-----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, SiH1KdvWpZgmn9wQ1V/KYL78/cU3NUgjZ9yOCkzHtIYfGKVuB0CfWoKUc3xtiifA x682k3K+mJlPN92uX6NWuA== 0001157523-07-004413.txt : 20070502 0001157523-07-004413.hdr.sgml : 20070502 20070502145630 ACCESSION NUMBER: 0001157523-07-004413 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070430 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070502 DATE AS OF CHANGE: 20070502 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04033 FILM NUMBER: 07810139 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 8-K 1 a5392823.txt VULCAN MATERIALS COMPANY 8-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ------------------------------------ FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 30, 2007 VULCAN MATERIALS COMPANY (Exact name of registrant as specified in its charter) New Jersey I-4034 63-0366371 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) 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: Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions: [] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. The Registrant's earnings release dated April 30, 2007, regarding its first quarter financial results for 2007 is attached hereto as Exhibit 99.1. Item 9.01 Financial Statements and Exhibits. (c) Exhibits: Exhibit No. Description ----------- ----------- 99.1 Earnings Release dated April 30, 2007. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized. VULCAN MATERIALS COMPANY (Registrant) By: /s/ William F. Denson, III ---------------------------- Dated: April 30, 2007 William F. Denson, III EX-99.1 2 a5392823-ex991.txt EXHIBIT 99.1 EXHIBIT 99.1 Vulcan Announces Record First Quarter Earnings Per Share BIRMINGHAM, Ala.--(BUSINESS WIRE)--April 30, 2007--Vulcan Materials Company (NYSE:VMC) today announced record first quarter net earnings of $89 million, or $0.91 per diluted share, a 34 percent increase from the prior year's first quarter net earnings of $0.68 per diluted share. First quarter net sales were $630 million compared with $642 million in the prior year. Don James, Vulcan's Chairman and Chief Executive Officer, stated, "We are very pleased with our first quarter operating results and the year-over-year growth in earnings. We expect the pricing environment for aggregates to remain favorable with demand supported by growth in public infrastructure and private nonresidential construction." As previously announced, net earnings in the first quarter of 2007 include a gain on sale of real estate in California of $0.27 per diluted share, which increased earnings $0.26 per diluted share after related incentive costs. Net earnings in the prior year's first quarter included a $0.07 per diluted share gain from the adjustment in the carrying value of the ECU earn-out (See Table E). Operating Results First quarter operating earnings were $137 million, compared with $99 million in the prior year. Gross profit as a percentage of net sales, which excludes gains on sale of real estate, was 26.5 percent, up 100 basis points from the prior year's level of 25.5 percent. Double-digit price increases for the Company's key products more than offset the earnings effect of lower sales volumes. The average unit price for aggregates in the first quarter increased 16 percent from the prior year's level, while aggregates shipments decreased 14 percent. First quarter 2007 aggregates shipments declined due to less favorable weather than in the first quarter of 2006 and weakness in residential construction. During last year's first quarter, aggregates shipments surged 13 percent due to the combination of favorable weather and strong demand, resulting in significantly higher than normal first quarter shipments. Earnings in the asphalt product line increased significantly as higher selling prices more than offset higher costs for key raw materials and lower sales volumes. First quarter concrete earnings were lower than the prior year's level as higher prices were more than offset by lower sales volumes and higher costs for raw materials. Concrete sales decreased $17 million from the prior year's first quarter and were a primary driver of the 2 percent decrease in overall net sales in the first quarter. Selling, administrative and general expenses in the first quarter increased approximately $9 million from the prior year due mostly to higher employee-related costs and expenses associated with certain corporate initiatives including the pending acquisition of Florida Rock Industries, improving business processes and the replacement of legacy information systems. Gain on sale of property, plant and equipment increased approximately $46 million from the prior year's