FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $1 Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of February 28, 1994:
Common Stock, $1 Par Value $1,784,219,068.88
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Shares outstanding
at February 28, 1994
Common Stock, $1 Par Value 36,511,033
Documents Incorporated by Reference:
Portions of the registrant's Annual Report to Shareholders for the year
ended December 31, 1993, are incorporated by reference into Parts I, II
and IV.
Portions of the registrant's annual proxy statement for the annual meeting
of its shareholders to be held on May 23, 1994, which will be filed within 120
days of the end of the fiscal year covered by this Report, are incorporated by
reference into Part III.
VULCAN MATERIALS COMPANY
CROSS REFERENCE SHEET FOR DOCUMENTS INCORPORATED BY REFERENCE
PAGE IN
FORM 10-K HEADING IN ANNUAL REPORT TO SHAREHOLDERS ANNUAL
ITEM NO. FOR YEAR ENDED DECEMBER 31, 1993 REPORT
1. Business (Financial Results Segment Financial Data 26-27
by Business Segments)
Note 11, Segment Data 51
Note 13, Impairment and Liquidation
of Assets 51
2. Properties Operations Directory 9
3. Legal Proceedings Note 9, Other Commitments and
Contingent Liabilities 49-51
5. Market for the Registrant's Common Stock Market Prices
Common Equity and Related and Dividends 28
Stockholder Matters
6. Selected Financial Data Selected Financial Data 25
7. Management's Discussion and Management's Discussion and 29-37
Analysis of Financial Analysis
Condition and Results
of Operations Financial Terminology 53
8. Financial Statements and Consolidated Statements of Earnings 40
Supplementary Data
Consolidated Balance Sheets 41
Consolidated Statements of Cash Flows 42
Consolidated Statements of
Shareholders' Equity 43
Notes to Financial Statements 44-51
Management's Responsibility for
Financial Reporting and
Internal Control 52
Independent Auditors' Report 52
Supplementary Information-
Quarterly Financial Data
(Unaudited) 38
14. Exhibits, Financial Management's Discussion and 29-37
Statement Analysis
Schedules and
Reports on
Form 8-K Note 13, Impairment and
Liquidation of Assets 51
HEADING IN PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 1994
10. Directors and Executive Election of Directors, Nominees for Election
Officers to the Board of Directors, Directors
Continuing in Office
11. Executive Compensation Compensation of Directors, Executive
Compensation, Shareholder Return
Performance Presentation, Retirement
Income Plan, Employee Special
Severance Plan
12. Security Ownership of Security Owership of Certain Beneficial
Certain Beneficial Owners Owners, Security Holdings of Management
and Management
VULCAN MATERIALS COMPANY
FORM 10-K ANNUAL REPORT
FISCAL YEAR ENDED DECEMBER 31, 1993
CONTENTS
PART ITEM PAGE
I 1 Business
2 Properties
3 Legal Proceedings
4 Submission of Matters to a Vote of Security
Holders
4 a. Executive Officers of the Registrant
II 5 Market for the Registrant's Common Equity and
Related Stockholder Matters
6 Selected Financial Data
7 Management's Discussion and Analysis of
Financial Condition and Results of Operations
8 Financial Statements and Supplementary Data
9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
III 10 Directors and Executive Officers of the Registrant
11 Executive Compensation
12 Security Ownership of Certain Beneficial Owners
and Management
13 Certain Relationships and Related Transactions
IV 14 Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
-- Signatures
PART I
ITEM 1. BUSINESS
Vulcan Materials Company and its subsidiaries (together called the
"Company") are principally engaged in the production, distribution and sale of
construction materials ("Construction Materials") and industrial chemicals
("Chemicals"). Construction Materials and Chemicals may each be considered
both a segment (or a line of business) and a class of similar products. The
Company believes it is the nation's leading producer of construction
aggregates.
All of the Company's products are marketed under highly competitive
conditions, including competition in price, service and product performance.
There are a substantial number of competitors in both Construction Materials
and Chemicals.
No material part of the business of either segment of the Company is
dependent upon a single customer or upon a few customers, the loss of any one
of which would have a materially adverse effect on the segment. The Company's
products are sold principally to private industry. Although large amounts of
construction materials are used in public works, relatively insignificant
sales are made directly to federal, state, county or municipal governments, or
agencies thereof.
The Company estimates that capital expenditures for environmental control
facilities for the current fiscal year (1994) and the succeeding fiscal year
(1995) will be approximately $10,301,000 and $11,820,000, respectively.
Environmental and zoning regulations have made it increasingly difficult for
the construction aggregates industry to expand existing quarries and to
develop new quarry operations. Although it cannot be predicted what policies
will be adopted in the future by governmental bodies regarding environmental
controls, the Company anticipates that future environmental control costs will
not have a materially adverse effect upon its business.
Environmental regulations also have a restrictive effect upon the
chemicals industry, both as to production and markets, especially the
production of and markets for certain chemicals which are subject to
regulation as ozone depleting chemicals. Regulatory developments under
current law in the United States ultimately will result in the discontinuance
of the production of carbon tetrachloride, which is used to produce
chlorofluorocarbons (CFCs), and in the elimination of the market for methyl
chloroform for emissive uses. However, the Company's manufacturing
flexibility will allow it to manufacture other products without producing
carbon tetrachloride and to serve other markets.
The Clinton Administration, through the United States Environmental
Protection Agency ("EPA"), has announced that it would seek authorization from
Congress to conduct a study over the next three years which would develop a
strategy for substituting, reducing, or prohibiting the use of chlorine and
chlorinated compounds. The proposed study is one of several Administration
recommendations dealing with the reauthorization of the Clean Water Act. It
is uncertain whether legislation dealing with chlorine and chlorinated
compounds will be enacted or, if enacted, what the terms of such legislation
will be. Accordingly, the impact, if any, of any such legislation on the
Company's Chemicals business cannot be predicted at this time.
The Company's principal sources of energy are electricity, natural gas
and diesel fuel. The Company does not anticipate any material difficulty in
obtaining the required sources of energy or in obtaining the raw materials
which it uses.
The Company conducts research and development activities for both of its
business segments. The Construction Materials research and development
laboratory is located near Birmingham, Alabama. The research and development
laboratory for Chemicals is located at the Wichita, Kansas, plant site. In
general, the Company's research and development effort is directed to applied
technological development for the use of its Construction Materials products
and for the manufacture or processing of its Chemicals products. The Company
spent approximately $5,401,000 in 1991, $5,435,000 in 1992, and $6,073,000 in
1993 on research and development activities for its two business segments.
In 1993, the Company employed an average of approximately 6,300 people.
As of December 31, 1993, about 22% of the Company's employees were represented
by a number of national unions. The Company considers its relationship with
its employees and their various representatives to be good.
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.
In 1987, the Company commenced a joint venture known as the Crescent
Market Project (the "Project") with a Mexican partner, Grupo ICA, to supply
construction aggregates principally to the United States Gulf Coast from a
quarrying operation on the Yucatan Peninsula of Mexico through a wholly-owned
subsidiary, Vulcan Gulf Coast Materials, Inc. The construction phase of the
Project is now complete. Substantially all shipments from the Yucatan quarry
are made by two self-unloading vessels owned by the Project.
CONSTRUCTION MATERIALS
The Company's construction aggregates business consists of the production
and sale of crushed stone, sand, gravel, rock asphalt and crushed slag (a
by-product of steel production). Crushed stone constituted approximately 74%
of the dollar volume of the Construction Materials segment's 1993 sales.
Construction aggregates of suitable characteristics are employed in virtually
all types of construction, including highway construction and maintenance, and
in the production of asphaltic and portland cement concrete mixes. They also
are widely used as railroad track ballast.
Each type of aggregate is sold in competition with other types of
aggregates and in competition with other producers of the same type of
aggregate. Because of the relatively high transportation costs inherent in
the business, competition is generally limited to the areas in relatively
close proximity to production facilities. Noteworthy exceptions are the areas
along the rivers served by the Company's Reed businesses, which serve markets
located along the Mississippi and Tennessee-Tombigbee river systems and the
Gulf Coast, areas served by rail-connected quarries, and the areas along the
Gulf Coast served by ocean-going vessels that transport stone from the
quarrying operation in Mexico. The Company's construction aggregates are sold
principally in portions of most of the southeastern states, portions of Texas,
northern and central Illinois, northern Indiana, east central Iowa and
southern Wisconsin.
The Company, directly or through joint ventures, operates 128 domestic
permanent and portable plants at quarries located in 14 states for the
production of crushed limestone and granite with estimated reserves totaling
approximately 7.4 billion tons.
The foregoing estimates of reserves are of recoverable stone of suitable
quality for economic extraction, based on drilling and studies by the
Company's geologists and engineers, recognizing reasonable economic and
operating restraints as to maximum depth of overburden and stone excavation.
Not included are reserves at the Company's inactive and undeveloped sites.
In 1993, the Company, directly or through joint ventures, operated 13 sand
and gravel plants, five slag plants and individual plants producing rock
asphalt, mineral filler, pulverized limestone and fine grind products.
Estimates of sand and gravel reserves, made on a basis comparable to the
estimates of stone reserves set forth above, total approximately 45 million
tons.
Other Construction Materials products and services include asphaltic
concrete, ready-mixed concrete, trucking services, barge transportation, coal
handling services, a Mack Truck distributorship, paving construction,
dolomitic lime, emulsified asphalt, industrial sand and several other
businesses.
Shipments of all construction aggregates from the Company's domestic
operations in 1993 totaled approximately 125 million tons, with crushed stone
shipments to customers accounting for 117 million tons.
CHEMICALS
The principal chemicals produced by the Company at its three chloralkali
plants described in Item 2, below, are chlorine, caustic soda (sodium
hydroxide), muriatic acid, caustic potash (potassium hydroxide) and
chlorinated hydrocarbons. In addition, the Company manufactures and sells
anhydrous hydrogen chloride and hydrogen. Chlorine and various hydrocarbons
(primarily ethylene and methanol) are used to produce the Company's line of
chlorinated hydrocarbons, including carbon tetrachloride, methylene chloride,
perchloroethylene, chloroform, methyl chloride, ethylene dichloride, methyl
chloroform and pentachlorophenol.
In October 1993, the Company authorized the construction of two additional
plants at the Port Edwards facility. Construction began in February 1994, on
a plant which will produce potassium carbonate. Potassium carbonate is used
in the manufacture of screen glass, rubber antioxidants and other chemicals.
Construction has also begun on a sodium hydrosulfide plant at Port Edwards.
Sodium hydrosulfide is used in the pulp and paper industry as well as others.
The potassium carbonate facility is scheduled to be completed during the
fourth quarter of 1994. The sodium hydrosulfide facility is scheduled to be
completed by the middle of 1994.
In January 1994, the Company acquired the business and assets of
Peroxidation Systems Inc., which are being operated through a wholly-owned
subsidiary named Vulcan Peroxidation Systems Inc. ("Vulcan PSI"). Vulcan PSI
provides equipment, chemicals and services to the municipal, industrial and
environmental water treatment markets.
In June 1992, the Company acquired the sodium chlorite business of Olin
Corporation ("Olin"). Pursuant to the Acquisition Agreement ("Agreement"),
the Company agreed to purchase the total output of the Olin sodium chlorite
plant until such time as the Company completed a sodium chlorite plant at its
Wichita facility. In February 1994, that plant was completed and, in
accordance with the Agreement, the Olin facility will be decommissioned by the
middle of 1994.
During 1993, further progress was made by the Company in its evaluation
and development of a possible joint venture to produce soda ash. Definitive
capital cost estimates were completed and efforts now are focused on obtaining
environmental permits.
The Company competes throughout the United States with numerous companies,
including some of the largest chemical companies, in the production and sale
of its lines of chemicals. The Company also competes for sales to customers
located outside of the United States, with sales to such customers currently
accounting for approximately 11% of the Company's chemicals sales.
Principal markets for the Company's chemical products and services include
pulp and paper, energy, food and pharmaceutical, chemical processing,
fluorocarbons and water treatment. Chlorine is used by the paper-making
industry in pulp and paper bleaching, while caustic soda is used primarily in
the kraft and sulfite pulping process. The Company supplies hydrochloric
acid, caustic soda beads, caustic potash and fracturing sand to the energy
industry for use in oil well stimulation and gas extraction. Caustic soda
also is used to demineralize water for steam production at electrical energy
facilities and to remove sulfur from gas and coal. Hydrochloric acid, caustic
soda, methylene chloride and caustic potash are used by the food and
pharmaceutical industries. The Company's sales to the chemical processing
industry serve companies that produce organic and inorganic chemical
intermediates and finished products ranging from clay-based catalysts to
agricultural herbicides. Products sold to this market include hydrochloric
acid, caustic soda beads, chlorine and liquid caustic soda. The Company sells
carbon tetrachloride, perchloroethylene, chloroform and methyl chloroform to
the fluorocarbons market. The Company's chlorine also is used in water and
sewage treatment, and its caustic soda and caustic potash are used in the
production of soaps and detergents. Sodium chlorite is used as a water
disinfection and purification chemical where it has strong positions in both
municipal and industrial markets. It also is used as an industrial bleaching
agent, in cleaning applications for the electronics industry, as a biocide in
the fruit processing industry and in various applications in the oil industry.
Vulcan PSI markets equipment, chemicals, and services for the purification and
decontamination of water and the control of hydrogen sulfide accumulations in
wastewater treatment facilities. Calcium chloride, produced at the Company's
Wichita complex, has a multitude of uses including de-icing of roads, dust
control, road stabilization and oil well completion.
The Company's underground reserves of salt, which is a basic raw material
in the production of chlorine and caustic soda, are located at or near its
Wichita, Kansas, and Geismar, Louisiana, plants. The Company purchases salt
for its Port Edwards, Wisconsin, plant. Ethylene and methanol, the other
major raw materials used in the Company's Chemicals operations, are purchased
from several different suppliers. Sources of salt, ethylene and methanol are
believed to be adequate for the Company's operations.
The Company is subject to the corrective action requirements of the
Resource Conservation and Recovery Act ("RCRA"). Under these requirements,
the EPA must identify facilities subject to RCRA's hazardous waste permitting
provisions where practices in the past have caused releases of hazardous waste
or constituents thereof. The owner of any such facility is then required to
conduct a Remedial Facility Investigation ("RFI") defining the nature and
extent of any such releases described by the EPA. If the RFI results
determine that constituent concentrations from any such release exceed action
levels specified by the EPA, the facility owner is further required to perform
a Corrective Measures Study ("CMS") identifying feasible technological
alternatives for addressing these releases. Depending upon the results
reported to the EPA in the RFI and CMS, the EPA subsequently may require
Corrective Measures Implementation ("CMI") by the facility owner -
essentially, implementation of a cleanup plan developed by the EPA based on
the RFI and CMS.
The Company expects to incur RFI/CMS costs over the next several years at
its Geismar, Port Edwards and Wichita Chemicals manufacturing facilities. For
each of these three facilities, the RFI/CMS results will determine whether the
EPA subsequently requires CMI to address releases at the facility, and the
scope and cost of any such CMI. With respect to those RFI/CMS costs that
currently can be reasonably estimated, the Company has determined that its
accrued reserves are adequate to cover such costs. However, the total costs
which ultimately may be incurred by the Company in connection with discharging
its obligations under RCRA's corrective action requirements cannot reasonably
be estimated at this time.
FINANCIAL RESULTS BY BUSINESS SEGMENTS
Net sales, earnings, identifiable assets and related financial data for
each of the Company's business segments for the three years ended December 31,
1993, are reported on page 51 (Note 11 of the Notes to Financial Statements)
and on pages 26 and 27 (under the caption "Segment Financial Data") in the
Company's 1993 Annual Report to Shareholders, which pages are incorporated
herein by reference.
ITEM 2. PROPERTIES
CONSTRUCTION MATERIALS
The Company's current estimate of approximately 7.4 billion tons of stone
reserves is approximately 150 million tons less than the estimate reported at
the end of 1992. Although increases in the Company's reserves have resulted
from the acquisition of quarry sites in Tennessee and Texas, these increases
have been more than offset by 1993 production tonnage and revisions in mining
plans. Management believes that the quantities of reserves at the Company's
stone quarries are sufficient to result in an average quarry life of more than
65 years at present operating levels.
The locations of the Company's domestic stone quarries are shown on page 9
of the Company's 1993 Annual Report to Shareholders, which page is
incorporated herein by reference. Of the 128 domestic stone quarries which
the Company operates directly or through joint ventures, 37 are located on
owned land, 23 are on land owned in part and leased in part, and 68 are on
leased land. While some of the Company's leases run until reserves at the
leased sites are exhausted, generally the Company's leases have definite
expiration dates which range from 1994 to 2085. Most of the Company's leases
have options to extend them well beyond their current terms.
Due to transportation costs, the marketing areas for most quarries in the
construction aggregates industry are limited, often consisting of a single
metropolitan area or one or more counties or portions thereof. The following
table itemizes the Company's 10 largest active stone quarries in terms of the
quantity of stone reserves, with nearby major metropolitan areas shown in
parentheses:
<TABLE>
<CAPTION>
Estimated
Years of Life Nature of
At Average Interest
Rate Of And Lease
Location Product Production* Expiration Date**
<S> <C> <C> <C> <C>
McCook (Chicago), Illinois Limestone 98 Owned
Paducah, Kentucky Limestone 50 Leased ***
Grayson (Atlanta), Georgia Granite Over 100 Owned
Gray Court (Greenville), South Carolina Granite Over 100 Owned
Warrenton, Virginia (Washington, D. C.) Diabase Over 100 Leased ***
Kennesaw (Atlanta), Georgia Granite 75 75% Owned
25% Leased 2013
Skippers, Virginia Granite Over 100 Leased 2016
Stafford, Virginia Granite Over 100 Owned
Lawrenceville (Norfolk/Virginia Granite 89 25% Owned
Beach), Virginia 75% Leased 2014
Dalton, Georgia Limestone Over 100 Leased 2085
<FN>
* Estimated years of life of stone reserves are based on the average annual
rate of production for the most recent three-year period, except for
reserves acquired or reactivated during that period, in which case the
estimated years of life are based on a shorter period. Revisions may be
necessitated by such occurrences as changes in zoning laws governing
quarry properties, changes in stone specifications required by major
customers and passage of government regulations applicable to quarry
operations. Estimates also are revised when and if additional geological
evidence indicates that a revision is necessary.
** Renewable through date shown.
*** Lease does not expire until reserves are exhausted. Surface rights at the
Paducah, Kentucky, quarry are owned.
</TABLE>
The locations of the 13 sand and gravel operations which the Company
operates directly or through joint ventures are shown on page 9 of the
Company's 1993 Annual Report to Shareholders, which page is incorporated
herein by reference. The estimated average life of these operations,
calculated in the same manner as in the chart set out above, is approximately
9 years. Approximately 52% of the Company's estimated 45 million tons of sand
and gravel reserves are located on owned land, with the remaining 48% located
on leased land.
CHEMICALS
Facilities for the production of chemicals are owned and operated by the
Company at Wichita, Kansas; Geismar, Louisiana; and Port Edwards, Wisconsin.
Vulcan PSI leases its headquarters in Tucson, Arizona, as well as eleven
offices in nine other states and one in Langen, Germany. With a few
exceptions, the Geismar and Wichita facilities produce the full line of
products manufactured in the Company's Chemicals business. The Port Edwards
plant produces chlorine, caustic soda, muriatic acid and caustic potash.
All of the plant facilities at Wichita are located on a 1,396-acre tract
of land owned by the Company. The facilities are situated approximately 10
miles southwest of Wichita. Mineral rights for salt are held by the Company
under two leases that are automatically renewable from year to year unless
terminated by the Company and under several other leases which may be kept in
effect so long as production from the underlying properties is continued. The
Company operates an electric power cogeneration facility at the Wichita plant
site which generates approximately one-third of the plant's electricity and
two-thirds of its process steam requirements. In addition, the Company owns
160 acres of water reserves and 320 acres of salt reserves.
The facilities at Geismar, Louisiana, are located on a 1,126-acre tract of
land owned by the Company. Included in the facilities at the Geismar plant is
an electric power cogeneration facility owned by the Company which supplies
substantially all of the electricity and process steam required by the plant.
Mineral rights for salt are held under a long-term lease expiring in 1997 with
an option to renew for an additional 10 years.
The plant facilities at Port Edwards, Wisconsin, are located on a 25-acre
tract of land, the surface rights to which are owned by the Company.
Currently, the Company purchases its salt requirements for the Port Edwards
facility from regional sources of supply.
The Company's Chemicals facilities are designed to permit a high degree
of flexibility as to feedstocks, product mix and by-product ratios; therefore,
actual plant production capacities vary according to these factors.
Management does not believe, however, that there is material excess in
production capacity at the Company's Chemicals facilities.
