SECURITIES AND EXCHANGE COMMISSION

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OmKcNCGbAVChi0iRTuDgeiESZ1ybf4EKxEt02pDQ3fS6itURA58nHy0aKW9FXlgD c3AWYudszhA86pkWdQ5/rw== 0000103973-04-000105.txt : 20040430 0000103973-04-000105.hdr.sgml : 20040430 20040430091152 ACCESSION NUMBER: 0000103973-04-000105 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VULCAN MATERIALS CO CENTRAL INDEX KEY: 0000103973 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 630366371 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04033 FILM NUMBER: 04767468 BUSINESS ADDRESS: STREET 1: 1200 URBAN CENTER DRIVE CITY: BIRMINGHAM STATE: AL ZIP: 35242 BUSINESS PHONE: 2052983000 MAIL ADDRESS: STREET 1: PO BOX 385014 CITY: BIRMINGHAM STATE: AL ZIP: 35238-5014 10-Q 1 q110q2004.htm VULCAN MATERIALS 10-Q 1Q 2004 SECURITIES AND EXCHANGE COMMISSION

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
_____________________________
FORM 10-Q
	(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 2004
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
VULCAN MATERIALS COMPANY (Exact name of registrant as specified in its charter)
New Jersey (State or other jurisdiction of incorporation)		1-4033 (Commission file number)	63-0366371 (I.R.S. Employer Identification No.)
1200 Urban Center Drive Birmingham, Alabama 35242 (Address of principal executive offices) (zip code)
(205) 298-3000 Registrant's telephone number including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes X No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Class
Common Stock, $1 Par Value

Shares outstanding
at March 31, 2004
102,104,111

VULCAN MATERIALS COMPANY

FORM 10-Q
QUARTER ENDED MARCH 31, 2004

Contents

			Page No.
PART I	FINANCIAL INFORMATION
	Item 1.	Financial Statements Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Earnings Condensed Consolidated Statements of Cash Flows Notes to Condensed Consolidated Financial Statements	3 4 5 6
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
	Item 4.	Controls and Procedures	22
PART II	OTHER INFORMATION
	Item 1.	Legal Proceedings	23
	Item 6.	Exhibits and Reports on Form 8-K	24
SIGNATURES			25

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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 Medium-term investments Accounts and notes receivable: Accounts and notes receivable, gross Less: Allowance for doubtful accounts Accounts and notes receivable, net Inventories: Finished products Raw materials Products in process Operating supplies and other Inventories Deferred income taxes Prepaid expenses Total current assets Investments and long-term receivables Property, plant and equipment: Property, plant and equipment, cost Less: Reserve for depr., depl., & amort. Property, plant and equipment, net Goodwill Other assets Total Liabilities and Shareholders' Equity Current maturities of long-term debt Notes payable Trade payables and accruals Other current liabilities Total current liabilities Long-term debt Deferred income taxes Other noncurrent liabilities Minority interest in a consolidated subsidiary Commitments and contingencies (Notes 10 & 14) Shareholders' equity Total Current ratio	$ 436,987 - -- 361,030 (8,434) 352,596 184,478 7,274 908 38,288 230,948 35,156 16,674 1,072,361 20,940 4,155,101 (2,268,158) 1,886,943 579,817 96,200 $ 3,656,261 $ 249,621 22,000 143,698 128,544 543,863 609,148 352,069 258,263 91,177 1,801,741 $ 3,656,261 2.0	$ 416,689 4,974 368,671 (8,718) 359,953 174,778 7,483 476 36,639 219,376 34,358 14,892 1,050,242 21,111 4,115,646 (2,222,998) 1,892,648 579,817 93,042 $ 3,636,860 $ 249,721 29,000 129,361 134,870 542,952 607,654 338,913 252,518 91,987 1,802,836 $ 3,636,860 1.9	$ 166,301 - -- 354,814 (9,419) 345,395 197,661 11,543 648 40,319 250,171 37,505 13,477 812,849 19,593 4,195,240 (2,192,508) 2,002,732 575,838 85,785 $ 3,496,797 $ 41,382 35,272 138,746 102,816 318,216 857,120 342,411 229,963 92,514 1,656,573 $ 3,496,797 2.6