first quarter due primarily to the aforementioned sale of real estate in California during January 2007. Other income decreased approximately $11 million from the prior year's first quarter. Other income in the current year's first quarter includes a $0.7 million gain in the carrying value of the ECU earn-out compared with a $12.2 million gain in the prior year's first quarter. In March, the Company received $8.4 million in cash from the 5CP earn-out agreement with the purchaser of its former Chemicals business. The cash receipt had no earnings effect in the current quarter. This earn-out is to be paid annually in the first quarter, subject to certain conditions, through 2013. During the first quarter, the Company acquired aggregates operations in Illinois and North Carolina. All results are unaudited. Outlook - Full Year 2007 Commenting on Vulcan's outlook for 2007, Mr. James stated, "We remain confident in our ability to continue strong earnings growth in 2007. Broader economic factors such as low interest rates, job growth, falling office vacancy rates and the solid fiscal condition of most states should continue to aid the more aggregate-intensive infrastructure and private nonresidential end-use markets in 2007 and support overall demand for aggregates in our markets. "The residential construction slowdown continued and contributed to lower aggregates and concrete shipments for the quarter. However, with mortgage interest rates still at relatively low historical levels and household formations increasing in our high growth markets, residential construction has the potential to stabilize in the second half of 2007 in many markets. "Aggregates demand from highway construction in Vulcan-served markets should increase in 2007, primarily as a result of higher federal and state spending levels and moderating liquid asphalt costs. In 2006, construction cost inputs for highway projects increased significantly, particularly liquid asphalt and diesel fuel, resulting in some delays for new contract awards. "We expect private nonresidential construction to continue to grow in 2007. This construction end market includes a wide array of project types and generally is more aggregates intensive than single-family residential construction. Economic factors, such as job growth, vacancy rates, private infrastructure needs and demographic trends, help drive demand for this type of construction. "We believe that our business continues to be well positioned to achieve earnings from continuing operations in 2007 of $5.51 to $5.91 per diluted share, consistent with full year guidance provided at the end of the fourth quarter." Mr. James further stated, "Aggregates pricing in 2007 should be 10 to 12 percent higher than the prior year's level. We expect aggregates shipments to be flat to down 2 percent from the prior year's level. The earnings contribution from higher aggregates pricing should more than offset the earnings effects of a potential decrease in aggregates shipments resulting from weakness in residential construction. Outlook - Second Quarter 2007 "In the second quarter, we expect to earn $1.55 to $1.70 per diluted share. Last year's second quarter earnings from continuing operations were $1.47 per diluted share and included a gain of $0.15 per share resulting from the sale of contractual rights as well as a $0.06 per share gain resulting from an increase in the carrying value of the ECU earn-out. This year's second quarter guidance does not include any comparable items." In keeping with past practice, Vulcan will give quarterly and annual earnings guidance. Revised guidance will be issued only if Vulcan determines that comparable earnings per share, on either a quarterly or an annual basis, will be outside its most recent published estimates. Additionally, quarterly and annual earnings guidance provided in this press release does not reflect the pending acquisition of Florida Rock Industries, Inc. Conference Call Vulcan will host a conference call at 10:00 a.m. CDT on Tuesday, May 1, 2007. Investors and other interested parties in the U.S. may access the teleconference live by calling (800) 291-5365 approximately 10 minutes before the scheduled start. International participants can dial (617) 614-3922. The access code is 89557595. A live webcast will be available via the Internet through Vulcan's home page at www.vulcanmaterials.com. The conference call will be recorded and available for replay approximately two hours after the call through May 8, 2007. Vulcan Materials Company, a member of the S&P 500 index, is the nation's largest producer of construction aggregates and a major producer of asphalt and concrete. Certain matters