OTHER PROPERTIES
The Company's corporate offices are located in an office complex near
Birmingham, Alabama. Headquarters staff of the Chemicals and Southern
divisions, and of Vulcan Gulf Coast Materials, Inc., also are located in this
complex. The space is occupied pursuant to a lease which runs through
December 31, 1998. The Company has the option of extending this lease for two
five-year periods. The Company's space in this complex is leased at an
approximate annual rental, as of December 31, 1993, of $1,131,000, which is
subject to limited escalation.
ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant in various lawsuits incident to the ordinary
course of business. It is not possible to determine with precision the
probable outcome or the amount of liability, if any, under these lawsuits;
however, in the opinion of the Company and its counsel, the disposition of
these lawsuits will not adversely affect the consolidated financial statements
of the Company to a material extent.
In the course of its Construction Materials and Chemicals operations, the
Company is subject to occasional governmental proceedings and orders
pertaining to occupational health and safety and protection of the
environment, such as proceedings or orders relating to noise abatement, air
emissions or water discharges. As part of its continuing program of
environmental stewardship, however, the Company has been able to resolve such
proceedings and to comply with such orders without any materially adverse
effect on its business.
In May 1985, the Company received a letter from the United States
Environmental Protection Agency ("EPA") regarding remedial actions at a
chemical waste disposal site located in Ascension Parish, Louisiana. Records
indicate that the Company generated a portion of the waste placed at the site
and the EPA has deemed the Company a potentially responsible party ("PRP")
with respect to the site under the Comprehensive Environmental Response
Compensation and Liability Act ("CERCLA"). On September 30, 1988, the EPA
issued a Unilateral Administrative Order ("UAO") to the Company and other
respondents. This UAO purported to require the respondents to clean up the
site in accordance with a remedial plan developed by EPA's contractor. On
February 5, 1991, following a review and revision process by the EPA, the EPA
issued a revised UAO which included its final remedial plan. This revised UAO
named the same respondents, including the Company, that were named in the
EPA's initial UAO. In a letter dated April 9, 1991, the Company and three
other companies that also generated waste placed at the site gave notice to
the EPA that the signatory companies intend to comply with all lawful terms
and conditions of the revised UAO.
In December 1988, the Company and other PRPs received a letter from the
EPA demanding reimbursement for approximately $1,540,000 in past costs and
administrative expenses incurred by the EPA in connection with the foregoing
matter. Effective June 8, 1992, the Company and other PRPs entered into a
Site Participation Agreement ("Agreement") allocating among the parties those
costs which are anticipated to be incurred or which might be incurred in
connection with the remediation activity at the site and those costs which may
be recovered by the EPA or other agencies in connection with their past
response work or oversight work at the site. Moreover, in June 1992, the EPA
orally informed the Company and other PRPs that it would seek to recover its
response and oversight costs incurred to date, and toward that end has made a
supplemental Information Request, pursuant to Section 104(e) of CERCLA,
seeking information to support such recovery of costs. The Company responded
to the supplemental Information Request on July 14, 1992. The demand by EPA
for recovery of costs includes the amount previously demanded from the Company
and the other parties in December 1988.
Cleanup of the site will take an extended period, but the majority of the
costs likely will be incurred in the first three years after commencement of
site work, which began in late 1992. It is estimated that the parties,
including the Company, to the aforementioned Agreement will incur a total cost
of $34,700,000 to perform the work required by EPA's final remedial plan and
payment of the EPA's past costs.
The Company has reviewed this cost estimate and the information currently
available to the Company relative to EPA's most recent request for recovery of
its costs. On the basis of this review and the information currently
available, the Company has determined that its accrued reserve should be
adequate to cover its allocated share of currently anticipated site
remediation costs and those response and oversight costs which may be
recovered by the EPA. The Company will continue to review relevant cost
information as it becomes available, particularly information relative to the
EPA's request for recovery of its costs. The Company has begun to make
payments from its accrued reserve pursuant to the Agreement.
In June 1986 and December 1989, lawsuits were filed in Louisiana federal
and state courts by over 100 people who live in the vicinity of the
above-described waste disposal site and who claimed damages for mental
anguish, personal injuries and/or diminution in property value as a result of
alleged releases from said site. These suits named as defendants the owners
and operators of the site and 17 chemical companies, including the Company,
alleged to have contributed some part of the waste at the site. The lawsuits
were consolidated into a single action in the United States District Court for
the Middle District of Louisiana. All claims in the consolidated action
subsequently either were dismissed or settled prior to trial, except that the
heirs of a deceased plaintiff have reserved the right later to file a wrongful
death action.
The Company has received a letter dated August 2, 1991, from the State
of New Jersey Department of Environmental Protection and Energy ("NJDEPE")
concerning a site located in Newark, New Jersey, which the Company previously
owned and upon which the Company operated a chemicals production facility from
the early 1960s until 1974. The NJDEPE's letter contends that hazardous
substances and pollutants contaminate the site and that a Remedial
Investigation/Feasibility Study ("RI/FS") is required in order to determine
the nature and extent of such contamination and to develop a remedial action
plan with respect thereto.
The Company has conducted a preliminary investigation with respect to this
matter and the merits of the NJDEPE's contentions. Based upon its preliminary
investigation and review, in a September 18, 1991, letter to the NJDEPE, the
Company questioned the factual and legal bases for the NJDEPE's contention
that the Company should bear some responsibility for remediating the site and
asked the NJDEPE to reconsider its tentative position and decide that the
Company should not be a responsible party at this site.
On November 11, 1991, the Company received from the NJDEPE "a Directive
and Notice to Insurers" (the "Directive"). It is not clear that the Directive
was intended to be directly responsive to the factual and legal assertions
made by the Company in its letter to the NJDEPE dated September 18, 1991. In
this Directive, nevertheless, the NJDEPE purports to direct the Company to pay
within thirty (30) days to the NJDEPE $1,000,000 to be used by the NJDEPE to
conduct an RI/FS at the site. The NJDEPE also asserts that it may have the
right to cause a lien to be placed against the real and personal property of
the Company to secure the payment of any such amounts. If the Company fails
to comply with the Directive, and it is later determined that the Company did
not have sufficient grounds for such non-compliance, the Company could be
subject to liability in an amount equal to three times the cost of the work
performed by the NJDEPE and statutory penalties in an amount not to exceed
$50,000 per day. Although the NJDEPE has not withdrawn its Directive, the
NJDEPE has informally agreed that it will not need to enforce its Directive as
long as the Company participates in the RI/FS for this site.
On August 20, 1993, two other allegedly responsible parties, Safety-Kleen
Environsystems Company and Bristol-Meyers Squibb Company (collectively, the
"Respondents"), entered into an Administrative Consent Order ("ACO") issued by
the NJDEPE concerning the site. The ACO contains certain findings of fact by
the NJDEPE and enforceable provisions governing the conduct by the Respondents
of an RI/FS for the site and remedial actions, if any, resulting therefrom.
Under a separate agreement with Respondents and certain successors, the
Company will share in the cost of the RI/FS. The Respondents estimate a cost
of $250,000 to complete the RI. The cost of the FS depends upon the results
of the RI.
Depending, in turn, upon the results of the RI/FS, it is possible that the
NJDEPE will require site remediation under the ACO. In that event, it is also
possible that the Respondents or the NJDEPE will assert that the Company
should bear some responsibility in connection with such remediation. At this
time, however, it is impossible to predict the ultimate outcome of this
matter.
The Company received a letter dated October 21, 1991, from Chevron USA,
Inc. ("Chevron"), in which Chevron contends that hazardous substances and
pollutants contaminate a site owned by Chevron and located in Woodbridge
Township, Middlesex County, New Jersey. The Company sold the site to Chevron
in 1958 and owned and operated a detinning facility adjacent to the Chevron
site until 1964. Chevron has advised the Company that, in response to the
identification of the site as a former solid waste management unit and
pursuant to the corrective action provisions of the Resource Conservation and
Recovery Act ("RCRA"), Chevron is investigating the feasibility of corrective
action and is seeking assistance from parties who may have been responsible
for some or all of the contamination at the site.
The Company and other allegedly responsible parties who received similar
correspondence from Chevron and who previously owned or operated facilities on
or adjacent to the site have had meetings with Chevron to discuss the status
of the site. The parties have received information from Chevron relative to
the contamination of the site, but have not verified this information by
independent sampling. Given the information available to the Company
regarding this site, the extent to which the Company's former operations may
have contributed to contamination at the site cannot now be established or
confirmed. For these reasons, it is impossible at this time for the Company
to predict the outcome of this matter or the existence or extent of any
liability of the Company with respect to this matter.
On January 3, 1992, the Company received a General Notice Letter from the
EPA regarding alleged releases or threatened releases of hazardous substances
at a hazardous waste treatment, storage and disposal site in Greer, South
Carolina, which was operated by Aqua-Tech Environmental, Inc., a South
Carolina corporation. The EPA's letter advised that the Company may be
considered a PRP under Section 107(a) of CERCLA. The Company confirmed that
in 1987 it sent cylinders containing titanium tetrachloride to the site for
disposal. On April 20, 1992, the Company became a party to a PRP Agreement
whereby the signatories thereto agreed to cooperate in responding as a PRP
group to the EPA.
On April 24, 1992, the EPA issued a UAO to many of the PRPs, including the
Company, directing that a removal action with respect to hazardous wastes
on-site be undertaken by them. The UAO covers only the removal action; the
EPA is considering whether to place the site on the National Priorities List
for remediation purposes. On May 1, 1992, the Steering Committee of the PRP
group notified the EPA of the intent of the participating PRPs to undertake
the removal work required by the UAO. Work at the site began on May 4, 1992.
To date, 179 PRPs have agreed to participate in the removal action and to
share the costs of the removal action according to a series of interim
allocations. The PRP group's consultant has estimated the cost of the removal
action to be $14,000,000. Interim allocations raising this amount have been
made among the PRP group. The Company has paid over $116,000 pursuant to
these interim allocations. The only identified waste of the Company which
remained at the site and required removal was one container which cost $355 to
remove and dispose of. Because the Company already has paid more than its
share of removal costs, the Company has withdrawn from further participation
in the removal action as a member of the PRP group.
It is impossible at this time to estimate whether the Company will recoup
amounts previously paid for the removal action. Additional costs for the
assessment and remediation of any contamination at the site have not been
estimated. Moreover, the extent to which the site is contaminated and the
extent to which the wastes the Company sent to the site may have contributed
to any such contamination have not been estimated or confirmed. However, the
Company does not believe that its potential share of any costs related to the
site will adversely affect the consolidated financial statements of the
Company to a material extent.
On October 23, 1992, the Company received a letter from the EPA pursuant
to Section 104(e) of CERCLA requesting information regarding waste generated
by the Company and disposed at a sanitary landfill in Muskego, Wisconsin,
which is operated by Waste Management of Wisconsin ("Muskego Landfill"). The
Company responded to this request by stating that it had no knowledge of the
generation of any solid waste by the Company's former aluminum recycling
facility in Oak Creek, Wisconsin, which would have been disposed of in the
Muskego Landfill. Nevertheless, the Company received on January 14, 1993, a
UAO pursuant to Section 106(a) of CERCLA directing that the Company and 45
other respondents/PRPs perform remedial design and remedial action work with
respect to the Muskego Landfill, which has been placed on the National
Priorities List by the EPA for cleanup of the release of hazardous substances.
The Company and other PRPs have formed a PRP Group to respond to the UAO
and to formulate allocations for Waste Management's past response costs,
totaling approximately $5,600,000, a remedial design study for the first phase
of remediation, costing approximately $470,000, and first phase remedial work,
costing an estimated $10,500,000. The Company has paid $4,800 toward
administrative costs for the PRP Group and $6,000 for its share of the
remedial design study. The Company's potential share of the ultimate cleanup
cost cannot be determined precisely at this time, and the Company is engaged
in negotiations as a member of the PRP Group with regard to a lump-sum payment
in settlement of the Company's share of the costs relating to the first phase
of remediation. However, the Company does not believe that its share of the
costs for the first phase will exceed $20,000. Moreover, the Company does not
believe that its potential share of such costs or of any additional costs for
the second phase of remediation involving groundwater will adversely affect
the consolidated financial statements of the Company to a material extent.
During the spring of 1992, representatives of the EPA conducted certain
inspections of the Company's chemicals manufacturing plant in Geismar,
Louisiana. Subsequent to completing those inspections, on March 18, 1993, a
Complaint, Compliance Order, and Notice of Opportunity for Hearing (the
"Multimedia Complaint and Order") was issued to the Company by the EPA. In
the Multimedia Complaint and Order, the EPA makes certain findings of fact and
law, and based upon such findings, alleges multiple count violations of RCRA,
CERCLA and the Clean Air Act, for which violations EPA seeks civil penalties
in the total amount of $298,650. The Multimedia Complaint and Order also
purports to impose upon the Company a civil compliance order requiring the
Company to implement certain actions pertaining to hazardous wastes stored for
longer than a year and to implement a tracking plan for plant wastes to ensure
accurate determination, identification and labeling of hazardous and
nonhazardous wastes generated and stored in containers at the plant. On April
30, 1993, the Company filed its Answer to Complaint and Compliance Order and
Request for Hearing (the "Answer") with the EPA, including a request for an
adjudicatory hearing as provided in the Multimedia Complaint and Order on all
factual and legal issues raised by the Company in its Answer. Subsequent to
the filing of its Answer, the Company and EPA have been engaged in
negotiations regarding the settlement of this matter, which negotiations
remain on-going.
On March 9, 1994, the Company received a letter from the EPA concerning
alleged releases or threatened releases of hazardous substances at the Jack's
Creek/Sitkin Smelting Superfund Site located in Mifflin County, Pennsylvania,
near the town of Maitland. The Sitkin Smelting Company operated a secondary
smelting facility at the site from 1958 until declaring bankruptcy in 1977.
The EPA's letter states that the Company may be considered a PRP pursuant to
Section 107(a) of CERCLA. The EPA advised that it may order some or all of
the PRPs to undertake response actions at the site and that PRPs may also be
liable for costs the EPA incurs or has incurred in responding to any releases
or threatened releases at the site. The EPA has already undertaken certain
response actions at the site, and has completed an RI/FS.
The Company is among the 880 PRPs that EPA has identified as having sold
and shipped a total of approximately 307 million pounds of material to the
business operated on the site. The EPA's documents indicate that the
Company's shipments occurred between 1972 and 1977, totalled approximately 1.8
million pounds, and represent .84% of the total weight of the materials sent
to this smelting facility. These shipments consisted primarily of sales of
brass and metal parts which the Company believes were co-products of its
former metals operation.
The Company is currently conducting an investigation of this matter and
anticipates participating in a meeting of PRPs who may form a steering
committee to negotiate on behalf of all the PRPs the apportionment of the
response costs with the EPA. The Company's share, if any, of past and future
response costs associated with the site will be the subject of on-going
discussions with other PRPs and the EPA. However, based on the limited
information currently available to it, the Company does not believe that its
ultimate share of such costs will adversely affect the consolidated financial
statements of the Company to a material extent.
As reported in the Company's Form 8-K Current Report dated June 12, 1992,
an antidumping petition was filed on May 20, 1992, with the International
Trade Commission ("ITC"), by two stone producers and a distributor in
southeast Texas alleging that a U.S. industry was being injured by imports of
crushed limestone from Mexico. The companies involved in the Crescent Market
Project quarry and crush limestone from Mexico's Yucatan Peninsula for sale
along the U.S. Gulf Coast. On June 29, 1992, the ITC, in a 5-0 vote (with one
commissioner not participating), determined that a U.S. industry was not being
injured by the importation of crushed limestone from Mexico. This ruling was
appealed to the United States Court of International Trade ("CIT") where the
determination of the ITC was sustained and the action was dismissed. The
judgment of the CIT has now been appealed to the United States Court of
Appeals for the Federal Circuit. Oral argument occurred on February 9, 1994,
and a decision is now pending.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of 1993 to the Company's
security holders through the solicitation of proxies or otherwise.
ITEM 4a. EXECUTIVE OFFICERS OF THE REGISTRANT
The names, positions and dates of birth of the executive officers (as
defined in 17 CFR 240.3b-7) of the Company are as follows:
Birth
Name Position Date
Herbert A. Sklenar Chairman, Chief Executive Officer
and Director 6/07/31
William J. Grayson, Jr. Executive Vice President,
Construction Materials 10/16/30
R. Morrieson Lord Senior Vice President, Human Resources 11/02/30
Richard K. Carnwath Vice President, Planning and Development 7/13/48
William F. Denson, III Vice President-Law and Secretary 8/01/43
Daniel F. Sansone Vice President-Finance and Treasurer 8/04/52
E. Starke Sydnor Assistant General Counsel 11/30/43
Peter J. Clemens, III Senior Vice President, West
- Construction Materials Group 12/17/43
Harold D. Lambert Senior Vice President -
Construction Materials Group 5/15/28
Robert L. Mayville Senior Vice President, Business Development
and Operations Services -
Construction Materials Group 10/03/34
Guy K. Mitchell, Jr. Senior Vice President, East -
Construction Materials Group 12/08/48
Guy M. Badgett, III President, Southeast Division 4/28/48
Michael J. Ferris President, Chemicals Division 10/20/44
William L. Glusac President, Southwest Division 8/07/50
Donald M. James President, Southern Division 1/20/49
Daniel J. Leemon President, Midsouth Division 5/14/38
Thomas R. Ransdell President, Vulcan Gulf Coast Materials, Inc. 6/25/42
James W. Smack President, Mideast Division 4/01/43
Christopher G. White President, Midwest Division 5/16/40
The principal occupations of the executive officers during the past five
years have been set forth below:
Herbert A. Sklenar was elected President and Chief Executive Officer
in May 1986. He was elected to his present position in May 1992.
William J. Grayson, Jr., was elected Executive Vice President,
Construction Materials Group, in February 1987.
R. Morrieson Lord was elected Senior Vice President, Human Resources, in
April 1979.
Richard K. Carnwath was elected Vice President, Planning and Development,
in July 1985.
William F. Denson, III, was elected Secretary in April 1981 and continues
to serve in that capacity. He served as Assistant General Counsel from May
1988 until May 1992, when he was appointed Vice President and Assistant
General Counsel. He was elected to his present position as Vice President-Law
effective January 1, 1994.
Daniel F. Sansone joined the Company as Controller in January 1988 and was
promoted to Vice President and Controller in May 1991. He was elected to his
present position as Vice President-Finance and Treasurer effective January 1,
1994.
E. Starke Sydnor became Assistant General Counsel in May 1988 and was
elected a corporate officer in May 1992.
Peter J. Clemens, III, served as Senior Vice President, Finance, from
October 1983 until January 1, 1994, when he became Senior Vice President-West,
Construction Materials Group.
Harold D. Lambert served as President, Midsouth Division, from January
1970 until July 1993. He was appointed to his present position as Senior Vice
President, Construction Materials Group effective August 1, 1993.
Robert L. Mayville was appointed President, Mideast Division, in September
1985. In May 1991, he was appointed Senior Vice President, Business
Development and Operations Services-Construction Materials Group.
Guy K. Mitchell, Jr., served as Vice President, North Carolina, Mideast
Division, until July 1989, when he was appointed President, Chattanooga
Division. In May 1991, he was appointed Senior Vice President-East,
Construction Materials Group.
Guy M. Badgett, III, served as Vice President, Midsouth Division, until
April 1991, when he was appointed Executive Vice President. He was appointed
to his present position as President, Southeast Division, in July 1992.
Michael J. Ferris was appointed President, Chemicals Division,
in May 1987.
William L. Glusac served as Vice President, East Tennessee and Kentucky,
Midsouth Division, until March 1990, when he was appointed Executive Vice
President, Southwest Division. In April 1991, he was appointed President,
Southwest Division.
Donald M. James joined the Company as Senior Vice President and General
Counsel in December 1992 and was appointed to his present position as
President, Southern Division, effective January 1, 1994. He was a partner
with the Birmingham law firm of Bradley, Arant, Rose and White prior to
joining the Company.
Daniel J. Leemon was appointed President, Midwest Division, in 1984, and
assumed the additional position of Chairman, Southwest Division, in December
1989. He was promoted to Senior Vice President-West, Construction Materials
Group, in May 1991. He served in this position through July 1993, and was
appointed to his present position as President, Midsouth Division, effective
August 1, 1993.
Thomas R. Ransdell was elected President of Vulcan Gulf Coast Materials,
Inc., in 1987.
James W. Smack served as Vice President-Virginia, Mideast Division, until
May 1991, when he was appointed President, Mideast Division.