See accompanying Notes to Condensed Consolidated Financial Statements

Vulcan Materials Company and Subsidiary Companies
(Amounts in thousands, except per share data)
Consolidated Statements of Earnings	Three Months Ended March 31
(Condensed and unaudited)	2004	2003
Net sales Delivery revenues Total revenues Cost of goods sold Delivery costs Cost of revenues Gross profit Selling, administrative and general expenses Other operating costs Minority interest in losses of a consolidated subsidiary Other income, net Earnings from continuing operations before interest and income taxes Interest income Interest expense Earnings from continuing operations before income taxes Provision for income taxes Earnings from continuing operations before cumulative effect of accounting change Discontinued operations Loss from discontinued operations Gain on disposal of discontinued operations Income tax benefit Loss on discontinued operations, net of income taxes Cumulative effect of accounting change, net of income taxes	$ 561,076 56,386 617,462 475,004 56,386 531,390 86,072 53,513 1,604 810 2,409 34,174 1,760 13,045 22,889 7,187 15,702 (1,141) - -- 434 (707) --	$ 518,888 47,843 566,731 449,401 47,843 497,244 69,487 50,656 4,550 144 1,136 15,561 998 13,486 3,073 930 2,143 (3,122) 1,858 382 (882) (18,811)
Net earnings (loss)	$ 14,995	$ (17,550)
Basic earnings per share: Earnings from continuing operations before cumulative effect of accounting change Discontinued operations Cumulative effect of accounting change Net earnings (loss) per share Diluted earnings per share: Earnings from continuing operations before cumulative effect of accounting change Discontinued operations Cumulative effect of accounting change Net earnings (loss) per share	$ 0.15 - -- -- $ 0.15 $ 0.15 (0.01) -- $ 0.14	$ 0.02 (0.01) (0.18) $ (0.17) $ 0.02 (0.01) (0.18) $ (0.17)
Weighted-average common shares outstanding: Basic Assuming dilution	102,188 103,425	101,779 102,371
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%

See accompanying Notes to Condensed Consolidated Financial Statements

Vulcan Materials Company and Subsidiary Companies	(Amounts in Thousands)
Consolidated Statements of Cash Flows	Three Months Ended March 31
(Condensed and unaudited)	2004	2003
Operating Activities Net earnings (loss) Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation, depletion, accretion and amortization Cumulative effect of accounting change Increase in assets before effects of business acquisitions Increase in liabilities before effects of business acquisitions Other, net Net cash provided by operating activities	$ 14,995 63,494 - -- (9,648) 21,650 3,523 94,014	$ (17,550) 67,718 18,811 (30,418) 36,293 1,054 75,908
Investing Activities Purchases of property, plant and equipment Proceeds from sale of property, plant and equipment Payment for business acquisitions, net of acquired cash Decrease in medium-term investments Change in investments and long-term receivables Net cash used for investing activities	(41,919) 5,106 (14,388) 4,974 145 (46,082)	(51,107) 4,771 - -- - -- (3,653) (49,989)
Financing Activities Net payments - commercial paper and bank lines of credit Payment of short-term debt Payment of long-term debt Dividends paid Proceeds from exercise of stock options Other, net Net cash used for financing activities	(7,000) (477) (24) (26,520) 6,573 (186) (27,634)	(2,025) (736) - -- (24,878) 248 (2,955) (30,346)
Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	20,298 416,689 $ 436,987	(4,427) 170,728 $ 166,301

See accompanying Notes to Condensed Consolidated Financial Statements

VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

Our accompanying condensed consolidated financial statements have been prepared in compliance with Form 10-Q instructions and thus do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of our management, the statements reflect all adjustments, including those of a normal recurring nature, necessary to present fairly the results of the reported interim periods. The statements should be read in conjunction with the summary of accounting policies and notes to financial statements included in our latest annual report on Form 10-K.

Due to the divestiture of the components of the Chemicals segment's Performance Chemicals business unit (Note 3), the operating results of these businesses have been presented as discontinued operations in our accompanying Condensed Consolidated Statements of Earnings.

Minority interest reflected in the accompanying Condensed 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.

Certain items previously reported in specific financial statement captions have been reclassified to conform to this presentation.

