-----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, MdhN43lJukLm/AXowvAvCDE47J1UvMio3ly00TNeB+EUcRZ3n+jMaFWcpyArb+oy Ut5Vl3piXT6zssS1yeDdnw== 0000103973-96-000014.txt : 19961115 0000103973-96-000014.hdr.sgml : 19961115 ACCESSION NUMBER: 0000103973-96-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: NYSE 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: 96661729 BUSINESS ADDRESS: STREET 1: ONE METROPLEX DR CITY: BIRMINGHAM STATE: AL ZIP: 35209 BUSINESS PHONE: 2058773000 MAIL ADDRESS: STREET 1: PO BOX 530187 CITY: BIRMINGHAM STATE: AL ZIP: 35253-0187 10-Q 1 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 quarterly period ended September 30, 1996 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-4033 VULCAN MATERIALS COMPANY (Exact name of registrant as specified in its charter) New Jersey 63-0366371 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Metroplex Drive, Birmingham, Alabama 35209 (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (205) 877-3000 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 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: Shares outstanding Class at October 31, 1996 Common Stock, $1 Par Value 34,663,348 VULCAN MATERIALS COMPANY FORM 10-Q QUARTER ENDED SEPTEMBER 30, 1996 Contents Page No. PART I FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Earnings 2 Condensed Consolidated Statements of Cash Flows 3 Notes to Condensed Consolidated Financial Statements 4 Exhibit 11 - Computation of Earnings Per Share 5 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 6 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 15
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS* (Amounts in thousands) September 30, December 31, September 30, Assets 1996 1995 1995 Current assets Cash and cash equivalents............................... $ 23,057 $ 21,869 $ 9,319 Accounts and notes receivable, less allowance for doubtful accounts: Sept. 30, 1996, $8,434; Dec. 31, 1995, $8,176; Sept. 30, 1995, $8,712................... 229,595 181,060 235,808 Inventories: Finished products..................................... 83,431 90,009 82,678 Raw materials......................................... 10,730 10,062 9,974 Products in process................................... 600 979 1,089 Operating supplies and other.......................... 29,540 25,751 25,989 Total inventories................................ 124,301 126,801 119,730 Deferred income taxes................................... 28,259 26,555 26,490 Prepaid expenses........................................ 7,659 5,836 9,693 Total current assets............................. 412,871 362,121 401,040 Investments and long-term receivables..................... 60,699 56,272 61,660 Property, plant and equipment, at cost less accumulated depreciation, depletion and amortization: Sept. 30, 1996, $1,219,381; Dec. 31, 1995, $1,161,404; Sept 30, 1995, $1,164,734........................................ 754,409 698,033 706,022 Deferred charges and other assets......................... 99,483 99,368 91,458 Total............................................ $1,327,462 $1,215,794 $1,260,180 Liabilities and Shareholders' Equity Current liabilities Current maturities of long-term obligations............. $ 6,565 $ 7,070 $ 5,716 Notes payable........................................... 18,178 3,569 80,274 Trade payables and accruals............................. 92,167 98,253 101,307 Other current liabilities............................... 91,402 68,517 79,287 Total current liabilities........................ 208,312 177,409 266,584 Long-term obligations..................................... 85,314 90,278 91,778 Deferred income taxes..................................... 89,626 85,935 84,897 Other noncurrent liabilities.............................. 68,067 65,534 63,217 Shareholders' equity...................................... 876,143 796,638 753,704 Total............................................ $1,327,462 $1,215,794 $1,260,180 * Balance sheets as of September 30 are unaudited. The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Amounts and shares in thousands, except per share data) Three Months Ended Nine Months Ended September 30* September 30* 1996 1995 1996 1995 Net sales........................................$ 443,626 $ 421,981 $ 1,171,389 $ 1,099,188 Cost of goods sold............................... 304,028 288,114 832,341 793,348 Gross profit on sales............................ 139,598 133,867 339,048 305,840 Selling, administrative and general expenses..... 44,185 39,578 126,018 115,760 Other operating costs............................ 