Christopher G. White served as Vice President, Operations, Midwest
Division, until he was appointed Executive Vice President of that Division in
1990. He served in the latter position until he was appointed President,
Midwest Division, in May 1991.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
"Common Stock Market Prices and Dividends" on page 28 of the Company's
1993 Annual Report to Shareholders is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
"Selected Financial Data" on page 25 of the Company's 1993 Annual Report
to Shareholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
"Management's Discussion and Analysis" on pages 29 through 37 and
"Financial Terminology" on page 53 of the Company's 1993 Annual Report to
Shareholders are incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information relative to this item is included in the
Company's 1993 Annual Report to Shareholders on the pages shown below, which
are incorporated herein by reference:
Page
Financial Statements and Notes 40-51
Management's Responsibility for Financial Reporting
and Internal Control 52
Independent Auditors' Report 52
Supplementary Information-Quarterly Financial Data
(Unaudited) 38
With the exception of the aforementioned information and the information
incorporated by reference in Items 1, 3, 5, 6, 7 and 14, the Company's 1993
Annual Report to Shareholders is not deemed filed as part of this Annual
Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
No information is required to be included in this report pursuant to Item
304 of Regulation S-K which requires disclosure of certain information if the
registrant has changed accountants under specified circumstances.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Within 120 days of the close of the Company's fiscal year on December 31,
1993, the Company will file a definitive proxy statement with the Securities
and Exchange Commission pursuant to Regulation 14A (the Company's "1994 Proxy
Statement"). The information under the headings "Election of Directors,"
"Nominees for Election to the Board of Directors" and "Directors Continuing in
Office" included in the 1994 Proxy Statement are incorporated herein by
reference. For the information required by Item 401 of Regulation S-K
concerning executive officers of the registrant, reference is also made to the
information provided in Part I, Item 4a, of this Annual Report on Form 10-K.
No information is required to be included in this report pursuant to Item 405
of Regulation S-K which requires disclosure of certain information concerning
compliance with Section 16(b) of the Securities Exchange Act of 1934.
ITEM 11. EXECUTIVE COMPENSATION
The information under the headings "Compensation of Directors," "Executive
Compensation," "Shareholder Return Performance Presentation," "Retirement
Income Plan" and "Employee Special Severance Plan" included in the Company's
1994 Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the headings "Security Ownership of Certain
Beneficial Owners" and "Security Holdings of Management" included in the
Company's 1994 Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No information is required to be included in this report pursuant to Item
404 of Regulation S-K, which requires disclosure of certain information with
respect to certain relationships or related transactions of the directors and
management.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS
The following financial statements are included in the Company's 1993
Annual Report to Shareholders on the pages shown below and are incorporated
herein by reference:
Page
Consolidated Statements of Earnings 40
Consolidated Balance Sheets 41
Consolidated Statements of Cash Flows 42
Consolidated Statements of Shareholders' Equity 43
Notes to Financial Statements 44-51
Management's Responsibility for Financial Reporting
and Internal Control 52
Independent Auditors' Report 52
Supplementary Information-Quarterly Financial
Data (Unaudited) 38
(a) (2) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedules for the years ended
December 31, 1993, 1992 and 1991 are included in Part IV (see Exhibits 99.1
through 99.5) of this report on the indicated pages:
Schedule VI Property, Plant and Equipment
Schedule VII Allowance for Depreciation, Depletion and
Amortization
Schedule IX Valuation and Qualifying Accounts and
Reserves
Schedule X Short-Term Borrowings
Schedule XI Supplementary Income Statement
Information
Other schedules are omitted because of the absence of conditions under
which they are required or because the required information is provided in the
financial statements or notes thereto.
Financial statements (and summarized financial information) of 50% or less
owned entities accounted for by the equity method have been omitted because
they do not, considered individually or in the aggregate, constitute a
significant subsidiary.
(a) (3) EXHIBITS
The exhibits required by Item 601 of Regulation S-K and indicated below,
other than Exhibits (11) and (12) which are on pages and of this
report, are either incorporated by reference herein or accompany the copies of
this report filed with the Securities and Exchange Commission and the New York
Stock Exchange. Copies of such exhibits will be furnished to any requesting
shareholder of the Company upon payment of the costs of copying and
transmitting the same.
(3)(a) Certificate of Incorporation (Restated 1988) of the Company.
Exhibit 3(a) to the Company's 1988 Form 10-K Annual Report is incorporated
herein by reference (File No. 1-4033).
(3)(b) By-laws of the Company, as restated February 2, 1990, and as last
amended February 12, 1993. Exhibit (3)(b) to the Company's 1992 Form 10-K
Annual Report is incorporated herein by reference.
(4) Exhibits 1 and 4 to the Form S-3 filed with the Securities and
Exchange Commission by the Company on May 2, 1991, and registering
$200,000,000 in debt securities is incorporated herein by reference. Form 8-K
Report filed with the Securities and Exchange Commission by the Company on
May 14, 1991, is incorporated herein by reference. The Company hereby agrees
to furnish the Securities and Exchange Commission, upon request, all
instruments defining the rights of holders of its other long-term debt or that
of any of its consolidated subsidiaries.
(10)(a) The Management Incentive Plan of the Company, as last amended and
restated. Exhibit 10(a) to the Company's 1989 Form 10-K Annual Report is
incorporated herein by reference (File No. 1-4033).
(10)(b) The 1981 Long-Range Performance Share Plan of the Company, as last
amended and restated. Exhibit 10(b) to the Company's 1989 Form 10-K Annual
Report is incorporated herein by reference (File No. 1-4033).
(10)(c) The 1991 Long-Range Performance Share Plan of the Company.
Exhibit A to the Company's definitive proxy statement for the annual meeting
of its shareholders held May 16, 1991 ("1991 Proxy Statement"), is
incorporated herein by reference (File No. 1-4033).
(10)(d) The Plan for Directors Emeriti and Other Eligible Directors, as
last amended and restated. Exhibit 10(c) to the Company's 1990 Form 10-K
Annual Report is incorporated herein by reference (File No. 1-4033).
(10)(e) The Unfunded Supplemental Benefit Plan for Salaried Employees.
Exhibit 10(d) to the Company's 1989 Form 10-K Annual Report is incorporated
herein by reference (File No. 1-4033).
(10)(f) The Deferred Compensation Plan for Directors Who Are Not Employees
of the Company, as last amended and restated on December 8, 1992. Exhibit A
to the Company's definitive proxy statement for the annual meeting of its
shareholders held May 20, 1993 is incorporated herein by reference.
(10)(g) The 1983 Long-Term Incentive Plan, as last amended and restated.
Exhibit 10(f) to the Company's 1989 Form 10-K Annual Report is incorporated
herein by reference (File No. 1-4033).
(10)(h) The Stock Plan for Nonemployee Directors. Exhibit B to the
Company's 1991 Proxy Statement is incorporated herein by reference
(File No. 1-4033).
(10)(i) The Employee Special Severance Plan of the Company. Exhibit 10(g)
to the Company's 1989 Form 10-K Annual Report is incorporated herein by
reference (File No. 1-4033).
(11) Computation of Earnings Per Share for the five years ended
December 31, 1993. (page of this report)
(12) Computation of Ratio of Earnings to Fixed Charges for the five years
ended December 31, 1993. (page of this report)
(13) The Company's 1993 Annual Report to Shareholders. (pages 29 through
95 of the bound exhibits)
(21) List of the Company's subsidiaries as of December 31, 1993. (page 96
of the bound exhibits)
(24) Powers of Attorney for all directors whose names are signed to this
Annual Report on Form 10-K pursuant to such Powers of Attorney. (pages 97
through 106 of the bound exhibits)
Information, financial statements and exhibits required by Form 11-K with
respect to the Company's Thrift Plan for Salaried Employees, Construction
Materials Divisions Hourly Employees Savings Plan and Chemicals Division
Hourly Employees Savings Plan, for the fiscal year ended December 31, 1993,
will be filed as one or more amendments to this Form 10-K on or before
June 29, 1994, as permitted by Rule 15d-21 under the Securities Exchange Act
of 1934.
(b) REPORTS ON FORM 8-K
On November 16, 1993, the Company filed a Form 8-K Report with the
Securities and Exchange Commission with respect to the projected segment
earnings for 1994.
INDEPENDENT AUDITORS' REPORT
Vulcan Materials Company:
We have audited the accompanying consolidated balance sheets of Vulcan
Materials Company and its subsidiary companies as of December 31, 1993, 1992
and 1991, and the related consolidated statements of earnings, shareholders'
equity, and cash flows for the years then ended, and have issued our report
thereon dated February 4, 1994; such financial statements and report are
included in your 1993 Annual Report to the Shareholders and are incorporated
herein by reference. Our audits also included the financial statement
schedules of Vulcan Materials Company and its subsidiary companies, listed in
Item 14. These schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion on these schedules based on our
audits. In our opinion, such supplemental schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information shown therein.
/s/ Deloitte & Touche
Birmingham, Alabama
February 4, 1994
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
(Registrant)
March 29, 1994 By /s/ H. A. Sklenar
Date H. A. Sklenar
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ H. A. Sklenar Chairman, Chief Executive March 29, 1994
H. A. Sklenar Officer and Director
(Principal Executive Officer)
/s/ D. F. Sansone Vice President-Finance March 29, 1994
D. F. Sansone and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
The following directors:
Marion H. Antonini Director
Livio D. DeSimone Director
John K. Greene Director
Richard H. Leet Director
Douglas J. McGregor Director
Ann D. McLaughlin Director
James V. Napier Director
Donald B. Rice Director
Orin R. Smith Director
By /s/ William F. Denson, III March 29, 1994
William F. Denson, III
Attorney-in-Fact for
each of the nine
directors listed above
<TABLE>
<CAPTION>
EXHIBIT 11
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
COMPUTATION OF EARNINGS PER SHARE
For the Years Ended December 31
Amounts in Thousands, Except Per Share Data
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Primary and fully diluted earnings:
Average common shares outstanding............ 36,757 37,590 38,052 38,676 40,223
Common share equivalents:
Performance Share Plan..................... 218 190 164 154 172
Total shares............................... 36,975 37,780 38,216 38,830 40,395
Net earnings from continuing
operations................................... $88,229 $90,980 $52,580 $120,278 $133,420
Net earnings (loss) from discontinued
operations................................... -- -- -- -- (4,051)
Net earnings before cumulative effect
of accounting changes........................ 88,229 90,980 52,580 120,278 129,369
Net earnings from cumulative effect
of accounting changes........................ -- 3,005 -- -- 1,490
Net earnings $88,229 $93,985 $52,580 $120,278 $130,859
Primary and fully diluted earnings
(loss) per share of common stock:
Continuing operations........................ $2.39 $2.41 $1.38 $3.10 $3.30
Discontinued operations...................... -- -- -- -- (0.10)
Earnings before cumulative effect
of accounting changes...................... 2.39 2.41 1.38 3.10 3.20
Cumulative effect of accounting
changes.................................... -- 0.08 -- -- 0.04
Net earnings................................. $2.39 $2.49 $1.38 $3.10 $3.24
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 12
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Years Ended December 31
Amounts in Thousands
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense before
capitalization credits.................... $10,187 $ 10,441 $11,336 $ 9,349 $ 6,873
Amortization of financing costs............. 115 116 75 44 42
One-third of rental expense................. 7,375 8,711 4,815 5,678 3,979
Total fixed charges....................... $ 17,677 $ 19,268 $16,226 $ 15,071 $ 10,894
Net earnings from continuing
operations.................................. $ 88,229 $ 90,980 $52,580 $120,278 $133,420
Provision for income taxes.................... 36,993 39,746 20,867 58,951 67,943
Fixed charges................................. 17,677 19,268 16,226 15,071 10,894
Capitalized interest credits.................. (1,016) (673) (131) (1,591) (756)
Amortization of capitalized interest.......... 882 792 840 705 603
Earnings from continuing operations
before income taxes as adjusted............. $142,765 $150,113 $90,382 $193,414 $212,104
Ratio of earnings to fixed charges............ 8.1 7.8 5.6 12.8 19.5
</TABLE>
OPERATIONS DIRECTORY
DIVISION OFFICES
CONSTRUCTION MATERIALS
Mideast Division Southeast Division
Winston-Salem, North Carolina Atlanta, Georgia
Midsouth Division Southern Division
Knoxville, Tennessee Birmingham, Alabama
Midwest Division Southwest Division
Chicago, Illinois San Antonio, Texas
Vulcan Gulf Coast Materials, Inc.
Birmingham, Alabama
CHEMICALS
Chemicals Division
Birmingham, Alabama
CONSTRUCTION MATERIALS AGGREGATES - PRODUCTION FACILITIES
Crushed Stone Plants - Domestic
ALABAMA Norcross Garrison
Birmingham Rabun Montour
Calera Red Oak Robins
Childersburg Stockbridge Vinton
Glencoe Villa Rica
Helena KENTUCKY
Huntsville ILLINOIS Brandenburg
Lacon Bolingbrook Cecilia
Ohatchee Casey Fort Knox
Russellville Fairbury Lake City
Scottsboro Joliet Lexington (2)
Trinity Kankakee
Tuscumbia Lemont MISSISSIPPI
McCook-Hodgkins Iuka
FLORIDA Momence
Brooksville * Plainfield NORTH CAROLINA
Pontiac Boone
GEORGIA Sycamore Charlotte
Adairsville Weston Concord
Columbus Elkin
Dalton INDIANA Enka
Grayson Francesville Gold Hill
Kennesaw Monon Henderson
LaGrange Hendersonville
Lithia Springs IOWA High Point
Lithonia Cedar Rapids Mocksville
Newnan Fairfax Morganton
North Wilkesboro
NORTH CAROLINA Maryville Richmond
(continued) Morristown Skippers
Rockingham Nashville (3) South Boston
Stokesdale Parsons Warrenton
Winston-Salem Readyville
Yadkinville Rogersville WISCONSIN
Savannah Milwaukee
SOUTH CAROLINA Sevierville Oshkosh
Anderson South Pittsburg Racine
Blacksburg Tazewell * Sussex
Gray Court
Greenville TEXAS
Liberty Abilene
Lyman Brownwood
Pacolet Eastland
Knippa
TENNESSEE San Antonio (3)
Athens Weatherford (2)
Bristol
Chattanooga VIRGINIA
Clarksville Boydton
Cleveland Chatham
Dayton Danville
Franklin Edgerton
Greeneville Garrisonville
Holladay Gate City
Kingsport Manassas
Knoxville (2) Norton
Lebanon Occoquan
CRUSHED STONE PLANTS - INTERNATIONAL
MEXICO
Playa del Carmen *
SLAG PLANTS SAND AND GRAVEL PLANTS
ALABAMA ALABAMA INDIANA
Birmingham (3) Huntsville Angola
Gadsden Fremont
FLORIDA Kimmell
TENNESSEE Polk * Lafayette (2)
Chattanooga Middlebury
ILLINOIS South Bend
Crystal Lake
Decatur TENNESSEE
Chattanooga
WISCONSIN
Oconomowoc
OTHER AGGREGATES
ALABAMA TEXAS
Birmingham Uvalde
Fine Grind Rock Asphalt
Products Plant Plant
ILLINOIS WISCONSIN
Hodgkins Sussex
Mineral Filler Pulverized Limestone
Plant Plant
* Joint Venture
AGGREGATES - PRINCIPAL SALES YARDS
ALABAMA SOUTH CAROLINA
Mobile (3) Myrtle Beach
FLORIDA TENNESSEE
Jacksonville * Memphis
Tampa *
TEXAS
GEORGIA Beaumont *
Bainbridge Galveston *
Houston *
INDIANA
Wanatah VIRGINIA
Alexandria
LOUISIANA Franklin
New Orleans * (4) Norfolk
Portsmouth
NORTH CAROLINA Springfield
Elizabeth City Suffolk
Virginia Beach
* Joint Venture
OTHER PRODUCTS AND SERVICES
ALABAMA ILLINOIS
Birmingham McCook
Conveyor Belt Service Facility Dock Facilities
Utility Plant Dolomitic Lime Plant
GEORGIA INDIANA
Ringgold Wanatah
Ready-mixed Concrete Plant Trucking Company
Trenton
Ready-mixed Concrete Plant
KENTUCKY TENNESSEE
Lake City Chattanooga
Coal Handling Terminals (4) Asphaltic Concrete
Barge Transportation Plants (2)
Emulsified Asphalt Plant
SOUTH CAROLINA Paving Construction Operation
Anderson Ready-mixed Concrete
Asphaltic Concrete Plant Plants (2)
Paving Construction Operation Cleveland
Liberty Asphaltic Concrete Plant
Asphaltic Concrete Plant Dayton
Pacolet Asphaltic Concrete Plant
Asphaltic Concrete Plant Knoxville
Crusher Repair Facility
Emulsified Asphalt Plant
Mack Truck Distributorship
TEXAS BAHAMAS
Abilene Nassau
Asphaltic Concrete Plants (2) Ocean Shipping Operation *
Brownwood
Asphaltic Concrete Plant
Eastland * Joint Venture
Asphaltic Concrete Plant
Fort Worth
Asphaltic Concrete Plant
San Antonio
Asphaltic Concrete Plants (4)
Ready-mixed Concrete Plants (3)
Uvalde
Trucking Company
Voca
Industrial Sand Plant
Weatherford
Asphaltic Concrete Plants (2)
CHEMICALS
PLANTS
KANSAS LOUISIANA WISCONSIN
Wichita Geismar Port Edwards
VULCAN PEROXIDATION SYSTEMS
ARIZONA
Tucson
Page 9
<TABLE>
<CAPTION>
FINANCIAL REVIEW
SELECTED FINANCIAL DATA
Amounts and shares in millions, except per share data
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net sales................................................. $ 1,133.5 $ 1,078.0 $ 1,007.5 $ 1,105.3 $ 1,076.2
Gross profit.............................................. $ 246.7 $ 249.1 $ 212.1 $ 291.4 $ 300.0
As a percent of net sales............................. 21.8% 23.1% 21.1% 26.4% 27.9%
Interest expense.......................................... $ 9.2 $ 9.8 $ 11.3 $ 7.8 $ 6.1
Net earnings from continuing operations.................. $ 88.2 $ 91.0 $ 52.6 $ 120.3 $ 133.4
As a percent of average shareholders' equity.......... 12.8% 13.3% 7.7% 18.2% 20.5%
Net earnings (loss) from discontinued operations.......... $ - $ - $ - $ - $ (4.0)
Cumulative effect of accounting changes................... $ - $ 3.0 $ - $ - $ 1.5
Net earnings.............................................. $ 88.2 $ 94.0 $ 52.6 $ 120.3 $ 130.9
Primary and fully diluted earnings per common share:
Net earnings from continuing operations.............. $ 2.39 $ 2.41 $ 1.38 $ 3.10 $ 3.30
Net earnings (loss) from discontinued operations...... $ - $ - $ - $ - $ (0.10)
Cumulative effect of accounting changes............... $ - $ 0.08 $ - $ - $ 0.04
Net earnings.......................................... $ 2.39 $ 2.49 $ 1.38 $ 3.10 $ 3.24
Effective tax rate........................................ 29.5% 30.4% 28.4% 32.9% 33.7%
Operating income from continuing operations after taxes... $ 93.3 $ 98.7 $ 59.5 $ 125.1 $ 137.2
As a percent of average capital employed.............. 9.7% 10.3% 6.1% 13.7% 16.1%
LIQUIDITY AND CAPITAL RESOURCES
Working capital........................................... $ 161.8 $ 169.8 $ 149.8 $ 61.5 $ 192.3
Current ratio............................................. 2.1 2.3 2.1 1.3 2.4
Net cash provided by continuing operations................ $ 194.1 $ 199.1 $ 184.9 $ 205.9 $ 255.8
As a percent of long-term obligations (year end)...... 190.2% 185.6% 166.4% 460.9% 463.7%
Ratio of earnings to fixed charges........................ 8.1 7.8 5.6 12.8 19.5
Total assets (year end)................................... $ 1,078.6 $ 1,083.9 $ 1,073.1 $ 1,118.0 $ 1,002.5
Average capital employed:
Short-term debt....................................... $ 25.2 $ 24.1 $ 72.7 $ 62.1 $ 8.3
Long-term obligations................................. 105.6 108.2 66.5 47.2 57.4
Other noncurrent liabilities.......................... 140.4 138.4 155.7 144.1 135.0
Shareholders' equity.................................. 691.7 686.5 682.7 661.5 651.4
Total............................................. $ 962.9 $ 957.2 $ 977.6 $ 914.9 $ 852.1
Long-term obligations (year end).......................... $ 102.0 $ 107.3 $ 111.1 $ 44.7 $ 55.2
As a percent of long-term capital..................... 10.9% 11.3% 11.8% 5.1% 6.4%
Dividends declared and paid per common share.............. $ 1.26 $ 1.20 $ 1.20 $ 1.20 $ 1.12
Total common stock dividends.............................. $ 46.3 $ 45.1 $ 45.7 $ 46.4 $ 45.1
Common shares outstanding (year end)...................... 36.3 37.2 38.0 38.1 39.5
</TABLE>
Page 25
<TABLE>
<CAPTION>
SEGMENT FINANCIAL DATA
Amounts in millions
Amount Percent of Company Total
1993 1992 1991 1990 1989 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET SALES
Construction Materials.. $ 756.7 $ 686.4 $ 648.1 $ 696.1 $ 645.7 67% 64% 64% 63% 60%
Chemicals............... 376.8 391.6 359.4 409.2 430.5 33 36 36 37 40
Total........... $1,133.5 $1,078.0 $1,007.5 $1,105.3 $1,076.2 100% 100% 100% 100% 100%
EARNINGS FROM CONTINUING
OPERATIONS BEFORE
INTEREST EXPENSE
AND INCOME TAXES
Construction Materials.. $ 116.7 $ 88.3 $ 41.8 $ 112.0 $ 115.3 87% 63% 50% 60% 55%
Chemicals............... 17.4 51.3 42.6 72.4 86.4 13 36 50 39 42
Segment earnings...... 134.1 139.6 84.4 184.4 201.7 100 99 100 99 97
Interest income, etc.... 0.3 0.9 0.3 2.6 5.8 - 1 - 1 3
Total........... $ 134.4 $ 140.5 $ 84.7 $ 187.0 $ 207.5 100% 100% 100% 100% 100%
OPERATING INCOME
FROM CONTINUING
OPERATIONS AFTER
TAXES
Construction Materials.. $ 81.6 $ 65.3 $ 32.1 $ 77.3 $ 78.4 87% 66% 54% 62% 57%
Chemicals............... 11.5 32.7 27.3 46.0 54.5 12 33 46 37 40
Interest income, etc.... 0.2 0.7 0.1 1.8 4.3 1 1 - 1 3
Total........... $ 93.3 $ 98.7 $ 59.5 $ 125.1 $ 137.2 100% 100% 100% 100% 100%
NET CASH PROVIDED
BY CONTINUING
OPERATIONS
Construction Materials.. $ 156.6 $ 141.9 $ 141.8 $ 130.2 $ 159.4 81% 71% 77% 63% 62%
Chemicals............... 41.1 63.8 50.0 76.4 93.6 21 32 27 37 37
Interest expense,
interest income,
etc., net........... (3.6) (6.6) (6.9) (0.7) 2.8 (2) (3) (4) - 1
Total........... $ 194.1 $ 199.1 $ 184.9 $ 205.9 $ 255.8 100% 100% 100% 100% 100%
</TABLE>
Page 26
<TABLE>
<CAPTION>
SEGMENT FINANCIAL DATA
Dollar amounts in millions
Amount Percent of Company Total
1993 1992 1991 1990 1989 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PROPERTY ADDITIONS
Construction Materials.. $ 59.3 $ 56.5 $60.8 $187.3 $127.7 59% 57% 71% 84% 87%
Chemicals............... 41.3 42.0 24.9 35.2 19.0 41 43 29 16 13
Total........... $100.6 $ 98.5 $85.7 $222.5 $146.7 100% 100% 100% 100% 100%
DEPRECIATION, DEPLETION
AND AMORTIZATION
Construction Materials.. $ 74.3 $ 75.5 $ 80.4 $ 71.7 $63.6 72% 73% 73% 72% 70%
Chemicals............... 28.5 27.8 29.3 28.5 27.3 28 27 27 28 30
Total........... $102.8 $103.3 $109.7 $100.2 $90.9 100% 100% 100% 100% 100%
AVERAGE CAPITAL EMPLOYED
Construction Materials.. $707.4 $708.4 $748.4 $656.8 $550.6 73% 74% 77% 72% 65%
Chemicals............... 248.5 226.4 226.1 228.9 227.8 26 24 23 25 27
Cash items.............. 7.0 22.4 3.1 29.2 73.7 1 2 - 3 8
Total........... $962.9 $957.2 $977.6 $914.9 $852.1 100% 100% 100% 100% 100%
OPERATING INCOME
FROM CONTINUING
OPERATIONS AFTER
TAXES AS A PERCENT
OF AVERAGE CAPITAL
EMPLOYED
Construction Materials.. 11.5% 9.2% 4.3% 11.8% 14.2%
Chemicals............... 4.6 14.5 12.1 20.1 23.9
Interest income, etc.... 3.0 3.0 5.1 6.1 6.0
Total........... 9.7% 10.3% 6.1% 13.7% 16.1%
<FN>
________
Definitions of certain financial terms used in this report are provided on page 53.
