling $10,594,000, including $69,000 related to discontinued operations. FAS 143 operating costs for our continuing operations are reported in cost of goods sold.

A reconciliation of the carrying amount of our asset retirement obligations for the year ended December 31, 2003 is as follows (in thousands of dollars):

Asset retirement obligations as of December 31, 2002	$         -
Cumulative effect adjustment	99,259
Liabilities incurred	-
Liabilities (settled)	(8,413)
Accretion expense	5,130
Revisions up (down)	11,707
Asset retirement obligations as of December 31, 2003	$107,683

The $99,259,000 cumulative effect portion of the asset retirement obligations was offset by amounts previously accrued under generally accepted accounting principles in effect prior to the issuance of FAS 143.

On a pro forma basis as required by FAS 143, if we had applied the provisions of FAS 143 as of January 1, 2002 the amount of asset retirement obligations would have been $94,469,000. Additionally, if we had applied the provisions of FAS 143 as of January 1, 2001 the amount of the asset retirement obligations would have been $88,738,000.

2002 - FAS 142
On January 1, 2002, we adopted FAS 142, "Goodwill and Other Intangible Assets," and, accordingly, discontinued goodwill amortization. Adjusted results assuming the elimination of goodwill amortization are summarized below (amounts in thousands, except per share data):

	2003	2002	2001
Net Earnings
As reported	$194,952	$169,876	$222,680
Goodwill amortization (net of taxes)	-	-	22,146
Adjusted net earnings	$194,952	$169,876	$244,826
Basic Net Earnings Per Share
As reported	$1.91	$1.67	$2.20
Goodwill amortization (net of taxes)	-	-	0.22
Adjusted net earnings	$1.91	$1.67	$2.42
Diluted Net Earnings Per Share
As reported	$1.90	$1.66	$2.17
Goodwill amortization (net of taxes)	-	-	0.22
Adjusted net earnings	$1.90	$1.66	$2.39

<PAGE 49>

In connection with the adoption of FAS 142, we were required to complete the first step of the two-step goodwill impairment test by June 30, 2002. In so doing, we identified nine reporting units, as defined by the statement: seven regional divisions in Construction Materials, Chloralkali Chemicals and Performance Chemicals. We determined the carrying value of each reporting unit by assigning assets and liabilities, including goodwill, to those reporting units as of January 1, 2002. Further, we determined the fair value of the reporting units using present value techniques.

Impairment was indicated in the Performance Chemicals reporting unit since its carrying value exceeded its fair value. This impairment resulted from the secular deterioration in business conditions facing the specialty chemicals industry. With this indication of impairment, we completed step two of the process by allocating the fair value of the reporting unit to its assets and liabilities. We engaged an independent third party to assist in determining the fair value of the reporting unit and in allocating such fair value to the individual assets and liabilities. As a result of completing step two of the impairment test, we determined that the goodwill in the Performance Chemicals reporting unit of $30,240,000 was fully impaired as of January 1, 2002. Accordingly, a net-of-tax transition adjustment totaling $20,537,000 was recorded as a cumulative effect of accounting change as of January 1, 2002.

The changes in the carrying amount of goodwill for each reportable segment for the years ended December 31, 2002 and 2003 are as follows (in thousands of dollars):

	Construction Materials	Chemicals	Total
Goodwill as of December 31, 2001	$557,947	$30,615	$588,562
Transitional impairment charge	-	(30,240)	(30,240)
Goodwill of acquired businesses	18,756	-	18,756
Purchase price allocation adjustments	(1,287)	-	(1,287)
Goodwill as of December 31, 2002	$575,416	$375	$575,791
Goodwill of acquired businesses	1,650	-	1,650
Purchase price allocation adjustments	2,376	-	2,376
Goodwill as of December 31, 2003	$579,442	$375	$579,817

2001 - FAS 133
Effective January 1, 2001, we adopted FAS 133, "Accounting for Derivative Instruments and Hedging Activities," as amended, which established accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. The cumulative effect of adopting this statement in 2001 was $6,276,000 reflected in other comprehensive income, net of income tax expense of $2,448,000, related to our natural gas over-the-counter commodity swap and option contracts.

note 18
Acquisitions

In 2003, we acquired the following for a cost of approximately $3,543,000, which was paid in cash:

- Hart County Stone Company - an aggregates facility in Kentucky.