862 1,046 2,684 3,287 Other income, net................................ 3,903 2,562 15,319 12,900 Earnings before interest expense and income taxes....................... 98,454 95,805 225,665 199,693 Interest expense................................. 1,903 3,054 6,363 8,650 Earnings before income taxes..................... 96,551 92,751 219,302 191,043 Provision for income taxes....................... 34,442 33,603 78,510 68,202 Net earnings ....................................$ 62,109 $ 59,148 $ 140,792 $ 122,841 Primary and fully diluted earnings per share of common stock.......................... $1.77 $1.64 $3.99 $3.40 Average common and common equivalent shares outstanding**........................... 35,089 35,984 35,265 36,087 Cash dividends per share of common stock......... $0.420 $0.365 $1.260 $1.095 Depreciation, depletion and amortization deducted above................................. $29,071 $28,184 $82,708 $82,302 Effective tax rate............................... 35.7% 36.2% 35.8% 35.7% * Unaudited ** Primary and fully diluted earnings per share of common stock is computed by dividing the net earnings by the weighted average number of common shares and common share equivalents outstanding during the period. Common share equivalents primarily represent the number of shares contingently issuable under long-range performance share plans. Refer to Exhibit 11 for computation. The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Nine Months Ended September 30* 1996 1995 Operations Net earnings .............................................. $ 140,792 $ 122,841 Adjustments to reconcile net earnings to net cash provided by continuing operations: Depreciation, depletion and amortization............... 82,708 82,302 Increase in assets before effects of business acquisitions................................ (38,942) (57,994) Increase in liabilities before effects of business acquisitions................................ 18,721 2,918 Other, net............................................. 17,307 (1,580) Net cash provided by continuing operations.......... 220,586 148,487 Net cash used for discontinued operations.................. (935) (725) Net cash provided by operations..................... 219,651 147,762 Investing Activities Purchases of property, plant and equipment................. (117,704) (77,499) Payment for business acquisitions (net of acquired cash)... (54,588) (21,027) Proceeds from sale of property, plant and equipment........ 9,732 9,493 Investment in nonconsolidated companies.................... (1,615) (1,512) Withdrawal of earnings from nonconsolidated companies...... -- 250 Net cash used for investing activities.............. (164,175) (90,295) Financing Activities Net borrowings - commercial paper and bank lines of credit. 14,609 37,495 Payment of short-term debt................................. (5,470) (4,541) Payment of long-term debt.................................. (120) (32) Purchases of common stock.................................. (19,409) (49,700) Dividends paid............................................. (43,898) (39,087) Net cash used for financing activities.............. (54,288) (55,865) Net increase in cash and cash equivalents.................. 1,188 1,602 Cash and cash equivalents at beginning of year............. 21,869 7,717 Cash and cash equivalents at end of period................. $ 23,057 $ 9,319 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized).................$ 4,901 $ 6,750 Income taxes......................................... 68,980 68,013 SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Liabilities assumed in business acquisition............$ 4,720 $ 1,382 * Unaudited The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying condensed 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 generally accepted accounting principles for complete financial statements. In the opinion of 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 the Company's latest annual report on Form 10-K. The reporting of segment data required by Statement of Financial Accounting Standards No. 14, Financial Reporting for Segments of a Business Enterprise, is confined to complete financial statements as provided in the Company's Form 10-K and annual report to shareholders. 2. Effective Tax Rate In accordance with generally accepted accounting principles, it is the Company's practice at the end of each interim reporting period to make a best estimate of the effective tax rate expected to be applicable for the full fiscal year. The rate so determined is used in providing for income taxes on a current year-to-date basis.
EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE (Amounts and shares in thousands, except per share data) Three Months Ended Nine Months Ended September 30 September 30 1996 1995 1996 1995 Primary and fully diluted earnings: Average common shares outstanding...... 34,713 35,481 34,834 35,737 Common share equivalents............. 376 503 431 350 Total shares................... 35,089 35,984 35,265 36,087 Net earnings.............................$ 62,109 $ 59,148 $ 140,792 $ 122,841 Primary and fully diluted earnings per share of common stock:...............$ 1.77 $ 1.64 $ 3.99 $ 3.40
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION GENERAL COMMENTS Seasonality of the Company's Business Results of any individual quarter are not necessarily indicative of results to be expected for the year due principally to the effect that weather can have on the sales and production volume of the Construction Materials segment. Normally, the highest sales and earnings of the Construction Materials segment are attained in the third quarter and the lowest are realized in the first quarter when sales and earnings are substantially below the levels realized in all subsequent quarters of the year. Segment Sales and Earnings Segment sales and earnings have been determined on the same basis as used in prior Form 10-Q reports. Segment earnings are earnings before interest expense and income taxes and after allocation of corporate expenses and income, other than "interest income, etc.," (principally interest income earned on cash items and gains or losses on corporate financing transactions), and after assignment of equity income to the segment with which it is related in terms of products and services. Allocations are based primarily on one or a combination of the following factors: average gross investment, average equity and sales. RESULTS OF OPERATIONS Third Quarter 1996 as Compared with Third Quarter 1995 Vulcan's sales, net earnings and earnings per share were at record levels for the third quarter. Net earnings were $62.1 million, or $1.77 per share, as compared with 1995 earnings and earnings per share of $59.1 million and $1.64. Net earnings and earnings per share were up 5% and 8%, respectively, from comparable 1995 results. Third quarter sales in 1996 were $443.6 million, up 5% from last year's total of $422.0 million. The segment detail of that increase is as follows (amounts in millions): Third Quarter Sales 1996 1995 Increase Construction Materials $285.5 $269.8 $15.7 Chemicals 158.1 152.2 5.9 Total $443.6 $422.0 $21.6 Third quarter Construction Materials sales were up 6% from last year's third quarter total. Shipments of crushed stone increased 6%. Excluding the impact of freight to remote distribution yards, the average sales price of crushed stone increased 2%. The increase in stone revenues was partially offset by declines in certain other product lines. Chemicals sales increased 4% from last year's level due to increased sales in the Performance Systems Business Unit, partly offset by lower sales for the Chloralkali Business Unit. Performance Systems results benefited from the acquisition of Mayo Chemical Company in the second quarter of 1996, as well as increased sales at Callaway Chemical Company. Lower Chloralkali sales reflect a decline in caustic soda prices. Earnings before interest expense and income taxes were $98.5 million as compared to $95.8 million in the same period last year. The segment detail of this result is shown in the following summary (amount in millions): Third Quarter Earnings Before Interest Expense and Income Taxes * Increase 1996 1995 (Decrease) Construction Materials $73.1 $67.8 $5.3 Chemicals 25.3 28.0 (2.7) Segment earnings* 98.4 95.8 2.6 Interest income, etc. .1 - .1 Total $98.5 $95.8 $2.7 * After allocation of corporate expense and income, other than "interest income, etc." (principally interest income earned on short-term investment of funds and gains or losses on corporate financing transactions), and after assignment of equity income to the segment with which it is related in terms of products and services. The Construction Materials segment reported record third quarter earnings of $73.1 million, up 8% from 1995 earnings of $67.8 million. The increase reflects higher volume and improved prices. The Chemicals segment recorded third quarter earnings of $25.3 million as compared with earnings of $28.0 million in 1995. The decrease of 10% reflects principally the effect of lower caustic soda prices. Selling, administrative and general expenses of $44.2 million increased 12% from the 1995 third quarter level. This reflects