EX-99 2 vmc2004qtr1.htm Exhibit 99

Exhibit 99.1

April 28, 2004
FOR IMMEDIATE RELEASE
Investor Contact: Mark Warren (205) 298-3220
Media Contact: David Donaldson (205) 298-3220

VULCAN ANNOUNCES STRONG FIRST QUARTER RESULTS

Birmingham, Ala. -- April 28, 2004 -- Vulcan Materials Company (NYSE:VMC) today announced that first quarter earnings from continuing operations before the cumulative effect of accounting change were $0.15 per diluted share compared to last year's $0.02 per share. The Company recorded net earnings of $0.14 per diluted share in the quarter as compared to a loss of $0.17 per share in the prior year. The prior year loss included a non-cash charge of $0.18 per share related to the cumulative effect of adopting FAS 143, "Accounting for Asset Retirement Obligations". Net sales were $561 million, 8 percent higher than the first quarter of 2003.

Commenting on the results, Don James, Chairman and CEO of Vulcan stated, "Favorable weather and robust construction activity across most markets in March led to a strong rebound in sales and earnings for Construction Materials. First quarter sales in Construction Materials were at a record level with higher sales volumes for all key products, including record aggregates shipments."

In the first quarter, net cash provided by operating activities increased over $18 million from the prior year due primarily to higher earnings. On April 1, 2004, the Company retired $243 million in five-year notes as scheduled with available cash.

Other operating costs decreased approximately $3 million due mostly to lower asset impairment charges.

All results are unaudited.

Segment Results - Construction Materials

For the quarter, net sales increased 10 percent to a record $431.9 million and segment earnings were $42.6 million, an increase of over $23 million from the prior year.

The record sales and strong earnings were due primarily to higher volumes in key products compared to the prior year. Aggregates shipments increased 10 percent as many of the Company's key markets benefited from better weather conditions and stronger construction activity than 2003. Aggregates margins improved from the prior year due to a combination of modest price increases and lower unit operating costs due to higher volumes.

Ready-mixed concrete volumes and earnings also benefited from drier weather and strong residential demand. Earnings from asphalt improved as the impact of higher volumes more than offset the effects of a slight increase in the cost for liquid asphalt.

Segment Results - Chemicals

Net sales of $129.2 million increased approximately $2 million from the first quarter of 2003. The growth in 5CP sales and improved market demand for other chlorinated products were offset by a significant weakness in caustic soda prices.

For the quarter, the segment recorded a loss of $8.5 million as compared to a loss of $3.6 million in the prior year. The impact of lower caustic soda prices and higher legal and asset impairment charges more than offset the effects of increased demand for chlorinated products, including 5CP, and improved plant operating performance.

Outlook

Mr. James stated, "Our 2004 outlook for Construction Materials remains unchanged with earnings for the year in the range of $415 to $445 million.

"A sustained recovery in construction activity appears to be underway. The 10 percent increase in the first quarter marks the third consecutive quarter in which aggregates shipments have rebounded with double digit gains in volume.

"Overall, for the full year, we expect aggregates shipments and pricing in our markets to increase modestly. Residential construction remains robust and we anticipate the pace in 2004 to approximate the level of activity in 2003. Highway construction should increase modestly for the full year and we anticipate a modest increase in private nonresidential construction late in the year.

"With respect to Chemicals, the growth in demand for 5CP and continuing improvements in plant operations should benefit segment results. Demand for chlorine and chlorinated products are improving. Caustic soda prices, however, have weakened considerably and are not expected to strengthen until late in the year. As a result, we are maintaining our projection of a segment loss of $5 to $15 million in 2004.

"Overall for 2004, we continue to expect earnings of $2.45 to $2.65 per share from continuing operations.

"In the second quarter, we expect earnings in both segments to improve from the prior year. As a result, we expect to earn between $0.75 and $0.85 per share."

Conference Call
Vulcan will host a conference call scheduled for 10:00 a.m. CDT on April 29, 2004. Investors and other interested parties may access the teleconference live by calling (800) 299-0148 or via the Internet through Vulcan's home page at vulcanmaterials.com.

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

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


TABLE A

Vulcan Materials Company and Subsidiary Companies


Consolidated Statements of Earnings
(Condensed and unaudited)

(Amounts in thousands,
except per share data)
Three Months Ended March 31
 

2004

2003

Net sales

$561,076

$518,888

Delivery revenues

56,386

47,843

Total revenues

617,462

566,731

Cost of goods sold

475,004

449,401

Delivery costs

56,386

47,843

Cost of revenues

531,390

497,244

Gross profit

86,072

69,487

Selling, administrative and general expenses

53,513

50,656

Other operating costs

1,604

4,550

Minority interest in losses

810

144

Other income, net

2,409

1,136

Earnings from continuing operations before interest and income taxes

34,174

15,561

Interest income

1,760

998

Interest expense

13,045

13,486

Earnings from continuing operations before income taxes

22,889

3,073

Provision for income taxes

7,187

 930

Earnings from continuing operations before cumulative effect of accounting change

15,702

2,143

Loss on discontinued operations

(707)

(882)

Cumulative effect of accounting change

         -

(18,811)

Net earnings (loss)

$ 14,995

$(17,550)

Basic net earnings per share:

    

   Earnings from continuing operations before cumulative effect of accounting change

$0.15

$0.02

   Discontinued operations

-

(0.01)

   Cumulative effect of accounting change

         -

(0.18)

   Net earnings (loss) per share

$0.15

$(0.17)

Diluted net earnings per share:

    

   Earnings from continuing operations before cumulative effect of accounting change

$0.15

$0.02

   Discontinued operations

(0.01)