- Global Stone - all assets relating to an aggregates unloading and distribution yard at the Port of Brownsville, Texas.

Both of these 2003 acquisitions related to our Construction Materials segment. Goodwill recognized in these transactions totaled $1,650,000 and is expected to be fully deductible for income tax purposes.

In 2002, we acquired the following for a cost of approximately $43,445,000, which was
paid in cash:

- SRM Aggregates, Inc. - three sales yards in Mississippi and related equipment.

- U.S. Aggregates, Inc. - two aggregates facilities in Alabama and Tennessee; one sales yard in Tennessee; ready-mix equipment; and two parcels of land in Tennessee.

- Fleet Capital Corporation and LaSalle National Leasing - certain equipment previously leased to U.S. Aggregates related to the above-mentioned facilities in Alabama and Tennessee.

- Nolichuckey Sand Co. Inc. - stock of sand and gravel company owning two aggregates facilities in Tennessee.

- Builder's Sand & Gravel, Inc. - an aggregates facility in Illinois.

- Transit Mix Concrete & Materials Company (d/b/a Trinity Aggregate Distribution Company) - assets and inventory located at a sales yard in Texas.

All the 2002 acquisitions related to our Construction Materials segment. Goodwill recognized in these transactions totaled $18,756,000. Acquisition goodwill, related to a stock purchase, in the amount of $4,818,000 will not be deductible for income tax purposes. The remaining goodwill related to 2002 acquisitions is expected to be fully deductible for income tax purposes.

In 2001, we acquired all our former joint venture partner's interests in the Crescent Market Companies for $121,100,000. In addition, during 2001 we acquired several smaller companies with a combined acquisition purchase price of approximately $18,000,000. With the exception of the Crescent Market Companies, funds for the purchases were primarily provided by internally generated cash flows.

The amount by which the total cost of these acquisitions exceeded the fair value of the net assets acquired, including identifiable intangibles, was recognized as goodwill.

All the 2003, 2002 and 2001 acquisitions described above were accounted for as purchases and, accordingly, the results of operations of the acquired businesses are included in the accompanying consolidated financial statements from their respective dates of acquisition. Had the businesses been acquired at the beginning of fiscal 2003 and 2002, respectively, on a pro forma basis, revenue, net earnings and earnings per share would not differ materially from the amounts reflected in the accompanying consolidated financial statements for 2003 and 2002.

End of Notes to Consolidated Financial Statements

<PAGE 50>

Financial Terminology

Acquisitions
The sum of net assets (assets less liabilities, including acquired debt) obtained in a business combination. Net assets are recorded at their fair value at the date of the combination, and include tangible and intangible items.

Capital Employed
The sum of interest-bearing debt, other noncurrent liabilities and shareholders' equity; for a segment: the net sum of the segment's assets, current liabilities, and allocated corporate assets and current liabilities, exclusive of cash items and debt. Average capital employed is a 12-month average.

Capital Expenditures
Capital expenditures include capitalized replacements of and additions to property, plant and equipment, including capitalized leases, renewals and betterments. Capital expenditures exclude the property, plant and equipment obtained by business acquisitions. Each segment's capital expenditures include allocated corporate amounts.

We classify our capital expenditures into three categories based on the predominant purpose of the project expenditures. Thus, a project is classified entirely as a replacement if that is the principal reason for making the expenditure even though the project may involve some cost-saving and/or capacity improvement aspects. Likewise, a profit-adding project is classified entirely as such if the principal reason for making the expenditure is to add operating facilities at new locations (which occasionally replace facilities at old locations), to add product lines, to expand the capacity of existing facilities, to reduce costs, to increase mineral reserves, to improve products, etc.