principally the effect of acquisitions and higher accruals referable to management incentive plans. Other income, net of other charges, was $3.9 million, up from the $2.6 million from the third quarter of 1995. This reflects lower miscellaneous charges and improved results from the Crescent Market Project (the Company's joint venture to supply limestone from Mexico to the U. S. Gulf Coast market). The effective tax rate for the quarter was 35.7%, down slightly from last year's third quarter rate of 36.2%. The decrease mainly reflects a greater effect on the tax rate of statutory depletion because of relatively higher Construction Materials earnings. Year-To-Date Comparisons as of September 30, 1996 and September 30, 1995 Vulcan's sales, net earnings and earnings per share were at record levels for the first nine months of 1996. Net earnings were $140.8 million, or $3.99 per share, as compared with 1995 earnings and earnings per share of $122.8 million and $3.40. Net earnings and earnings per share were up 15% and 17%, respectively, from comparable 1995 results. Sales of $1.2 billion for the first nine months of 1996 increased 7% from the 1995 total of $1.1 billion. Sales of the segments are summarized as follows (amounts in millions): Sales for the Nine Months Ended September 30 1996 1995 Increase Construction Materials $ 714.1 $ 663.5 $50.6 Chemicals 457.3 435.7 21.6 Total $1,171.4 $1,099.2 $72.2 Construction Materials sales were up 8% over 1995. Crushed stone shipments increased 6%, while prices, exclusive of freight to distribution yards, increased 3%. Chemicals sales increased 5% due to increased sales in the Performance Systems Business Unit. Earnings for the current year to date before interest expense and income taxes were $225.7 million, up 13% from the 1995 result. Segment detail is shown below (amounts in millions): Earnings before Interest Expense and Income Taxes for the Nine Months Ended September 30 1996 1995 Increase Construction Materials $144.1 $132.0 $12.1 Chemicals 79.8 67.7 12.1 Segment earnings * 223.9 199.7 24.2 Interest income, etc. 1.8 - 1.8 Total $225.7 $199.7 $26.0 * After allocation of corporate expense and income, other than "interest income, etc." (principally interest income earned on short-term investment of funds and gains or losses on corporate financing transactions), and after assignment of equity income to the segment with which it is related in terms of products and services. Construction Materials earnings increased 9% due to higher volumes and prices. Chemicals earnings increased 18%, reflecting increased contribution from Performance Systems, higher Chloralkali volume and lower raw materials costs. Selling, administrative and general expenses increased 9% due to the impact of acquisitions and the costs of a project to redesign the Construction Materials segment's procurement process. The provision for income taxes during the first nine months was $78.5 million as compared with 1995's provision of $68.2 million, reflecting increases in pretax earnings and the effective tax rate. The effective tax rate for the period was 35.8%, up from last year's rate of 35.7%. On October 21, 1996, H. A. Sklenar, Chairman and Chief Executive Officer, made certain statements concerning the Company's earnings outlook. Excerpts of the relevant press release quoting Mr. Sklenar are as follows: "Strong stone shipments in Vulcan's Construction Materials segment accounted for most of the improvement in overall 1996 third quarter results. Construction activity in most regions benefited from strong demand. For the fourth quarter of 1996, we think stone shipments and earnings from operations may exceed last year's record levels; however, segment earnings are expected to be down somewhat from last year's record results due to lower gains from land sales, which were especially large in last year's fourth quarter. Notwithstanding these significantly lower gains, Construction Materials segment earnings for the full year probably will exceed 1995's record level. "Third quarter earnings for our Chemicals segment were lower than the comparable 1995 result. The Chloralkali Business Unit's results were hurt by a softening in liquid caustic soda prices, which declined 13% from last year's third quarter level and were down 5% from this year's second quarter. Third quarter 1995 Chloralkali earnings included a $3.5 million charge for environmental remediation at the Cleve Reber Superfund site in Louisiana. For the fourth quarter of 1996, continued softness in liquid caustic soda prices as well as higher energy costs are expected to result in significantly lower