2. Stock-based Compensation

The pro forma effect on net earnings and earnings per share if we had applied the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-based Compensation" (FAS 123), and SFAS No. 148, "Accounting for Stock-based Compensation - Transition and Disclosure, an Amendment of FASB Statement No. 123" (FAS 148), to stock-based employee compensation for the three months ended March 31 is illustrated below (amounts in thousands, except per share data):

Three Months Ended
    March 31

    2004

    2003

Net earnings (loss), as reported
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
Deduct: Total stock-based employee compensation
  expense determined under fair value based
  method for all awards, net of related tax effects

$ 14,995

1,251

  (2,315)

$ (17,550)

281

  (1,485)

Pro forma net earnings (loss)

$ 13,931

$ (18,754)

Earnings per share:
  Basic, as reported
  Basic, pro forma

  Diluted, as reported
  Diluted, pro forma

$0.15
$0.14

$0.14
$0.13

$(0.17)
$(0.18)

$(0.17)
$(0.18)

The impact related to discontinued operations was immaterial to our Condensed Consolidated Statements of Earnings.

3. Discontinued Operations

During 2003 we sold our Performance Chemicals businesses resulting in the classification of their financial results as discontinued operations in the accompanying Condensed Consolidated Statements of Earnings. 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.

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

Three Months Ended
    March 31

    2004

    2003

Net sales
Total revenues
Loss before interest and income taxes
Pretax loss

$ 0.8
$ 0.8
$ (1.0)
$ (1.1)

$ 31.5
$ 33.7
$ (1.3)
$ (1.3)

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

March 31
  2004

Dec. 31
  2003

March 31
  2003

Current assets
Property, plant and equipment, net
Other assets
  Total assets

$ 0.3
- --
    --
$ 0.3

$ 8.4
- --
    --
$ 8.4

$ 47.1
38.1
   9.6
$ 94.8

Current liabilities
Deferred income taxes
Other noncurrent liabilities
  Total liabilities

$  2.5
- --
  16.6
$ 19.1

$  4.5
- --
  16.5
$ 21.0

$ 10.7
- --
  18.2
$ 28.9

4. 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):

Three Months Ended
    March 31

    2004

    2003

Weighted-average common shares outstanding
Dilutive effect of:
    Stock options
    Other
Weighted-average common shares outstanding,
  assuming dilution

102,188

962
     275

103,425

101,779

416
     176

102,371

Antidilutive common stock equivalents are not included in our earnings per share calculations and for the three months ended March 31 were as follows: 2004 - 0; and 2003 - 5,031,980.

5. Effective Tax Rate

In accordance with accounting principles generally accepted in the United States of America, it is our practice for the end of each interim reporting period to make a best estimate of the effective tax rate expected for the full fiscal year. The rate so determined is used in providing for income taxes on a current year-to-date basis.

6. Derivative Instruments

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 SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (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 $3,429,000 less income tax expense of $1,289,000 in our consolidated financial statements as of March 31, 2004. If market prices for natural gas remained at the March 31, 2004 level, earnings of $3,429,000 would be classified into pretax earnings within the next 12 months. Comparatively, as of March 31, 2003, our consolidated financial statements reflected the fair value of the open co ntracts as a component of accumulated other comprehensive income of $4,156,000, less income tax expense of $1,562,000.

In the quarter ended December 31, 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 as an asset in our Condensed Consolidated Balance Sheets with an offsetting adjustment to record the underlying debt at its fair value. As of March 31, 2004, the estimated fair value of our interest rate swap agreement reflected projected proceeds of $778,000.

There was no impact to earnings due to hedge ineffectiveness during the quarters ended March 31, 2004 and 2003.

7. Comprehensive Income

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. Total comprehensive income is detailed below (in thousands of dollars):

Three Months Ended
    March 31

    2004

    2003

Net earnings (loss)
Other comprehensive income (loss):
  Fair value adjustments to cash
    flow hedges
Total comprehensive income (loss)

$ 14,995

  (509)
$ 14,486

$ (17,550)

     156
$ (17,394)

8. Benefit Plans

The following table sets forth the components of net periodic benefit cost for the three months ended March 31 (in thousands of dollars):

	Pension Benefits		Postretirement Benefits
	2004	2003	2004	2003
Components of Net Periodic Benefit Cost: Service cost Interest cost Expected return on plan assets Amortization of prior service cost Recognized actuarial (gain)/loss	$ 4,474 6,921 (10,222) 521 (94)	$ 4,117 6,347 (9,431) 521 (384)	$ 1,205 1,574 - -- (57) 344	$ 677 982 - -- (57) --
Net periodic benefit cost	$ 1,600	$ 1,170	$ 3,066	$ 1,602

We also sponsor unfunded, nonqualified pension plans. The pension expense for these plans for the three months ended March 31, 2004 and 2003 was $806,000 and $763,000, respectively.