Capital expenditures classified as environmental control do not reflect those expenditures for environmental control activities, including industrial health programs, that are expensed currently. Such expenditures are made on a continuing basis and at significant levels in each of our segments. Frequently, profit-adding and major replacement projects also include expenditures for environmental control purposes.

Cash Items
The sum of cash, cash equivalents, short-term investments and medium-term investments.

Net Sales
Total customer revenues from continuing operations for our products and services excluding delivery revenues, net of discounts, if any.

Ratio of Earnings to Fixed Charges
The sum of earnings from continuing operations before income taxes, minority interest in (earnings) losses of a consolidated subsidiary, amortization of capitalized interest and fixed charges net of interest capitalization credits, divided by fixed charges. Fixed charges are the sum of interest expense before capitalization credits, amortization of financing costs and one-third of rental expense.

Ratio of Total Debt to Total Capital
The sum of notes payable, current maturities and long-term debt, divided by total capital. Total capital is the sum of total debt and shareholders' equity.

Segment Earnings
Earnings from continuing operations before interest and income taxes and after allocation of corporate expenses and income, other than interest, to the segment with which it is related in terms of products and services. Allocations are based on a trailing 12-month average capital employed and net sales.

Shareholders' Equity
The sum of common stock (less the cost of common stock in treasury), capital in excess of par value, retained earnings and accumulated other comprehensive income (loss), as reported in the balance sheet. Average shareholders' equity is a 12-month average.

Short-term Debt
The sum of current interest-bearing debt, including current maturities of long-term debt and interest-bearing notes payable.

Total Shareholder Return
Average annual rate of return using both stock price appreciation and quarterly dividend reinvestment. Stock price appreciation is based on a point-to-point calculation, using end-of-year data.

<PAGE 51>

Net Sales, Total Revenues, Net Earnings and Earnings Per Share
Vulcan Materials Company and Subsidiary Companies

Amounts in millions, except per share data	2003	2002	2001
Net Sales
First quarter	$518.9	$499.5	$531.8
Second quarter	694.8	644.8	720.3
Third quarter	747.6	679.8	725.2
Fourth quarter	657.5	581.3	624.7
Total	$2,618.8	$2,405.4	$2,602.0
Total Revenues
First quarter	$566.7	$550.2	$580.9
Second quarter	766.8	708.8	789.8
Third quarter	829.9	748.9	801.9
Fourth quarter	728.8	640.2	693.0
Total	$2,892.2	$2,648.1	$2,865.6
Gross Profit
First quarter	$69.5	$83.7	$76.9
Second quarter	159.6	154.3	190.4
Third quarter	197.1	168.0	203.1
Fourth quarter	157.3	110.5	153.6
Total	$583.5	$516.5	$624.0
Earnings (Loss) from Continuing Operations Before Cumulative Effect of Accounting Changes
First quarter	$2.1	$14.5	$8.4
Second quarter	66.3	67.4	82.2
Third quarter	94.1	77.3	94.2
Fourth quarter	61.0	37.5	57.1
Total	$223.5	$196.7	$241.9
Basic Earnings (Loss) Per Share from Continuing Operations Before Cumulative Effect of Accounting Changes
First quarter	$0.02	$0.14	$0.08
Second quarter	0.65	0.66	0.81
Third quarter	0.92	0.76	0.93
Fourth quarter	0.60	0.37	0.56
Total	$2.19	$1.93	$2.38
Diluted Earnings (Loss) Per Share from Continuing Operations Before Cumulative Effect of Accounting Changes
First quarter	$0.02	$0.14	$0.08
Second quarter	0.65	0.66	0.80
Third quarter	0.91	0.75	0.92
Fourth quarter	0.59	0.37	0.56
Total	$2.18	$1.92	$2.36
Net Earnings (Loss)
First quarter	$(17.5)	$(8.9)	$5.7
Second quarter	56.0	65.4	79.6
Third quarter	99.1	76.8	92.2
Fourth quarter	57.4	36.6	45.2
Total	$195.0	$169.9	$222.7
Basic Net Earnings (Loss) Per Share
First quarter	$(0.17)	$(0.09)	$0.06
Second quarter	0.55	0.64	0.79
Third quarter	0.97	0.75	0.91
Fourth quarter	0.56	0.36	0.44
Full year	$1.91	$1.67	$2.20
Diluted Net Earnings (Loss) Per Share
First quarter	$(0.17)	$(0.09)	$0.06
Second quarter	0.55	0.64	0.78
Third quarter	0.96	0.75	0.90
Fourth quarter	0.56	0.36	0.44
Full year	$1.90	$1.66	$2.17

