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, GMs4QlYvYXLPxen4ms7gJhXxML233mC1RDGTAYlymEYB38EeqgA9Qd65J+jwGqb0 9sFOG8QBnxF5cOtrrISUYA== 0000103973-04-000212.txt : 20041029 0000103973-04-000212.hdr.sgml : 20041029 20041029104322 ACCESSION NUMBER: 0000103973-04-000212 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041029 DATE AS OF CHANGE: 20041029 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: 041104640 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 q310q2004.htm VULCAN MATERIALS COMPANY 3Q 2004 10Q 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 September 30, 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 September 30, 2004
102,407,893

VULCAN MATERIALS COMPANY

FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 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	16
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
	Item 4.	Controls and Procedures	27
PART II	OTHER INFORMATION
	Item 1.	Legal Proceedings	28
	Item 2	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	29
	Item 6.	Exhibits and Reports on Form 8-K	30
SIGNATURES			31

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Vulcan Materials Company and Subsidiary Companies	(Amounts in Thousands)
Consolidated Balance Sheets (Condensed and unaudited)	September 30 2004	December 31 2003	September 30 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 Other commitments and contingencies (Notes 11 & 15) Shareholders' equity Total Current ratio	$ 346,683 - -- 466,378 (9,457) 456,921 162,357 7,579 781 35,550 206,267 35,100 24,771 1,069,742 20,371 4,227,205 (2,356,348) 1,870,857 579,817 95,267 $ 3,636,054 $ 1,302 48,000 157,606 169,485 376,393 607,158 341,949 268,341 95,277 1,946,936 $ 3,636,054 2.8	$ 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	$ 330,205 4,972 446,668 (10,124) 436,544 162,080 8,206 271 39,768 210,325 36,009 19,429 1,037,484 20,965 4,149,684 (2,216,337) 1,933,347 579,180 88,624 $ 3,659,600 $ 284,783 30,500 138,307 132,197 585,787 608,188 361,312 248,002 91,138 1,765,173 $ 3,659,600 1.8

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 September 30		Nine Months Ended September 30
(Condensed and unaudited)	2004	2003	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 expense (income), net Minority interest in (earnings) 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 (provision) Gain (loss) on discontinued operations, net of income taxes Cumulative effect of accounting changes, net of income taxes	$ 803,885 87,307 891,192 583,762 87,307 671,069 220,123 60,374 616 (2,006) 2,476 159,603 1,351 9,055 151,899 52,778 99,121 (280) - -- 121 (159) --	$ 747,584 82,321 829,905 550,525 82,321 632,846 197,059 56,777 2,030 (1,476) 979 137,755 1,125 13,750 125,130 31,074 94,056 (8,824) 17,223 (3,306) 5,093 --	$ 2,103,855 221,120 2,324,975 1,619,932 221,120 1,841,052 483,923 171,961 (2,507) (3,290) 8,444 319,623 4,350 31,369 292,604 89,856 202,748 (1,631) - -- 636 (995) --	$ 1,961,259 202,192 2,163,451 1,535,156 202,192 1,737,348 426,103 161,398 7,186 1,520 1,724 260,763 3,047 40,880 222,930 60,414 162,516 (16,363) 6,443 3,839 (6,081) (18,811)
Net earnings	$ 98,962	$ 99,149	$ 201,753	$ 137,624
Basic earnings per share: Earnings from continuing operations before cumulative effect of accounting change Discontinued operations Cumulative effect of accounting change Net earnings 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 per share	$ 0.97 - -- -- $ 0.97 $ 0.96 - -- -- $ 0.96	$ 0.92 0.05 -- $ 0.97 $ 0.91 0.05 -- $ 0.96	$ 1.98 (0.01) -- $ 1.97 $ 1.96 (0.01) -- $ 1.95	$ 1.60 (0.06) (0.19) $ 1.35 $ 1.58 (0.06) (0.18) $ 1.34
Weighted-average common shares outstanding: Basic Assuming dilution	102,502 103,659	101,859 102,805	102,361 103,513	101,812 102,583
Cash dividends per share of common stock	$ 0.260	$ 0.245	$ 0.780	$ 0.735
Depreciation, depletion, accretion and amortization from continuing operations	$ 63,801	$ 66,916	$191,045	$198,925
Effective tax rate	34.7%	24.8%	30.7%	27.1%

See accompanying Notes to Condensed Consolidated Financial Statements

Vulcan Materials Company and Subsidiary Companies	(Amounts in Thousands)
Consolidated Statements of Cash Flows	Nine Months Ended September 30
(Condensed and unaudited)	2004	2003
Operating Activities Net earnings 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	$ 201,753 191,047 - -- (100,420) 77,144 (5,893) 363,631	$ 137,624 208,097 18,811 (102,566) 106,190 (16,907) 351,249
Investing Activities Purchases of property, plant and equipment Proceeds from sale of property, plant and equipment Payment for business acquisitions, net of acquired cash (Increase) decrease in medium-term investments Change in investments and long-term receivables Net cash used for investing activities	(142,017) 26,665 (29,433) 4,974 661 (139,150)	(139,777) 48,387 (2,493) (4,972) (5,075) (103,930)
Financing Activities Net borrowings (payments) - commercial paper and bank lines of credit Payment of short-term debt and current maturities Payment of long-term debt Dividends paid Proceeds from exercise of stock options Other, net Net cash used for financing activities	19,000 (249,542) (195) (79,684) 14,551 1,383 (294,487)	(6,798) (6,391) (197) (74,658) 2,514 (2,312) (87,842)
Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	(70,006) 416,689 $ 346,683	159,477 170,728 $ 330,205