During the three months ended March 31, 2004 and 2003, no contributions were made to the pension plans.

9. Accounting Change

On January 1, 2003, we adopted SFAS No. 143, "Accounting for Asset Retirement Obligations" (FAS 143). 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. 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 of 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 three months ended March 31, 2004, we recognized FAS 143 related operating costs totaling $2,788,000. For the three months ended March 31, 2003, we recognized FAS 143 related operating costs totaling $2,380,000 including $33,000 related to discontinued operations. With the exception of the costs related to discontinued operations, all FAS 143 related operating costs are reported within cost of goods sold in our accompanying Condensed Consolidated Statements of E arnings.

Our asset retirement obligations are reported in our accompanying Condensed Consolidated Balance Sheets within the total for other noncurrent liabilities. A reconciliation of the carrying amount of our asset retirement obligations since adoption is as follows (in thousands of dollars):

Asset retirement obligations as of December 31, 2002

$        --

    Cumulative effect adjustment
    Liabilities incurred
    Liabilities (settled)
    Accretion expense
    Revisions up (down)

99,259
- --
(1,412)
1.257
           --

Asset retirement obligations as of March 31, 2003

$  99,104

    Liabilities incurred
    Liabilities (settled)
    Accretion expense
    Revisions up (down)

--
(7,001)
3,873
    11,707

Asset retirement obligations as of December 31, 2003

$ 107,683

    Liabilities incurred
    Liabilities (settled)
    Accretion expense
    Revisions up (down)

--
(940)
1,389
           --

Asset retirement obligations as of March 31, 2004

$ 108,132

The $99,259,000 cumulative effect portion of the asset retirement obligations during the 2003 adoption of FAS 143 was partially offset by amounts previously accrued under generally accepted accounting principles in effect prior to the issuance of FAS 143.

10. Guarantees

We have guarantee contracts in the form of irrevocable standby letters of credit. Our commercial banks issue these 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 March 31, 2004 are summarized in the table below (in thousands of dollars):

Amount

  Term

   Maturity

Risk management requirement for insurance claims
Payment surety required by utilities
Contractual reclamation/restoration requirements

$ 17,989
5,110
   3,303

One year
One year
One year

Renewable annually
Renewable annually
Renewable annually

    Total standby letters of credit

$ 26,402

11. New Accounting Standards

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51" (FIN 46). FIN 46 required variable interest entities, as defined, to be consolidated by the primary beneficiary of the entity. FIN 46, as revised, was effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must have been applied for the first interim or annual period ending after December 15, 2003. As we had no variable interest entities required to be consolidated as a result of FIN 46, there was no impact to 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." We adopted the annual disclosure provisions for the fiscal year ended December 31, 2003. We adopted the interim disclosure provisions effective with this filing as provided in Note 8.

12. Segment Data

We have two reportable segments, Construction Materials and Chemicals, which are organized around their products and services. The accounting policies of the segments are the same as those described in the summary of significant accounting polices in the notes to our consolidated financial statements on our latest annual report on Form 10-K. Our determination of segment earnings (a) does not reflect discontinued operations; (b) recognizes equity in the earnings or losses on 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. Allocations are based on a trailing 12-month average capital employed and net sales.

As the result of our decision 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 Condensed Consolidated Statements of Earnings.

Because the majority of our activities are domestic, sales and assets outside the United States are not material.