</TABLE>
Page 27
<TABLE>
<CAPTION>
COMMON STOCK MARKET PRICES AND DIVIDENDS
Range of Dividend Paid
Common Stock Market Prices Per Share
1993 1992
Quarter Ended High Low High Low 1993 1992
<S> <C> <C> <C> <C> <C> <C>
March 31 . . . . . . . . . $56 1/8 $47 $40 1/4 $36 $.31 1/2 $ .30
June 30. . . . . . . . . . 52 40 1/4 46 3/4 37 5/8 .31 1/2 .30
September 30 . . . . . . . 49 3/4 43 3/4 46 1/2 39 3/4 .31 1/2 .30
December 31. . . . . . . . 50 3/4 43 1/2 49 5/8 39 1/2 .31 1/2 .30
$ 1.26 $1.20
</TABLE>
The Company's common stock is traded on the New York Stock Exchange (tickler
symbol VMC). As of January 31, 1994, the number of shareholders of record
approximated 4,800.
Dividends paid in 1993 totaled $46,296,000 as compared with $45,095,000 paid
in 1992. On February 11, 1994, the Board of Directors authorized a quarterly
dividend of 33 cents per common share payable March 10, 1994. The new
quarterly dividend represents a 5% increase over quarterly dividends paid
in 1993.
During the last five years, the Company's dividend payout rate has averaged
48% of prior year net earnings. The Company's policy is to pay out a
reasonable share of earnings as dividends consistent, on average, with the
payout record of the last few years, and consistent with the goal of
maintaining debt ratios within prudent and generally acceptable limits.
Page 28
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Vulcan's net earnings in 1993 were $88.2 million, or $2.39 per share, as
compared with net earnings and earnings per share before the cumulative effect
of an accounting change, of $91.0 million and $2.41 in 1992. In 1992 the
Company adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, which resulted in net earnings of $3.0 million,
or 8 cents per share. With the accounting change included, 1992 net earnings
and earnings per share totaled $94.0 million and $2.49, respectively.
Sales in 1993 were $1,133.5 million as compared to the 1992 total of $1,078.0
million. Pretax earnings were $125.2 million as compared to $130.7 million
in 1992.
SALES
Sales were up 5% from the 1992 total. Construction Materials sales increased
10% while Chemicals sales declined 4%. Construction Materials sales increased
principally because of improved shipments, while the Chemicals shortfall
reflects lower prices and the effect on volume of a less favorable product
mix. Specific elements of the change in sales from 1992 to 1993 are shown
below (amounts in millions):
<TABLE>
<CAPTION>
Increased Higher Total
(Decreased) (Lower) Increase
Unit Volume Prices (Decrease)
<S> <C> <C> <C>
Construction Materials . . . . . . . . $60.2 $10.1 $70.3
Chemicals . . . . . . . . . . . . . . (9.9) (4.9) (14.8)
Total . . . . . . . . . . . . . . $50.3 $ 5.2 $55.5
</TABLE>
The following table summarizes the increase in sales from 1991 to 1992
(amounts in millions):
<TABLE>
<CAPTION>
Increased Lower Total
Unit Volume Prices Increase
<S> <C> <C> <C>
Construction Materials . . . . . . . . $42.1 $(3.8) $38.3
Chemicals. . . . . . . . . . . . . . . 36.9 (4.6) 32.3
Total. . . . . . . . . . . . . . . $79.0 $(8.4) $70.6
</TABLE>
Construction Materials sales in 1993 increased due to stronger demand for
crushed stone, which reflected increased construction activity in most
markets. Shipments of crushed stone improved 7% from the 1992 level.
Slightly higher unit selling prices also contributed to the increase. The
decline in Chemicals sales in 1993 reflects sharply lower caustic soda prices
and unfavorable product mix changes, only partially offset by improved prices
for chlorine and chlorinated organic products. Total Chemicals tons shipped
remained at 1992 levels. However, sales were shifted from higher to lower
margin products due to market conditions and the regulatory phase-out of
certain products.
The increase in Construction Materials sales in 1992 was principally due to
higher volume, reflecting increased construction activity in some markets.
The 1992 increase in Chemicals sales reflects strong demand for both organic
and inorganic products and higher plant operating rates. Sales of sodium
chlorite, which were initiated at mid-year, accounted for $6.1 million of the
sales increase. Higher prices for organic products were more than offset by
lower caustic soda prices.
EARNINGS
Earnings before interest expense and income taxes for 1993 were $134.4
million, down 4% from comparable 1992 earnings of $140.5 million. The 1992
amount was up 66% from the $84.7 million earned in 1991.
Construction Materials segment earnings of $116.7 million, which are before
interest expense and income taxes, increased 32% from 1992's level of $88.3
million. The increase principally reflects the impact of higher volume.
Construction Materials segment earnings in 1992 were more than double the 1991
result of $41.8 million. The increase reflects the impacts of higher volume,
lower production costs and the absence of significant unusual charges.
In 1991 the Company recorded a provision of $16.2 million referable to the
impairment of certain Construction Materials assets located in Texas. The
Company also recorded provisions that year totaling $4.9 million for shutdown
costs associated with the liquidation of its Construction Materials assets in
south Florida. Both of these items are discussed in Note 13 to the financial
statements.
Chemicals segment earnings in 1993 of $17.4 million were down sharply from
1992's result of $51.3 million. The decline reflects net lower prices, a less
favorable product mix, and higher energy, raw materials and other
manufacturing costs. Bad debt expense also increased in 1993.
Chemicals segment earnings in 1992 were $51.3 million, up 20% from 1991
earnings of $42.6 million. The increase reflects principally higher volume.
Higher prices for organic products were more than offset by lower prices for
caustic soda, and operating costs also increased in 1992.
OPERATING COSTS AND EXPENSES
Cost of goods sold of $886.8 million in 1993 increased 7% from 1992's level,
principally as a result of higher volume in the Construction Materials segment
and increased energy, raw materials and manufacturing costs in the Chemicals
segment. Cost of goods sold increased 4% in 1992 from the 1991 amount,
reflecting mainly higher volume in both segments, partially offset by lower
unit costs in the Construction Materials segment.
Repair and maintenance expenses were $120.0 million in 1993, up 4% from the
1992 amount due to higher volume in the Construction Materials segment. Total
repair and maintenance expenses in 1992 were up 4% from the 1991 amount. The
increase reflects principally higher scheduled maintenance expense in the
Chemicals segment. Construction Materials repair and maintenance expenses in
1992 were up slightly from the 1991 level.
Depreciation, depletion and amortization expense totaled $102.8 million in
1993, a slight decline from the 1992 amount of $103.3 million. The decrease
reflects in part the effect of reduced spending for property additions in 1991
and 1992. Property additions increased 2% in 1993. Depreciation, depletion
and amortization expense in 1992 decreased 6% from 1991, also as a result of
the reduced capital spending.
Energy costs (excluding depreciation and operating expenses referable to
Chemicals cogeneration facilities) totaled $124.7 million, up 4% from the 1992
level. The increase relates mainly to higher natural gas prices in the
Chemicals segment. The 4% increase in 1992 to $119.8 million is primarily due
to higher production levels in the Chemicals segment.
During the years 1985 to 1989, the Company recorded provisions totaling $28.8
million for environmental remediation at a now-closed third party waste
disposal site to which the Chemicals segment last shipped waste materials in
1970. No additional provisions referable to this site have been made. The
Company and other companies that also generated waste placed at the site have
received approval of a cleanup plan from the United States Environmental
Protection Agency. Preliminary cleanup activities at the site began in 1992.
Although the cost of the cleanup and the Company's share thereof cannot be
determined precisely at this time, the Company currently believes that the
aforementioned provisions are adequate. Provisions for other environmental
expenses for the last four years have not been material. Contingent
liabilities for environmental remediation activities of the Chemicals segment
and discontinued operations are discussed in Note 9 to the financial
statements.
Selling, administrative and general expenses totaled $111.1 million in 1993,
up 5% from the 1992 level. This increase reflects principally higher bad debt
provisions, higher professional fees and normal increases in personnel costs,
partially offset by lower provisions for stock- based incentive plans. In
1992, selling, administrative and general expenses increased 7% from the 1991
level. This increase is due mainly to higher provisions for management
incentive plans, which were severely restricted in 1991. Both the short-term
incentive program and the long-term plans are designed to reflect Company
performance and the costs of those plans are fully reflected in the Company's
financial statements. Much of the change in expense in 1993 reflects
movements in the price of the Company's stock as well as reduced payout
estimates for certain long-term awards.
Other operating costs totaled $5.0 million in 1993 as compared with $5.3
million in 1992. These costs were $28.2 million in 1991. The decrease from
1991 to 1992 reflects the absence in 1992 of the previously referenced
impairment and liquidation provisions recorded in 1991.
OTHER ITEMS
Other income, net of other charges, was $3.7 million in 1993 as compared with
$2.5 million in 1992. The increase reflects mainly improved results referable
to current as well as discontinued joint ventures. Other income in 1992
compared favorably with a net charge of $.5 million in 1991. The favorable
comparison reflects principally higher gains on the sale of assets and
improved results from joint ventures.
Interest expense was $9.2 million in 1993, down from the 1992 amount of $9.8
million. Interest expense in 1992 decreased from the 1991 amount of $11.2
million. The declines in both years reflect lower average borrowings as well
as higher capitalized interest on construction projects.
INCOME TAXES
The Company's 1993 effective tax rate was 29.5%, down from the 1992 rate of
30.4%. The decrease reflects principally an increased favorable effect of
statutory depletion and an adjustment to prior year accruals for state income
taxes, partially offset by an increase in the federal statutory rate. The
increase in the federal rate, including an adjustment to deferred taxes for
the rate change, lowered 1993 earnings per share by 6 cents. The 1992
effective rate increased from the 1991 rate of 28.4% reflecting a decreased
relative effect of statutory depletion, which had an abnormally high impact in
1991 because of the unusual charges mentioned earlier.
As discussed in Note 7 to the financial statements, in 1992 the Company
adopted Statement of Financial Accounting Standards (SFAS) NO. 109, Accounting
for Income Taxes, which supersedes SFAS NO. 96. The Company previously
adopted SFAS No. 96 in 1989. The principal change made by SFAS No. 109 is to
revise the criteria for recognition and measurement of deferred tax assets.
The cumulative effect of adopting SFAS No. 109 is to revise the criteria for
recognition and measurement of deferred tax assets. The cumulative effect of
adopting SFAS NO. 109 created net earnings of $3.0 million, which was
equivalent to 8 cents per share.
RETURN ON EQUITY AND CAPITAL
The ratio of net earnings to average shareholders equity was 12.8% in 1993, as
compared with the 1992 and 1991 returns of 13.3% and 7.7%, respectively. The
ratio of operating income after taxes to average capital employed for the
Company was 9.7% in 1993. Comparable returns in 1992 and 1991 were 10.3% and
6.1% respectively. The decreases in the 1993 return measures are due
principally to the effect of lower earnings in the Chemicals segment,
substantially offset by improved results from the Construction Materials
segment. The increases in the 1992 return measures reflect higher earnings in
both business segments.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Net cash provided by continuing operations amounted to $194.1 million in 1993,
down $5.0 million, or 3%, from 1992's total of $199.1 million. Net cash
provided by the Chemicals segment decreased by $22.7 million, principally as a
result of lower earnings. Net cash provided by the Construction Materials
segment increased $14.7 million due to higher earnings. Although mixed
economic conditions affected both business segments throughout the year, the
Company's ability to generate significant cash flows enabled it again to fund
capital requirements internally, reduce total indebtedness and return cash to
its shareholders.
Net cash provided by segment operations in each of the last three years,
including the effect of working capital changes, is summarized below (amounts
in millions):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Construction Materials . . . . . $156.6 $141.9 $141.8
Chemicals. . . . . . . . . . . . 41.1 63.8 50.0
Interest expense, interest
income, etc., net. . . . . . . (3.6) (6.6) (6.9)
Total. . . . . . . . . . . . . $194.1 $199.1 $184.9
</TABLE>
Net cash used for investing activities totaled $103.8 million in 1993, down
$6.9 million from the 1992 level. Cash expenditures for property, plant and
equipment were $96.0 million in 1993, up $20.8 million, while cash investments
of $9.6 million in associated companies decreased $2.0 million from comparable
1992 investments. Cash spending for acquisitions totaled $4.5 million as
compared with $33.2 million in 1992.
Net cash used for financing activities amounted to $90.9 million in 1993, down
$2.8 million from the prior year's $93.7 million. Interest-bearing debt was
reduced $4.6 million in 1993 compared with a net decrease of $16.2 million in
1992. Although no long-term debt was issued during 1992 or 1993, the Company
issued $81.0 million of medium-term notes in 1991 that replaced the majority
of its commercial paper and permitted prepayment of the remaining balance of
its 10 1/4% debentures. Purchases of the Company's common stock increased by
$7.6 million to $40.0 million in 1993.
Cash and cash equivalents amounted to $14.0 million at December 31, 1993, down
slightly from the 1992 year end balance of $15.7 million.
WORKING CAPITAL
Working capital, exclusive of debt and cash items (cash, cash equivalents and
short-term investments), totaled $150.9 million at December 31, 1993, down
$5.7 million from the 1992 level. This decrease compares with a working
capital increase of $10.9 million in 1992 and a decrease of $11.3 million in
1991. Working capital increases referable to acquisitions amounted to
$300,000 in 1993, $4.2 million in 1992 and $2.8 million in 1991.
Accounts and notes receivable totaled $150.4 million at December 31, 1993,
decreasing $1.0 million from the 1992 balance. Inventories at year end 1993
of $105.0 million were $2.9 million below the comparable 1992 level due to
lower Construction Materials inventories.
Current liabilities, excluding debt items, were $137.7 million at the end of
1993, up 4% from the 1992 total of $132.6 million due mainly to higher accrued
liabilities in Chemicals. The increase in payables and accrued liabilities
resulted principally from a reclassification of certain environmental
liabilities from deferred to current accounts and an increase in accrued
maintenance expenses.
The Company's overall current position is summarized below (dollar amounts in
millions and as of year end):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Working capital, exclusive of
debt and cash items . . . . . . . . $150.9 $156.6 $145.7
Cash and cash equivalents. . . . . . . 14.0 15.7 19.0
Short-term debt. . . . . . . . . . . . (1.7) (1.1) (13.2)
Accrued interest . . . . . . . . . . . (1.4) (1.4) (1.7)
Total working capital (including
debt and cash items) . . . . . $161.8 $169.8 $149.8
Current ratio. . . . . . . . . . . . . 2.1 2.3 2.1
Acid test ratio. . . . . . . . . . . . 1.2 1.2 1.2
Turnover ratios:*
Customer receivables:
Construction Materials . . . . . 7.2 7.2 7.0
Chemicals. . . . . . . . . . . . 5.7 6.0 6.2
Total. . . . . . . . . . . . . 6.7 6.7 6.7
Inventories:
Construction Materials . . . . . 6.8 6.1 5.6
Chemicals. . . . . . . . . . . . 10.5 12.5 9.9
Total. . . . . . . . . . . . . 7.8 7.6 6.7
<FN>
* Calculated by dividing net sales and cost of goods sold by the average of
month-end receivables and inventories, respectively.
</TABLE>
The decrease in the current ratio from 1992 to 1993 was due to higher current
liabilities, mainly accrued liabilities for materials and services, and
slightly lower receivables and inventories. These were partially offset by a
higher current portion of deferred taxes.
The increase in the current ratio in 1992 over 1991 was due to higher current
assets, mainly receivables and the current portion of deferred taxes,
partially offset by lower inventories and cash.
The turnover ratio for Construction Materials receivables remained constant at
7.2 in 1993. The small decrease in the Chemicals turnover ratio from 6.0 in
1992 to 5.7 in 1993 reflects slower remittances from customers. The increase
in the Construction Materials turnover ratio from 7.0 in 1991 to 7.2 in 1992
resulted primarily from higher sales. Higher receivables, which reflected
slower collections from customers, caused a small decrease in the turnover
ratio for Chemicals from 6.2 in 1991 to 6.0 in 1992.
Construction Materials achieved a better inventory turnover ratio in 1993 due
to lower average inventory levels and higher sales volume. Chemicals
inventory turnover declined from 12.5 in 1992 to 10.5 in 1993 due primarily to
an increase in average inventory levels. Both segments had better inventory
turnover ratios in 1992 over 1991 primarily due to lower average inventory
levels in Construction Materials and Chemicals of 6% and 15%, respectively.
PROPERTY ADDITIONS
Property additions, including acquisitions, totaled $100.6 million in 1993, up
slightly from the 1992 level of $98.5 million. The Company classifies its
property additions into three categories based upon the predominant purpose of
the project, as explained on page 53.