(0.01)

   Cumulative effect of accounting change

         -

(0.18)

   Net earnings (loss) per share

$0.14

$(0.17)

Weighted-average common shares outstanding:

    

   Basic

102,188

101,779

   Assuming dilution

103,425

102,371

Cash dividends per share of common stock

$0.260

$0.245

Depreciation, depletion, accretion and amortization from continuing operations

$63,492

$65,060

Effective tax rate

31.4%

30.3%


 

TABLE B

Vulcan Materials Company and Subsidiary Companies

    



Operating Results by Reportable Segment (Unaudited)

(Amounts in thousands)
Three Months Ended
March 31
 

2004

2003

Net Sales

    

Construction Materials

$431,883

$392,037

Chemicals

129,193

126,851

   Total

$561,076

$518,888

Total Revenues

    

Construction Materials

$474,399

$428,435

Chemicals

143,063

138,296

   Total

$617,462

$566,731

Earnings from Continuing Operations Before Interest and Income Taxes

    

Construction Materials

$ 42,645

$ 19,149

Chemicals

(8,471)

(3,588)

   Segment* earnings

$34,174

$15,561

Depreciation, Depletion, Accretion and Amortization from
   Continuing Operations

    

Construction Materials

$51,577

$52,197

Chemicals

11,915

12,863

   Total

$63,492

$65,060

*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.

  


TABLE C

Vulcan Materials Company and Subsidiary Companies

(Amounts in thousands)

Consolidated Balance Sheets
(Condensed and unaudited)

March 31
2004  

December 31
2003  

March 31
2003  

Assets

      

Cash and cash equivalents

$436,987

$416,689

$166,301

Medium-term investments

-

4,974

-

Accounts and notes receivable:

      

   Accounts and notes receivable, gross

361,030

368,671

354,814

   Less: Allowance for doubtful accounts

(8,434)

(8,718)

(9,419)

      Accounts and notes receivable, net

352,596

359,953

345,395

Inventories:

      

   Finished products

184,478

174,778

197,661

   Raw materials

7,274

7,483

11,543

   Products in process

908

476

648

   Operating supplies and other

38,288

36,639

40,319

      Inventories

230,948

219,376

250,171

Deferred income taxes

35,156

34,358

37,505

Prepaid expenses

16,674

14,892

13,477

      Total current assets

1,072,361

1,050,242

812,849

Investments and long-term receivables

20,940

21,111

19,593

Property, plant and equipment:

      

   Property, plant and equipment, cost

4,155,101

4,115,646

4,195,240

   Less: Reserve for depreciation, depletion and amortization

(2,268,158)

(2,222,998)

(2,192,508)

   Property, plant and equipment, net

1,886,943

1,892,648

2,002,732

Goodwill

579,817

579,817

575,838

Other assets

96,200

93,042

85,785

      Total

$3,656,261

$3,636,860

$3,496,797

Liabilities and Shareholders' Equity

      

Current maturities of LTD

$249,621

$249,721

$41,382

Notes payable

22,000

29,000

35,272

Trade payables and accruals

143,698

129,361

138,746

Other current liabilities

128,544

134,870

102,816

      Total current liabilities

543,863

542,952

318,216

Long-term debt

609,148

607,654

857,120

Deferred income taxes

352,069

338,913

342,411

Other noncurrent liabilities

258,263

252,518

229,963

Minority interest

91,177

91,987

92,514

Shareholders' equity

1,801,741

1,802,836

1,656,573

      Total

$3,656,261

$3,636,860

$3,496,797

Current ratio

2.0

1.9

2.6


 

TABLE D

Vulcan Materials Company and Subsidiary Companies

    


Consolidated Statements of Cash Flows
(Condensed and unaudited)

(Amounts in thousands)
Three Months Ended
March 31
 

2004

2003

Operating Activities

    

Net earnings (loss)

$14,995

$(17,550)

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

    

   Depreciation, depletion, accretion and amortization

63,494

67,718

   Cumulative effect of accounting change

-

18,811

   Increase in assets before effects of business acquisitions

(9,648)

(30,418)

   Increase in liabilities before effects of business acquisitions

21,650

36,293

   Other, net

3,523

1,054

      Net cash provided by operating activities

94,014

75,908

Investing Activities

    

Purchases of property, plant and equipment

(41,919)

(51,107)

Proceeds from sale of property, plant and equipment

5,106

4,771

Payment for businesses acquired, net of acquired cash

(14,388)

-

Decrease in medium-term investments

4,974

-

Change in investments and long-term receivables

145

(3,653)

      Net cash used for investing activities

(46,082)

(49,989)

Financing Activities

    

Net payments - commercial paper and bank lines of credit

(7,000)

(2,025)

Payment of short-term debt

(477)

(736)

Payment of long-term debt

(24)

-

Dividends paid

(26,520)

(24,878)

Proceeds from exercise of stock options

6,573

248

Other, net

(186)

(2,955)

      Net cash used for financing activities

(27,634)

(30,346)

Net increase (decrease) in cash and cash equivalents

20,298

(4,427)

Cash and cash equivalents at beginning of period

416,689

170,728

Cash and cash equivalents at end of period

$436,987

$166,301


 

TABLE E

1. Supplemental Cash Flow Information

    

Supplemental information referable to the Condensed Consolidated Statements of Cash Flows for the three months ended March 31 is summarized below (amounts in thousands):

  
 

2004

2003

Supplemental Disclosure Of Cash Flow Information

    

Cash paid (refunded) during the period for:

    

   Interest, net of amount capitalized

$7,609

$7,338

   Income taxes

1,239

(4,536)