Following is the comparative segment financial disclosure (amounts in millions):

Three Months Ended
     March 31

  2004

  2003

NET SALES
  Construction Materials
  Chemicals
     Total

$ 431.9
   129.2
$ 561.1

$ 392.0
   126.9
$ 518.9

TOTAL REVENUES
  Construction Materials
  Chemicals
     Total

$ 474.4
  143.1
$ 617.5

$ 428.4
  138.3
$ 566.7

EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE INTEREST
AND INCOME TAXES
  Construction Materials
  Chemicals
     Total

$ 42.7
   (8.5)
$ 34.2

$ 19.2
   (3.6)
$ 15.6

March 31
   2004

Dec. 31
   2003

March 31
   2003

IDENTIFIABLE ASSETS
  Construction Materials
  Chemicals
     Identifiable Assets
  General corporate assets and other
  Cash items
       Total

$ 2,636.8
     503.7
3,140.5
78.8
      437.0
$ 3,656.3

$ 2,620.1
     518.8
3,138.9
81.3
      416.7
$ 3,636.9

$ 2,652.5
     609.2
3,261.7
68.8
     166.3
$ 3,496.8

13. Supplemental Cash Flow Information

Supplemental information referable to our 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
      Income taxes

$ 7,609
1,239

$ 7,338
(4,536)

14. Commitments and Contingencies

As previously reported in our Annual Report on form 10-K for the year ended December 31, 2003, we have been named as one of numerous defendants in 164 lawsuits in Mississippi and Texas by 10,817 plaintiffs, one case in California with 125 plaintiffs and two cases in Louisiana with two plaintiffs. 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 number have been removed to Federal district court. The plaintiffs in the cases in Mississippi and Texas allege personal injuries 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 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. In the case in California, the plai ntiffs allege personal injuries relating to exposure to silica, and the cases in Louisiana relate to liability as a premises owner on which sand blasting was used. All of these cases are in the early stages of discovery.

It is our opinion that the disposition of these described lawsuits will not adversely affect our consolidated financial position to a material extent.

15. Subsequent Event

On April 1, 2004, we made a scheduled debt payment using available cash in the principal amount of $243,000,000 related to 5.75% five-year notes issued in 1999.

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations

GENERAL COMMENTS

Seasonality of our Business

Results of any individual quarter are not necessarily indicative of results to be expected for the year due principally to the effect that weather can have on the sales and production volume of our Construction Materials segment. Normally, the highest sales and earnings of our Construction Materials segment are attained in the third quarter and the lowest are realized in the first quarter when sales and earnings are substantially below the levels realized in all subsequent quarters of the year.

Segment Earnings

Segment earnings are 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.

Forward-Looking Statements

Certain matters discussed in this report contain forward-looking statements that are subject to risks, assumptions and uncertainties that could cause our 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 we operate; 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 our periodic reports.

RESULTS OF OPERATIONS

The following 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.

First Quarter 2004 as Compared with First Quarter 2003

Continuing Operations:
We reported first quarter net sales of $561.1 million, 8% higher than the first quarter of 2003. First quarter earnings from continuing operations before cumulative effect of accounting change were $15.7 million, or $0.15 per diluted share, compared to last year's $2.1 million, or $0.02 per diluted share.

For the quarter, Construction Materials reported record net sales of $431.9 million, up $39.9 million or 10% from the prior year. The record net sales were due primarily to higher volumes in key products compared to the prior year. Aggregates shipments increased 10% as many of our key markets benefited from better weather conditions and stronger construction activity than 2003. Aggregates pricing increased modestly. Ready-mixed concrete volumes benefited from drier weather and strong residential demand. Our Chemicals segment reported first quarter net sales of $129.2 million, up $2.3 million from the prior year. The growth in 5CP sales and improved market demand for other chlorinated products were offset by a significant weakness in caustic soda prices.

Earnings from continuing operations before interest and income taxes of $34.2 million were up $18.6 million from the first quarter of 2003. Construction Materials segment earnings were $42.7 million compared to $19.2 million in the prior year. This $23.5 million increase was due mostly to the stronger volumes in key products resulting from the above-mentioned better weather conditions and stronger construction activity. Aggregates margins improved from the prior year due to a combination of modest price increases and lower unit operating costs due to higher volumes. 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. The Chemicals segment recorded a loss of $8.5 million as compared to a loss of $3.6 million in the first quarter of 2003. 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, in cluding 5CP, and improved plant operating performance.

Selling, administrative and general expenses of $53.5 million increased $2.9 million or 6% from the first quarter 2003 level due primarily to increased costs for healthcare and incentive compensation. Conversely, other operating costs of $1.6 million decreased $2.9 million from the prior year mostly due to lower asset impairment charges.