discussed in this release, including expectations regarding future performance, contain forward-looking statements that are subject to assumptions, risks and uncertainties that could cause actual results to differ materially from those projected. These assumptions, risks and uncertainties include, but are not limited to, those associated with general economic and business conditions; changes in interest rates; the timing and amount of federal, state and local funding for infrastructure; changes in the level of spending for residential and private nonresidential construction; the highly competitive nature of the construction materials industry; pricing; weather and other natural phenomena; energy costs; costs of hydrocarbon-based raw materials; increasing healthcare costs; the timing and amount of any future payments to be received under two earn-outs contained in the agreement for the divestiture of the Company's Chemicals business; the Company's ability to manage and successfully integrate acquisitions; and other assumptions, risks and uncertainties detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year. Forward-looking statements speak only as of the date hereof, and Vulcan assumes no obligation to publicly update such statements. Table A Vulcan Materials Company and Subsidiary Companies (Amounts and shares in thousands, except per share data) Three Months Ended Consolidated Statements of Earnings March 31 ---------------------- (Condensed and unaudited) 2007 2006 - ---------------------------------------------------------------------- Net sales $ 630,187 $ 642,272 Delivery revenues 57,000 66,415 ---------- ---------- Total revenues 687,187 708,687 Cost of goods sold 462,992 478,378 Delivery costs 57,000 66,415 ---------- ---------- Cost of revenues 519,992 544,793 ---------- ---------- Gross profit 167,195 163,894 Selling, administrative and general expenses 74,402 65,012 Gain on sale of property, plant and equipment, net 46,387 757 Other operating expense, net 2,034 625 ---------- ---------- Operating earnings 137,146 99,014 Other income, net 1,202 12,093 Interest income 1,323 2,647 Interest expense 6,635 6,285 ---------- ---------- Earnings from continuing operations before income taxes 133,036 107,469 Provision for income taxes 43,697 35,564 ---------- ---------- Earnings from continuing operations 89,339 71,905 Loss on discontinued operations, net of tax (465) (1,820) ---------- ---------- Net earnings $ 88,874 $ 70,085 ====================================================================== Basic earnings (loss) per share: Earnings from continuing operations $ 0.94 $ 0.72 Discontinued operations (0.01) (0.02) ---------- ---------- Net earnings per share $ 0.93 $ 0.70 Diluted earnings (loss) per share: Earnings from continuing operations $ 0.91 $ 0.70 Discontinued operations - (0.02) ---------- ---------- Net earnings per share $ 0.91 $ 0.68 ====================================================================== Weighted-average common shares outstanding: Basic 95,172 100,552 Assuming dilution 97,778 102,346 Cash dividends declared per share of common stock $ 0.46 $ 0.37 Depreciation, depletion, accretion and amortization from continuing operations $ 60,801 $ 53,673 Effective tax rate from continuing operations 32.8% 33.1% ====================================================================== Table B Vulcan Materials Company and Subsidiary Companies (Amounts in thousands) Consolidated Balance Sheets March 31 December 31 March 31 (Condensed and unaudited) 2007 2006 2006 - ---------------------------------------------------------------------- Assets - ------------------------------- Cash and cash equivalents $ 69,960 $ 55,230 $ 80,343 Medium-term investments - - 68,965 Accounts and notes receivable: Accounts and notes receivable, gross 395,124 394,815 506,558 Less: Allowance for doubtful accounts (3,108) (3,355) (4,539) ------------ ------------ ------------ Accounts and notes receivable, net 392,016 391,460 502,019 Inventories: Finished products 235,307 214,508 201,904 Raw materials 10,950 9,967 10,977 Products in process 1,628 1,619 2,058 Operating supplies and other 18,531 17,443 17,499 ------------ ------------ ------------ Inventories 266,416 243,537 232,438 Deferred income taxes 22,165 25,579 20,959 Prepaid expenses 15,016 15,388 16,378 ------------ ------------ ------------ Total current assets 765,573 731,194 921,102 Investments and long-term receivables 2,383 6,664 6,864 Property, plant and equipment: Property, plant and equipment, cost 4,026,960 3,897,618 3,582,868 Less: Reserve for depr., depl., & amort. (2,070,840) (2,028,504) (1,917,815) ------------ ------------ ------------ Property, plant