The table below summarizes property additions by each category
(amounts in millions):
<TABLE>
<CAPTION>
Project Purpose 1993 1992 1991
<S> <C> <C> <C>
Replacement. . . . . . . . . . . $ 48.7 $29.2 $36.1
Environmental control. . . . . . 7.1 11.6 3.3
Subtotal . . . . . . . . . . . 55.8 40.8 39.4
Profit adding:
Acquisitions . . . . . . . . . 4.2 23.0 21.3
Other. . . . . . . . . . . . . 40.6 34.7 25.0
Subtotal . . . . . . . . . . . 44.8 57.7 46.3
Total. . . . . . . . . . . $100.6 $98.5 $85.7
</TABLE>
Total property additions were higher in 1993 as increased spending for
replacement projects in Construction Materials more than offset lower spending
for environmental control and profit adding projects.
The increase in property additions in 1992 reflects higher spending for profit
adding and environmental control projects which more than offset lower
replacement spending. Three Construction Materials acquisitions accounted for
virtually all of the $23.0 million spent for businesses acquired. Three
Chemicals environmental improvement projects comprised over half of the
spending in that category. Two of those projects, the construction of a
calcium chloride production facility and installation of penta-acid
purification equipment, are primarily responsible for a reduction in the
segment's reportable emissions of hazardous wastes of more than 60% in 1993
from the previous year.
As a percent of net cash provided by continuing operations, spending for
replacement and environmental control projects was 29% in 1993, 20% in 1992
and 21% in 1991. Commitments for capital expenditures were $11.7 million at
December 31, 1993. This included $9.1 million referable to various Chemicals
projects.
SHORT-TERM BORROWINGS AND INVESTMENTS
During most of 1992 and 1993, the Company was in a net short-term borrowing
position. Short-term borrowings in 1993 reached a maximum of $64.0 million,
averaged $25.5 million and were zero at year end. Comparable 1992 amounts
were $56.3 million, $21.3 million and zero, respectively. The higher 1993
levels were attributable predominately to higher average levels of receivables
and inventories as compared with 1992.
Details pertaining to short-term borrowings during the last three years
(dollar amounts in millions) are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Year end. . . . . . . . . . . . . $ - $ - $ 9.8
Maximum outstanding . . . . . . . $64.0 $ 56.3 $ 128.0
Average outstanding . . . . . . . $25.5 $ 21.3 $ 75.0
Weighted average interest rate. . 3.2% 3.8% 6.5%
</TABLE>
The above interest rate averages were computed using daily outstanding
principal amounts. The Company's policy is to maintain unused bank lines of
credit and/or committed credit facilities at least equal to its outstanding
commercial paper. Unsecured bank lines of credit totaling $70.0 million were
maintained at the end of 1993. Standard & Poor's Corporation and Moody's
Investors Services, Inc. have assigned ratings of A-1+ and P-1, respectively,
to the Company's commercial paper.
It is the Company's policy to invest cash in excess of its operating
requirements in interest- bearing securities having an original or remaining
maturity of one year or less. When investing such temporarily excess funds,
the Company's objectives, in order of their importance, are (1) to meet
projected cash requirements; (2) to preserve the principal of each short-term
investment; and (3) to realize the maximum available return consistent with
the preceding objectives.
The investment of excess cash during the last three years (dollar amounts in
millions) is shown below:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Maximum invested . . . . . . . . . . . . $ 26.2 $ 32.7 $ 25.5
Average invested . . . . . . . . . . . . $ 7.2 $ 21.9 $ 2.8
Taxable-equivalent yield . . . . . . . . 3.3% 4.3% 5.6%
Year end . . . . . . . . . . . . . . . . $ - $ 15.7 $ 5.7
Average maturity
(at year end, in days) . . . . . . . . - 7 13
</TABLE>
LONG-TERM OBLIGATIONS
During 1993 the Company reduced its total long-term obligations by $5.3
million to $102.0 million as compared with a net decrease of $3.8 million in
1992. In February 1992 the Company refunded 7 7/8%/8% tax exempt bonds in the
amount of $5.8 million at the lower rate of 6 3/8%. In March 1992 the Company
exercised its option to prepay a 10 3/4% capitalized lease obligation in the
amount of $2.9 million. During the three-year period ended December 31, 1993,
long-term obligations increased cumulatively by $57.4 million from the $44.7
million outstanding at December 31, 1990; however, total interest bearing
obligations (including short-term debt) decreased $48.4 million during the
same period.
During the same three year period, shareholders' equity, net of common stock
purchases of $77.6 million and dividends of $137.1 million, increased by $22.8
million to $703.0 million. The Company's overall long-term capital position
is shown in the following table (dollar amounts in millions and as of
year end):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Long-term debt . . . . . . . . . . . . $102.0 $107.2 $108.4
Capitalized lease obligations. . . . . - .1 2.7
Total long-term obligations. . . . . 102.0 107.3 111.1
Other noncurrent liabilities . . . . . 132.8 141.5 143.7
Shareholders' equity . . . . . . . . . 703.0 700.1 682.9
Total long-term capital. . . . . . . $937.8 $948.9 $937.7
Long-term obligations
as a percent of: . . . . . . . . . .
Total long-term capital. . . . . . . 10.9% 11.3% 11.8%
Shareholders' equity . . . . . . . . 14.5% 15.3% 16.3%
Net cash provided by
continuing operations
as a percent of
long-term obligations. . . . . . . . 190% 186% 166%
Ratio of earnings to
fixed charges. . . . . . . . . . . . 8.1 7.8 5.6
</TABLE>
The ratio of earnings to fixed charges increased in 1993 as the decrease in
earnings was offset by a decline in rental expense. The improvement in the
1992 ratio of earnings to fixed charges is attributable principally to higher
earnings. At current debt levels, future ratios of earnings to fixed charges
will reflect primarily changes in earnings.
Although the future ratio of long-term obligations to total long-term capital
will depend upon specific investment and financing decisions, management
believes the Company's cash generating capability, along with its financial
strength and business diversification, can reasonably support a ratio of 25%
to 30%. The actual ratio at the end of 1993 was 10.9%. The Company has made
acquisitions from time to time and will continue to actively pursue attractive
investment opportunities. If financing is required for this purpose, it may
be accomplished temporarily on a short-term basis or by incurring long-term
debt.
The Company's long-term borrowing requirements can be satisfied in either the
public debt or private placement markets. Vulcan's medium-term notes issued
in 1991 are rated AA- by Standard & Poor's and A1 by Moody's.
In 1990 the Company adopted Statement of Financial Accounting Standards No.
105, Disclosure of Information about Financial Instruments with
Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit
Risk. Refer to Note 9 to the financial statements for additional
information.
COMMON STOCK
Common stock issued during 1993 totaled 21,479 shares valued at $903,000.
Comparable figures in 1992 were 18,216 shares and $717,000. Common stock
issued during 1993, 1992 and 1991 related to the Company's long-term
management incentive plans. In addition, shares were issued in 1993 through
the Stock Plan for Non-employee Directors. Shares held in the treasury were
used to satisfy these distributions.
During 1993 the Company purchased 895,015 shares of its common stock at a cost
of $40.0 million, equal to an average price of $44.68 per share. The acquired
shares are being held for general corporate purposes, including distributions
under management incentive plans. The Company's decisions to purchase shares
of common stock are made based upon the common stock's valuation and price,
the Company's liquidity, its actual and projected needs for cash for
investment projects and regular dividends, and the Company's debt level.
Following are the number and cost of shares purchased during each of the last
three years:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Shares purchased:
Number. . . . . . . . . . . 895,015 786,230 141,319
Total cost (millions) . . . $40.0 $32.4 $5.2
Average cost. . . . . . . . $44.68 $41.24 $36.92
Shares in treasury at year-end:
Number. . . . . . . . . . . 10,224,218 9,350,682 8,582,668
Average cost. . . . . . . . $35.03 $34.05 $33.35
</TABLE>
CAPITAL EMPLOYED
During 1993 total average capital employed in continuing operations was $962.9
million, up $5.7 million from the 1992 average of $957.2 million. The latter
figure reflects a decrease of $20.4 million, or 2%, from the $977.6 million
employed on average in 1991. Average capital employed in the Company's
business segments is shown in the table below (amounts in millions):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Construction Materials . . . . . . . . $707.4 $708.4 $748.4
Chemicals. . . . . . . . . . . . . . . 248.5 226.4 226.1
Cash items . . . . . . . . . . . . . . 7.0 22.4 3.1
Total. . . . . . . . . . . . . . . . $962.9 $957.2 $977.6
</TABLE>
The sources and deployment of the year-to-year increases in total average
capital employed are shown below (amounts in millions; brackets indicate
a decrease):
<TABLE>
<CAPTION>
1992-93 1991-92
<S> <C> <C>
Sources:
Short-term debt. . . . . . . . . . . $ 1.1 $(48.6)
Long-term obligations. . . . . . . . (2.6) 41.6
Other noncurrent liabilities . . . . 2.0 (17.2)
Shareholders' equity . . . . . . . . 5.2 3.8
Total . . . . . . . . . . . . . . $ 5.7 $(20.4)
Deployment:. . . . . . . . . . . . . .
Construction Materials . . . . . . . $ (1.0) $(40.0)
Chemicals. . . . . . . . . . . . . . 22.0 .3
Cash items . . . . . . . . . . . . . (15.3) 19.3
Total . . . . . . . . . . . . . . $ 5.7 $(20.4)
</TABLE>
During the period 1989 through 1993, total average capital employed in
continuing operations has grown at an average annual compound rate of 4.2%, or
by the cumulative amount of $179.1 million. During this period,
interest-bearing debt has increased by $63.0 million and, as a percent of
average capital employed, has increased from 8.6% to 13.6%. The following
summary indicates the sources and deployment of the increase in average
capital employed from 1989 to 1993 (amounts in millions):
<TABLE>
<CAPTION>
Amount
of Increase % of
(Decrease) Total
<S> <C> <C>
Sources:
Short-term debt. . . . . . . . . . . $ 21.1 12 %
Long-term obligations. . . . . . . . 41.9 24
Other noncurrent liabilities . . . . 13.1 8
Shareholders' equity . . . . . . . . 98.1 56
Total . . . . . . . . . . . . . . $174.2 100 %
Deployment:
Construction Materials . . . . . . . $222.2 128 %
Chemicals. . . . . . . . . . . . . . 18.0 10
Cash items . . . . . . . . . . . . . (61.1) (35)
Total continuing operations 179.1 103
Discontinued operations. . . . . . . . (4.9) (3)
Total . . . . . . . . . . . . . . $174.2 100 %
</TABLE>
SUMMARY OF INTERNAL CASH FLOWS AND TRANSACTIONS WITH INVESTORS
Pages 60 and 61 of this report contain detailed information showing the
principal elements of operating and investing cash flows referable to the
Company's segments for each of the last 11 years. The table on page 62
summarizes these detailed cash flows and also shows the cash flows referable
to nonsegment activities and transactions between the Company and its
suppliers of invested capital, both lenders and shareholders.
A cumulative summary of these flows for the five-year period ended
December 31, 1993 is provided on the following page. As indicated in the
table, the net cash flows referable to all of the Company's operating and
investing activities, and to the tax deductibility of interest expense,
totaled $365.6 million during the last five years. Transactions with capital
suppliers during the same period required $429.1 million, including $417.7
million returned to shareholders and $11.4 million to lenders. Discontinued
operations required $16.4 million. The net result of these cash flows was a
decrease in cash items of $75.4 million from the end of 1988 to the end
of 1993.
<TABLE>
<CAPTION>
SUPPLEMENTARY INFORMATION - QUARTERLY FINANCIAL DATA
Amounts in millions, except per share data
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
<S> <C> <C> <C> <C> <C>
1993
Net sales.............................................. $214.1 $306.0 $331.3 $282.1 $1,133.5
Gross profit........................................... 29.7 74.0 85.1 57.9 246.7
Net earnings (loss).................................... (0.5) 31.6 36.6 20.5 88.2
Primary and fully diluted earnings (loss) per share.... (0.01) 0.84 0.99 0.57 2.39
1992
Net sales.............................................. $210.6 $284.2 $312.3 $270.9 $1,078.0
Gross profit........................................... 35.6 74.5 80.8 58.2 249.1
Net earnings before cumulative effect
of accounting change............................... 4.6 30.2 35.8 20.4 91.0
Cumulative effect of accounting change................. 3.0 - - - 3.0
Net earnings........................................... 7.6 30.2 35.8 20.4 94.0
Primary and fully diluted earnings per share:
Before cumulative effect of accounting change...... 0.12 0.80 0.94 0.55 2.41
Cumulative effect of accounting change............. 0.08 - - - 0.08
Net earnings....................................... 0.20 0.80 0.94 0.55 2.49
1991
Net sales.............................................. $197.1 $266.4 $289.2 $254.8 $1,007.5
Gross profit........................................... 27.6 66.7 71.3 46.5 212.1
Net earnings (loss).................................... (2.2) 25.9 30.2 (1.3) 52.6
Primary and fully diluted earnings (loss) per share.... (0.06) 0.68 0.79 (0.03) 1.38
</TABLE>
Page 38
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
Vulcan Materials Company and Subsidiary Companies
For the Years Ended December 31, 1993, 1992, and 1991
Amounts and shares in thousands, except per share data
1993 1992 1991
<S> <C> <C> <C>
Net sales............................................. $1,133,489 $1,078,035 $1,007,478
Cost of goods sold.................................... 886,764 828,951 795,346
Gross profit on sales................................. 246,725 249,084 212,132
Selling, administrative and general expenses.......... 111,085 105,749 98,859
Other operating costs
Impairment and liquidation charges (Note 13)...... - - 21,147
Abandonments, idle facilities expense, etc........ 4,987 5,326 7,008
Total other operating costs................... 4,987 5,326 28,155
Other income (charges), net
Interest income................................... 1,013 1,795 1,507
Other, net........................................ 2,727 690 (1,973)
Total other income (charges), net............. 3,740 2,485 (466)
Earnings before interest expense and income taxes..... 134,393 140,494 84,652
Interest expense (Note 4)............................. 9,171 9,768 11,205
Earnings before income taxes.......................... 125,222 130,726 73,447
Provision for income taxes (Note 7)
Current........................................... 37,460 46,833 36,357
Deferred.......................................... (467) (7,087) (15,490)
Total provision for income taxes.............. 36,993 39,746 20,867
Net earnings before cumulative effect of
accounting change................................. 88,229 90,980 52,580
Cumulative effect of accounting change (Note 7)....... - 3,005 -
Net earnings.......................................... $ 88,229 $ 93,985 $ 52,580
Primary and fully diluted earnings per share
Net earnings before cumulative effect of
accounting change............................. $2.39 $2.41 $1.38
Cumulative effect of accounting change (Note 7)... - 0.08 -
Net earnings...................................... $2.39 $2.49 $1.38
Dividends per share .................................. $1.26 $1.20 $1.20
Average common and common equivalent shares outstanding 36,975 37,780 38,216
<FN>
The accompanying Notes to Financial Statements are an integral part of these statements.
</TABLE>
Page 40
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
Vulcan Materials Company and Subsidiary Companies
As of December 31, 1993, 1992 and 1991
Amounts in thousands
1993 1992 1991
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents (Note 2).................................. $ 13,996 $ 15,669 $ 18,993
Accounts and notes receivable:
Customers, less allowance for doubtful accounts: 1993, $7,284;
1992, $6,814; 1991, $6,267.................................. 141,606 142,454 130,439
Other........................................................... 8,798 8,941 7,699
Inventories (below estimated current cost by $32,986 for 1993,
$32,371 for 1992 and $42,701 for 1991; Note 3).............. 105,017 107,948 112,636
Current portion of deferred income taxes............................ 26,898 24,604 11,900
Prepaid expenses.................................................... 6,298 5,213 3,480
Total current assets........................................ 302,613 304,829 285,147
Investments and long-term receivables................................... 56,505 49,970 40,699
Property, plant and equipment, net (Note 4)............................. 657,785 663,721 675,440
Deferred charges and other assets (Note 8).............................. 61,648 65,395 71,825
Total....................................................... $1,078,551 $1,083,915 $1,073,111
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities:
Long-term debt.................................................. $ 1,671 $ 1,029 $ 1,660
Capitalized lease obligations................................... 70 70 1,827
Notes payable (Note 2).............................................. - - 9,763
Trade payables and accruals......................................... 89,504 81,775 67,951
Accrued income taxes................................................ 14,450 17,040 16,551
Accrued salaries and wages.......................................... 20,437 19,371 17,536
Accrued interest.................................................... 1,356 1,383 1,688
Other accrued liabilities (Note 9).................................. 13,327 14,368 18,412
Total current liabilities................................... 140,815 135,036 135,388
Long-term debt (Note 5)................................................. 102,035 107,205 108,434
Long-term capitalized lease obligations (Note 6)........................ - 70 2,672
Deferred income taxes (Note 7).......................................... 74,193 72,383 69,626
Deferred management incentive and other compensation (Note 8)........... 17,885 18,618 15,906
Other postretirement benefits (Note 8).................................. 27,377 24,880 22,491
Other noncurrent liabilities (Note 9)................................... 13,283 25,611 35,666
Other commitments and contingent liabilities (Note 9)
Shareholders' equity
Common stock, $1 par value.......................................... 46,573 46,573 46,573
Capital in excess of par value...................................... 4,587 3,962 3,463
Retained earnings (Note 5).......................................... 1,009,912 967,979 919,089
Total....................................................... 1,061,072 1,018,514 969,125
Less cost of stock in treasury...................................... 358,109 318,402 286,197
Total shareholders' equity.................................. 702,963 700,112 682,928
Total....................................................... $1,078,551 $1,083,915 $1,073,111
<FN>
The accompanying Notes to Financial Statements are an integral part of these statements.
</TABLE>
Page 41
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Vulcan Materials Company and Subsidiary Companies
For the Years Ended December 31, 1993, 1992 and 1991
Amounts in thousands
1993 1992 1991
<S> <C> <C> <C>
OPERATIONS
Net earnings before cumulative effect of accounting change......................... $ 88,229 $ 90,980 $ 52,580
Adjustments to reconcile net earnings to net cash provided by
continuing operations:
Depreciation, depletion and amortization................................... 102,780 103,345 109,725
Provisions for impairment and liquidation of assets (Note 13).............. - - 21,147
(Increase) decrease in assets before effects of business acquisitions:
Accounts and notes receivable.......................................... 991 (11,760) 14,728
Inventories............................................................ 3,199 6,592 3,220
Current portion of deferred income taxes............................... (2,294) (12,704) (4,855)
Prepaid expenses....................................................... (1,085) (681) 363
Increase (decrease) in liabilities before effects of business acquisitions:
Accrued interest and income taxes...................................... (27) (305) (427)
Trade payables, accruals, etc.......................................... 5,906 12,828 1,412
Deferred income taxes.................................................. 1,810 2,757 (15,546)
Other noncurrent liabilities........................................... (10,564) (4,954) (57)
Issuance of common stock in connection with Performance Share Plan......... 904 717 1,038
Other, net................................................................. 4,246 12,311 1,530
Net cash provided by continuing operations............................. 194,095 199,126 184,858
Net cash used for discontinued operations (Note 9)................................. (1,077) (1,031) (1,514)
Cumulative effect of accounting change (Note 7).................................... - 3,005 -
Net cash provided by operations........................................ 193,018 201,100 183,344
INVESTING ACTIVITIES
Purchases of property, plant and equipment......................................... (95,977) (75,191) (63,645)
Payment for business acquisitions ................................................. (4,507) (33,216) (24,719)
Proceeds from sale of property, plant and equipment................................ 6,009 8,924 2,627
Investment in nonconsolidated companies............................................ (9,637) (11,609) (13,000)
Withdrawal of earnings from nonconsolidated companies.............................. 301 400 25
Net cash used for investing activities................................. (103,811) (110,692) (98,712)
FINANCING ACTIVITIES
Net payments-commercial paper and bank lines of credit............................. - (9,803) (97,368)
Proceeds from issuance of long-term debt (Note 5).................................. - - 81,000
Payment of short-term debt ........................................................ (1,184) (3,759) (4,607)
Payment of long-term debt.......................................................... (3,414) (2,651) (12,335)
Purchases of common stock (Note 10)................................................ (39,986) (32,424) (5,217)
Dividends paid..................................................................... (46,296) (45,095) (45,664)
Net cash used for financing activities................................. (90,880) (93,732) (84,191)
Net increase (decrease) in cash and cash equivalents............................... (1,673) (3,324) 441
Cash and cash equivalents at beginning of year..................................... 15,669 18,993 18,552
Cash and cash equivalents at end of year........................................... $ 13,996 $ 15,669 $ 18,993
<FN>
The accompanying Notes to Financial Statements are an integral part of these statements.
