EX-99 3 g66702ex99.txt PRESS RELEASE 1 EXHIBIT 99 January 22, 2001 FOR IMMEDIATE RELEASE Contact: Charles R. Brown (205) 298-3191 VULCAN ANNOUNCES FOURTH QUARTER AND FULL YEAR RESULTS Birmingham, Alabama, January 22, 2001 - Vulcan Materials Company (NYSE:VMC) today announced record fourth quarter sales of $630.4 million, a 4 percent increase over the 1999 fourth quarter record of $605.6 million. Pretax earnings totaled $61.7 million, and net earnings were $48.3 million, or $0.47 per share (diluted). Comparable 1999 results were $92.5 million, $64.8 million and $0.64 per share, respectively. For the year, sales of $2,491.7 million were up 6 percent from the 1999 total of $2,355.8 million, representing the eighth consecutive record year for sales. Pretax earnings of $333.7 million were down 5 percent from the $351.6 million earned in 1999. Net earnings of $233.6 million and $2.29 per share were 3 percent below the comparable 1999 results of $239.7 million and $2.35 per share. For the sixth consecutive year, net cash provided by operations was at a record level. At $418.2 million, net cash provided by operations was 4 percent higher than the $403.0 million generated in 1999. All results are preliminary and, as yet, unaudited. Commenting on results for the fourth quarter, Donald M. James, Chairman and Chief Executive Officer of Vulcan, stated, "Construction Materials achieved record sales and slightly higher earnings than last year's record results. These results were realized even as severe winter weather in November and December curtailed demand for aggregates and limited production across most of our Midwestern and Southeastern markets. Furthermore, operating costs continued to be burdened with higher fuel costs, penalizing earnings by over $5 million. Sales of $473.9 million were 3 percent above 1999's level while earnings of $87.0 million were slightly higher than last year's $86.4 million. Aggregates shipments increased nearly 1 percent, and prices were up over 4 percent. Excluding recent acquisitions and greenfields, aggregates shipments were 6 percent below 1999's fourth quarter. "As anticipated in our December 19, 2000 press release, Chemicals earnings suffered due to sharply higher natural gas prices, provisions referable to Performance Chemicals' reorganization and the effect of required accelerated equipment overhauls. This resulted in a loss of $11.0 million for the quarter as compared to the prior year's quarterly earnings of $14.4 million, in spite of significant improvement in caustic soda prices. Sales of $156.5 million were up 8 percent from last year due to the new Chloralkali joint venture." With respect to full year results for 2000, Mr. James stated, "I am extremely pleased to report another year of significant accomplishments. Our sales and operating cash flows set new records. Pricing and operating improvements in our businesses allowed us to substantially offset a $0.35 per share negative impact from higher costs referable to energy and hydrocarbon based raw materials and a $0.07 per share negative effect from provisions referable to Performance Chemicals' reorganization. 2 "Construction Materials reported record sales for the eighth consecutive year. Sales for the year of $1,886.0 million were up 4 percent from 1999's $1,810.5 million. Aggregates shipments of 222.3 million tons represented the ninth consecutive record, increasing 1 percent over the 1999 level, while pricing for aggregates improved 4 percent. Earnings for the year of $375.7 million represented the seventh consecutive record, exceeding 1999's record of $370.0 million by 2 percent despite a more than $25 million negative impact from higher fuel and liquid asphalt costs. All of these results include recent acquisitions and greenfields, most notably the October 2000 Tarmac acquisition. Excluding these acquisitions and greenfields, sales increased 3 percent while aggregates shipments decreased 1 percent. Weaker private construction activity in some markets, delays in TEA-21 project implementation and the early onset of winter weather in the fourth quarter were the primary causes of the decline in volume. "The Chemicals segment posted 2000 sales of $605.8 million, up 11 percent from the 1999 level of $545.2 million. This growth in sales came primarily from the new Chloralkali joint venture, which began operating in the second half of the year. Segment earnings were $1.4 million as compared to 1999's $25.8 million. Chloralkali realized improved pricing and higher volumes for key products but this was offset by a more than $30 million