<PAGE 59>

EX-21

Exhibit (21)
VULCAN MATERIALS COMPANY SUBSIDIARIES As of December 31, 2003 (Active Subsidiaries Only)
Entity	State or Other Jurisdiction of Incorporation or Organization	% Owned Directly or Indirectly by Vulcan
Subsidiaries:
Atlantic Granite Company	South Carolina	66-2/3
Azusa Rock, Inc.	California	100
BHJ Chemical Company, LLC	Delaware	100
Calizas Industriales del Carmen, S.A. de C.V.	Mexico	100
CalMat Co.	Delaware	100
CalMat Leasing Co.	Arizona	100
Goodman Road Properties, LLC	North Carolina	100
MedTex Lands, Inc.	Texas	100
Nolichuckey Sand Co., Inc.	Tennessee	100
Palomar Transit Mix Co.	California	100
Rancho Piedra Caliza, S.A. de C.V.	Mexico	100
Rapica Servicios Tecnicos Y Administrativos, S.A. de C.V.	Mexico	100
RECO Transportation, LLC	Delaware	100
Servicios Integrales, Gestoria Y Administracion, S.A. de C.V.	Mexico	100
Soportes Tecnicos Y Administrativos, S.A. de C.V.	Mexico	100
Southwest Gulf Railroad Company	Texas	95
Statewide Transport, Inc.	Texas	100
Triangle Rock Products, Inc.	California	100
Vulcan Aggregates Company, LLC	Delaware	100
Vulcan Chemicals Investments, LLC	Delaware	100
Vulcan Chloralkali, LLC	Delaware	51
Vulcan Construction Materials, LLC	Delaware	100
Vulcan Construction Materials, LP	Delaware	100
Vulcan Gulf Coast Materials, Inc.	New Jersey	100
Vulcan International Holdings ApS	Denmark	100
Vulcan International Holdings II ApS	Denmark	100
Vulcan Lands, Inc.	New Jersey	100
Vulcan Performance Chemicals, Ltd.	British Columbia	100
Vulica Shipping Company, Limited	Bahamas	100
Wanatah Trucking Co., Inc.	Indiana	100

EX-23

Exhibit (23)

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement No. [333-67586 on Form S-3 and Registration Statements No. 333-40394, 333-99805,and 333-99807] on Form S-8 of Vulcan Materials Company of our reports dated March 10, 2004 (which reports express an unqualified opinion and include an explanatory paragraph related to the adoption of Statement of Financial Accounting Standards (SFAS) No. 143, 142 and 133 appearing in and incorporated by reference in the Annual Report on Form 10-K of Vulcan Materials Company for the year ended December 31, 2003 and to the reference to us under the heading "Experts" in the Prospectus, which is part of these Registration Statements.

/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Birmingham, Alabama
March 10, 2004

EX-24

Exhibit (24)

POWER OF ATTORNEY

         The undersigned director of Vulcan Materials Company, a New Jersey corporation, hereby nominates, constitutes and appoints William F. Denson, III, and Amy M. Tucker, and each of them, the true and lawful attorneys of the undersigned to sign the name of the undersigned as director to the Annual Report on Form 10-K for the year ended December 31, 2003 of said corporation to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to any and all amendments to said report.

         The undersigned hereby grants to said attorneys full power of substitution, resubstitution and revocation, all as fully as the undersigned could do if personally present, hereby ratifying all that said attorneys or their substitutes may lawfully do by virtue hereof.

         IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company has executed this Power of Attorney this 1st day of March, 2004.

/s/ Philip J. Carroll, Jr.                     
     Philip J. Carroll, Jr.