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 this business unit 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 the majority partner of this joint venture 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 and nine months ended September 30 is illustrated below (amounts in thousands, except per share data):

	Three Months Ended September 30		Nine Months Ended September 30
	2004	2003	2004	2003
Net earnings, 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	$ 98,962 1,094 (2,162)	$ 99,149 703 (1,768)	$ 201,753 3,286 (6,491)	$ 137,624 1,200 (4,585)
Pro forma net earnings	$ 97,894	$ 98,084	$ 198,548	$ 134,239
Earnings per share: Basic, as reported Basic, pro forma Diluted, as reported Diluted, pro forma	$0.97 $0.96 $0.96 $0.94	$0.97 $0.96 $0.96 $0.95	$1.97 $1.94 $1.95 $1.92	$1.35 $1.32 $1.34 $1.31

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 which excludes gain on disposal were as follows (in millions of dollars):

Three Months Ended
   September 30

Nine Months Ended
   September 30

    2004

    2003

    2004

    2003

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

$ 0.0
$ 0.0
$ (0.1)
$ (0.3)

$ 5.2
$ 5.7
$ (8.9)
$ (8.8)

$ 0.8
$ 0.8
$ (1.2)
$ (1.6)

$ 62.5
$ 67.0
$ (16.5)
$ (16.4)

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):

Sept. 30
  2004

Dec. 31
  2003

Sept. 30
  2003

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

$  0.9
- --
    --
$  0.9

$  8.4
- --
    --
$  8.4

$ 26.3
0.9
  12.4
$ 39.6

Current liabilities
Other noncurrent liabilities
  Total liabilities

$  2.1
     2.9
$   5.0

$  4.5
     3.1
$   7.6

$ 8.2
     3.1
$ 11.3

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 September 30		Nine Months Ended September 30
	2004	2003	2004	2003
Weighted-average common shares outstanding Dilutive effect of: Stock options Other Weighted-average common shares outstanding, assuming dilution	102,502 853 304 103,659	101,859 684 262 102,805	102,361 859 293 103,513	101,812 545 226 102,583

Antidilutive common stock equivalents are not included in our earnings per share calculations. The number of antidilutive common stock equivalents is summarized as follows (in thousands of shares):

	Three Months Ended September 30		Nine Months Ended September 30
	2004	2003	2004	2003
Antidilutive common stock equivalents	7	4,095	6	4,100

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. In addition, during the third quarter of 2004 we recorded an increase in estimated income tax liability for open audit years.

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 March 2005, has been reflected as a favorable component of accumulated other comprehensive income of $2,307,000 less income tax expense of $867,000 in our consolidated financial statements as of September 30, 2004. If market prices for natural gas remained at the September 30, 2004 level, earnings of $2,307,000 would be classified into pretax earnings within the next 12 months. Comparatively, as of September 30, 2003, our consolidated financial statements reflected the fair val ue of the open contracts as a component of accumulated other comprehensive income of $1,865,000, less income tax expense of $702,000.

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 in our Condensed Consolidated Balance Sheets with an adjustment to record the underlying hedged debt at its fair value. As of September 30, 2004, the estimated fair value of our interest rate swap agreement reflected projected payments of $25,000.

There was no impact to earnings due to hedge ineffectiveness during the quarters and nine months ended September 30, 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
   September 30

Nine Months Ended
   September 30

    2004

    2003

    2004

    2003

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

$ 98,962

    (124)
$ 98,838

$ 99,149

    (1,958)
$ 97,191

$ 201,753

    (1,209)
$ 200,544

$ 137,624

    (1,275)
$ 136,349

8. Benefit Plans

The following tables set forth the components of net periodic benefit cost (in thousands of dollars):

PENSION BENEFITS	Three Months Ended September 30		Nine Months Ended September 30
	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	$ 4,497 6,927 (10,201) 538 (83)	$ 4,768 7,196 (10,189) 572 (540)	$ 13,493 20,780 (30,604) 1,613 (249)	$ 13,653 20,739 (29,809) 1,665 (1,464)
Net periodic benefit cost	$ 1,678	$ 1,807	$ 5,033	$ 4,784

POSTRETIREMENT BENEFITS	Three Months Ended September 30		Nine Months Ended September 30
	2004	2003	2004	2003
Components of Net Periodic Benefit Cost: Service cost Interest cost Amortization of prior service cost Recognized actuarial loss	$ 1,080 1,400 (46) 251	$ 766 1,111 (57) --	$ 3,340 4,342 (149) 840	$ 2,209 3,204 (171) --
Net periodic benefit cost	$ 2,685	$ 1,820	$ 8,373	$ 5,242

We also sponsor unfunded, nonqualified pension plans. The pension expense for these plans was as follows: three months ended September 30, 2004 - $744,000 and 2003 - $777,000; and nine months ended September 30, 2004 - $2,233,000 and 2003 - $2,316,000.