</TABLE>
Page 42
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Vulcan Materials Company and Subsidiary Companies
For the Years Ended December 31, 1993, 1992, and 1991
Amounts and shares in thousands
1993 1992 1991
Shares Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Common stock, $1 par value
Authorized, 160,000 shares
Issued (no changes in 1993, 1992 and 1991)..... 46,573 $ 46,573 46,573 $ 46,573 46,573 $ 46,573
Capital in excess of par value
Balance at beginning of year................... 3,962 3,463 2,758
Distributions under Performance Share Plan..... 604 499 705
Distributions under Stock Plan for
Non-employee Directors...................... 21 - -
Balance at end of year......................... 4,587 3,962 3,463
Retained earnings
Balance at beginning of year................... 967,979 919,089 912,173
Net earnings................................... 88,229 93,985 52,580
Cash dividends on common stock................. (46,296) (45,095) (45,664)
Balance at end of year......................... 1,009,912 967,979 919,089
Common stock held in treasury
Balance at beginning of year................... (9,350) (318,402) (8,582) (286,197) (8,467) (281,312)
Purchase of common shares...................... (895) (39,985) (786) (32,423) (141) (5,217)
Distributions under Performance Share Plan..... 20 270 18 218 26 332
Distributions under Stock Plan for
Non-Employee Directors...................... 1 8 - - - -
Balance at end of year......................... (10,224) (358,109) (9,350) (318,402) (8,582) (286,197)
Total...................................... $ 702,963 $ 700,112 $ 682,928
<FN>
The accompanying Notes to Financial Statements are an integral part of these statements.
</TABLE>
Page 43
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
all majority or wholly-owned subsidiary companies. All significant
intercompany transactions and accounts have been eliminated in consolidation.
Investments in joint ventures and the common stock of associated companies in
which the Company has ownership interests of 20% to 50% are accounted for by
the equity method. All other investments are carried at the lower of cost or
market, and income is recorded as dividends are received or interest is
earned.
CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The Company classifies as cash equivalents all highly liquid securities with a
maturity of three months or less at the time of purchase. Other marketable
securities with a maturity of over three months, but not more than one year,
at the time of purchase, are classified as short-term investments.
INVENTORIES
The Company uses the last-in, first-out (LIFO) method of valuation for most of
its inventories because it results in a better matching of costs with
revenues. Inventories, other than operating supplies, are stated at the lower
of cost, as determined by the LIFO method, or market. Such cost includes raw
materials, direct labor and production overhead. Substantially all operating
supplies are carried at average cost, which does not exceed market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are carried at cost less allowances for
accumulated depreciation, depletion and amortization. The cost of properties
held under capital leases is equal to the lower of the net present value of
the minimum lease payments or the fair value of the leased property at the
inception of the lease.
DEPRECIATION, DEPLETION AND AMORTIZATION
Depreciation is computed by the straight-line method at rates based upon the
estimated service lives of the various classes of assets, which include
machinery and equipment, buildings and land improvements. Amortization of
capitalized leases is included with depreciation expense.
Cost depletion on depletable quarry land is computed by the unit of production
method based upon estimated recoverable units.
Leaseholds are amortized over varying periods not in excess of applicable
lease terms.
OTHER COSTS
Income is charged as costs are incurred for start-up of new plants and for
normal recurring costs of mineral exploration, removal of overburden from
active mineral deposits, and research and development.
Repairs and maintenance are charged to costs and operating expenses. Renewals
and betterments which add materially to the utility or useful lives of
property, plant and equipment are capitalized.
Environmental remediation costs are accrued as liabilities and expensed when
environmental assessments and/or remedial efforts are probable, and the cost
can be reasonably estimated. Costs are accrued no later than the feasibility
study and/or when the Company commits to a formal plan of action.
Environmental compliance costs include maintenance and operating costs with
respect to pollution control facilities, the cost of ongoing monitoring
programs and similar costs. Such costs are expensed as incurred.
INCOME TAXES
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, which
supersedes and amends SFAS No. 96. The principal change made by SFAS No. 109
is to revise the criteria for recognition and measurement of deferred tax
assets. The effect of the change in accounting method is disclosed in
Note 7.
Annual provisions for income taxes are based primarily on reported earnings
before income taxes and include appropriate provisions for deferred income
taxes resulting from the tax effect of the difference between the tax basis of
assets and liabilities and their carrying amounts for financial reporting
purposes. In addition, such provisions reflect adjustments for the following
items:
Permanent differences, principally the excess of percentage depletion
over the tax basis of depletable properties.
An estimate of additional cost that may be incurred, including
interest on deficiencies but excluding adjustments representing
temporary differences, upon final settlement of returns after audit
by various taxing authorities.
Balances or deficiencies in prior year provisions that become
appropriate as audits of those years progress.
EARNINGS PER SHARE
Primary and fully diluted earnings per share of common stock are computed by
dividing net earnings by the weighted average number of common shares and
common share equivalents outstanding during the year. Common share
equivalents represent the number of shares contingently issuable under
long-term performance share plans and the stock plan for non-employee
directors.
2. CASH
Bank lines of credit amounted to $70,000,000 and $60,000,000 at year end 1993
and 1992, respectively. These lines were not in use at the end of either
year. At the end of 1991, bank lines totaled $95,000,000, of which
$10,000,000 was used to back up commercial paper outstanding.
All of the lines of credit extended to the Company in 1993, 1992, and 1991
were based on a commitment fee arrangement. The Company also maintained
balances or paid fees to compensate its banks for certain services. The
Company was in compliance with these informal compensation arrangements during
all three years. Because the arrangements are evaluated on a twelve-month
average basis, the Company does not consider any of its cash balances to be
restricted as of any specific date.
3. INVENTORIES
Inventories at December 31 are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Finished products . . . . . . . . . . $ 75,954 $ 74,684 $ 79,988
Raw materials . . . . . . . . . . . . 3,856 4,123 2,162
Products in process . . . . . . . . . 965 943 1,100
Operating supplies and other. . . . . 24,242 28,198 29,386
Total inventories . . . . . . . . . $105,017 $107,948 $112,636
</TABLE>
The above amounts include inventories valued under the LIFO method totaling
$80,614,000, $78,968,000 and $82,284,000 at December 31, 1993, 1992, and 1991,
respectively. If all inventories valued at LIFO cost had been valued under
the methods (substantially average cost) used prior to the adoption of the
LIFO method, the approximate effect on net earnings would have been an
increase of $387,000 ($.01 per share effect) in 1993, a decrease of $6,409,000
($.17 per share effect) in 1992, and an increase of $3,904,000 ($.10 per share
effect) in 1991.
4. PROPERTY, PLANT AND EQUIPMENT
Balances of major classes of assets and allowances for depreciation, depletion
and amortization at December 31 are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Land and land
improvements. . . . . . $ 200,856 $ 198,272 $ 187,812
Buildings . . . . . . . . . . . . . . 62,995 61,088 58,978
Machinery and equipment . . . . . . . 1,372,667 1,317,671 1,271,425
Leaseholds. . . . . . . . . . . . . . 5,575 5,490 5,556
Construction in progress. . . . . . . 55,912 41,912 30,633
Total. . . . . . . . . . . . . . 1,698,005 1,624,433 1,554,404
Less allowances for
depreciation, depletion
and amortization. . . . . . . . . . 1,040,220 960,712 878,964
Property, plant and
equipment, net. . . . . . . . . . . $ 657,785 $ 663,721 $ 675,440
</TABLE>
The Company capitalized interest cost of $1,016,000 in 1993, $673,000 in 1992
and $131,000 in 1991 with respect to qualifying construction projects. Total
interest cost incurred before recognition of the capitalized amount was
$10,187,000 in 1993, $10,441,000 in 1992 and $11,336,000 in 1991.
Balances referable to capitalized leases included in property, plant and
equipment at December 31 are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Land and land improvements. . . . . . $ 16 $ 16 $ 16
Buildings . . . . . . . . . . . . . . 59 59 59
Machinery and equipment . . . . . . . 9,978 9,984 9,984
Total. . . . . . . . . . . . . . 10,053 10,059 10,059
Less allowance for
amortization. . . . . . . . . . . . 9,128 8,842 8,547
Property, plant and
equipment, net. . . . . . . . . . . $ 925 $ 1,217 $ 1,512
</TABLE>
Amortization of capitalized leases amounted to $292,000 in 1993, $294,000 in
1992 and $300,000 in 1991.
5. DEBT
Long-term debt, exclusive of current maturities, at December 31 is summarized
as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Medium-term notes . . . . . . . . . . . . . . $ 80,000 $ 81,000 $ 81,000
Notes issued for businesses
acquired in 1987. . . . . . . . . . . . . . 2,478 5,863 5,863
6 5/8% pollution control
revenue bonds . . . . . . . . . . . . . . . 6,800 6,800 6,800
7 7/8% and 8% pollution control
revenue bonds . . . . . . . . . . . . . . . - - 5,800
6 3/8% pollution control
revenue bonds . . . . . . . . . . . . . . . 5,800 5,800 -
Variable rate pollution control
revenue bonds . . . . . . . . . . . . . . . 3,350 3,700 4,000
Other notes . . . . . . . . . . . . . . . . . 3,607 4,042 4,971
Total . . . . . . . . . . . . . . . . . . $102,035 $107,205 $108,434
</TABLE>
In May 1991 the Company filed a shelf registration statement with the
Securities and Exchange Commission for the registration of $200,000,000
principal amount of debt securities. The issuances of medium-term notes in
1991 totaled $81,000,000. The net proceeds from the sale of the debt
securities in 1991 were used for general corporate purposes, principally the
reduction of commercial paper borrowings and long-term indebtedness. The
dollar-weighted average maturity of the notes, as calculated from the dates of
issuance, approximates 13 years. Maturities at the time of issuance ranged
from three to thirty years with a maximum of $10,000,000 due in any one year.
The weighted average interest rate on the notes is 8.53% with a range of 7.59%
to 8.85%.
In March 1991 the Company made a cash payment of $6,000,000 both to satisfy
the sinking fund requirement of $3,000,000 for its 10 1/4% debentures and to
exercise the option to retire an additional $3,000,000 of the debentures at
par. In April 1991 the Company retired the remainder of its outstanding
10 1/4% debentures in the principal amount of $6,326,000. The early
extinguishment of this debt resulted in a pretax charge of $233,000,
representing the premium paid on the called debentures and the unamortized
issuance costs.
The notes issued for businesses acquired in 1987 consist of $1,648,000 in
fixed rate notes (10.13%) due 2007 and $830,000 in variable rate notes due
2008. The fixed rate notes are payable in ten equal annual installments
beginning in 1998. The variable rate notes, which are resettable every three
years based upon a spread over a specified U.S. Treasury note index, are
payable in three equal installments in 2002, 2005 and 2008, unless the holders
exercise put options at earlier dates. In September 1993 the Company paid
$3,385,000 to certain variable rate noteholders who elected to exercise put
options on the three year anniversary of the reset date as specified in the
notes. This reduced the principal balance of the variable rate notes from
$4,215,000 to $830,000.
The 6 5/8% pollution control revenue bonds issued on behalf of the Company in
1978 are payable in installments of $1,000,000 in the years 1998 and 1999 and
installments of $1,200,000 in the years 2000-2003. The 7 7/8% and 8%
pollution control revenue bonds issued in 1980 were refunded effective
February 1, 1992, at an interest rate of 6 3/8%, and are now payable in 2012.
The variable rate pollution control revenue bonds issued in 1981 and 1984 are
due in 1996 ($1,400,000) and 1999 ($1,950,000), respectively.
Other notes include various obligations with interest rates ranging from 7.49%
to 10.00%. These relate principally to notes issued for acquired properties.
The aggregate principal payments for the five years subsequent to December 31,
1993 are: 1994-$1,671,000; 1995-$4,687,000; 1996-$7,070,000; 1997-$5,400,000;
and 1998-$6,565,000.
As a result of its repayment of certain indebtedness during 1991, the Company
is no longer subject to any contractual restrictions on the aggregate amount
of its indebtedness or minimum working capital, or the amount it may expend
for cash dividends and purchases of its stock.
Disclosure of the estimated fair value of long-term debt and other financial
instruments is made in accordance with the requirements of SFAS No. 107,
Disclosure about Fair Value of Financial Instruments. The estimated fair
value amounts have been determined by the Company, using available market
information and appropriate valuation methodologies. Based primarily on the
present value of cash outflows, using year-end interest rates, the estimated
fair value of long-term debt at December 31, 1993 is $114,372,000. This
compares with a carrying value of $102,035,000. As of December 31, 1992, the
estimated fair value of long-term debt is $114,797,000 and the carrying value
is $107,205,000. These valuations have been determined by discounting
expected future cash flows using interest rates on U.S. Treasury bills, notes
or bonds, as appropriate. For cash equivalents, accounts and notes
receivable, current portion of deferred income taxes, accounts payable,
accrued income taxes, accrued interest and other applicable accrued
liabilities, the carrying amounts are a reasonable estimate of fair value.
The fair value estimates presented are based on information available to
management as of December 31, 1993 and December 31, 1992. Although management
is not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued since those
dates.
6. LEASES
Total rental expense of nonmineral leases, exclusive of rental payments made
under leases of one month or less, is summarized as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Minimum rentals . . . . . . . . . . . $ 7,600 $ 7,247 $ 6,762
Contingent rentals (based
principally on usage) . . . . . . . 10,021 8,875 5,130
Total . . . . . . . . . . . . . . $17,621 $16,122 $11,892
</TABLE>
Future minimum lease payments under all leases with initial or remaining
noncancellable lease terms in excess of one year, exclusive of mineral leases,
at December 31, 1993 are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
<S> <C> <C>
1994. . . . . . . . . . . . . . . . . . . . . . . . . $75 $ 7,498
1995. . . . . . . . . . . . . . . . . . . . . . . . . 0 5,474
1996. . . . . . . . . . . . . . . . . . . . . . . . . 0 4,504
1997. . . . . . . . . . . . . . . . . . . . . . . . . 0 3,295
1998. . . . . . . . . . . . . . . . . . . . . . . . . 0 2,491
Remaining years . . . . . . . . . . . . . . . . . . . 0 7,162
Total minimum lease payments. . . . . . . . . . . . . 75 $30,424
Less: Amount representing interest . . . . . . . . . 5
Present value of net minimum
lease payments . . . . . . . . . . . . . . . . . . $70
</TABLE>
Lease agreements frequently include renewal options and require that the
Company pay for utilities, taxes, insurance and maintenance expense. Options
to purchase also are included in some lease agreements, particularly capital
leases.
7. INCOME TAXES
Effective January 1, 1992, the Company adopted SFAS No. 109, Accounting for
Income Taxes. The cumulative effect of applying the new accounting method to
years prior to 1992 increased net earnings by $3,005,000 ($.08 per share),
which was reflected separately in the consolidated statement of earnings for
the first quarter of 1992. The cumulative effect is not included in any of
the summary information provided below. Implementation of the new method had
no material impact on 1993 or 1992 earnings.
The components of earnings before income taxes are as follows (in thousands
of dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Domestic. . . . . . . . . . . . . . . $123,932 $132,370 $75,746
Foreign . . . . . . . . . . . . . . . 1,290 (1,644) (2,299)
Total . . . . . . . . . . . . . . . $125,222 $130,726 $73,447
</TABLE>
Provisions for income taxes consist of the following (in thousands
of dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Current:
Federal . . . . . . . . . . . . . . $33,179 $38,798 $ 30,369
State and local . . . . . . . . . . 4,277 8,016 5,958
Foreign . . . . . . . . . . . . . . 4 19 30
Total . . . . . . . . . . . . . . 37,460 46,833 36,357
Deferred:
Federal . . . . . . . . . . . . . . (59) (5,988) (13,054)
State and local . . . . . . . . . . (408) (1,099) (2,436)
Total . . . . . . . . . . . . . . (467) (7,087) (15,490)
Total provision . . . . . . . . . . . $36,993 $39,746 $ 20,867
</TABLE>
The provisions for income taxes differ from amounts computed by applying the
federal statutory rate to earnings before income taxes due to the following
reasons (in thousands of dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Taxes at federal statutory rate . . . . . . . $43,828 $44,447 $24,972
Increase (decrease) in
taxes resulting from:
Depletion . . . . . . . . . . . . . . . . . (9,092) (8,114) (7,004)
State and local income taxes,
net of federal income
tax benefit . . . . . . . . . . . . . . . 2,516 4,563 2,325
Adjustment to December 31, 1992,
net deferred income tax liability for
enacted federal tax rate change . . . . . 1,110 0 0
Miscellaneous items . . . . . . . . . . . . (1,369) (1,150) 574
Total provision . . . . . . . . . . . . . . . $36,993 $39,746 $20,867
</TABLE>
The effective tax rate on income differs from the U. S. statutory rate due to
the following:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Federal statutory tax rate. . . . . . . . . . 35.0% 34.0% 34.0%
Increase (decrease) in tax
rate resulting from:
Depletion . . . . . . . . . . . . . . . . . (7.3) (6.2) (9.5)
State and local income taxes,
net of federal income
tax benefit . . . . . . . . . . . . . . . 2.0 3.5 3.2
Adjustment to December 31, 1992,
net deferred income tax liability for
enacted federal tax rate change . . . . . 0.9 0.0 0.0
Miscellaneous items . . . . . . . . . . . . . (1.1) (0.9) 0.7
Effective tax rate. . . . . . . . . . . . . . 29.5% 30.4% 28.4%
</TABLE>
Deferred income taxes on the balance sheet result from temporary differences
between the amount of assets and liabilities recognized for financial
reporting and tax purposes. The components of the net deferred income tax
liability are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Deferred tax assets related to:
Accrual for postretirement benefits . . . . . $11,117 $ 9,900 $ 8,093
Accrual for environmental reclamation . . . . 8,675 11,639 13,392
Accounts receivable, principally
allowance for doubtful accounts . . . . . . 3,075 2,820 2,633
Inventory adjustments . . . . . . . . . . . . 7,231 6,985 6,376
Pensions, incentives and
deferred compensation . . . . . . . . . . . 4,827 4,361 1,664
Other items . . . . . . . . . . . . . . . . . 6,126 5,633 6,559
Total deferred tax assets . . . . . . . . . 41,051 41,338 38,717
Deferred tax liabilities related to:
Fixed assets, principally depreciation. . . . 83,175 84,461 92,239
Other items . . . . . . . . . . . . . . . . . 5,171 4,656 4,204
Total deferred tax liabilities. . . . . . . 88,346 89,117 96,443
Net deferred tax liability. . . . . . . . . . . $47,295 $47,779 $57,726
</TABLE>
8. PENSION, OTHER POSTRETIREMENT BENEFIT AND INCENTIVE COMPENSATION PLANS
In 1991 the Company merged seven of its hourly flat dollar pension plans into
a single plan, reducing the total number of Company sponsored noncontributory,
defined benefit pension plans from nine to three. These plans cover
substantially all employees other than those covered by union-administered
plans. Normal retirement age is 65, but the plans contain provisions for
earlier retirement. Benefits for the Salaried Plan and the Chemicals Hourly
Plan are based on salaries or wages and years of service; the Construction
Materials Hourly Plan provides benefits equal to a flat dollar amount for each
year of service.
Charges to earnings referable to company-administered pension plans totaled
$2,148,000 in 1993, $2,216,000 in 1992 and $561,000 in 1991. Components of
the net periodic pension charges are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Service cost - benefits earned
during the period . . . . . . . . . $ 8,286 $ 8,072 $ 6,438
Interest cost . . . . . . . . . . . . 16,195 15,465 14,108
Actual return on plan assets. . . . . (32,280) (15,176) (50,049)
Net amortization and deferral . . . . 9,947 (6,145) 30,064
Net periodic pension charge . . . . $ 2,148 $ 2,216 $ 561
</TABLE>
The Company's qualified pension plans have assets in excess of the accumulated
benefit obligation. Plan assets are composed primarily of marketable domestic
and international equity securities, corporate and government debt securities
and real estate. Unrecognized net plan assets at the implementation of SFAS
No. 87, Employers' Accounting for Pensions, in 1986 are being amortized over
the average of the covered employees' remaining service lives, which range
from 12 to 16 years. The following table reconciles the funded status of all
the Company's plans with the related amounts recognized in the Company's
consolidated balance sheets at December 31 (in thousands of dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Actuarial present value of
benefit obligations:
Based on employment
service to date
and current salary levels:
Vested. . . . . . . . . . . . . . . . . . $(139,958) $(120,923) $(115,311)
Nonvested . . . . . . . . . . . . . . . . (5,927) (5,087) (4,934)
Accumulated benefit
obligation . . . . . . . . . . . . . (145,885) (126,010) (120,245)
Effect of projected future
salary increases. . . . . . . . . . . . . (85,297) (71,511) (68,529)
Projected benefit
obligation. . . . . . . . . . . . . . . . (231,182) (197,521) (188,774)
Plan assets at fair market
value . . . . . . . . . . . . . . . . . . . 271,821 248,558 242,946
Plan assets in excess of
projected benefit
obligation. . . . . . . . . . . . . . . . . 40,639 51,037 54,172
Unamortized portion of
unrecognized net asset
at implementation of
SFAS No. 87 . . . . . . . . . . . . . . . . (20,167) (23,638) (27,109)
Unrecognized net gain . . . . . . . . . . . . (16,395) (22,300) (16,320)
Unrecognized prior
service cost. . . . . . . . . . . . . . . . 9,308 10,145 6,426
Net prepaid pension cost. . . . . . . . . . $ 13,385 $ 15,244 $ 17,169
</TABLE>
Annual net periodic pension charges and credits are calculated using plan
assumptions as of the end of the prior year, whereas the funded status and
related pension obligations are determined using the assumptions as of the end
of the current year. Plan assumptions at December 31 were as follows:
<TABLE>
<CAPTION>
1993 1992 1991 1990
<S> <C> <C> <C> <C>
Discount rates used to determine
the pension obligations
- First 18 years. . . . . . . . . . 7.25% 8.00% 8.00% 9.00%
- Thereafter . . . . . . . . . . . 7.25 6.75 6.75 7.50
Discount rates used to determine
the net periodic cost and
other recognized gains
- First 18 years. . . . . . . . . . 8.00 8.00 8.00 9.00
- Thereafter . . . . . . . . . . . 6.75 6.75 6.75 7.50
Rates of increase in
compensation levels
(for salary-related plans). . . . . 5.50 5.50 5.50 6.00
Expected long-term rates of
return on plan assets . . . . . . . 8.25 8.25 8.25 8.25
</TABLE>
The Company funds the pension trusts currently in amounts determined under the
individual entry age level premium method, including benefit increases
expected as a result of projected wage and salary increases occurring between
the date of valuation and the individual retirement dates.