Interest expense of $13.0 million decreased $0.4 million resulting from the reduction in outstanding debt.

Our effective tax rate was 31.4% for the first quarter of 2004, up from the 2003 rate of 30.3% for the comparable period. This increase reflects principally a lower favorable effect of statutory depletion.

Discontinued Operations and Cumulative Effect of Accounting Change:
As described in Note 3 to the Condensed Consolidated Financial Statements, our Performance Chemicals business unit is reported in discontinued operations pursuant to FAS 144. Loss on discontinued operations totaled $0.7 million, or $0.01 per diluted share for the first three months of 2004 compared with a $0.9 million loss, or $0.01 per diluted share in 2003. The 2003 loss included a $1.9 million pretax gain on the disposal of our wastewater treatment business.

The cumulative effect of accounting change in the first quarter of 2003 resulted from our adoption of FAS 143 as described in Note 9 to the Condensed Consolidated Financial Statements. This adoption resulted in a cumulative, one-time, non-cash charge of $18.8 million or $0.18 per diluted share.

Net earnings for the first quarter of 2004 of $15.0 million or $0.14 per diluted share reflected the $0.7 million loss, or $0.01 per diluted share impact, from the divestiture of our Performance Chemicals business unit. Comparatively, the net loss of $17.6 million or $0.17 per diluted share for the first quarter of 2003 reflected both the $0.9 million loss, or $0.01 per diluted share impact, from the divestiture of our Performance Chemicals business unit, and the $18.8 million charge, or $0.18 per diluted share impact, from the adoption of FAS 143.

LIQUIDITY AND CAPITAL RESOURCES

We believe that we have sufficient financial resources, including cash provided by operating activities and ready access to the capital markets, to fund 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 $94.0 million in the first three months of 2004, up nearly 24% from the $75.9 million generated in the same period last year. This $18.1 million increase in cash provided by operating activities resulted primarily from higher cash earnings. Net cash used for investing activities of $46.1 million decreased $3.9 million from the first three months of 2003 due to an $8.8 million decrease in investments (including medium-term) and long-term receivables, and a $9.2 million decrease in capital purchases offset in part by increased acquisition spending of $14.4 million. Net cash used for financing activities decreased $2.7 million from 2003's comparable period to total $27.6 million for the three months ended March 31, 2004. This reduction in cash used resulted from a $6.3 million increase in proceeds from exercises of stock options.

Working Capital

Working capital, the excess of current assets over current liabilities, totaled $528.5 million at March 31, 2004. This represented a $21.2 million increase from our December 31, 2003 level and a $33.9 million increase from our March 31, 2003 level. The increase from year-end 2003 resulted primarily from an increase in cash items of $15.3 million, a seasonal increase in inventories of $11.6 million and a decrease in notes payable of $7.0 million offset in part by a seasonal increase in accounts payable of $14.0 million. The increase from March 31, 2003 resulted primarily from an increase in cash items of $270.7 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 an increase in certain accrued liabilities. The scheduled debt payment was made on April 1, 2004.

The current ratio was 2.0 as of March 31, 2004. This compares to the 1.9 ratio at year-end 2003 and the 2.6 ratio at March 31, 2003. The 2004 increase in the current ratio resulted primarily from the above-mentioned increases in cash items and inventories. The decrease in the current ratio from March to December 2003 resulted primarily from the above-mentioned reclassification of $243.0 million of notes from long-term to current.

Short-term Borrowings

Short-term borrowings consisted of the following (in thousands of dollars):

March 31
   2004

Dec. 31
   2003

March 31
   2003

Bank borrowings
  Total notes payable

$ 22,000
$ 22,000

$ 29,000
$ 29,000

$ 35,272
$ 35,272

Unsecured bank lines of credit totaling $350.0 million were maintained at March 31, 2004, none of which was in use. In addition, the Chloralkali joint venture had an uncommitted bank credit facility in the amount of $40.0 million available at March 31, 2004, of which $22.0 million was drawn, as noted above.

Current Maturities

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

	March 31 2004	Dec. 31 2003	March 31 2003
5.75% 5-year notes payable in 2004 Private placement notes Medium-term notes Tax-exempt bonds Other notes	$ 243,000 5,000 1,621	$ 243,000 5,000 1,721	$ -- 35,000 5,000 1,382
Total	$ 249,621	$ 249,721	$ 41,382

On April 1, 2004, we made the scheduled debt payment in the principal amount of $243.0 million related to the five-year notes issued in 1999.