We previously disclosed in the notes to our financial statements for the quarter ended June 30, 2004 our expectation to contribute the estimated maximum deductible pension contribution of $7,000,000 in 2004. Our current expectations are that the estimated maximum deductible pension contribution is $6,363,000 and to contribute said amount in the fourth quarter of 2004. During the nine months ended September 30, 2004 and 2003, no contributions were made to the pension plans.

9. Long-term Debt

Long-term debt is detailed below (in thousands of dollars):

Sept. 30
  2004

Dec. 31
  2003

Sept. 30
  2003

6.40% 5-year notes issued 2001*
5.75% 5-year notes issued 1999
6.00% 10-year notes issued 1999
Private placement notes
Medium-term notes
Tax-exempt bonds
Other notes

$ 239,975
- --
250,000
83,385
23,000
8,200
     3,900

$ 240,000
243,000
250,000
84,121
28,000
8,200
     4,054

$ 240,000
243,000
250,000
119,484
28,000
8,200
     4,287

  Total debt excluding notes payable
Less current maturities of long-term debt

$ 608,460
     1,302

$ 857,375
  249,721

$ 892,971
  284,783

Total long-term debt

$ 607,158

$ 607,654

$ 608,188

Estimated fair value of long-term debt

$ 655,543

$ 675,249

$ 684,268

* Includes a $25.0 thousand reduction in valuation at Sept. 30, 2004 for the fair value of interest rate swaps.

Scheduled debt payments during 2004 included $243,000,000 in the second quarter to retire the 5.75% five-year notes issued in 1999 and $5,000,000 in the third quarter to retire an 8.55% medium-term note issued in 1991.

10. 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 recognition of 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 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. Adoption of this standard 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 and nine months ended September 30, 2004, we recognized FAS 143 related operating costs totaling $3,167,000 and $8,951,000, respectively. For the three and nine month s ended September 30, 2003, we recognized FAS 143 related operating costs totaling $2,554,000 (including $7,000 related to discontinued operations) and $7,355,000 (including $68,000 related to discontinued operations), respectively. 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 Earnings.

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

99,259
- --
(5,555)
3,792
    11,267

Asset retirement obligations as of September 30, 2003

$ 108,763

    Liabilities incurred
    Liabilities (settled)
    Accretion expense
    Revisions up

--
(2,858)
1,338
        440

Asset retirement obligations as of December 31, 2003

$ 107,683

    Liabilities incurred
    Liabilities (settled)
    Accretion expense
    Revisions up

40
(5,306)
4,019
     5,061

Asset retirement obligations as of September 30, 2004

$ 111,497

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.

11. 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 September 30, 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

$ 19,437
5,100
   1,465

One year
One year
One year

Renewable annually
Renewable annually
Renewable annually

    Total standby letters of credit

$ 26,002

12. Acquisitions

For the nine months ended September 30, 2004, we have acquired three aggregates facilities in Tennessee and one aggregates facility in Virginia for a cost of approximately $29,433,000, which was paid in cash. All of these acquisitions related to our Construction Materials segment.

13. 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 of nonconsolidated companies as part of segment earnings, (c) reflects allocations of general corporate expenses to the segments; (d) does not reflect interest income or expense; and (e) is before income taxes. 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 (in millions of dollars):

	Three Months Ended September 30		Nine Months Ended September 30
	2004	2003	2004	2003
NET SALES Construction Materials Chemicals Total	$ 649.3 154.6 $ 803.9	$ 616.3 131.3 $ 747.6	$ 1,665.9 438.0 $ 2,103.9	$ 1,565.0 396.3 $ 1,961.3
TOTAL REVENUES Construction Materials Chemicals Total	$ 723.4 167.8 $ 891.2	$ 685.5 144.4 $ 829.9	$ 1,845.7 479.3 $ 2,325.0	$ 1,729.8 433.7 $ 2,163.5
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INTEREST AND INCOME TAXES Construction Materials Chemicals Total	$ 148.7 10.9 $ 159.6	$ 144.1 (6.3) $ 137.8	$ 312.8 6.8 $ 319.6	$ 282.3 (21.5) $ 260.8

Sept. 30
   2004

Dec. 31
   2003

Sept. 30
   2003

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

$ 2,717.6
     483.8
3,201.4
88.0
      346.7
$ 3,636.1

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

$ 2,725.7
     524.6
3,250.3
79.1
     330.2
$ 3,659.6

14. Supplemental Cash Flow Information

Supplemental information referable to our Condensed Consolidated Statements of Cash Flows for the nine months ended September 30 is summarized below (in thousands of dollars):

  2004

  2003

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
  Cash paid during the period for:
      Interest, net of amount capitalized
      Income taxes

$ 33,045
58,635

$ 34,886
11,934

15. Commitments and Contingencies

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2003 and Quarterly Report on Form 10-Q for the quarters ended March 30, 2004 and June 30, 2004, we have been named as one of numerous defendants in 218 lawsuits in Mississippi and Texas by 11,009 plaintiffs, seven cases in California with 132 plaintiffs, two cases in Louisiana with two plaintiffs, one case in Kentucky with 454 plaintiffs, one case in West Virginia with 22 plaintiffs, one case in Illinois with one plaintiff, two cases in Florida with 2 plaintiffs and one case in Ohio with 1 plaintiff. The first of these lawsuits was filed in July 1993, and the most recent case was filed in August 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 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. In the cases in California, Kentucky, West Virginia, Illinois, Ohio and Florida, the plaintiffs 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. We are seeking dismissal from the cases in Mississippi, Kentucky, California, West Virginia, Ohio and Florida because there was no exposure by the plaintiffs to Vulcan's product in those states.