Certain of the Company's hourly employees in unions are covered by
multi-employer defined benefit pension plans. Contributions to these plans
approximated $1,637,000 in 1993, $1,281,000 in 1992 and $1,223,000 in 1991.
The actuarial present value of accumulated plan benefits and net assets
available for benefits for employees in the union-administered plans are not
determinable from available information.
In addition to pension benefits, the Company provides certain health care
benefits and life insurance for some retired employees. Substantially all of
the Company's salaried employees and, where applicable, hourly employees may
become eligible for those benefits if they reach at least age 55 and meet
certain service requirements while working for the Company. Generally,
company-provided health care benefits terminate when covered individuals
become eligible for Medicare benefits or reach age 65, whichever first
occurs.
Effective January 1, 1989, the Company changed to an accrual method of
accounting for the aforementioned postretirement benefits based on actuarially
determined costs to be accrued over the period from the date of hire to the
full eligibility date of employees who are expected to qualify for benefits.
In December 1990 the Financial Accounting Standards Board issued SFAS No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, which
requires the use of an accrual method. Effective in 1992, the Company
modified its benefit calculation methodology to fully comply with SFAS 106
with no significant effect on earnings. The cost of providing postretirement
benefits under the accrual method amounted to $4,370,000 in 1993, $3,936,000
in 1992 and $3,749,000 in 1991.
The components of net periodic postretirement benefit charges and credits are
as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Service cost - benefits attributed
to service during the period. . . . . . . . $1,536 $1,418 $1,194
Interest cost . . . . . . . . . . . . . . . . 2,792 2,514 2,562
Actual return on assets . . . . . . . . . . . (136) (124) (127)
Net amortization and deferral . . . . . . . . 178 128 120
Net periodic postretirement
benefit cost. . . . . . . . . . . . . . . $4,370 $3,936 $3,749
</TABLE>
If the 1993, 1992 and 1991 costs had been determined under the previous
method, which recognized the cost of providing postretirement benefits by
expensing the contributions when made, the amounts would have been $1,872,000,
$1,547,000 and $1,275,000, respectively.
The Company funds the postretirement benefits plan each year through
contributions to a trust fund for health care benefits and through payments of
premiums to providers of life insurance. All assets of the plan relate to the
life insurance and are composed of reserves held by the insurer. The
following table sets forth the combined funded status of the plan and its
reconciliation with the related amounts recognized in the Company's
consolidated balance sheet at December 31 (in thousands of dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees. . . . . . . . . . . . . . . . . . $(11,471) $(10,032) $ (9,328)
Fully eligible active
plan participants . . . . . . . . . . . . (11,982) (10,788) (9,317)
Other active plan participants. . . . . . . (16,004) (13,363) (12,015)
Total accumulated postretirement
benefit obligation. . . . . . . . . . . (39,457) (34,183) (30,660)
Plan assets at fair market value. . . . . . . 2,378 2,171 1,995
Accumulated postretirement benefit
obligation in excess of plan assets . . . . (37,079) (32,012) (28,665)
Unrecognized prior service cost . . . . . . . 7 7 8
Unrecognized net loss . . . . . . . . . . . . 8,495 5,925 4,967
Accrued postretirement benefit cost . . . $(28,577) $(26,080) $(23,690)
</TABLE>
Annual net periodic postretirement benefit charges and credits are calculated
using plan assumptions as of the end of the prior year, whereas the funded
status and related benefit obligations are determined using the assumptions
as of the end of the current year. Plan assumptions at December 31 were
as follows:
<TABLE>
<CAPTION>
1993 1992 1991 1990
<S> <C> <C> <C> <C>
Discount rates
- First 18 years. . . . . . . . . . 7.25% 8.00% 8.00% 9.00%
- Thereafter . . . . . . . . . . . 7.25 6.75 6.75 7.50
Expected long-term rate of
return on plan assets . . . . . . . 7.00 7.00 7.00 7.00
Rate of increase in per
capita claims cost
- First year . . . . . . . . . . . 13.0 14.0 7.5 7.5
- Ultimate rate . . . . . . . . . . 6.0 6.0 7.5 7.5
</TABLE>
Effective December 31, 1992, the assumed annual rate of increase in per capita
claims cost was changed to reflect current rates of claims cost increase. A
decrease of 1.0% per year in the rate is assumed until an ultimate rate of
6.0% is achieved. If the health care cost trend rates were increased 1.0%
each year, the accumulated postretirement benefit obligation as of December
31, 1993 would have increased by $2,662,000 (or 6.7%) and the aggregate of
the service and interest cost for 1993 would have increased by $346,000
(or 8.0%).
In November 1992, the Financial Accounting Standards Board issued SFAS
No. 112, Employers' Accounting for Postemployment Benefits, and adoption is
required by the Company in 1994. The Company anticipates no material impact
from adoption.
The Company has a number of incentive compensation plans under which awards
are made to officers and other key employees. Expense provisions referable to
the plans amounted to $4,295,000 in 1993, $7,467,000 in 1992 and $3,306,000 in
1991. The expense provisions for these plans reflect the cost of
distributions payable currently as well as distributions that may be payable
in future periods if certain conditions are satisfied. Expense provisions for
certain of the plans also are affected by changes in the market value of the
Company's common stock.
9. OTHER COMMITMENTS AND CONTINGENT LIABILITIES
In 1987 the Company formed three jointly-owned companies with Industrias ICA,
S.A. de C.V., ("Indica"), a principal member of Grupo ICA, one of Mexico's
leading diversified industrial entities, to develop and operate a limestone
quarry on Mexico's Yucatan Peninsula and to import Mexican crushed stone for
sale along the U.S. Gulf Coast (the "Crescent Market Project"). The
shareholder agreements for these three companies provide that each sponsor
will contribute its share of the equity required to fund the project. The
Company's share of $68,188,000 had been contributed by December 31, 1993;
Indica contributed a substantially equal pro rata amount. Two of the
jointly-owned companies have entered into term loan agreements to fund up to
$90,750,000 of their investments. The current balance of these loans is
$71,668,000. The Company and Indica have agreed to guarantee these loans on a
several and pro rata basis equal to approximately 50% each. Certain of the
loan guarantees will be terminated if and when the project meets defined
financial tests. In addition, the Company has approximately $3,700,000
outstanding from the three companies at December 31, 1993 as its share of
loans to the project.
Other commitments of the Company include the purchase of property, plant and
equipment approximating $11,661,000 at December 31, 1993.
The Company is a defendant in various lawsuits incident to the ordinary course
of business. It is not possible to determine with precision the probable
outcome or the amount of liability, if any, under these lawsuits; however, in
the opinion of the Company and its counsel, the disposition of these lawsuits
will not adversely affect the consolidated financial statements of the Company
to a material extent.
As indicated in the Notes to Financial Statements in the Company's 1992 Annual
Report, the Company received a letter from the United States Environmental
Protection Agency ("EPA") in May 1985 regarding remedial actions at a chemical
waste site in Ascension Parish, Louisiana. Records indicate that the Company
generated a portion of the waste placed at the site, and the Company therefore
has been deemed by the EPA to be a potentially responsible party ("PRP") with
respect to the site under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA").
On February 5, 1991, the EPA issued a unilateral administrative order ("UAO")
which directs the named respondents, including the Company and other PRPs, to
clean up the site. In a letter dated April 9, 1991, the Company, along with
three other PRPs named in the UAO, gave notice to the EPA that they intend to
comply with all lawful terms and conditions of the UAO.
In December 1988, the Company and other PRPs received a letter from the EPA
demanding reimbursement for approximately $1,540,000 in past costs and
administrative expenses incurred by the EPA in connection with the foregoing
matter. Effective June 8, 1992, the Company and other PRPs entered into a
Site Participation Agreement ("Agreement") allocating among the parties those
costs which are anticipated to be incurred or which might be incurred in
connection with the remediation activity at the site and those costs which may
be recovered by the EPA or other agencies in connection with their past
response work or oversight work at the site. Moreover, in June, 1992, the EPA
orally informed the Company and other PRPs that it would seek to recover its
response and oversight costs incurred to date, and toward that end has made a
supplemental Information Request, pursuant to Section 104(e) of CERCLA,
seeking information to support such recovery of costs. The Company responded
to the Information Request on July 14, 1992. The demand by EPA for recovery
of costs includes the amount previously demanded from the Company and the
other PRPs in December 1988.
Cleanup of the site will take an extended period of time. Commencement of
cleanup work at the site began in late 1992, and the majority of the costs
likely will be incurred in the first three years. The engineering consultants
and contractors engaged by the Company and other PRPs have estimated a total
cost of $34,700,000 to complete the work required by EPA's final remedial
plan.
The Company has reviewed the cost estimates and information currently
available relative to EPA's most recent request for recovery of its costs. On
the basis of this review, the Company has determined that its accrued reserve
is adequate to cover its allocated share of currently anticipated site
remediation costs and those response and oversight costs which may be
recovered by the EPA. The Company will continue to review relevant cost
information as it becomes available, particularly information relative to the
EPA's request for recovery of its costs. The Company has begun to make
payments from its accrued reserve pursuant to the Agreement.
The Company has been identified by government authorities and certain private
parties as potentially responsible for cleanup costs at various other sites,
including sites formerly owned and operated by the Company. The operations of
the Company also continue to be affected by the compliance requirements of
various laws, regulations, administrative orders and permits relating to
protection of the environment. Although future costs of cleanup at other
sites and the future costs of environmental compliance may be significant, the
Company does not believe that these matters and the aforementioned potential
share of cleanup costs for the Ascension Parish site will adversely affect the
consolidated financial statements of the Company to a material extent.
The Company's consolidated balance sheets as of December 31 include accrued
environmental cleanup costs for the Chemicals segment of $19,100,000 for 1993,
$26,530,000 for 1992 and $30,371,000 for 1991. These amounts include
noncurrent liabilities of $5,701,000, $17,458,000 and $27,376,000,
respectively.
In the fourth quarter of 1987, the Company discontinued its former Metals
segment and recorded a loss on disposal that reflected provisions for phaseout
costs, including the estimated cost of contractual liabilities associated with
environmental remediation at several Metals plants. Whereas the costs for
many contractual liabilities associated with environmental remediation were
reasonably ascertainable when an additional provision for estimated phaseout
costs was recorded in 1989, the estimates for other such liabilities vary
widely and could result in future increases, or possibly decreases, in the
total provision for phaseout costs. Factors that might have an impact on such
estimates include the results of further environmental testing, engineering
analyses and planning, and negotiations among interested parties. The Company
has completed several environmental remediation projects at certain of these
Metals plants, and expenditures were within recorded provisions. While
completion of these projects represents significant progress in addressing the
contractual liabilities, several substantial remediation projects remain to be
completed by the Company.
Current liabilities reported on the Company's consolidated balance sheets
include accrued provisions for discontinued operations in the following
amounts as of December 31: $1,583,000 in 1993; $2,666,000 in 1992; and
$3,706,000 in 1991. In addition, other noncurrent liabilities include
$2,650,000 each in 1993, 1992 and 1991 referable to discontinued operations.
An antidumping petition was filed on May 20, 1992, with the International
Trade Commission ("ITC"), by two stone producers and a stone distributor in
southwest Texas alleging that a U.S. industry was being injured by imports of
crushed limestone from Mexico. The companies involved in the Crescent Market
Project quarry and crush limestone from Mexico's Yucatan Peninsula for sale
along the U.S. Gulf Coast. On June 29, 1992, the ITC, in a 5-0 vote (with one
commissioner not participating), determined that there was no reasonable
indication that an industry in the United States was materially injured or
threatened with material injury by the importation of crushed limestone from
Mexico. This ruling was appealed to the United States Court of International
Trade ("CIT"), where the determination of the ITC was sustained and the action
dismissed. The judgment of the CIT was then appealed to the United States
Court of Appeals for the Federal Circuit, where oral argument was heard in
February 1994. No decision has been rendered on the appeal.
10. COMMON STOCK
A total of 10,499,963 shares has been purchased at a cost of $363,911,000
pursuant to a common stock purchase plan initially authorized by the Board of
Directors in July 1985 and increased in subsequent years, and pursuant to a
tender offer during the period November 5, 1986 through December 4, 1986. The
number of shares remaining under purchase authorizations was 1,074,672 as of
December 31, 1993.
11. SEGMENT DATA
Operations in the Company's Construction Materials segment principally involve
the production and sale of crushed aggregates and related products and
services. The Chemicals segment produces and sells inorganic and organic
chemicals.
Segment data referable to net sales to unaffiliated customers, earnings,
property additions, and depreciation, depletion and amortization are provided
in Segment Financial Data on pages 60 and 61.
The Company's determination of segment earnings recognizes equity in the
income or losses of nonconsolidated affiliates of the Construction Materials
segment as part of segment earnings and also reflects allocations of general
corporate expenses to the segments. SFAS No. 14, Financial Reporting for
Segments of a Business Enterprise, does not provide for the inclusion of these
items in "operating profit or loss of reportable segments." The net amounts
of those items were expenses of $15,542,000 in 1993, $17,819,000 in 1992 and
$17,475,000 in 1991.
Segment earnings are reconciled with earnings before income taxes as follows
(in thousands of dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Segment earnings. . . . . . . . . . . . . . . $134,089 $139,609 $84,407
Interest income, etc. . . . . . . . . . . . . 304 885 245
Interest expense. . . . . . . . . . . . . . . (9,171) (9,768) (11,205)
Earnings before income taxes. . . . . . . . . $125,222 $130,726 $73,447
</TABLE>
Identifiable assets by segment at December 31 are as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Construction Materials. . . . . . . . . . . . $ 670,079 $ 688,898 $ 710,061
Chemicals . . . . . . . . . . . . . . . . . . 288,720 285,163 267,595
Total identifiable assets . . . . . . . . . . 958,799 974,061 977,656
Investment in
nonconsolidated
affiliates. . . . . . . . . . . . . . . . . 51,054 43,424 39,051
General corporate assets. . . . . . . . . . . 54,702 50,761 37,411
Cash items. . . . . . . . . . . . . . . . . . 13,996 15,669 18,993
Total assets. . . . . . . . . . . . . . . . . $1,078,551 $1,083,915 $1,073,111
</TABLE>
12. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental information referable to the Consolidated Statements of Cash
Flows is summarized below (amounts in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Cash payments:
Interest (exclusive of
amount capitalized). . . . . . . . . . $ 9,198 $10,073 $11,632
Income taxes. . . . . . . . . . . . . . . 41,393 45,413 34,205
Noncash investing and
financing activities:
Amounts referable to
business acquisitions:
Other liabilities assumed. . . . . . . - 213 54
Debt issued in purchase of
property, plant and equipment. . . . . - 191 40
</TABLE>
13. IMPAIRMENT AND LIQUIDATION OF ASSETS
In 1987 the Company acquired the White's Mines businesses, located in Texas.
The long- range forecasts underlying that acquisition proved to be overly
optimistic because of sharply lower oil prices and substantially weaker demand
for construction materials. Updated long- term forecasts indicated no
recovery to originally anticipated levels; consequently, management concluded
that the Company's Texas assets should be written down to estimated
recoverable value. In the fourth quarter of 1991, the Company recorded a
pretax write-down of $16,217,000, which reduced consolidated net earnings by
$10,088,000, or $.26 per common share.
In the third quarter of 1991, the Company initiated a phased liquidation of
its construction materials business in south and east Florida, which included
two stone quarries, a sales yard and two ready-mixed concrete plants. This
decision reflected both the effects of unattractive market conditions and
significant real estate values associated with certain land parcels utilized
in the business. Together, these factors made it difficult to earn acceptable
returns on the assets employed at those locations. In the fourth quarter of
1991, the Company recorded a pretax provision of $4,930,000 for shutdown costs
associated with the liquidation of these assets. As a result, consolidated
net earnings were reduced by $3,067,000, or $.08 per common share. Due to
potentially long lead-times and other uncertainties involved in selling real
estate, any gains from such sales will be recorded when realized.
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
AND INTERNAL CONTROL
The Shareholders of Vulcan Materials Company:
Vulcan's management acknowledges and accepts its responsibility for all the
information contained in the financial statements and other sections of this
report. The statements were prepared in conformity with generally accepted
accounting principles appropriate in the circumstances and we believe they
reflect fairly the Company's financial position, results of operations and
cash flows for the periods shown. The financial statements necessarily
reflect our informed judgments and estimates of the expected outcome of
numerous current events and transactions.
The Company maintains an internal control structure which we believe provides
reasonable assurance that the Company's financial statements, books and
records accurately reflect the Company's financial condition, results of
operations and cash flows and that the Company's assets are safeguarded from
loss or unauthorized use. This internal control structure includes
well-defined and communicated policies and procedures, organizational
structures that provide for appropriate separations of responsibilities, high
standards applied in the selection and training of management personnel, and
adequate procedures for properly assessing and applying accounting principles,
including careful consideration of the accuracy and appropriateness of all
significant accounting estimates. Vulcan also has an internal audit function
that continually reviews compliance with established policies and procedures.
The Company's independent auditors, Deloitte & Touche, consider the internal
control structure as a part of their audits of the Company's financial
statements and provide an independent opinion as to the fairness of the
presentation of those statements. Their report is presented below.
The Board of Directors pursues its oversight role for the financial statements
and internal control structure in major part through the Audit Review Committee,
which is composed of five outside directors. In addition, the full Board
regularly reviews detailed management reports covering all aspects of the
Company's financial affairs. The Audit Review Committee meets periodically
with management, the independent auditors and the internal auditors to review
the work of each and to ensure that each is properly discharging its
responsibilities. To ensure independence, the Committee also meets on these
matters with the internal and independent auditors without the presence of
management representatives.
/s/ D. F. Sansone
Vice President, Finance
February 4, 1994
INDEPENDENT AUDITORS' REPORT
The Shareholders of Vulcan Materials Company:
We have audited the accompanying consolidated balance sheets of Vulcan
Materials Company and its subsidiary companies as of December 31, 1993,
1992 and 1991, and the related consolidated statements of earnings,
shareholders' equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Vulcan Materials Company
and its subsidiary companies at December 31, 1993, 1992 and 1991, and the
results of their operations and their cash flows for the years then ended
in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche
Birmingham, Alabama
February 4, 1994
Page 52
FINANCIAL TERMINOLOGY
Capital employed For the Company: the sum of interest-bearing
debt, capitalized lease obligations, other
noncurrent liabilities and shareholders' equity;
for a segment: the net sum of the segment's
assets, current liabilities, and allocated
corporate assets and current liabilities,
exclusive of cash items and short-term debt
Cash items The sum of cash, cash equivalents and
short-term investments
Common shareholders' The sum of common stock (less the cost of common
equity stock in treasury), capital in excess of par
value and retained earnings, as reported in the
balance sheet
Long-term capital The sum of long-term debt, long-term capitalized
lease obligations, other noncurrent liabilities
and shareholders' equity
Operating income For the Company: net earnings from continuing
from continuing operations plus the after-tax cost of interest
operations after expense; for a segment: segment earnings less
taxes the segment's computed share of the consolidated
provision for income taxes
Property additions * Capitalized replacements of and additions to
property, plant and equipment (and such assets of
businesses acquired), including capitalized
leases, renewals and betterments; each segment's
property additions include allocated corporate
amounts
Ratio of earnings The sum of earnings from continuing operations
to fixed charges before income taxes, amortization of capitalized
interest and fixed charges net of interest
capitalization credits, divided by fixed charges.
Fixed charges are the sum of interest expense
before capitalization credits, amortization of
financing costs and one-third of rental expense.
Segment earnings 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 segments 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.