Long-term Obligations

Long-term obligations and measures are summarized below (amounts in thousands, except percentages):

	March 31 2004	Dec. 31 2003	March 31 2003
Long-term obligations: Long-term debt Total long-term obligations	$ 609,148 $ 609,148	$ 607,654 $ 607,654	$ 857,120 $ 857,120
Long-term capital: Long-term debt Deferred income taxes Other noncurrent liabilities Shareholders' equity Total long-term capital	$ 609,148 352,069 258,263 1,801,741 $ 3,021,221	$ 607,654 338,913 252,518 1,802,836 $ 3,001,921	$ 857,120 342,411 229,963 1,656,573 $ 3,086,067
Long-term obligations as a percent of: Long-term capital Shareholders' equity	20.2% 33.8%	20.2% 33.7%	27.8% 51.7%

The calculations of total debt to total capital are summarized below (amounts in thousands, except percentages):

	March 31 2004	Dec. 31 2003	March 31 2003
Debt: Current maturities of long-term debt Notes payable Long-term debt Total debt	$ 249,621 22,000 609,148 $ 880,769	$ 249,721 29,000 607,654 $ 886,375	$ 41,382 35,272 857,120 $ 933,774
Capital: Total debt Shareholders' equity Total capital	$ 880,769 1,801,741 $ 2,682,510	$ 886,375 1,802,836 $ 2,689,211	$ 933,774 1,656,573 $ 2,590,347
Ratio of total debt to total capital	32.8%	33.0%	36.0%

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%. 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.

Guarantees

We have guarantee contracts in the form of irrevocable standby letters of credit. Our commercial banks 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 the standby letters of credit expire or are cancelled.

Our standby letters of credit as of March 31, 2004 are summarized in the table below (in thousands of dollars):

	Amount	Term	Maturity
Risk management requirement for insurance claims Payment surety required by utilities Contractual reclamation/restoration requirements	$ 17,989 5,110 3,303	One year One year One year	Renewable annually Renewable annually Renewable annually
Total standby letters of credit	$ 26,402

CRITICAL ACCOUNTING POLICIES

We follow certain significant accounting policies when preparing our consolidated financial statements. A summary of these policies is included in our latest annual report on Form 10-K. 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 our 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 we believe to be reasonable under the circumstances. The result 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. Our act ual results may differ from these estimates.

We believe that estimates, assumptions and judgments involved in the accounting policies described in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our most recent annual report on Form 10-K have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies.

Item 3. Quantitative and Qualitative Disclosures
About 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: March 31, 2004 - $3,429,000 favorable; December 31, 2003 - $4,246,000 favorable; and March 31, 2003 - $4,156,000 favorable. 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 our underlying commodity swap and option contracts based on the fair value at March 31, 2004 of approximately $1,184,000.

We are exposed to interest rate risk due to our various long-term debt instruments. Substantially all of our 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 $50,000,000. 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 November 3, 2003 and 1.167% at March 31, 2004. 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 $240,000,000. The realized gains and losses upon settlement related to the interest rate swap agreement are reflected in interest expense concurrent w ith the hedged interest payments on the debt. The estimated fair values of this agreement were as follows: March 31, 2004 - $778,000 favorable; and December 31, 2003 - $302,000 favorable.

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

At March 31, 2004, the estimated fair market value of our debt instruments was $925,115,000 as compared to our book value of $858,769,000. The effect of a hypothetical decline in interest rates of 1% would increase our fair market value of the liability by approximately $23,091,000.

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 AA-rated corporate 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 our latest annual report on Form 10-K.

Item 4. 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 Securities and Exchange Commission (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 March 31, 2004. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to mater ial information required to be included in our periodic SEC 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 II. OTHER INFORMATION

Item 1. Legal Proceedings

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2003, we have been named as one of numerous defendants in 164 lawsuits in Mississippi and Texas by 10,817 plaintiffs, one case in California with 125 plaintiffs and two cases in Louisiana with two plaintiffs. 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 number have been removed to Federal district court. The plaintiffs in the cases in Mississippi and Texas allege personal injuries 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 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. In the case in California, the plai ntiffs allege personal injuries relating to exposure to silica, and the cases in Louisiana relate to liability as a premises owner on which sand blasting was used. All of these cases are in the early stages of discovery.