As previously reported on Form 10-K for the year ended December 31, 2003, we have been named as a defendant in multiple lawsuits filed in 2001 and 2002 in state court and federal district court in Louisiana. The lawsuits claim damages for various personal injuries allegedly resulting from releases of chemicals at our Geismar, Louisiana, plant in 2001. To date, 87 lawsuits, involving approximately 3,015 named plaintiffs have been filed. A trial for the issues of causation and damages for 10 plaintiffs related to the April 2001 release was held in July 2004. Five of these plaintiffs were dismissed during the trial. A jury awarded the remaining 5 plaintiffs an aggregate award of $201,000. Additionally, on October 5, 2004, the judge granted our motion for summary judgment dismissing approximately 2,000 to 2,100 plaintiffs subject to a show cause hearing in

November. We estimate 1,265 plaintiffs will remain after that hearing. The next cases are bench trials scheduled for the fourth quarter of 2004.

As previously reported on Form 10-K for the year ended December 31, 2003, we are involved in an action filed in November 1998 by the City of Modesto in state court in California. This claim arose from allegations of perchloroethylene contamination of municipal water wells in the City of Modesto and alleges certain claims against us and other chemical and equipment manufacturers, distributors and dry cleaners. The trial of this case is currently set for February 2005. We intend to defend this action vigorously.

Although the ultimate outcome is uncertain, it is our opinion that the disposition of these described lawsuits, as well as certain other lawsuits, will not have a material adverse affect on our consolidated financial position.

16. Subsequent Event

On October 11, 2004, we entered into an agreement to sell essentially all of the assets of our Chemicals segment to a subsidiary of Occidental Chemical Corporation. These assets consist primarily of chloralkali facilities in Wichita, Kansas; Geismar, Louisiana and Port Edwards, Wisconsin and the facilities of our Chloralkali joint venture located in Geismar. The decision to sell the chemicals business was based on our desire to focus our resources on the construction materials business.

The transaction, which has been structured as a purchase of assets, involves an initial cash payment, contingent future payments under two earn-out provisions, and the transfer of certain liabilities. The initial payment will result in net cash proceeds of approximately $155 million after taxes, transaction costs and the cost of acquiring the minority partner's 49% share of the Chloralkali joint venture. In addition to the cash purchase price, we will also be entitled to receive cash payments under two separate earn-outs, subject to certain conditions. The first earn-out is based on ECU (electrochemical unit) and natural gas prices during the five-year period following the closing and is capped at $150 million. Payments under the second earn-out will be determined based primarily on the performance of the hydrochlorocarbon product HCC-240fa (commonly referred to as 5CP) from the closing of the transaction through 2012. Under this earn-out provision, cash plant margin for HCC-240fa in excess of an agreed upon threshold, and after certain capital expenditures, will be shared equally with the purchaser. Based on our outlook for ECU values, natural gas prices and marketplace performance of the HCC-240fa product, we project pretax undiscounted earn-out proceeds of approximately $145 million, although there can be no assurance as to the ultimate amount received. The purchaser will also assume certain liabilities relating to the chemicals business, including the obligation to monitor and remediate historical and future releases of hazardous materials at or from the three plant facilities. We will retain certain other liabilities of the chemicals business.

Closing of the transaction, which is anticipated to occur during the first half of 2005, is subject to customary regulatory and other closing conditions. The total cash costs to be incurred in connection with the transaction are estimated to be approximately $0.02 per diluted share, and consist primarily of transaction fees. As of September 30, 2004, we performed an impairment test of the related long-lived assets. The test indicated no impairment of the Chemicals segment assets. We will continue to assess the Chemicals segment assets for impairment on a quarterly basis or as significant new information becomes available. The assessment will compare the anticipated initial proceeds from the sale of the net assets and our estimate of the probable receipts from the earn-out provisions to

the carrying value of the assets. There can be no assurance as to the future amount received from the earn-outs, if any.

As this event was not approved by the Board of Directors until the fourth quarter, the related assets and liabilities are classified as held and used in the accompanying Condensed Consolidated Balance Sheets. The major classes of assets and liabilities for the periods presented were as follows (in millions of dollars):

Sept. 30
  2004

Dec. 31
  2003

Sept. 30
  2003

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

$  116.5
316.9
     10.0
$  443.4

$  124.7
341.1
     10.6
$  476.4

$  116.0
348.0
     11.1
$  475.1

Current liabilities
Other noncurrent liabilities
  Total liabilities

$   57.0
     25.7
$   82.7

$   49.6
     24.1
$   73.7

$   51.2
     16.2
$   67.4

Minority interest in a consolidated subsidiary

$   95.3

$   92.0

$   91.1

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 volumes 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, including expectations regarding future performance, 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; 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 healthcare costs; and other risks, assumptions and uncertainties detailed from time to time in our periodic reports. Forward-looking statements speak only as of the date hereof, and we assume no obligation to update such statements.