/s/ Livio D. DeSimone                     
     Livio D. DeSimone

/s/ Phillip W. Farmer                       
     Phillip W. Farmer

/s/ H. Allen Franklin                       
     H. Allen Franklin

/s/ Ann McLaughlin Korologos      
    Ann McLaughlin Korologos

/s/ Douglas J. McGregor                
     Douglas J. McGregor

/s/ James V. Napier                       
    James V. Napier

/s/ Donald B. Rice                         
     Donald B. Rice

/s/ Orin R. Smith                          
     Orin R. Smith

/s/ Vincent J. Trosino__________
     Vincent J. Trosino

EX-31

Exhibit 31(a)
Certification of Chief Executive Officer
I, Donald M. James, certify that:
1.	I have reviewed this annual report on Form 10-K of Vulcan Materials Company;
2.	Based on my knowledge, this annual 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 annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of Vulcan Materials Company as of, and for, the periods presented in this annual report;
4.	Vulcan Materials Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for Vulcan Materials Company and have:
a)		designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to Vulcan Materials Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)		evaluated the effectiveness of Vulcan Materials Company's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
c)		disclosed in this annual report any change in Vulcan Materials Company's internal control over financial reporting that occurred during Vulcan Materials Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Vulcan Materials Company's internal control over financial reporting.
5.	Vulcan Materials Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Vulcan Materials Company's auditors and the audit committee of Vulcan Materials Company's Board of Directors:
a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Vulcan Materials Company's ability to record, process, summarize and report financial information; and
b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the Vulcan Materials Company's internal control over financial reporting.
Date       March 12, 2004
			Donald M. James Chairman and Chief Executive Officer

<PAGE 1>

Exhibit 31(b)
Certification of Chief Financial Officer
I, Mark E. Tomkins, certify that:
1.	I have reviewed this annual report on Form 10-K of Vulcan Materials Company;
2.	Based on my knowledge, this annual 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 annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of Vulcan Materials Company as of, and for, the periods presented in this annual report;
4.	Vulcan Materials Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for Vulcan Materials Company and have:
a)		designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to Vulcan Materials Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)		evaluated the effectiveness of Vulcan Materials Company's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
c)		disclosed in this annual report any change in Vulcan Materials Company's internal control over financial reporting that occurred during Vulcan Materials Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Vulcan Materials Company's internal control over financial reporting.
5.	Vulcan Materials Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Vulcan Materials Company's auditors and the audit committee of Vulcan Materials Company's Board of Directors:
a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Vulcan Materials Company's ability to record, process, summarize and report financial information; and
b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the Vulcan Materials Company's internal control over financial reporting.
Date       March 12, 2004
			Mark E. Tomkins Senior Vice President, Chief Financial Officer and Treasurer

<PAGE 2>

EX-32

Exhibit 32(a)
Certificate of Chief Executive Officer of Vulcan Materials Company Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
I, Donald M. James, Chairman and Chief Executive Officer of Vulcan Materials Company, certify that the Annual Report on Form 10-K (the "Report") for the year ended December 31, 2003, filed with the Securities and Exchange Commission on the date hereof:
(i)	fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Vulcan Materials Company.
		Donald M. James Chairman and Chief Executive Officer March 12, 2004
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Vulcan Materials Company and will be retained by Vulcan Materials Company and furnished to the Securities and Exchange Commission or its staff upon request.

<PAGE 1>

Exhibit 32(b)
Certificate of Chief Financial Officer of Vulcan Materials Company Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
I, Mark E. Tomkins, Senior Vice President and Chief Financial Officer of Vulcan Materials Company, certify that the Annual Report on Form 10-K (the "Report") for the year ended December 31, 2003, filed with the Securities and Exchange Commission on the date hereof:
(i)	fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Vulcan Materials Company.
		Mark E. Tomkins Senior Vice President and Chief Financial Officer March 12, 2004
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Vulcan Materials Company and will be retained by Vulcan Materials Company and furnished to the Securities and Exchange Commission or its staff upon request.

<PAGE 2>