increase in costs for natural gas and hydrocarbon-based raw materials and over $10 million for provisions referable to Performance Chemicals' reorganization. "During 2000, we made notable progress in the execution of our growth strategies for both segments. Within Construction Materials, CalMat delivered $0.08 per share accretion in earnings despite $0.06 per share negative impact of higher costs for fuel and liquid asphalt. In 2000 we acquired several additional aggregates facilities, most notably those associated with Tarmac, which will increase our annual aggregates shipments by approximately 18 million tons. We are confident that we will be able to continue to realize operating improvements from CalMat, Tarmac and our other recent acquisitions. Our new Chloralkali joint venture facilities were completed and brought on-line. This investment leverages our existing facilities and support structure and should provide relatively stable earnings contributions of approximately $15 million annually." Turning to the outlook for 2001, Mr. James stated, "Consistent with our December 19, 2000 press release, we expect to achieve earnings per share in the range of $2.85 to $3.00. This outlook is premised on the economy experiencing a 'soft landing'. We expect Construction Materials to generate its eighth consecutive year of record earnings, in the range of $425 to $450 million and Chemicals to achieve earnings in the range of $70 to $80 million. "Since our earlier guidance, many economists have expressed the view that the U.S. economy weakened significantly in the fourth quarter of 2000 and that this weakness may continue into the first half of 2001. As a result, Construction Materials may face difficult earnings comparisons to last year's relatively strong first half results. For the full year, we expect strengthening demand from the highway sector to more than offset a decline in demand from housing. Growth in aggregates volume, including acquisitions completed in 2000, could approximate 8 percent. Pricing for aggregates is projected to increase 3 to 4 percent, and we continue to expect additional operational improvements from our existing and newly acquired operations. Barring an economic recession, Construction Materials should attain earnings in the previously indicated $425 to $450 million range. 3 "With respect to Chemicals, the outlook for caustic soda pricing has continued to strengthen since our prior press release, but has been somewhat offset by weaker pricing for chlorine. Natural gas prices remain at a relatively high level, but expectations are that prices will moderate later in the year. Based on these assumptions, Chemicals should attain $70 to $80 million in earnings with increasingly more favorable quarterly earnings comparisons as the year progresses. "With respect to quarterly earnings for 2001, first quarter earnings comparisons will be impacted by higher gas prices, as well as higher interest, amortization and depreciation charges associated with Tarmac. Economic weakness and the normal sensitivity of our Construction Materials business to weather early in the year may also impact the comparison. As a result, we expect that first quarter earnings could be as low as $0.10 per share. Thereafter, we expect to report increasingly favorable quarterly earnings comparisons to 2000, resulting in earnings per share in the aforementioned range of $2.85 to $3.00 in 2001." Full year 2000 selling, administrative and general expenses increased due mainly to provisions referable to Performance Chemicals' reorganization and charitable contributions. Other operating costs increased $3.5 million for the year due primarily to higher amortization of goodwill referable to acquisitions. The Company's 2000 effective tax rate was 30.0 percent, down from the 1999 rate of 31.8 percent. The decrease reflects principally an adjustment to prior year accruals, as well as an increased favorable effect of statutory depletion due to relatively higher Construction Materials earnings. A broadcast of the quarterly earnings conference call scheduled for 10:00 CST on January 23, 2001 will be available via the Internet through Vulcan's home page at www.vulcanmaterials.com. Vulcan Materials Company, an S&P 500 company, is a producer of industrial materials with significant positions in two industries. It is the nation's foremost producer of construction aggregates, a major producer of other construction materials, and a leading chemicals manufacturer, supplying chloralkali and other industrial chemicals. Certain matters discussed in this release 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, oil and energy costs, cost of hydrocarbon-based raw materials and other risks and uncertainties detailed from time to time in the Company's SEC reports, including the report on Form 10K for the year. (Tables Follow) 4 Table A VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