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.

Third Quarter 2004 as Compared with Third Quarter 2003

We announced record third quarter net sales of $803.9 million and earnings from continuing operations of $0.96 per diluted share, a 5% increase from last year's $0.91 per diluted share. Net earnings of $99.0 million, or $0.96 per diluted share approximated last year's record third quarter when net earnings were $99.1 million, or $0.96 per diluted share.

For the quarter, Construction Materials' net sales were $649.3 million, a 5% increase from the prior year's $616.2 million. Net sales benefited from improved pricing for aggregates and ready-mixed concrete and stronger volumes in asphalt. Aggregates pricing increased over 3% and shipments increased modestly over last year's record third quarter levels. Extreme weather in the third quarter had an adverse impact on shipments and plant operations in Georgia, North Carolina, Florida and Alabama. However, in California, Texas, Virginia and Arizona, where markets were not impacted by adverse weather, shipments were strong. Third quarter net sales in our Chemicals segment of $154.6 million increased 18% from the prior year. Third quarter pricing for caustic soda was slightly lower than the prior year, but up significantly from the second quarter. Pricing improved for most other products, including chlorine and chlorinated organics. Sales volumes of 5CP continued to reflect strong growth.

Earnings from continuing operations before interest and income taxes of $159.6 million were up $21.8 million or 16% from the third quarter of 2003. Construction Materials segment earnings were $148.7 million compared to $144.1 million in the prior year. The favorable earnings effects from improved pricing and higher volumes were somewhat reduced by higher costs for diesel fuel and liquid asphalt, healthcare and performance-based compensation. Additionally, higher operating costs in certain plants due to heavy rains and flooding, as well as planned activities related to plant improvement projects, negatively impacted earnings in the quarter. Chemicals recorded segment earnings of $10.9 million, a $17.2 million improvement from the prior year's loss of $6.3 million. Earnings benefited from the aforementioned pricing improvements and continued strong growth in 5CP sales volumes.

Selling, administrative and general expenses of $60.4 million increased $3.6 million or 6% from the prior year third quarter due primarily to higher costs for healthcare and performance-based compensation. Other operating expense of $0.6 million decreased $1.4 million due to higher gains on asset sales and a reduction in asset abandonment costs partly offset by increased environmental remediation accruals. Minority interest in earnings of $2.0 million represented a $0.5 million increase from the comparable prior year as the improved earnings in the Chloralkali joint venture resulted in an increase in the minority partner's share of the earnings.

Interest expense of $9.1 million decreased $4.7 million resulting from the reduction in outstanding debt due to the retirement of $243.0 million of debt in the second quarter of 2004.

Our effective tax rate from continuing operations was 34.7% for the third quarter of 2004, up from the 2003 rate of 24.8% for the comparable period. This increase reflects higher estimated income tax liabilities for open audit years, the recovery in the chemicals business which has a higher effective tax rate and higher state taxes.

Year-to-Date Comparisons as of September 30, 2004 and September 30, 2003

Net sales of $2.1 billion for the first nine months of 2004 increased 7% from the comparable 2003 total of $2.0 billion. Earnings from continuing operations before cumulative effect of accounting changes were $202.7 million, or $1.96 per diluted share. Comparable 2003 earnings were $162.5 million, or $1.58 per diluted share. 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 $1.0 million, or $0.01 per diluted share for the first nine months of 2004 compared with a $6.1 million loss, or $0.06 per diluted share in 2003. The year-to-date September 2003 results included gain on disposal of discontinued operations in the pretax amount of $6.4 million.

The cumulative effect of accounting change in the first quarter of 2003 resulted from our adoption of FAS 143 as described in Note 10 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 nine months of 2004 of $201.8 million or $1.95 per diluted share reflected a $1.0 million loss, or $0.01 per diluted share impact, from the divestiture of our Performance Chemicals business unit. Comparatively, the net earnings of $137.6 million or $1.34 per diluted share for the first nine months of 2003 reflected both the $6.1 million loss, or $0.06 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.

Construction Materials' net sales of $1.7 billion were up $100.9 million, or 6%, from the first nine months of 2003. This increase resulted primarily from higher aggregates shipments and prices and higher ready-mixed concrete volumes. Aggregates shipments and pricing increased 5% and 2%, respectively, and ready-mixed concrete volumes increased 10%. The Chemicals segment reported net sales of $438.0 million for the first nine months of 2004, up $41.7 million or 11% from the comparable period in 2003. Volumes for caustic soda, chlorine and chlorinated organics were up from the first nine months of 2003. However, caustic soda pricing, while rising in recent quarters, was lower than the prior year by 25%.

Earnings from continuing operations before interest and income taxes of $319.6 million were up $58.8 million from the first nine months of 2003. Construction Materials' segment earnings were $312.8 million compared to $282.3 million in the prior year. The favorable earnings impact from the aforementioned increase in net sales was partially offset by higher costs for diesel fuel and liquid asphalt, healthcare and performance-based compensation. Year-to-date, the Chemicals segment's earnings improved $28.3 million resulting in earnings of $6.8 million compared to a loss of $21.5 million in the prior year. This earnings improvement was due primarily to increased volume, improved pricing for chlorinated organics products, better results in our Chloralkali joint venture and increased operating leverage resulting from better operating performance and improved plant reliability.