Short-term debt The sum of current interest-bearing debt,
including current maturities of long-term debt
and capitalized lease obligations, and
interest-bearing notes payable
* The Company classifies its property additions into three categories
based upon the predominant purpose of the project expenditures. Thus, a
project is classified entirely as a replacement if that is the principal
reason for making the expenditure even though the project may involve
some cost saving and/or capacity improvement aspects. Likewise, a
profit adding project is classified entirely as such if the principal
reason for making the expenditure is to add operating facilities at new
locations (which occasionally replace facilities at old locations), to
add product lines, to expand the capacity of existing facilities, to
reduce costs, to increase mineral reserves or to improve products, etc.
Property additions classified as environmental control expenditures do
not reflect those expenditures for environmental control activities,
including industrial health programs, which are expensed currently.
Such expenditures are made on a continuing basis and at significant
levels in each of the Company's segments. Frequently, profit adding and
major replacement projects also include expenditures for environmental
control purposes.
Page 53
VULCAN MATERIALS COMPANY
SUBSIDIARIES
As of December 31, 1993
STATE OR OTHER % OWNED
JURISDICTION OF DIRECTLY OR
INCORPORATION INDIRECTLY
ENTITY OR ORGANIZATION BY VULCAN
Subsidiaries
Atlantic Granite Company1 South Carolina 33 1/3
Birmingham Slag Company1 Alabama 100
BRT Transfer Terminal, Inc. Kentucky 100
Calizas Industriales del Carmen,
S.A. de C.V. Mexico 49
Central States Materials, Inc. Kentucky 100
CSM Trucking Company, Inc. Tennessee 100
Dixie Sand and Gravel Company1 Tennessee 100
Knoxville Mack Distributors, Inc.1 Tennessee 100
Lambert Bros., Inc.1 Tennessee 100
Midsouth Machine and Service Company Tennessee 100
Reco Transportation, Inc. Kentucky 100
Reed Crushed Stone Company, Incorporated Kentucky 100
Reed Terminal Company, Inc. Kentucky 100
Statewide Transport, Inc. Texas 100
Vulcan/ICA Distribution Company
(Partnership) Texas 52
Vulcan Gulf Coast Aggregates, Inc. New Jersey 100
Vulcan Gulf Coast Materials, Inc. New Jersey 100
Vulcan International, Ltd. U.S. Virgin Islands 100
Vulcan Lands, Inc. New Jersey 100
Vulcan Peroxidation Systems Inc.2 New Jersey 100
Vulcan Soda Ash Company California 100
VULICA Shipping Company, Limited Bahamas 50
Wanatah Trucking Co., Inc. Indiana 100
Wesco Contracting Company1 Tennessee 100
White's Mines, Inc.1 Texas 100
1 Inactive
2 Formed in January 1994
POWER OF ATTORNEY
STATE OF GEORGIA )
COUNTY OF FULTON )
The undersigned director of Vulcan Materials Company, a New Jersey
corporation, hereby nominates, constitutes and appoints W. F. Denson, III,
and E. Starke Sydnor, and each of them, the true and lawful attorneys of the
undersigned to sign the name of the undersigned as director to the End Report
on Form 10-K for the year ended December 31, 1993 of said corporation to be
filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, and to any and all amendments to
said report.
The undersigned hereby grants to said attorneys full power of
substitution, resubstitution and revocation, all as fully as the undersigned
could do if personally present, hereby ratifying all that said attorneys or
their substitutes may lawfully do by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company
has executed this Power of Attorney this 22nd day of February, 1994.
/s/ James V. Napier
James V. Napier
STATE OF GEORGIA )
COUNTY OF FULTON )
On this 22 day of February in the year 1994, before me, Rheta Johnson, a
Notary Public of said State, duly commissioned and sworn, personally appeared
James V. Napier, known to me to be the person whose name is subscribed to the
within instrument, and acknowledged that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Rheta Johnson
Notary Public in and for said State
[SEAL]
My Commission Expires:
June 10, 1995
POWER OF ATTORNEY
STATE OF CONNECTICUT )
COUNTY OF FAIRFIELD )
The undersigned director of Vulcan Materials Company, a New Jersey
corporation, hereby nominates, constitutes and appoints W. F. Denson, III,
and E. Starke Sydnor, and each of them, the true and lawful attorneys of the
undersigned to sign the name of the undersigned as director to the End Report
on Form 10-K for the year ended December 31, 1993 of said corporation to be
filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, and to any and all amendments to said
report.
The undersigned hereby grants to said attorneys full power of
substitution, resubstitution and revocation, all as fully as the undersigned
could do if personally present, hereby ratifying all that said attorneys or
their substitutes may lawfully do by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company
has executed this Power of Attorney this 23rd day of February, 1994.
/s/ Marion H. Antonini
Marion H. Antonini
STATE OF CONNECTICUT )
COUNTY OF FAIRFIELD )
On this 23rd day of February in the year 1994, before me, Kathleen W.
Allen, a Notary Public of said State, duly commissioned and sworn, personally
appeared Marion H. Antonini, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he executed the
same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Kathleen W. Allen
Notary Public in and for said State
[SEAL]
My Commission Expires:
June 30, 1998
POWER OF ATTORNEY
STATE OF ILLINOIS )
COUNTY OF COOK )
The undersigned director of Vulcan Materials Company, a New Jersey
corporation, hereby nominates, constitutes and appoints W. F. Denson, III,
and E. Starke Sydnor, and each of them, the true and lawful attorneys of the
undersigned to sign the name of the undersigned as director to the End Report
on Form 10-K for the year ended December 31, 1993 of said corporation to be
filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, and to any and all amendments to said
report.
The undersigned hereby grants to said attorneys full power of
substitution, resubstitution and revocation, all as fully as the undersigned
could do if personally present, hereby ratifying all that said attorneys or
their substitutes may lawfully do by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company
has executed this Power of Attorney this 22nd day of February, 1994.
/s/ John K. Greene
John K. Greene
STATE OF ILLINOIS )
COUNTY OF COOK )
On this 22nd day of February in the year 1994, before me, Renee N. Duba, a
Notary Public of said State, duly commissioned and sworn, personally appeared
John K. Greene, known to me to be the person whose name is subscribed to the
within instrument, and acknowledged that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Renee N. Duba
Notary Public in and for said State
[SEAL]
My Commission Expires:
September 4, 1994
POWER OF ATTORNEY
STATE OF GEORGIA )
COUNTY OF HALL )
The undersigned director of Vulcan Materials Company, a New Jersey
corporation, hereby nominates, constitutes and appoints W. F. Denson, III,
and E. Starke Sydnor, and each of them, the true and lawful attorneys of the
undersigned to sign the name of the undersigned as director to the End Report
on Form 10-K for the year ended December 31, 1993 of said corporation to be
filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, and to any and all amendments to said
report.
The undersigned hereby grants to said attorneys full power of
substitution, resubstitution and revocation, all as fully as the undersigned
could do if personally present, hereby ratifying all that said attorneys or
their substitutes may lawfully do by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company
has executed this Power of Attorney this 21 day of February, 1994.
/s/ Richard H. Leet
Richard H. Leet
STATE OF GEORGIA )
COUNTY OF HALL )
On this 21st day of February in the year 1994, before me, Janey R. Smith,
a Notary Public of said State, duly commissioned and sworn, personally
appeared Richard H. Leet, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he executed the
same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Janey R. Smith
Notary Public in and for said State
[SEAL]
My Commission Expires: 1/24/98
POWER OF ATTORNEY
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES )
The undersigned director of Vulcan Materials Company, a New Jersey
corporation, hereby nominates, constitutes and appoints W. F. Denson, III,
and E. Starke Sydnor, and each of them, the true and lawful attorneys of the
undersigned to sign the name of the undersigned as director to the End Report
on Form 10-K for the year ended December 31, 1993 of said corporation to be
filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, and to any and all amendments to said
report.
The undersigned hereby grants to said attorneys full power of
substitution, resubstitution and revocation, all as fully as the undersigned
could do if personally present, hereby ratifying all that said attorneys or
their substitutes may lawfully do by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company
has executed this Power of Attorney this 22nd day of February, 1994.
/s/ Donald B. Rice
Donald B. Rice
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES )
On February 22, 1994, before me, Frances B. DeVincent, Notary Public,
personally appeared Donald B. Rice, personally known to me or proved to me on
the basis of satisfactory evidence to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in
his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Frances B. DeVincent
Notary Public in and for said State
[SEAL]
My Commission Expires:
September 24, 1994
POWER OF ATTORNEY
STATE OF MINNESOTA )
COUNTY OF WASHINGTON )
The undersigned director of Vulcan Materials Company, a New Jersey
corporation, hereby nominates, constitutes and appoints W. F. Denson, III,
and E. Starke Sydnor, and each of them, the true and lawful attorneys of the
undersigned to sign the name of the undersigned as director to the End Report
on Form 10-K for the year ended December 31, 1993 of said corporation to be
filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, and to any and all amendments to said
report.
The undersigned hereby grants to said attorneys full power of
substitution, resubstitution and revocation, all as fully as the undersigned
could do if personally present, hereby ratifying all that said attorneys or
their substitutes may lawfully do by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company
has executed this Power of Attorney this 22nd day of February, 1994.
/s/ Livio D. DeSimone
Livio D. DeSimone
STATE OF MINNESOTA )
COUNTY OF WASHINGTON )
On this 22nd day of February in the year 1994, before me, Joan Deshler, a
Notary Public of said State, duly commissioned and sworn, personally appeared
Livio D. DeSimone, known to me to be the person whose name is subscribed to
the within instrument, and acknowledged that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Joan F. Deshler
Notary Public in and for said State
[SEAL]
My Commission Expires:
July 26, 1997
POWER OF ATTORNEY
STATE OF OHIO )
COUNTY OF CUYAHOGA )
The undersigned director of Vulcan Materials Company, a New Jersey
corporation, hereby nominates, constitutes and appoints W. F. Denson, III,
and E. Starke Sydnor, and each of them, the true and lawful attorneys of the
undersigned to sign the name of the undersigned as director to the End Report
on Form 10-K for the year ended December 31, 1993 of said corporation to be
filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, and to any and all amendments to said
report.
The undersigned hereby grants to said attorneys full power of
substitution, resubstitution and revocation, all as fully as the undersigned
could do if personally present, hereby ratifying all that said attorneys or
their substitutes may lawfully do by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company
has executed this Power of Attorney this 21 day of February, 1994.
/s/ Douglas J. McGregor
Douglas J. McGregor
STATE OF OHIO )
COUNTY OF CUYAHOGA )
On this 21 day of February in the year 1994, before me, Barbara A. Haag,
a Notary Public of said State, duly commissioned and sworn, personally
appeared Douglas J. McGregor, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he executed the
same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Barbara A. Haag
Notary Public in and for said State
[SEAL]
My Commission Expires:
January 7, 1998
POWER OF ATTORNEY
DISTRICT OF COLUMBIA )
The undersigned director of Vulcan Materials Company, a New Jersey
corporation, hereby nominates, constitutes and appoints W. F. Denson, III,
and E. Starke Sydnor, and each of them, the true and lawful attorneys of the
undersigned to sign the name of the undersigned as director to the End Report
on Form 10-K for the year ended December 31, 1993 of said corporation to be
filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, and to any and all amendments to said
report.
The undersigned hereby grants to said attorneys full power of
substitution, resubstitution and revocation, all as fully as the undersigned
could do if personally present, hereby ratifying all that said attorneys or
their substitutes may lawfully do by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company
has executed this Power of Attorney this 24th day of February, 1994.
/s/ Ann D. McLaughlin
Ann D. McLaughlin
DISTRICT OF COLUMBIA )
On this 24th day of February in the year 1994, before me, Sarah A. Agnew,
a Notary Public of said State, duly commissioned and sworn, personally
appeared Ann D. McLaughlin, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he executed the
same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Sarah A. Agnew
Notary Public in and for said State
[SEAL]
My Commission Expires: 5-31-96
POWER OF ATTORNEY
STATE OF NEW JERSEY )
COUNTY OF MIDDLESEX )
The undersigned director of Vulcan Materials Company, a New Jersey
corporation, hereby nominates, constitutes and appoints W. F. Denson, III,
and E. Starke Sydnor, and each of them, the true and lawful attorneys of the
undersigned to sign the name of the undersigned as director to the End Report
on Form 10-K for the year ended December 31, 1993 of said corporation to be
filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, and to any and all amendments to said
report.
The undersigned hereby grants to said attorneys full power of
substitution, resubstitution and revocation, all as fully as the undersigned
could do if personally present, hereby ratifying all that said attorneys or
their substitutes may lawfully do by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Vulcan Materials Company
has executed this Power of Attorney this 1 day of March, 1994.
/s/ Orin R. Smith
Orin R. Smith
STATE OF NEW JERSEY )
COUNTY OF MIDDLESEX )
On this 1st day of March in the year 1994, before me, Theresa Richards, a
Notary Public of said State, duly commissioned and sworn, personally appeared
Orin R. Smith, known to me to be the person whose name is subscribed to the
within instrument, and acknowledged that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Theresa Richards
Notary Public in and for said State
[SEAL]
My Commission Expires: June 27, 1995
<TABLE>
<CAPTION>
SCHEDULE VI
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
PROPERTY, PLANT AND EQUIPMENT
For the Years Ended December 31, 1993, 1992 and 1991
Amounts in Thousands
Column A Column B Column C Column D Column E Column F
Balance at Other Balance
Beginning Additions Changes (1) at End
Classification of Period at Cost Retirements Add (Deduct) of Period
<S> <C> <C> <C> <C> <C>
1993
Land................................. $ 54,980 $ 604 $ 737 $ (21) $ 54,826
Depletable land ..................... 87,519 1,162 722 (134) 87,825
Land improvements.................... 55,773 3,083 749 98 58,205
Buildings............................ 61,088 2,427 551 31 62,995
Machinery and equipment.............. 1,317,671 78,948 27,395 3,443 1,372,667
Leaseholds........................... 5,490 325 300 60 5,575
Construction in progress............. 41,912 14,002 2 -- 55,912
Total............................. $1,624,433 $100,551 $30,456 $3,477 $1,698,005
1992
Land................................. $ 53,329 $ 2,068 $ 387 $ (30) $ 54,980
Depletable land...................... 80,721 6,830 203 171 87,519
Land improvements.................... 53,761 2,234 203 (19) 55,773
Buildings............................ 58,978 2,049 104 165 61,088
Machinery and equipment.............. 1,271,425 73,912 27,573 (93) 1,317,671
Leaseholds........................... 5,556 45 111 -- 5,490
Construction in progress............. 30,634 11,353 75 -- 41,912
Total............................. $1,554,404 $98,491 $28,656 $ 194 $1,624,433
1991
Land................................. $ 51,841 $ 1,784 $ 1,095 $ 799 $ 53,329
Depletable land...................... 89,838 5,904 14,066 (955) 80,721
Land improvements.................... 54,251 1,332 1,370 (452) 53,761
Buildings............................ 57,093 2,509 693 69 58,978
Machinery and equipment.............. 1,238,565 70,896 38,549 513 1,271,425
Leaseholds........................... 5,283 247 -- 26 5,556
Construction in progress............. 27,922 3,049 337 -- 30,634
Total............................. $1,524,793 $85,721 $56,110 $ -- $1,554,404
<FN>
(1) Net reclassifications.
</TABLE>
[TEXT]
<TABLE>
<CAPTION>
SCHEDULE VII
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
ALLOWANCE FOR DEPRECIATION, DEPLETION AND AMORTIZATION
For the Years Ended December 31, 1993, 1992 and 1991
Amounts in Thousands
Column A Column B Column C Column D Column E Column F
Additions Other
Balance at Charged to Changes (1) Balance
Beginning Costs and Add at End
Classification of Period Expenses Retirements (Deduct) of Period
<S> <C> <C> <C> <C> <C>
1993
Depletable land......................... $ 13,066 $ 960 $ 198 $ (1) $ 13,827
Land improvements....................... 27,624 3,146 741 641 30,670
Buildings............................... 35,857 2,814 432 (16) 38,223
Machinery and equipment................. 882,554 95,703 24,599 2,173 955,831
Leaseholds.............................. 1,611 157 100 1 1,669
Total................................ $960,712 $102,780 $26,070 $2,798 $1,040,220
1992
Depletable land......................... $ 11,948 $ 948 $ 25 $ 195 $ 13,066
Land improvements....................... 25,291 3,095 156 (606) 27,624
Buildings............................... 33,184 2,733 66 6 35,857
Machinery and equipment................. 807,074 96,424 21,544 600 882,554
Leaseholds.............................. 1,467 144 -- -- 1,611
Total................................ $878,964 $103,344 $21,791 $ 195 $ 960,712
1991
Depletable land......................... $ 12,160 $ 1,384 $ 1,595 $ (1) $ 11,948
Land improvements....................... 23,201 3,091 1,001 -- 25,291
Buildings............................... 30,844 2,739 399 -- 33,184
Machinery and equipment................. 736,559 102,382 31,867 -- 807,074
Leaseholds.............................. 1,338 128 -- 1 1,467
Total................................ $804,102 $109,724 $34,862 $ -- $ 878,964
<FN>
(1) Net reclassifications.
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE IX
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the Years Ended December 31, 1993, 1992 and 1991
Amounts in Thousands
Column A Column B Column C Column D Column E Column F
Additions Charged to
Balance at Costs Balance
Beginning and Other at End
Description of Period Expenses Accounts Deductions of Period
<S> <C> <C> <C> <C> <C>
Reserves deducted from assets to
which they apply:
1993
Accrued environmental costs.............. $26,530 $ (110) $7,320 (1) $19,100
Doubtful receivables..................... 6,814 1,237 767 (2) 7,284
Cash discounts........................... 92 1,411 1,391 (3) 112
Allowance for slow-moving inventories
of finished products................... 460 -- -- 460
Allowance for slow-moving inventories
of parts and supplies.................. 4,526 (2,572) 98 (5) 1,856
Total................................. $38,422 $ (34) $9,576 $28,812
1992
Accrued environmental costs.............. $30,371 $ 3,184 $7,025 (1) $26,530
Doubtful receivables..................... 6,267 1,666 1,119 (2) 6,814
Cash discounts........................... 89 1,409 1,406 (3) 92
Allowance for slow-moving inventories
of finished products................... 513 (53) -- 460
Allowance for slow-moving inventories
of parts and supplies.................. 4,663 (148) (11)(4) 4,526
Total................................. $41,903 $ 6,058 $9,539 $38,422
1991
Accrued environmental costs.............. $30,207 $ 2,797 $2,633 (1) $30,371
Doubtful receivables..................... 5,293 1,730 756 (2) 6,267
Cash discounts........................... 78 1,271 1,260 (3) 89
Allowance for slow-moving inventories
of finished products................... 349 164 -- 513
Allowance for slow-moving inventories
of parts and supplies.................. 4,424 239 -- 4,663
Total................................. $40,351 $ 6,201 $4,649 $41,903
<FN>
(1) Expenditures on environmental remediation projects
(2) Write-offs of uncollectible accounts and worthless notes, less recoveries
(3) Cash discounts allowed
(4) Write-offs of parts and supplies, less parts sold
(5) Inventory revaluation
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE X
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
SHORT-TERM BORROWINGS
For the Years Ended December 31, 1993, 1992 and 1991
Dollar Amounts in Thousands
Column A Column B Column C Column D Column E Column F
Maximum Average Weighted
Weighted Amount Amount Average
Balance Average Outstanding Outstanding Interest Rate
Category of Aggregate at End of Interest During the During the During the
Short-Term Borrowings Period Rate Period Period (1) Period (2)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Notes payable to banks................. $ -- -- $ 12,000 $ 1,327 3.34%
Commercial paper....................... -- -- 63,000 24,202 3.23
All categories......................... -- -- 64,000 25,529 3.24
Year ended December 31, 1992:
Notes payable to banks................. $ -- -- $ 9,500 $ 529 4.46%
Commercial paper....................... -- -- 56,000 20,763 3.75
All categories......................... -- -- 56,300 21,292 3.77
Year ended December 31, 1991:
Notes payable to banks................. $ -- -- $ 14,900 $ 1,430 6.70%
Commercial paper....................... 9,763 5.79% 128,000 73,579 6.52
All categories......................... 9,763 5.79% 128,000 75,009 6.52
<FN>
(1) The average amount outstanding during the period was computed by
dividing the total of the daily outstanding principal balances by
the actual number of days in the calendar year.
(2) The weighted average interest rate during the period was computed by
dividing the actual interest expense by the average amount
outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE XI
VULCAN MATERIALS COMPANY AND SUBSIDIARY COMPANIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
For the Years Ended December 31, 1993, 1992 and 1991
Amounts in Thousands
Charged to Costs and Expenses
1993 1992 1991
<S> <C> <C> <C>
Repairs and maintenance........................ $120,018 $115,715 $111,407
Depreciation, depletion and amortization....... 102,780 103,344 109,724
Taxes other than income:
Payroll...................................... 19,536 17,952 17,125
Property, franchise, etc..................... 17,967 17,924 17,325
Royalties...................................... 15,811 14,332 14,175
Advertising.................................... 460 512 537
</TABLE>