(THOUSANDS OF DOLLARS) THREE MONTHS ENDED TWELVE MONTHS ENDED CONSOLIDATED STATEMENTS OF EARNINGS DECEMBER 31 DECEMBER 31 ------------------------ ---------------------------- (CONDENSED AND UNAUDITED) 2000 1999 2000 1999 ----------------------------------------------------------------------------------------------------------------------- Net sales $630,398 $605,590 $2,491,744 $2,355,778 Cost of goods sold 500,836 454,705 1,908,057 1,769,327 -------- -------- ---------- ---------- Gross profit on sales 129,562 150,885 583,687 586,451 Selling, administrative and general expenses 54,261 50,864 216,978 205,643 Other operating costs 7,561 7,840 26,220 22,714 Minority interest in (earnings) losses 1,510 16 7,843 (54) Other income, net 6,710 8,588 28,815 37,767 -------- -------- ---------- ---------- Earnings before interest and income taxes 75,960 100,785 377,147 395,807 Interest income 1,095 1,326 4,678 4,330 Interest expense 15,376 9,626 48,087 48,576 -------- -------- ---------- ---------- Earnings before income taxes 61,679 92,485 333,738 351,561 Provision for income taxes 13,400 27,668 100,187 111,868 -------- -------- ---------- ---------- Net earnings $ 48,279 $ 64,817 $ 233,551 $ 239,693 ======================================================================================================================= Basic net earnings per share $ 0.48 $ 0.64 $ 2.31 $ 2.38 Diluted net earnings per share $ 0.47 $ 0.64 $ 2.29 $ 2.35 ======================================================================================================================= Average common shares outstanding (thousands) 101,272 100,799 101,037 100,895 Average common shares outstanding, assuming dilution (thousands) 102,081 101,904 102,012 102,190 Cash dividends per share of common stock $ 0.210 $ 0.195 $ 0.840 $ 0.780 Depreciation, depletion and amortization deducted above $ 67,108 $ 54,645 $ 232,365 $ 207,108 Effective tax rate 21.7% 29.9% 30.0% 31.8% =======================================================================================================================
See accompanying Notes to Financial Statements 5 Table B VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
(THOUSANDS OF DOLLARS) THREE MONTHS ENDED TWELVE MONTHS ENDED VARIANCE DECEMBER 31 DECEMBER 31 FAV/(UNFAV) OPERATING RESULTS BY REPORTABLE ------------------------- --------------------------- 2000 YTD VS SEGMENT (UNAUDITED) 2000 1999 2000 1999 1999 YTD ------------------------------------------------------------------------------------------------------------------ NET SALES Construction Materials $473,870 $461,023 $1,885,987 $1,810,544 $ 75,443 Chemicals 156,528 144,567 605,757 545,234 60,523 -------- -------- ---------- ---------- -------- Total $630,398 $605,590 $2,491,744 $2,355,778 $135,966 ======== ======== ========== ========== ======== EARNINGS BEFORE INTEREST AND INCOME TAXES Construction Materials $ 86,968 $ 86,367 $ 375,734 $ 369,996 $ 5,738 Chemicals (11,008) 14,418 1,413 25,811 (24,398) -------- -------- ---------- ---------- -------- Segment* earnings $ 75,960 $100,785 $ 377,147 $ 395,807 $(18,660) ======== ======== ========== ========== ======== EARNINGS BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND AMORTIZATION (EBITDA)** Construction Materials $134,977 $129,358 $ 553,331 $ 530,682 $ 22,649 Chemicals 8,091 26,072 56,181 72,233 (16,052) -------- -------- ---------- ---------- -------- Segment* EBITDA** $143,068 $155,430 $ 609,512 $ 602,915 $ 6,597 ======== ======== ========== ========== ========
* After allocation of corporate expenses and income, other than interest, and after assignment of equity income to the segments with which it is related in terms of products and services. Allocations are based on average capital employed and customer sales. ** EBITDA is presented because it is a widely accepted financial indicator of a company's ability to service and/or incur indebtedness. However, EBITDA should not be construed as an alternative to net income as a measure of a company's operating results or to operating cash flow as a measure of liquidity. See accompanying Notes to Financial Statements 6 Table C VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