Selling, administrative and general expenses of $172.0 million increased $10.6 million or 7% from the first nine months of 2003 due primarily to increased costs for healthcare and incentive compensation. Other operating income of $2.5 million was favorable $9.7 million as a result of higher gains on sale of assets, lower asset abandonment costs, lower environmental remediation accruals and lower asset impairment charges. Improved results in our Chloralkali joint venture resulted in an increase in the minority partner's interest in earnings of $4.8 million. Other income, net of other charges, of $8.4 million increased $6.7 million due mostly to insurance refunds and lower current year charges related to non-operating liabilities.

Year-to-date interest expense of $31.4 million decreased $9.5 million resulting from the reduction in outstanding debt as $243.0 million in outstanding notes were retired in April as scheduled.

Our effective tax rate from continuing operations was 30.7% for the year, as projected through September 30 2004, up from 27.1% for the comparable period of 2003. This increase reflects higher estimated income tax liabilities for open audit years, the recovery in the chemicals business which has a higher effective tax rate and higher state taxes.

Impact of Subsequent Event on Future Results of Operations

As noted in the Subsequent Event Note to the Condensed Consolidated Financial Statements (Note 16), on October 11, 2004, we entered into an agreement to sell essentially all of the assets of our Chemicals segment to a subsidiary of Occidental Chemical Corporation. Closing of the transaction, which is anticipated to occur during the first half of 2005, will result in the elimination of our Chemicals segment operating results. The total cash costs to be incurred in connection with the transaction are estimated to be approximately $0.02 per diluted share, and consist primarily of transaction fees. We will assess the Chemicals segment assets for impairment on a quarterly basis or as significant new information becomes available. The assessment will compare the anticipated initial proceeds from the sale of the net assets and our estimate of the probable receipts from the earn-out provisions to the carrying value of the assets. There can be no assurance as to the future amount received from the earn-outs, if any.

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.

On October 11, 2004, we entered into an agreement to sell essentially all of the assets of our Chemicals segment to a subsidiary of Occidental Chemical Corporation, (See Note 16 to the Condensed Consolidated Financial Statements). Proceeds from the sale will be used for general corporate purposes. We believe that the sale will not have a significant effect on our ability 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 $363.6 million in the first nine months of 2004, up nearly 4% from the $351.2 million generated in the same period last year. This $12.4 million increase in cash provided by operating activities resulted primarily from higher cash earnings. Net cash used for investing activities of $139.2 million increased $35.2 million from the first nine months of 2003. This increase in cash used for investing activities resulted from a $26.9 million increase in payments for business acquisitions, a $21.7 million reduction in proceeds from the sale of property, plant and equipment and a $2.2 million increase in capital purchases partially offset by a $15.6 million decrease in investments (including medium-term) and long-term receivables. Net cash used for financing activities increased $206.6 million from the first nine months of 2003 to total $294.5 million for the nine months ended September 30, 2004. This increase in cash used for financing activities result ed primarily from the 2004 scheduled debt payments: $243.0 million in the second quarter and $5.0 million in the third quarter.

Working Capital

Working capital, the excess of current assets over current liabilities, totaled $693.3 million at September 30, 2004. This represented a $186.1 million increase from our December 31, 2003 level and a $241.7 million increase from our September 30, 2003 level. Both of these increases resulted primarily from increases in internally generated cash. The increase in working capital from year-end 2003 resulted primarily in a decrease in current maturities of $248.4 million and a seasonal increase of receivables of $97.0 million partially offset by a decrease in cash items of $70.0 million and an increase in notes payable of $19.0 million. The increase in working capital from September 30, 2003 resulted primarily in a decrease in current maturities of $283.5 million and an increase in cash items of $16.5 million.

The current ratio was 2.8 as of September 30, 2004. This compares to the 1.9 ratio at year-end 2003 and the 1.8 ratio at September 30, 2003.

Short-term Borrowings

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

Sept. 30
   2004

Dec. 31
   2003

Sept. 30
   2003

Bank borrowings
Commercial paper
  Total notes payable

$   8,000
  40,000
$ 48,000

$ 29,000
        --
$ 29,000

$ 30,500
        --
$ 30,500

We issued $40.0 million of commercial paper in the third quarter of 2004 to fund current working capital needs in lieu of liquidating short-term investments with favorable terms. We plan to continue this practice from time to time as circumstances warrant.

Unsecured bank lines of credit totaling $350.0 million were maintained at September 30, 2004, none of which was drawn down. In addition, the Chloralkali joint venture had an uncommitted bank credit facility in the amount of $30.0 million available at September 30, 2004, of which $8.0 million was drawn, as noted above in the bank borrowings.