It is our opinion that the disposition of these described lawsuits will not adversely affect our consolidated financial position to a material extent.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit 3(a) - By-laws, as restated February 2, 1990, and as last amended March 30, 2004.

Exhibit 31(a) - Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31(b) - Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32(a) - Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32(b) - Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

We filed a Current Report on Form 8-K on January 5, 2004, pursuant to which we furnished our updated earnings guidance dated January 5, 2004, regarding our fourth quarter 2003 financial results.

We filed a Current Report on Form 8-K on February 3, 2004, pursuant to which we furnished our earnings release dated February 2, 2004, regarding our fourth quarter 2003 financial results.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VULCAN MATERIALS COMPANY

Date April 30, 2004

/s/ Ejaz A. Khan
Ejaz A. Khan
Vice President, Controller and Chief Information Officer

/s/ Mark E. Tomkins
Mark E. Tomkins
Senior Vice President, Chief Financial Officer and
Treasurer

EX-3 2 by-laws2004.htm EXHIBIT 3(A)-BY-LAWS AS LAST AMENDED MARCH 30, 2004 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 March 30, 2004

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

<PAGE 3>

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 presiding director, 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

<PAGE 4>

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.

<PAGE 5>

           (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.

<PAGE 6>

           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.

<PAGE 7>

           (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 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.

<PAGE 8>

           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 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.

<PAGE 9>

           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.

           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.

<PAGE 10>

           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.

           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

<PAGE 11>

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.

<PAGE 12>

           (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

<PAGE 13>

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.

<PAGE 14>

           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.

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

<PAGE 15>

           (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.

<PAGE 16>

EX-31 3 exhibit31-sec302.htm EXHIBIT 31(A)&(B) SECTION 302 CERTIFICATIONS CEO & CFO CERTIFICATIONS

EXHIBIT 31(a)
Certification of Chief Executive Officer
I, Donald M. James, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Vulcan Materials Company;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of Vulcan Materials Company as of, and for, the periods presented in this quarterly 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 quarterly report is being prepared;
b)		evaluated the effectiveness of Vulcan Materials Company's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
c)		disclosed in this quarterly 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 April 30, 2004
			/s/ Donald M. James Donald M. James Chairman and Chief Executive Officer

EXHIBIT 31(b)
Certification of Chief Financial Officer
I, Mark E. Tomkins, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Vulcan Materials Company;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of Vulcan Materials Company as of, and for, the periods presented in this quarterly 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 quarterly report is being prepared;
b)		evaluated the effectiveness of Vulcan Materials Company's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
c)		disclosed in this quarterly 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 April 30, 2004
			/s/ Mark E. Tomkins Mark E. Tomkins Senior Vice President, Chief Financial Officer and Treasurer

EX-32 4 exhibit32-sec906.htm EXHIBIT 32(A)&(B) SECTION 906 CERTIFICATIONS CEO & CFO EXHIBIT 99

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 Quarterly Report on Form 10-Q (the "Report") for the quarter ended March 31, 2004, 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.
		/s/Donald M. James Donald M. James Chairman and Chief Executive Officer April 30, 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.

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 Quarterly Report on Form 10-Q (the "Report") for the quarter ended March 31, 2004, 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.
		/s/Mark E. Tomkins Mark E. Tomkins Senior Vice President and Chief Financial Officer April 30, 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.

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Asset retirement obligations as of December 31, 2002	$ --
Cumulative effect adjustment Liabilities incurred Liabilities (settled) Accretion expense Revisions up (down)	99,259 - -- (1,412) 1.257 --
Asset retirement obligations as of March 31, 2003	$ 99,104
Liabilities incurred Liabilities (settled) Accretion expense Revisions up (down)	-- (7,001) 3,873 11,707
Asset retirement obligations as of December 31, 2003	$ 107,683
Liabilities incurred Liabilities (settled) Accretion expense Revisions up (down)	-- (940) 1,389 --
Asset retirement obligations as of March 31, 2004	$ 108,132

	2004	2003
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid (refunded) during the period for: Interest, net of amount capitalized Income taxes	$ 7,609 1,239	$ 7,338 (4,536)