and equipment, net 1,956,120 1,869,114 1,665,053 Goodwill 650,206 620,189 628,683 Other assets 196,633 200,673 185,255 ------------ ------------ ------------ Total assets $ 3,570,915 $ 3,427,834 $ 3,406,957 ============ ============ ============ Liabilities and Shareholders' Equity - ------------------------------- Current maturities of long-term debt $ 727 $ 630 $ 32,547 Short-term borrowings 240,400 198,900 - Trade payables and accruals 156,008 154,215 137,538 Other current liabilities 129,080 133,763 154,102 ------------ ------------ ------------ Total current liabilities 526,215 487,508 324,187 Long-term debt 321,503 322,064 322,859 Deferred income taxes 290,404 287,905 282,400 Other noncurrent liabilities 338,237 319,458 287,229 Shareholders' equity 2,094,556 2,010,899 2,190,282 ------------ ------------ ------------ Total liabilities and shareholders' equity $ 3,570,915 $ 3,427,834 $ 3,406,957 ====================================================================== Table C Vulcan Materials Company and Subsidiary Companies (Amounts in thousands) Three Months Ended Consolidated Statements of Cash Flows March 31 ---------------------- (Condensed and unaudited) 2007 2006 - ---------------------------------------------------------------------- Operating Activities - ---------------------------------------------- Net earnings $ 88,874 $ 70,085 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation, depletion, accretion and amortization 60,801 53,691 Net gain on sale of property, plant and equipment (46,387) (757) Contributions to pension plans (292) (318) Share-based compensation 3,871 5,478 Increase in assets before initial effects of business acquisitions and dispositions (21,652) (29,831) Increase (decrease) in liabilities before initial effects of business acquisitions and dispositions 11,710 (23,187) Other, net 1,220 (3,144) ---------- ---------- Net cash provided by operating activities 98,145 72,017 ---------- ---------- Investing Activities - ---------------------------------------------- Purchases of property, plant and equipment (122,636) (95,787) Proceeds from sale of property, plant and equipment 50,823 2,572 Payment for businesses acquired, net of acquired cash (58,857) (13,681) Proceeds from sales and maturities of medium- term investments - 106,175 Decrease in investments and long-term receivables 1,435 104 Other, net 8,730 (13) ---------- ---------- Net cash used for investing activities (120,505) (630) ---------- ---------- Financing Activities - ---------------------------------------------- Net short-term borrowings 41,500 - Payment of short-term debt and current maturities (320) (240,305) Payment of long-term debt (27) - Purchases of common stock (4,800) (19,337) Dividends paid (43,762) (37,167) Proceeds from exercise of stock options 22,980 14,644 Excess tax benefits from exercise of stock options 15,501 7,161 Other, net 6,018 8,822 ---------- ---------- Net cash provided by (used for) financing activities 37,090 (266,182) ---------- ---------- Net increase (decrease) in cash and cash equivalents 14,730 (194,795) Cash and cash equivalents at beginning of period 55,230 275,138 ---------- ---------- Cash and cash equivalents at end of period $ 69,960 $ 80,343 ====================================================================== Table D 1. Supplemental Cash Flow Information Supplemental information referable to the Condensed Consolidated Statements of Cash Flows for the three months ended March 31 is summarized below (amounts in thousands): 2007 2006 - ---------------------------------------------------------------------- Supplemental Disclosure of Cash Flow Information - ---------------------------------------------------- Cash paid during the period for: Interest, net of amount capitalized $ 1,632 $ 6,999 Income taxes 3,145 9,154 Supplemental Schedule of Noncash Investing and Financing Activities - ---------------------------------------------------- Accrued liabilities for purchases of property, plant and equipment 29,500 9,934 Debt issued for purchases of property, plant and equipment 5 - Proceeds receivable from exercise of stock options 48 - 2. Net Sales and Unit Shipments (Amounts in thousands) Three Months Ended March 31 ----------------------- Net Sales by Product - Customer 2007 2006 ----------------------- Aggregates, excluding freight to remote distribution sites $ 423,850 $ 426,852 Freight to remote distribution sites 31,908 33,014 ----------- ----------- Aggregates 455,758 459,866 Asphalt mix 96,845 85,201 Concrete 48,028 64,573 Other products 29,556 32,632 ----------- ----------- Total net sales $ 630,187 $ 642,272 =========== =========== Unit Shipments Aggregates Customer tons 45,705 