Current Maturities

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

	Sept. 30 2004	Dec. 31 2003	Sept. 30 2003
5.75% 5-year notes payable in 2004 Private placement notes Medium-term notes Other notes	$ -- - -- - -- 1,302	$ 243,000 - -- 5,000 1,721	$ 243,000 35,000 5,000 1,783
Total	$ 1,302	$ 249,721	$ 284,783

Scheduled debt payments during 2004 included $243.0 million in the second quarter to retire the 5.75% five-year notes issued in 1999 and $5.0 million in the third quarter to retire an 8.55% medium-term note issued in 1991.

Long-term Obligations

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

	Sept. 30 2004	Dec. 31 2003	Sept. 30 2003
Long-term obligations: Long-term debt Total long-term obligations	$ 607,158 $ 607,158	$ 607,654 $ 607,654	$ 608,188 $ 608,188
Long-term capital: Long-term debt Deferred income taxes Other noncurrent liabilities Shareholders' equity Total long-term capital	$ 607,158 341,949 268,341 1,946,936 $ 3,164,384	$ 607,654 338,913 252,518 1,802,836 $ 3,001,921	$ 608,188 361,312 248,002 1,765,173 $ 2,982,675
Long-term obligations as a percent of: Long-term capital Shareholders' equity	19.2% 31.2%	20.2% 33.7%	20.4% 34.5%

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

	Sept. 30 2004	Dec. 31 2003	Sept. 30 2003
Debt: Current maturities of long-term debt Notes payable Long-term debt Total debt	$ 1,302 48,000 607,158 $ 656,460	$ 249,721 29,000 607,654 $ 886,375	$ 284,783 30,500 608,188 $ 923,471
Capital: Total debt Shareholders' equity Total capital	$ 656,460 1,946,936 $ 2,603,396	$ 886,375 1,802,836 $ 2,689,211	$ 923,471 1,765,173 $ 2,688,644
Ratio of total debt to total capital	25.2%	33.0%	34.3%

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 current 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. Such acquisitions could be funded by using internally generated cash flow or issuing debt or equity securities.

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 September 30, 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	$ 19,437 5,100 1,465	One year One year One year	Renewable annually Renewable annually Renewable annually
Total standby letters of credit	$ 26,002

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 results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Our ac tual 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.

Additionally, we consider that the following expanded policies on income taxes and impairment of long-lived assets excluding goodwill to be critical accounting policies due to the significant level of estimates, assumptions and judgments and their potential impact on our consolidated financial statements.

Income Taxes

Our effective tax rate is based on expected income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate. On an interim basis, we estimate the annual tax rate based upon projected taxable income for the full year and record a quarterly income tax provision in accordance with the anticipated annual rate. As the year progresses, we refine the estimates of the year's taxable income as new information becomes available, including year-to-date financial results. This continual estimation process often results in a change to our expected effective tax rate for the year. When this occurs, we adjust the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision equals the expected annual tax rate. Significant judgment is required in determining our effective tax rate and in evaluating our tax positions.

In accordance with SFAS No. 109, "Accounting for Income Taxes" (FAS 109), we recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets represent items to be used as a tax deduction or credit in future tax returns for which we have already properly recorded the tax benefit in the income statement. At least quarterly, we assess the likelihood that the deferred tax asset balance will be recovered from future taxable income. We take into account such factors as prior earnings history, expected future earnings, carry-back and carry-forward periods, and tax strategies that could potentially enhance the likelihood of a realization of a deferred tax asset. To the extent recovery is unlikely, a valuation allowance is established against the deferred tax asset, increasing our income tax expense in the year such determination is made.

The Accounting Principles Board Opinion No. 23, "Accounting for Income Taxes, Special Areas" (APB 23), does not require United States income taxes to be provided on foreign earnings when such earnings are indefinitely reinvested offshore. We have determined that foreign earnings are to be repatriated as soon as practicable, therefore, United States income taxes are provided when foreign earnings are recorded.

We establish accruals for certain tax contingencies when, despite the belief that our tax return positions are fully supported, we believe that certain positions are likely to be challenged and that our position may not be fully sustained. The tax contingency accruals are adjusted due to changing circumstances, such as the progress of tax audits, case law and emerging legislation. Our effective tax rate includes the impact of tax contingency accruals as considered appropriate by management.

A number of years may elapse before a particular matter, for which we have recorded a contingent liability, is audited and finally resolved. The number of years with open tax audits varies by jurisdiction. In the United States, the Internal Revenue Service has substantially completed its audits of our tax years 1999 through 2001. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe our tax contingency accruals are adequate to address known tax contingencies. Favorable resolution of such contingencies could be recognized as a reduction in our effective tax rate in the year of resolution. Unfavorable settlement of any particular issue could increase the effective tax rate and may require the use of cash in the year of resolution. Our tax contingency accruals are presented in the balance sheet within current liabilities.

Impairment of Long-lived Assets Excluding Goodwill

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

In connection with the planned disposition of the Chemicals segment (as noted in Note 16 to the Notes to Condensed Consolidated Financial Statements), we performed an impairment test of the related long-lived assets. As of the September 30, 2004 measurement date, the test indicated no impairment of the Chemicals segment assets. The impairment test was based on our estimate of the probability of selling the business as compared to continuing to operate the business as of September 30, 2004. Under the sale estimate, the fair value is comprised of the initial proceeds from the sale of the net assets and our current estimate of the likely receipts from the earn-out provisions based on an expected future cash flow analysis. We will continue to reevaluate the Chemicals segment for potential impairment of the long-lived assets on a quarterly basis or as significant new information becomes available.