Chloralkali operating earnings. For the full year, Chloralkali earnings are expected to approximate 1995's record level due to the absence of the significant unusual charges recorded in last year's second half." Certain matters discussed above contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These include general business conditions, competitive factors, pricing, weather conditions, energy costs and other risks and uncertainties detailed from time to time in the Company's reports with the Securities and Exchange Commission. LIQUIDITY AND CAPITAL RESOURCES Working Capital Working capital exclusive of debt and cash items totaled $209.0 million at September 30, 1996, 20% above the 1995 year-end amount of $174.8 million. Higher receivables were partially offset by higher current liabilities. Working capital at September 30, 1996 decreased slightly from the same date last year. Higher inventories were offset by higher accrued liabilities. The Company's current ratio, which is based on all components of working capital, including cash and debt items, was 2.0 as of September 30, 1996 and year-end 1995. Cash Flows Cash provided by continuing operations during the first nine months totaled $220.6 million, up 49% from the $148.5 million generated in the same period last year. This increase reflects higher earnings, a reduction in escrow deposits referable to land transactions and less increase in working capital. Cash used for investing activities was $164.2 million, as compared with the 1995 total of $90.3 million. This increase reflects higher purchases of property, plant and equipment and higher spending for business acquisitions. Cash used for financing activities totaled $54.3 million, down from the 1995 amount of $55.9 million. The decrease reflects lower purchases of common stock, offset by lower net borrowings. Property Additions Property additions in the first nine months of 1996 totaled $147.0 million as compared with $92.5 million in the same period last year. During the first quarter of 1996 the Construction Materials segment acquired the assets and real property of Lester's Material Service, Inc. for use as an aggregate distribution yard. During the second quarter of 1996 the Construction Materials segment acquired all of the assets associated with the existing Cherokee quarry from Martin Marietta. In the second quarter of 1996, the Chemicals segment acquired Mayo Chemical Company, Inc. and Miller-Aldridge Chemicals, Inc. Mayo was incorporated into Callaway Chemical Company and Miller-Aldridge was incorporated into Vulcan Chemical Technologies, Inc. In the third quarter of 1996, the Chemicals segment acquired the municipal drinking water treatment business of the Drew Industrial Division of Ashland Chemical Company. The Drew business, which has annual sales of approximately $6 million, will be combined with the municipal water treatment segment of Vulcan Chemical Technologies, Inc. Short-term Borrowings Short-term borrowings as of September 30, 1996 and 1995 consisted of notes payable to banks totaling $18.2 million and $80.3 million, respectively. Long-term Borrowings As of September 30, 1996, long-term obligations were 7.6% of long-term capital and 9.7% of shareholders' equity. The corresponding 1995 percentages were 9.2% and 12.2%. Common Stock Transactions Pursuant to the Company's common stock purchase program, 105,500 shares of common stock were purchased in the third quarter of 1996 at a total cost of $6.0 million, equal to an average price of $57.18 per share. In the first nine months of 1996, 343,200 shares were purchased at a total cost of $19.4 million, or $56.56 per share. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 11 - Computation of Earnings per Share * (b) Reports on Form 8-K There were no reports on Form 8-K filed for the nine months ended September 30, 1996. _____________________ * Included in Part I 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 November 13, 1996 /s/ E. A. Khan E. A. Khan Controller /s/ D. F. Sansone D. F. Sansone Vice President - Finance EX-27 2
5 This schedule contains summary financial information extracted from the Consolidated Statement of Earnings for the nine months ended September 30, 1996, and the Consolidated Balance Sheet as of September 30, 1996, and is qualified in its entirety by reference to such financial statements. 1000 9-MOS DEC-31-1996 SEP-30-1996 23057 0 238029 8434 124301 412871 1973790 1219381 1327462 208312 85314 0 0 46573 829570 1327462 1171389 1171389 832341 832341 2684 521 6363 219302 78510 140792 0 0 0 140792 3.99 3.99
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