53,292 Internal tons (1) 2,338 2,873 ----------- ----------- Aggregates - tons 48,043 56,165 =========== =========== Asphalt mix - tons 2,036 2,264 Concrete - cubic yards 504 750 (1) Represents tons shipped primarily to our other operations (e.g., asphalt mix and concrete). Revenue from internal shipments is not included in net sales as presented in the accompanying Consolidated Statements of Earnings. Table E Reconciliation of Non-GAAP Performance Measures (Amounts in thousands, except per share data) Three Months Ended March 31 ---------------------- 2007 2006 ---------------------- GAAP Earnings from continuing operations before income taxes $ 133,036 $ 107,469 Gain on sale of California real estate, net (1) (42,852) - Gain from adjustment in the carrying value of the ECU earn-out (2) (700) (12,181) ---------- ---------- Earnings from continuing operations before income taxes, excluding gains on sale of California real estate and adjustment in the carrying value of the ECU earn-out (3) $ 89,484 $ 95,288 ========== ========== GAAP Earnings from continuing operations, net of tax $ 89,339 $ 71,905 Gain on sale of California real estate, net (1) (25,390) - Gain from adjustment in the carrying value of the ECU earn-out, net of tax (2) (420) (7,300) ---------- ---------- Earnings from continuing operations, excluding gains on sale of California real estate and adjustment in the carrying value of the ECU earn-out, net of tax (3) $ 63,529 $ 64,605 ========== ========== GAAP Diluted earnings per share from continuing operations $ 0.91 $ 0.70 After-tax gain per diluted share resulting from sale of California real estate, net (1) (0.26) - After-tax gain per diluted share resulting from the adjustment in the carrying value of the ECU earn-out (2) - (0.07) ---------- ---------- Earnings per share from continuing operations, excluding gains on sale of California real estate and adjustment in the carrying value of the ECU earn-out, net of tax (3) $ 0.65 $ 0.63 ========== ========== (1) In January 2007, the Company sold approximately 125 acres of vacant land located in San Bernardino County, California resulting in a pretax gain of $43.8 million. The amounts shown above are net of the related incentives ratably applied in accordance with U.S. Generally Accepted Accounting Principles (GAAP). (2) In June 2005, the Company sold substantially all the assets of its Chemicals business, known as Vulcan Chemicals, to a subsidiary of Occidental Chemical Corporation, Basic Chemicals. Subject to certain conditions as defined in a separate earn-out agreement, Basic Chemicals is required to make future payments based on ECU and natural gas prices during the five-year period beginning July 1, 2005, capped at $150 million (ECU earn-out or ECU derivative). The ECU earn-out is accounted for as a derivative instrument; accordingly, it is reported at fair value. Changes to the fair value of the ECU derivative are recorded within continuing operations pursuant to SAB Topic 5:Z:5. (3) The Company prepares and reports its financial statements in accordance with GAAP. Internally, management monitors the operating performance of its construction materials business using non-GAAP metrics similar to those above. These non-GAAP measures exclude the effects of two items, described more fully above: 1) the gain on the sale of California real estate during the first quarter of 2007 (included in gain on sale of property, plant and equipment, net in the accompanying condensed consolidated statements of earnings), and 2) the ECU earn-out obtained in connection with the June 2005 sale of our Chemicals business, including the associated changes in carrying value (included in other income, net in the accompanying condensed consolidated statements of earnings). In Management's opinion, these non-GAAP measures are important indicators of the ongoing operations of our construction materials business and provide better comparability between reporting periods because they exclude items that may not be indicative of or are unrelated to our core business and provide a better baseline for analyzing trends in our core operations. The Company does not, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The Company believes the disclosure of the effects of these items increases the reader's understanding of the underlying performance of the business and that such non-GAAP financial measures provide investors with an additional tool to evaluate our financial results and assess our prospects for future performance. CONTACT: Vulcan Materials Company Investor Contact: Mark Warren, 205-298-3220 or Media Contact: David Donaldson, 205-298-3220 -----END PRIVACY-ENHANCED MESSAGE-----