INVESTOR ACCESS TO COMPANY FILINGS

We make available on our website, vulcanmaterials.com, free of charge, copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as well as all Forms 4 and 5 filed by our executive officers and directors, as soon as the filings are made publicly available by the Securities and Exchange Commission on its EDGAR database, at sec.gov. In addition to accessing copies of our reports online, you may request a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2003, at no charge, by writing to:

William F. Denson, III
Secretary
Vulcan Materials Company
1200 Urban Center Drive
Birmingham, Alabama 35242

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: September 30, 2004 - $2,307,000 favorable; December 31, 2003 - $4,246,000 favorable; and September 30, 2003 - $1,865,000 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 September 30, 2004 of approximately $931,000.

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 2.20% at September 30, 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 with the hedged interest pay ments on the debt. The estimated fair values of this agreement were as follows: September 30, 2004 - $25,000 unfavorable and December 31, 2003 - $302,000 favorable.

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

At September 30, 2004, the estimated fair market value of our debt instruments was $656,846,000 as compared to our book value of $608,460,000. The effect of a hypothetical decline in interest rates of 1% would increase our fair market value of the liability by approximately $19,601,000.

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 September 30, 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 m aterial 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

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases
of Equity Securities

Our Board of Directors previously authorized a share repurchase program under which we may purchase up to 12,000,000 shares of the Company's outstanding common stock. As of September 30, 2004, the number of shares remaining under this authorization was 8,473,988. We may make repurchases from time to time in the open market or through privately negotiated transactions, depending upon market, business, legal and other conditions.

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 May 14, 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 July 29, 2004, pursuant to which we furnished our earnings release dated July 28, 2004, regarding our second quarter 2004 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 October 29, 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 bylaws5142004.htm EXHIBIT 3(A) BY-LAWS 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 May 14, 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 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 7 8 8 8 8 8 9 9 9 9 9 10 10 10 10 10 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 14
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. The number of directors constituting the Board of Directors shall not be less than nine nor more than twelve, with the actual number of directors to be fixed, from time to time, by resolution adopted by a majority of the entire Board of Directors. 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.

           (c)    Division Officers. The Chief Executive Officer of the corporation may appoint such officers of any division of the corporation as he may deem proper,

<PAGE 7>

except that division chairmen and presidents may be appointed only by the Board of Directors. A division officer shall not be an officer of the corporation, and shall serve as an officer only of the division to which appointed, but a person who holds a division 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 and Division Officers. Group senior vice presidents and division chairmen and presidents shall serve at the pleasure of the Board of Directors. Group senior vice presidents and division chairmen and presidents may be removed from office, either with or without cause, at any time, by the Board of Directors. Other group and division officers shall serve at the pleasure of the Chief Executive Officer of the corporation. Any other group or division officer may be removed from office as a group or division officer, either with or without cause, at any time, by the Chief Executive Officer of the corporation.

           SECTION 3.3.

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

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

           SECTION 3.4.    Chief Executive Officer

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

<PAGE 8>

profitable growth and development and shall perform such other duties as may be assigned to him by the Board of Directors.

           SECTION 3.5.    Chief Operating Officer

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

           SECTION 3.6.    President

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

           SECTION 3.7.    Chief Administrative Officer

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

           SECTION 3.8.    Vice Presidents

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

           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

<PAGE 9>

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

           SECTION 3.10.    Associate General Counsel

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

           SECTION 3.11.    Secretary

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

           SECTION 3.12.    Treasurer

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

           SECTION 3.13.    Controller

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

           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.

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           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 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.

<PAGE 11>

           (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.

           (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.

<PAGE 12>

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 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

<PAGE 13>

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 certificate may be surrendered.

ARTICLE VI
Miscellaneous

           SECTION 6.l.    Fiscal Year

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

           SECTION 6.2.    Corporate Seal

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

           SECTION 6.3.    Delegation of Authority

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

           SECTION 6.4    Notices

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

<PAGE 14>

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

<PAGE 15>

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

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

<PAGE 16>

EX-31 3 exhibit31-sec302.htm EXHIBIT 31(A) & (B) CERT OF CEO AND CFO SEC 302 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 October 29, 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 October 29, 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) CERT OF CEO AND CFO SEC 906 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 September 30, 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 October 29, 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 September 30, 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 October 29, 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.

-----END PRIVACY-ENHANCED MESSAGE-----

Asset retirement obligations as of December 31, 2002	$ --
Cumulative effect adjustment Liabilities incurred Liabilities (settled) Accretion expense Revisions up	99,259 - -- (5,555) 3,792 11,267
Asset retirement obligations as of September 30, 2003	$ 108,763
Liabilities incurred Liabilities (settled) Accretion expense Revisions up	-- (2,858) 1,338 440
Asset retirement obligations as of December 31, 2003	$ 107,683
Liabilities incurred Liabilities (settled) Accretion expense Revisions up	40 (5,306) 4,019 5,061
Asset retirement obligations as of September 30, 2004	$ 111,497

	2004	2003
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest, net of amount capitalized Income taxes	$ 33,045 58,635	$ 34,886 11,934