(THOUSANDS OF DOLLARS) CONSOLIDATED BALANCE SHEETS DECEMBER 31 DECEMBER 31 (CONDENSED AND UNAUDITED) 2000 1999 ----------------------------------------------------------------------------------------------------------- ASSETS Cash and cash equivalents $ 55,276 $ 52,834 Accounts and notes receivable: Accounts and notes receivable, gross 390,849 339,413 Less: Allowance for doubtful accounts (8,982) (9,722) ---------- ---------- Accounts and notes receivable, net 381,867 329,691 Inventories: Finished products 155,258 131,032 Raw materials 15,578 13,735 Products in process 1,020 933 Operating supplies and other 27,188 33,034 ---------- ---------- Inventories 199,044 178,734 Deferred income taxes 36,815 52,931 Prepaid expenses 13,660 10,534 ---------- ---------- Total current assets 686,662 624,724 Investments and long-term receivables 72,558 77,064 Property, plant and equipment: Property, plant and equipment, cost 3,496,204 3,149,897 Less: Reserve for depr., depl., & amort (1,647,570) (1,510,182) ---------- ---------- Property, plant and equipment, net 1,848,634 1,639,715 Goodwill 562,044 454,783 Deferred charges and other assets 50,834 43,207 ---------- ---------- Total $3,220,732 $2,839,493 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current maturities of long-term debt $ 6,756 $ 6,175 Notes payable 270,331 101,695 Trade payables and accruals 159,817 136,056 Other current liabilities 113,827 142,716 ---------- ---------- Total current liabilities 550,731 386,642 Long-term debt 685,361 698,862 Deferred income taxes 268,797 250,833 Minority interest 103,626 67,979 Other noncurrent liabilities 127,063 111,524 Shareholders' equity 1,485,154 1,323,653 ---------- ---------- Total $3,220,732 $2,839,493 =========================================================================================================== Current ratio 1.2 1.6 ===========================================================================================================
See accompanying Notes to Financial Statements 7 Table D VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
(THOUSANDS OF DOLLARS) TWELVE MONTHS ENDED DECEMBER 31 CONSOLIDATED STATEMENTS OF CASH FLOWS -------------------------------- (CONDENSED AND UNAUDITED) 2000 1999 OPERATING ACTIVITIES Net earnings $ 233,551 $ 239,693 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation, depletion and amortization 232,365 207,108 Increase in assets before effects of business acquisitions (47,764) (34,468) Increase (decrease) in liabilities before effects of business acquisitions 9,113 (6,610) Other, net (9,108) (2,754) ---------- ---------- Net cash provided by operating activities 418,157 402,969 ---------- ---------- INVESTING ACTIVITIES Purchases of property, plant and equipment (340,409) (314,650) Payment for business acquisitions, net of acquired cash (265,081) (780,440) Proceeds from sale of property, plant and equipment 62,349 103,067 Withdrawal of earnings from nonconsolidated companies 13,227 16,134 ---------- ---------- Net cash used for investing activities (529,914) (975,889) ---------- ---------- FINANCING ACTIVITIES Net borrowings - commercial paper and bank lines of credit 168,635 91,342 Payment of short-term debt (6,075) (96,276) Payment of long-term debt (8,000) (1,180) Proceeds from issuance of long-term debt -- 496,875 Purchases of common stock -- (12,508) Dividends paid (84,765) (78,730) Contributions from minority interest of consolidated subsidiary 35,648 36,064 Other, net 8,756 9,607 ---------- ---------- Net cash provided by financing activities 114,199 445,194 ---------- ---------- Net increase (decrease) in cash and cash equivalents 2,442 (127,726) Cash and cash equivalents at beginning of year 52,834 180,560 ---------- ---------- Cash and cash equivalents at end of year $ 55,276 $ 52,834 ===========================================================================================================
See accompanying Notes to Financial Statements 8 Table E NOTES TO FINANCIAL STATEMENTS 1. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental information referable to the Consolidated Statements of Cash Flows for the twelve months ended December 31 is summarized below (amounts in thousands):
2000 1999 --------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest, net of amount capitalized $49,253 $ 39,079 Income taxes 70,615 85,756 SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES Liabilities and long-term debt assumed in business acquisitions Fair value of stock issued in business acquisitions 16,742 480,087 Debt issued in purchase of assets, net of assumed liabilities 1,300 10,580 3,421 8,645